MSC Flaminia in the Supreme Court - charterers have limitation rights under the 1976 convention, even against the shipowner

Posted: 12/05/2025

The recent Supreme Court judgment in MSC Mediterranean Shipping Company SA v Conti 11 Container Schiffahrts-GmbH & Co KG MS [2025] UKSC 14 provides crucial clarification on the right to limit liability under the 1976 Convention on Limitation of Liability for Maritime Claims.

Background

On 14 July 2012, an explosion occurred on board the container vessel, MSC Flamina. The vessel was owned by Conti and on time charter to MSC. The incident tragically led to loss of life as well as a significant loss to owners and their underwriters.

Following arbitration, Conti were awarded USD 200 million in damages, based on MSC’s breach of contractual provisions whereby they had allowed the shipment of dangerous cargo. In turn, MSC began proceedings to limit its liability under the 1976 Convention. MSC’s actions were based on four heads of claim:

payments to national authorities for environment protective measures;
costs related to cargo discharge and decontamination;
removal of firefighting water;
removal of residual waste.

MSC argued that all four heads fell within Article 2(1) of the 1976 Convention, and they were therefore entitled to limit liability.

Conti in turn challenged MSC's attempt to apply limitation. Conti argued that:

A charterer could not limit its liability in respect of claims made by the owner where those claims represented losses suffered by the owner.
Based on the Supreme Court decision in the Ocean Victory [2017] UKSC 35, Conti further argued that even if some claims were conceptually within Article 2(1), the fact that they arose from damage to the vessel meant that they were then non-limitable as a matter of law.

Conti put forward the above arguments before the Admiralty Court, where the judge held at first instance that all four heads of claims were connected to the repair of the vessel and therefore not subject to limitation. The decision was further upheld by the Court of Appeal, on the basis that losses originally suffered by an owner could not then be susceptible to limitation against another 'insider'.

MSC appealed the Court of Appeal's decision to the Supreme Court.

Supreme Court

The Supreme Court considered two key issues:

Firstly, whether a charterer may limit its liability for claims made by an owner – where losses were largely suffered by the owner.
Secondly, whether any of the four heads were subject to Article 2(1) of the 1976 Convention.

Regarding the first issue, the Supreme Court held that the convention does not support the exclusion of a charterer from invoking limitation – this, even in circumstances where the losses in question were suffered by the owner. Unlike the Court of Appeal, the Supreme Court saw no room for an ‘insider’/‘outsider’ dichotomy.

The Supreme Court also expressly rejected the 'original loss' argument put forward by Conti. The Supreme Court highlighted the importance of predictability and equitable treatment, confirming that all entities classified as 'shipowners' under Article 1(2) of the 1976 Convention, including charterers, could exercise the limitation rights.

On the second issue, the court cited the decisions in the CMA Djakarta [2004] EWCA Civ 114 and the Ocean Victory and held that claims for damages to the vessel / consequential losses do not fall within the scope of Article 2(1) of the 1976 Convention. The court went on to reject MSC's position that the claims could be viewed as consequential and flowing from damage to cargo.

With regards to payments made in mitigation, the court rejected MSC’s argument that these were limitable under Article 2(1)(f), since these costs were necessary payments to facilitate the repair of the vessel.

In terms of the costs associated with discharging and decontamination, the court accepted that these would fall within Article 2(1)(e).

Conclusion

The Supreme Court has in its judgement in the MSC Flaminia provided an authoritative exposition of the limitation rights of a charterer under the 1976 Convention.

It has further clarified that limitation under Article 2(1) depends not on the cause, but on the nature of the claim.

This clarification will no doubt be welcomed by the industry.

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