Limitation of Liability Convention key in Interconnector Cable Damage Case

In the case of Enemalta Plc (C 65836) v. Vessel CHEM P (IMO Nr. 6806444) and its owner the foreign company RV International DMCC incorporated in the UAE, the First Hall Civil Court presided by Mr Justice Grazio Mercieca handed down a rather interesting decision on the 14^th of July 2022.

In terms of a plea made by Enemalta Plc, on the 28^th of March 2022, a precautionary warrant of arrest (425/22) against the sea-going vessel CHEM P, for the amount of thirty million Euro (€30,000,000), after it had allegedly hit and caused severe damages to the interconnector. In terms of Article 836(1) of the Code or Organisation and Civil Procedure (“COCP”) (Chapter 12 of the Laws of Malta), CHEM P and its owning company proceeded with filing a counter-warrant requesting inter alia, the Court to declare that:

• The amount claimed in terms of the above is not substantiated as a result of already-available alternative security covering the value of the vessel;
• In terms of Article 836(1)(e) of the COCP, the security offered to total $7,100,000 (€6,614,140.11) would suffice so as to revoke the precautionary act; and
• In the event that the precautionary act is not revoked, whether in whole or in part, impose in its stead, an adequate amount for the payment of the penalties, damages and interest.

Enemalta Plc replied arguing that the warrant was issued for an amount which was much lower than the actual damages suffered, now totalling to €48,697,749. The vessel’s insurers seemed to have abandoned it, as they did not entertain the idea of an alternative form of security. Moreover, the vessel did not offer satisfactory security in terms of the Convention on the Limitation of Liability for Maritime Claims 1976 as amended by the protocol of 1996 which was transposed into Maltese law under Subsidiary Legislation 234.16.

By virtue of the application dated 27^th of June 2022, CHEM P and RV International referred to the limitation of liability exception and argued that based on their calculation in terms of the aforementioned Convention, the vessel’s maximum possibility liability is $17,927,616.37 US dollars, equivalent to €17,306,319.50. Finally, it was also argued that according to Article 10 (2) of the Convention, there was no need to constitute a limitation fund to invoke such limitation of liability. In light of the above, the defendants, therefore, asked the Court to revise the value secured by the warrant to €17,306,319.50.

Enemalta held that whilst it agreed with the defendants’ computation, it stated that in line with various case laws on the matter, the warrant should also cover the judicial costs, which in accordance with the schedules to the COCP, amount to €1,207,071.91, and the Court agreed.

Therefore, the Court held that the amount of the warrant was to be reduced to €18,513,319.41, i.e. €17,306,319.50 (maximum liability in terms of the Convention) + €1,207,071.91 (judicial costs). The Court also ordered all procedural costs to be borne by the CHEM P and RV International DMCC.

Concluding remarks

The way the Court approached the present case triggers a certain way of thinking which seems to have been missing in similar cases of this nature. Whilst the Court accepted the shipowner’s request to reduce the amount indicated in the relative warrant of arrest in line with the Convention, it did so prior to the commencement of the hearing of the substantive proceedings. Generally, in similar cases namely, inter alia Alexander Agius (240356M) v. Vessel NS Koralle (IMO Nr. 8415201) and its owner Cora Navigation SA, such a request would only be considered when addressing the relative pleas in the substantive proceedings. This avant-garde approach will most definitely be seen as a step forward within the local marine litigation sphere ensuring that such delicate situations are dealt with in a proper and timely manner.