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Zurich Insurance Company Ltd (t/a Navigators and General) & others v Halycon Yacht Charter LLP [2024] EWHC 937 (Admlty) confirmed limitation claims may be heard in a different jurisdiction to the substantive claim, allowing parties to seek lower limitation in more favourable jurisdictions.
Facts
On 7 September 2022 a fire broke out on a motor cruiser, the Big Kahuna, while she was at berth in Corfu, Greece. The fire spread to surrounding vessels causing three vessels to sink. One of which was Halycon, a 95-foot classic wooden ketch.
On 15 November 2022, the owners and insurers of Big Kahuna (Claimants) commenced a limitation claim in the Admiralty Court of England & Wales pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims (1976 Convention). The 1976 Convention was incorporated into English law under the Merchant Shipping Act 1995 (UK).
On 15 November 2022, Halycon (Defendant) applied to stay the English limitation proceedings based on forum non conveniens. Halycon argued that Greece was clearly the more appropriate forum for both the limitation and substantive claims.
Difference in Limitation
The dispute arose because there was a significant discrepancy between Greek and English limitation funds.
In England & Wales the claim limit was set at 500,000 SDR, which was around £530,000. This was pursuant to the small craft claim limit for vessels under 300 tonnes under article 15(2) of the 1976 Convention.
Greece only incorporated the limit from 1 May 2023 under their New Code of Private Maritime Law. As the incident had occurred in 2022, the previous and higher limit applied under article 6 of the 1976 Convention. The limit was calculated to be 1,510,000 SDR which was around £1.6m.
Issue for Determination
The English courts may stay a proceeding when England is an inappropriate forum under the doctrine of forum non conveniens. The Defendant has the onus to establish that there is another forum which is clearly or distinctly more appropriate even if England is not the natural or appropriate forum.
The Defendant argued:
- the jurisdiction where the tort had been committed is prima facie the natural forum;
- the Greek courts may refuse to recognise an English limitation decree;
- the Claimants were forum-shopping for their sole benefit; and
- separate proceedings in Greece and England would be wasteful and disorderly for the parties and the courts.
Judgment
The application for a stay of the English proceedings was dismissed. The Defendant did not prove the Greek courts to be a clearly or distinctly more appropriate forum for the limitation claim.
Firstly, it is common for a limitation claim and a substantive claim to be tried separately in separate jurisdictions. Shipowners are allowed primacy to choose their domestic court as the forum to set up their limitation fund and establish their right to limit their liability, as established in Volvox Hollandia.
Secondly, it is unfair to accuse the Claimants of “forum-shopping” when the Claimants were an English insurer and English shipowner. The fact that the Greek limitation was more favourable to the Defendant did not make it inherently more just.
Lastly, the proceedings in England would not be wasteful. A single unitary limitation could allow for the management and ranking of a full cohort of claims. It is unlikely there will be a conflict of limitations as it is uncertain whether it would be disputed in Greece, especially when it is common for limitations and substantive claims to be tried in different jurisdictions. The English court should not be deterred from proceeding with a limitation claim simply because another court in another jurisdiction may not recognise its limitation decree.
Our Comments
A limitation claim arising out of a casualty is separate to the substantive claims, therefore a party cannot be prevented from bringing a limitation claim in their domestic court if it is more favourable than the jurisdiction where the tort arose.
To challenge the jurisdiction of English courts, it is not enough to prove that the English court is not the natural forum, the defendant must prove that the other forum is clearly more appropriate. When doing so the defendant cannot rely on a discrepant limitation amount, as an advantage to a party is reciprocated by a disadvantage to another.
The New Zealand courts’ approach on the doctrine of forum non conveniens is analogous to that in England. Therefore New Zealand parties may seek to bring domestic proceedings for claims that occurred in foreign jurisdictions if they are satisfied that there is no other jurisdiction that is explicitly more appropriate.
Insurers and shipowners may consider and compare different jurisdictions to set up their limitation fund early on. Other parties to a casualty claim should also clarify the limitation with the shipowners early on to avoid litigation costs down the track.
If you have any questions about conflict of laws or maritime claims, please get in touch with our Trade & Transport Team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
