In early February 2025—more than twelve years after the tragic incident—the UK Supreme Court heard the final legal arguments in the long-running case surrounding the container vessel MSC FLAMINIA. Although the underlying commercial dispute had already been settled, the court proceeded to rule on the significant legal issues involved, recognizing their broader relevance to maritime law.

Background to the Casualty

On 14 July 2012, a devastating explosion occurred in cargo hold number 4 of the MSC FLAMINIA while the ship was crossing the Atlantic from Charleston to Antwerp. The explosion caused a severe fire and resulted in tragic loss of life. In addition to the human toll, the vessel’s Owners and their insurers suffered substantial financial losses.

An arbitration tribunal later awarded approximately USD 200 million to the Owners. In response, MSC, the vessel’s Charterers, sought to limit their liability under the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC 1976). While MSC acknowledged that certain categories of loss were non-limitable, they attempted to cap their liability in relation to:

• Costs of cargo discharge and decontamination,
• Removal of firefighting water,
• Payments made to national authorities for pollution prevention, and
• Disposal of burnt waste material from the vessel.

The Owners, however, contended that none of these claims fell within the scope of Article 2.1 of the LLMC 1976 and thus could not be limited.

High Court’s Approach – A Single Unified Claim

The High Court rejected the Owners’ submission that the LLMC 1976 implies a distinction between “insiders” (those falling within the definition of “shipowner” in Article 1.2, including the owner, charterer, manager, or operator of a seagoing ship) and “outsiders” (any other party entitled to bring a claim), which would preclude a charterer from limiting liability against an owner as both are considered “insiders” under the Convention.

However, the Court characterised the entirety of the Owners’ claims as forming part of a single, unified claim for damage to the vessel and the consequential losses arising therefrom. It was held that the relevant expenses were incurred to enable the repair of the vessel—specifically, the removal and disposal of the contaminated cargo was necessary for the repair process to proceed.

Accordingly, applying the reasoning in CMA DJAKARTA, the Court concluded that such claims fell outside the scope of limitation under Article 2.1(a) of the LLMC 1976, as they concerned the restoration of the vessel itself.

The Article 2.1 (a) reads as follow:  Whatever the basis of liability may be, shall be subject to limitation of liability: (a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;

Court of Appeal – Charterer’s Limitation Not Extended to Owner’s Claims

The Court of Appeal held that the LLMC 1976 was not intended to broaden a charterer’s entitlement to limit liability to encompass claims brought by the shipowner, including those relating to losses personally sustained by the owner.

Supreme Court – A Return to the Convention’s Text

Despite the parties reaching an universal settlement of all claims (in multiple jurisdictions) , the Supreme Court chose to proceed with the appeal due to the importance of the legal questions raised. The Court focused on two central issues:

1. Whether a charterer can limit liability for claims brought by a shipowner for losses the owner suffered directly; and
2. Whether the specific claims advanced by the Owners fell within Article 2.1 and, if so, whether the fact that they stemmed from damage to the ship rendered them non-limitable.

No Basis for “Insider/Outsider” Distinction

The Court closely examined the language of the LLMC 1976 and found no textual support for treating claims from within the «shipowner» group differently than those from external parties. Imposing such a distinction, the Court held, would effectively introduce unwarranted restrictions into the term “claims” as used in Articles 1.1 and 2.1.

The ruling emphasized that the LLMC treats all parties defined as shipowners under Article 1.2 equally, with no indication that some should be entitled to different rights.

Article 2.1(a) – Consequential Losses Still Excluded

The Charterers attempted to argue that the losses were ultimately caused by damage to the cargo, which had triggered the explosion. The Court rejected this causation-based reasoning, reaffirming that the proper test is the nature of the claim, not its root cause. In this case, the Owners’ losses arose from damage to the vessel itself, rendering them non-limitable under Article 2.1(a).

Article 2.1(f) – Mitigation Expenses

The Court rejected the Charterers’ argument that payments made by the Owners (e.g. to national authorities or for removing firefighting water) were limitable as these payments were not connected to a «limitable loss» (like cargo damage or personal injury) but were necessary to repair the vessel, which is not a limitable category of loss under the limitation regime.

The Court agreed obiter that if a cost serves to mitigate both vessel and cargo losses, it could potentially be limitable. However, this depends on the main or dominant purpose of the expenditure — only if the dominant purpose is to mitigate cargo loss (which is limitable) can limitation apply.

Article 2.1(e) – Removal of Contaminated Cargo

The Supreme Court concurred with the Court of Appeal’s obiter observation that the costs associated with the removal of the contaminated cargo fall within the scope of limitable claims under Article 2.1(e) of the LLMC 1976. Therefore, it rejected the Owners’ contention that Article 2.1(e) is confined solely to claims brought by third parties external to the operation of the vessel.

The Court clarified that where a claim is properly characterised as relating to damage to the ship or consequential loss arising therefrom, it is excluded from limitation only under Article 2.1(a), based on the specific wording and interpretation of that provision. However, such exclusion under one subparagraph does not preclude the claim from being limitable under another subparagraph where the Convention expressly provides for it.

Accordingly, the existence of a specific ground for limitation under Article 2.1(e) permits limitation of liability for such losses, notwithstanding their exclusion from Article 2.1(a).

Final Thoughts– A Clarifying Decision on the Scope of Limitation

The MSC FLAMINIA litigation has offered a thorough examination of the LLMC 1976 and its scope of application. Although the lower courts concurred in finding that the Owners’ claims were not subject to limitation, they arrived at that outcome via differing legal analyses. The Supreme Court’s judgment brings much-needed clarity to this complex area.

The case highlights the critical importance of accurately classifying claims when assessing the right to limit liability. While general damage to the vessel and consequential losses are excluded under Article 2.1(a), certain costs—such as those associated with the removal of contaminated cargo—may still be limitable if they fall within other specified provisions of the Convention.