A recent decision has extended the definition of “charterer” under the Convention on Limitation of Liability for Maritime Claims 1976 as amended (the “Convention”). The right to limit liability under the Convention is limited to “shipowners”, as defined in Article 1.2 of the Convention as “the owner, charterer, manager or operator of a sea-going ship.” It has been established that “charterer” can include slot charterers.  This latest judgment indicates that the definition can be expanded to non-vessel operating carriers.

Background – The X-Press Pearl Incident

The case was SEA Consortium Pte Ltd v Bengal Tiger Line Pte Ltd (The “X-Press Pearl”) [2024] EWHC 3174. In brief, the “X-Press Pearl” was carrying containers under a variety of contractual arrangements on behalf of Maersk, Bengal Tiger Line and MSC (“the Applicants”) when it caught fire on 20 May 2021, subsequently sinking on 2 June 2021 with the loss of both the vessel and all its cargo.

Following the incident, the registered owners, bareboat charterers and time charterers applied to the court under Article 6 of the Convention and were granted the right to constitute a limitation fund which limited their liability in respect of any loss or damage arising out of or in connection with the incident.

The Applicants applied to the court for orders that the definition and right to limit liability in connection with the X-Press Pearl casualty under the Convention should extend to them. The court agreed it should.

Comparison with The MSC Napoli Case

The decision develops the precedent set in The MSC Napoli case Metvale Ltd v Monsanto International SARL & Ors [2008] EWHC 3002 (Admty) which established that slot charterers could be considered ‘charterers’ under the Convention and, thus, eligible to limit liability.

In that case, the consideration payable to MSC was described as “slot charter hire” and was payable for the slot allocation, whether it was used or unused.

The applicants relied on the court’s reasoning in The MSC Napoli that there were features of slot charters that bore similarities to time or voyage charters and that the term ‘charterer is apt to include any type of charterer, whether demise, time or voyage charterer’. The judge held that the slot charterers in that case were each a ‘charterer…of a seagoing ship’, despite the fact they did not have the right to use or direct the use of the control the entire cargo carrying capacity of the vessel. This brought them within the definition of “shipowners” and, therefore, entitled to limit their liability under the Convention.

The Court’s Decision on Slot Charterers and NVOCCs

In the X-Press Pearl case, the Applicants were not all named as slot-charterers, but the court ultimately determined that the substance of the relevant contracts was such as to bring them within that definition, including parties that might otherwise be described as non-vessel owning carriers (NVOOCs).

Implications for Maritime Operators and Logistics Providers

This ruling reinforces the ability of parties involved in slot charter or similar agreements to limit their liability and aligns with the Convention’s purpose to encourage international trade by sea.

When considering whether a party is a “charterer” within Article 1(2) of the Convention, the court will focus on the specific contractual arrangements between the parties, and the circumstances in which the purported “charterers” enjoyed the services of the vessel. The labels given to parties will carry little weight in determining whether they are a “charterer” for this purpose – it is the substance of the contractual relationship that will be considered.

Need Advice on Maritime Liability or Slot Charter Agreements?

Our Shipping & Logistics team advises global carriers, logistics providers and insurers on matters involving the Limitation of Liability Convention and international shipping claims. Contact us at online.enquiries@la-law.com or call 01202 786260.