In January 2007 the MSC Napoli suffered damage in heavy weather and was beached on the south coast of England. The casualty led to claims in excess of GBP 100 million against the owners of the vessel (the claimants). On 27 February 2007 the claimants constituted a limitation fund under the LLMC 1976 in the sum of GBP 14,710,000. On 31 July 2007 the Court made a general limitation decree.

On 13 March 2008 the Admiralty Registrar ordered the trial of two preliminary issues:

(i) Whether Hapag-Lloyd AG (HPL) and Stinnes Linien GmbH (Stinnes) are shipowners for the purposes of art 1 of the LLMC 1976 and are thus entitled to limit their liability under the LLMC 1976; and

(ii) Whether, if the answer to (i) is yes, the limitation fund constituted in this action is deemed to be constituted by HPL for the purpose of the LLMC 1976.

HPL were slot charterers of the vessel from Mediterranean Shipping Co (MSC) under a slot charter agreement dated 29 August 2006. HPL issued its own bills of lading or sea waybills in respect of 172 laden containers. The bills provided for German law and jurisdiction. Stinnes were also slot charterers of the vessel from MSC pursuant to a slot charter agreement dated 15 October 2006. Stinnes issued 24 bills of lading which also provided for German law and jurisdiction.

Most of the bill of lading holders lodged claims against the fund by way of ADM20 forms. A small number of claimants instructed German lawyers. No party sought to challenge HPL's and Stinnes' right to limit.

Held: The answer to both preliminary issues is yes.

By art 1.2 of the LLMC 1976, the definition of shipowner includes a charterer. HPL and Stinnes are slot charterers and claim to be shipowners. BIMCO has described a slot charter as a hybrid type of contract. As distinct from a time charterparty when the entire vessel is being chartered, slot charterers are only hiring space on a vessel and are not acting as operators (as under a time charterparty) and usually have no control over the operation of the vessel.

HPL’s slot charter agreement with MSC provided that MSC will allocate 300 slots, or 4,200 tonnes per vessel voyage leg, whichever is used first. The slot charterer had to pay hire in respect of all the slots whether used or not. The agreement provided for the charterers to issue bills of lading for goods occupying the slots. Stinnes’ slot charter agreement was in the same form although the duration was different.

The slot charter agreements have some features in common with a time charter. They last for a period of time and hire is paid for the use of cargo carrying capacity. However, it is not comparable to a time charter in that the charterer does not direct the vessel where to go. The agreement provided that the voyage shall be as mutually agreed. In this respect it is more akin to a voyage charterparty.

The object of the LLMC 1976 is to encourage the provision of international trade by way of sea carriage (see CGM v Classica Shipping [2004] 1 Lloyd’s Rep 460 (CMI728)). The LLMC 1976 encourages such trade by limiting the liabilities which arise on a distinct occasion which include cargo claims. If charterers who had issued bills of lading as carriers were not within the definition of 'shipowner', claimants could direct their claims at the charterers and so avoid the limit on a shipowner’s liability. The charterers would have a claim against the shipowner but they would be able to limit liability thus leaving the charterers to bear the excess cargo claim over the limit. The inclusion of charterers within the definition of ‘shipowner’ ensures that this does not happen.

The ordinary meaning of the word 'charterer' is apt to include any type of charterer, whether time, voyage or demise. There is no reason why it should not also include a slot charterer. Were slot charterers not within the definition, slot chartering, which is an established, efficient way of organising the carriage of goods, might fall into disuse. Therefore, in accordance with the ordinary meaning of the word 'charterer' and in light of the object and purpose of the LLMC 1976 a slot charterer is within the definition of shipowner and entitled to limit liability.

As to the second issue, pursuant to art 11.3 of the LLMC 1976 a fund constituted by one of the persons mentioned in art 9 or their insurer shall be deemed constituted by all persons mentioned in art 9. The fund was constituted by the claimant. The claimant is the owner of a seagoing ship (the MSC Napoli) and is therefore a person mentioned in art 1.2 and accordingly a person mentioned in art 9. HPL and Stinnes, being the charterers of MSC Napoli, are persons mentioned in art 1.2 and accordingly persons mentioned in art 9. It follows that the fund is deemed to be constituted by HPL and Stinnes.

There is no clarity as to whether the person who has put up the fund is entitled to any contribution from those who take the benefit of the fund as 'shipowners'. The LLMC 1976 does not deal with that matter. Whether there is any right to contribution or restitution may have to depend on the general law.