Three related companies sought a decree limiting their alleged liability for damage caused by the anchor of the barge Stema Barge II to an underwater cable carrying electricity from France to England. The cable owner, RTE Réseau de Transport d'Électricité SA (RTE), accepted that Splitt Chartering APS, as the registered owner of the barge, and Stema Shipping A/S (Stema A/S), as charterer or operator of the barge, were entitled to limit their liability. The issue was whether Stema Shipping (UK) Ltd (Stema UK), a company said to be the operator of the barge while it was at anchor off Dover, was within the class of persons entitled to limit their liability pursuant to the LLMC 1976, which has the force of law pursuant to the Merchant Shipping Act 1995 (UK). Teare J held that Stema UK was: see Splitt Chartering APS v Saga Shipholding Norway AS [2020] EWHC 1294 (Admlty) (CMI781).

RTE appealed against this decision, both as a matter of law and as to certain of the Judge's findings of fact. RTE argued that the Judge was wrong in construing 'the operator' of a ship in the LLMC as including 'any entity which, with the permission of the owner, directs its employees to board the ship and operate her in the ordinary course of the ship's business', whether or not that ruling was limited to unmanned ships. Second, the Judge was wrong in his application of the law to the facts in ruling that, despite its functionally and temporally limited activities on the barge, Stema UK was its operator. Third, the Judge erred as matter of construction in ruling that there could be more than one operator of a ship. Fourth, the Judge erred in fact in finding that the decision to leave the barge at anchor on 20 November 2016 was taken by, among others, representatives of Stema UK, and that those representatives were members of 'the steering committee' mentioned in the Barge Operator Manual while the barge was at anchor off Dover.

Held: Appeal allowed. Stema UK's claim for a declaration that it is entitled to limit its liability is dismissed.

The travaux préparatoires of the LLMC 1976 recorded proposals that limitation protection be extended beyond 'operators (owners, charterers etc)' and their servants to include 'all persons rendering services in direct connection with the navigation, management or the loading, stowing or discharging of the ship', but those proposals were rejected by majority vote of the contracting parties. There was also a proposal that the word 'responsible' in art 1.4 be deleted - 'If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention' - and replaced by the phrase 'legally liable at law in the absence of a contract' in order to prevent shipowners extending protection to other persons by contract, but that proposal was also rejected.

In CMA CGM SA v Classica Shipping Co Ltd (The CMA Djakarta) [2004] EWCA Civ 114, [2004] 1 Lloyd's Rep 460 (CMI728) Longmore LJ (with whom Waller and Neuberger LJJ agreed) emphasised that the task of the Court is to construe the LLMC as it stands, without any English law preconceptions, but by reference to broad and generally acceptable principles of construction. Whilst it may be difficult to know in any given case what are broad and generally accepted principles, some such principles are undoubtedly enshrined in arts 31 and 32 of the Vienna Convention on the Law of Treaties 1969. Longmore LJ set out what had been agreed between the owner and charterers in that case to be the object and purpose of the Convention, namely: (a) enabling owners, charterers, managers and operators to limit their liability so as to encourage the provision of international trade by way of sea carriage; (b) providing higher limits of liability but making them more difficult to 'break'; and (c) enabling salvors to limit their liability in the same way as owners. Having done so, Longmore LJ stated that it was not possible to ascertain with certainty any object or purpose of the LLMC beyond this common ground. In CMA Djakarta the issue was whether the term 'the charterer' in art 1.2, being part of the definition of 'shipowner', was limited to charterers who were acting as though they were owners, that is to say, by managing or operating a ship under time charter, or whether it extended to cover a voyage charterer. The Court of Appeal rejected the contention that a charterer must be acting as owner, Longmore LJ explaining that to so construe art 1.2 would be to place a gloss on the word 'charterer', whereas the ordinary meaning was a charterer acting in its capacity as such. That approach was expressly approved by Lord Clarke in Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2017] UKSC 35, [2017] 1 Lloyd's Rep 521 [78] (CMI16).

In ASP Ship Management Pty Ltd v Administrative Appeals Tribunal [2006] FCAFC 23 (CMI1909), the Federal Court of Australia considered the question of when a ship is 'operated by' an Australian resident, firm, or company within the meaning of s 10 of the Navigation Act 1912 (Cth). The Court stated that the question was whether an entity has sufficient management and control of a ship, as a chattel and as an operating enterprise, such that it can be said that the ship is operated by that entity, albeit in association with any other party. The Court emphasised that an affirmative answer to the question whether a ship is operated by an entity in association with another is not provided by a conclusion that the entity merely assists in the operation of the ship by another. The ship must be 'operated by' the entity for the purposes of s 10. After considering the history of the use of the word 'operator' in limitation Conventions and statutes, including the history in England as set out and explained at first instance and in the Court of Appeal in CMA Djakarta, the Court rejected the contention that 'operator' relates only to the entity that has the commercial disposition of the ship, or has the final authority on operational matters. Nor was it a matter of distinguishing between physical and commercial operations.

As to the first ground of appeal, the Judge concluded that the ordinary meaning of 'the operator of a ship' includes the entity which, with the permission of the owner, directs its employees to board the ship and operate it in the ordinary course of business. On its face, such a conclusion appears circular, begging the question of what it means to operate a ship. It must be the case, to make sense of the conclusion, that the Judge intended to refer to 'operate her machinery', being the formulation that he had earlier adopted. It is also unclear whether that conclusion is limited to unmanned ships, or applies also to conventional merchant vessels. The Judge qualified his conclusion by reference to unmanned vessels, but also expressed it in more general terms. Further, the rationale identified by the Judge, namely, that an associated company of the owner that does the work should be protected in order to encourage international trade by sea carriage, would seem to apply whether or not the vessel was unmanned.

The Judge’s conclusion, if applicable to all vessels, appears to bestow the benefit of limitation on those who provide crew to operate the machinery of those vessels, even if they have no other role in the broader operation of the vessel. That would be contrary to the view of the Federal Court of Australia in ASP, and cannot easily be reconciled with the Judge’s own prior conclusion; it is difficult to see that a person who does no more than provide crew to operate the machinery of a vessel is any more 'the operator' than the crew which that person provides. It would also potentially expand the protection to large classes of analogous service providers, notwithstanding that they were intended to be excluded from the protection of the LLMC, as revealed in the travaux préparatoires. That conclusion would be significantly reduced in scope and effect, and potentially explained, if it was indeed intended to be limited to unmanned vessels. However, the Judge did not explain in any detail why the position of those who physically operate the machinery of a ship is different in the case of unmanned vessels, and the Court is not persuaded that it should be. Once it is accepted (as the Judge did) that 'operator' must be considered at a higher level of abstraction than mere physical operation, involving an element of management or control, it is not clear why the full-time presence or otherwise of a master and crew on the vessel is crucial. Management and control will almost certainly be found in those who direct the onboard personnel (not the master and crew, as the Judge himself held), being legal persons who are highly unlikely to be on board the vessel.

Whilst the decision in ASP was addressing the term 'operated by' in a different statute employing different language, the approach of the Federal Court of Australia (which had in mind the wording of the LLMC) is instructive, and accords with art 1.2. In particular, the mere provision of the crew for a vessel does not mean that the vessel is operated by the provider. The decision in CMA Djakarta does not require a different conclusion. The charterer of a vessel is a well-defined and understood category, and the Court of Appeal’s decision did no more than emphasise that the term should be applied in full and without a gloss. The terms 'the manager' and 'the operator' are, in contrast, more open-textured and, as the Judge held, overlapping. There is no difficulty in construing the term 'the operator' as requiring an element of management and control of the vessel. That is not to impose a gloss on the word 'operator', nor to read the LLMC restrictively, but to give a sensible meaning to a term in the overall context of art 1, particularly in the light of the travaux préparatoires. There is no reason why the position should be different in relation to an unmanned vessel, nor why the physical operation of such a vessel necessarily involves an element of management and control so as to make the provider of the crew the operator of the vessel, regardless of whether they are supervised by an operator and manager from afar.

It may be unfortunate if the limitation afforded to a group of companies which comprises the owner, charterer, and operator of a vessel is effectively lost because an associated company provided crew for certain mechanical operations of the vessel. However, such a group can take steps to bring all its associates within the umbrella of the protection by ensuring that crew are seconded to the owner or operator and/or ensuring that the owner or operator is responsible for the actions of the associate: given the importance of limitation of liability to the viability of the enterprise, ensuring such protection would seem to be an important business consideration for those engaged in international trade by sea, and one which they might be expected to arrange with care. The approach of the Judge would effectively extend the protection given under art 1.4 to 'associated companies' providing services to the vessel, even if the owner is not responsible for their actions. Whilst that might be seen to be a fair or reasonable result, it is not what the LLMC currently provides, and a revision to so provide is a matter for the contracting parties, not the courts.

Applying this legal test to the facts, the actions of Stema UK were plainly by way of assistance to Stema A/S in its role as operator, not by way of becoming a second or alternative operator or manager. It is somewhat remarkable that Stema UK could be described as the operator of the barge when its own managing director made no such suggestion.