This case involved the referral of the legal question as to whether a claim, for which there was a final German judgment, could be limited by notification in a limitation fund established pursuant to Part 9 of the Merchant Shipping Act, now Part 9a of the Merchant Shipping Act. If so, must limitation be determined by the rules of the LLMC 1976, or by Part 9 as worded in accordance with Act No 228 of 21 April 1999 amending the Merchant Shipping Act? By this Act, Denmark implemented the 1996 Protocol to the LLMC 1976, which entered into force on 13 May 2004, after Denmark and nine other countries had ratified the Protocol: see art 11 of the LLMC 1996. The 1996 Protocol was ratified by Denmark on 12 April 2002: see Executive Order No 28 of 14 October 2004. The 1996 Protocol significantly increased liability limits. In the present case, where the ship measured 1,937 tonnes, Part 9a of the Merchant Shipping Act (LLMC 1976) leads to a limitation of 406,979 SDRs, while Part 9 of the Merchant Shipping Act (LLMC 1996) leads to a limitation of 1 million SDRs.

The Amendment Act to the Merchant Shipping Act stipulated in s 170 that the rules in Part 9 (LLMC 1996) shall apply in all cases where limitation of liability is invoked by a Danish court. However, the rules of Part 9a (LLMC 1976) shall apply 'if the person limiting his liability so requests and at the time of the request had his domicile or principal place of business in a State bound by the [LLMC 1976], but not the 1996 Protocol thereto': see s 170(2) of the Merchant Shipping Act. The most important parts of the amending Act entered into force on 1 January 2004.

In deciding the legal questions referred, the following provisions are of particular importance: Section 177 of the Merchant Shipping Act: 'If arrest is applied for, an action is brought, or other legal proceedings are instituted in Denmark with respect to claims which according to their nature may be limited, a limitation fund may be constituted with the Maritime and Commercial Court.'

Section 178(1)(ii) and (v) of the Merchant Shipping Act:

After a limitation fund has been constituted in the Realm [of Denmark] or in Finland, Norway or Sweden, no arrest or seizure or exercise of other rights over a ship or property which belongs to a person on behalf of whom the fund has been constituted and who is entitled to limitation of liability for claims which may be raised against the fund, cf. however, section 180(2), may be exercised in respect of said claim. If arrest of ship or property has been carried out or if security has been given to avoid arrest, in such circumstances the arrest shall be lifted or the security released. ...

The regulations in subsections 1 and 3 may apply correspondingly if it is established that a limitation fund which is constituted in a state which is not a State Party can be considered equal to a limitation fund as mentioned in section 177.

The Merchant Shipping Act, s 180(1):

A person liable may invoke limitation of liability notwithstanding that a limitation fund has not been constituted. The court shall then only consider the claims which are pleaded under the case. If the person liable so claims, the judgment shall, however, include a reservation that other claims which are subject to limitation of liability shall be included in the calculation of the limitation of liability.

Section 182(1): 'Sections 171-181 shall apply in all cases where limitation of liability is claimed before a Danish court.'

Section 231 of the Merchant Shipping Act: 'The rules in this Part shall apply to limitation funds established under ss 177 [the relevant rule in this case], 195 and 214. A limitation fund shall be established at the Maritime and Commercial Court.'

On 11 July 2002, the M/S Uno, based in Fredericia, Denmark, collided with the barge Dettmer Tank 46/116 in the Kiel Canal in Germany. The collision caused the M/S Uno to sink within minutes, and resulted in death, personal injury, and cargo loss. The M/S Uno was owned by Interessentskabet Uno (Uno), whose stakeholders were Erik Petersen Schmidt and Rasmus Peter Schmidt. The vessel was hull insured with Codan A/S and P&I insured with Assuranceforeningen Skuld. The cargo insurer for the cargo in question was Tryg A/S (Tryg). The wreck of the M/S Uno was removed by the Wasser- und Schiffahrtsdirikktion Nord in Kiel (WSN), which paid EUR 770,000 for the removal. After income from the sale of the wreck, etc, WSN's claims in connection with wreck removal amounted to EUR 746,528.

In April 2003, WSN's claim was heard in the Landgericht Itzehoe in Germany. Uno alleged limitation of liability under the Handelsgesetzbuch (German Commercial Code / HGB) § 487(2), in conjunction with art 6 of the LLMC 1976. The Court refused to rule on Uno's plea of limitation of liability under HGB § 487(2). The judgment of 29 April 2003 was endorsed by the Landgericht Itzehoe on 3 July 2003. On 6 February 2004, the Bailiff's Court in Fredericia granted the German judgment endorsement so that it could be enforced in Denmark. WSN then requested the Bailiff's Court in Fredericia to enforce the judgment. In its order of 13 September 2004, the Bailiff's Court ruled that the LLMC 1976 preceded the Brussels recognition and enforcement of judgments Convention. Uno had failed to appeal the German judgment, the judgment did not contain reservations as mentioned in the Merchant Shipping Act, s 180(1), and a limitation fund had not been established before the judgment became final on 3 July 2003. Uno could therefore not invoke s 178(1)(ii) of the Merchant Shipping Act.

The decision of the Bailiff's Court in Fredericia was appealed to the Western High Court, which ruled on 23 February 2005. During the appeal, Uno filed a claim in principle that the case be referred to the Maritime and Commercial High Court, and in the alternative asked that the attachment of its assets be denied. WSN filed a claim for confirmation of the Bailiff's Court order. The Western High Court rejected the claim for referral to the Maritime and Commercial High Court and stated that, following the action before the Landgericht Itzehoe, Uno had the option of setting up a limitation fund with the competent German authority in accordance with art 11 of the LLMC 1976. In that case, the German rules implementing the rules of art 13 of the Convention would have applied.

However, Uno did not set up such a fund, and the Landgericht Itzehoe subsequently ruled in the case on 29 April 2003. The Western High Court found that the German judgment was covered by the Brussels regime, and could therefore be enforced in Denmark. Article 57 of the Convention could not lead to a different result, since the LLMC 1976 does not lay down rules on the jurisdiction of courts, or on the recognition or enforcement of judgments. The limitation fund that Uno had now constituted in Denmark, had been established after the judgment of the Landgericht Itzehoe was final, and s 178(1)(ii) of the Merchant Shipping Act therefore did not preclude the Court from making an attachment on the basis of the German judgment. The bailiff's decision was upheld.

Uno on 29 March 2004 made a request for the establishment of a limitation fund pursuant to s 177 of the Merchant Shipping Act. On 2 April 2004, the Maritime and Commercial High Court ruled: 'According to the information available to the court, the shipowner of the M/S Uno may limit his liability in accordance with the provisions of Part 9 of the Merchant Shipping Act.' On 14 April 2004, the Maritime and Commercial High Court issued an executive order on the establishment of a limitation fund in Statstidende. The notification deadline was 1 July 2004. WSN reported its claim to the fund on 11 June 2004. The reported claim was 406,979 SDRs with interest. Other claims from Tryg and Umweltschutzamt, Itzehoe, were notified on 29 June 2004.

The legal question outlined above was then referred to the Maritime and Commercial High Court.

Held: WSN must acknowledge that the claim notified in the fund must be limited in accordance with the Merchant Shipping Act's limitation of liability rules applicable at the time of the damage, ie the LLMC 1976.

Is limitation available?

Pursuant to s 177 of the Merchant Shipping Act, a limitation fund may be established at the Maritime and Commercial High Court in Copenhagen if arrest is sought in Denmark, an action is brought, or other legal action is requested, in connection with claims that may be limited. According to the wording of this provision, the background to it and its purpose, it must be assumed that a request for execution of a judgment such as that of 29 April 2003 from the Landgericht Itzehoe, which concerns a claim which, by its nature, may be limited, may form the basis for the establishment of a limitation fund in Denmark. An opposite view would lead to the unacceptable result that the area of application of the rules on limitation of liability through the constitution of a fund could be eliminated to a not insignificant extent.

The fact that there is a final judgment from another EU country does not preclude limitation of liability when establishing a limitation fund in Denmark. According to art 57 of the Brussels Convention, it is without prejudice to Conventions which the Contracting States have acceded to, or will accede to, and which, in specific areas, lay down rules on jurisdiction and the recognition and enforcement of judgments. Articles 11-13 of the LLMC 1976 lay down detailed rules for the establishment of a limitation fund, the distribution of the fund, and the exclusion of other legal steps following the establishment of a limitation fund, including the exclusion of ship arrest. These provisions must, moreover, in accordance with the statement of the Ministry of Trade and Industry in connection with the submission of the proposal to amend the Merchant Shipping Act (implementation of the 1996 Protocol to the Global Limitations Convention of 1976, etc, Bill No. 165, Parliamentary Assembly 1998-99), take precedence over the Brussels Convention.

The same result was reached in the judgment of the European Court of Justice of 14 October 2004 in Mærsk Olie og Gas A/S v Firma M de Haan and W de Boer (C-39/02) which, among other things, held that an application from a shipowner to the competent court of a State for the establishment of a limitation fund specifying a particular injured party, and an action in another State by the injured party against the shipowner, did not give rise to a lis pendens effect in accordance with art 21 of the Brussels Convention. Furthermore, the European Court held that an action for damages, and a request for the creation of a limitation fund, do not have the same subject-matter. It follows that the limitation fund constituted on 5 April 2004 was also set up correctly in relation to WSN's claims.

It is irrelevant to the question of the justification for the establishment of the limitation fund of 5 April 2004 that Uno did not, before the Landgericht Itzehoe, make reservations under s 180(1)(ii) of the Merchant Shipping Act on other claims, because there would be no other claims against Uno in Germany in connection with the wreckage removal, for which a separate fund was set up in Germany. A reservation in the judgment of the Landgericht Itzehoe would therefore be meaningless under German law.

LLMC 1976 or LLMC 1996?

As to WSN's alternative claim that the provisions of the 1996 Protocol in Part 9 of the Merchant Shipping Act should apply to the limitation fund of 5 April 2004, the 1996 Protocol provides in art 9.1 that the LLMC 1976, as amended by the Protocol, only applies to claims arising from events that occur after the Protocol enters into force for any State Party to the Protocol. The amended rules entered into force on 1 January 2004. It is therefore right that the limitation fund of 5 April 2004 was established with amounts in accordance with the LLMC 1976.

According to s 170 of the Merchant Shipping Act, Part 9 of the Merchant Shipping Act, which contains the provisions of the 1996 Protocol, shall apply in all cases where limitation of liability is invoked by a Danish court. However, the rules of Part 9a containing the provisions of the LLMC 1976 may apply if: 1) this is requested and; 2) the applicant is domiciled or has its principal place of business in a State bound by the LLMC 1976, but not by the 1996 Protocol. These provisions are intended, as is clear from the comments on the provision, to resolve some of the conflict of laws issues that may arise as a result of some States acceding to the 1996 Protocol, while others remain with the LLMC 1976. The provisions are not relevant to the question of the timely application of the 1996 Protocol, which must be decided in accordance with art 9.1 of the Protocol.

For the reasons stated by Uno, it is moreover accepted that Denmark was not bound by the 1996 Protocol at the time of the creation of the limitation fund. Under art 11 of the 1996 Protocol, it enters into force 90 days after the date on which ten States have expressed their consent to be bound by the Protocol. The condition of accession by ten states was met on 13 February 2004, which is why the Protocol entered into force on 13 May 2004, from which date Denmark, which had ratified the Protocol on 12 April 2002, was bound by it. Denmark was thus not bound by the 1996 Protocol on 1 January 2004, notwithstanding that the Amendment Act entered into force by Executive Order No 782 of 5 September 2003, which stated that it would take effect on 1 January 2004. The two conditions stated for the application of the LLMC 1976 were thus fulfilled at the time of the creation of the limitation fund.