The Stolt Commitment v Thorco Cloud Collision case revisited by the Supreme Court of the Netherlands

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Arnold J van Steenderen
Van Steenderen Mainport, Rotterdam
arnold.vansteenderen@mainportlawyers.com

Introduction

This article sets out the Dutch Supreme Court’s decision of 29 May 2020 in the Stolt Commitment v Thorco Cloud case.

On 16 December 2015, there was a collision off Singapore between the Stolt Commitment, owned by Stolt Commitment BV and bareboat chartered to Stolt Tankers BV, and the Thorco Cloud, owned by A Line Corporation and bareboat chartered to Marship MPP GmbH & Co KG. As a result, the Thorco Cloud sank.

Parties interested in the Thorco Cloud commenced proceedings against, among others, Stolt Commitment BV and Stolt Tankers BV in a Norwegian court for the loss of the Thorco Cloud and the costs of removal of her wreck. Stolt Commitment BV commenced arbitration proceedings in Rotterdam against Stolt Tankers BV, claiming that under the bareboat charter Stolt Tankers BV was to indemnify Stolt Commitment BV for the damages and costs resulting from the collision. A request for fund formation and limitation of liability was submitted to the District Court of Rotterdam.

There was no issue of lis pendens in the first instance proceedings. Although the proceedings in Norway involved the same parties and the claims have the same cause of action, that is the collision, the object of the proceedings was different. The proceedings in question concerned the limitation of liability, whereas the alleged liability is the object of the Norwegian proceedings.

This case is about the limitation of liability for maritime claims on the basis of the Convention on Limitation of Liability for Maritime Claims (LLMC). The Netherlands has made use of the option under article 10.1 of the LLMC and has arranged in its national laws that limitation of liability is only possible by constituting a limitation fund. The questions needed to be resolved were the following: (1) Does this court have jurisdiction? The LLMC shall not determine on what basis the court or other competent authority referred to in Article 11(1) LLMC has jurisdiction to hear an application for the formation of funds on the basis of the LLMC. This is without prejudice to the fact that Article 11(1) LLMC restricts the power of the court or other competent authority to accede to a fundraising request on the basis of the LLMC by requiring that the court or authority in the state bound by the Convention to institute proceedings in respect of actions subject to limitation. (2) What is the material scope of article 9 Brussels I-bis Regulation? Although the CJEU has not yet ruled on this issue, for the time being it can be assumed that article 9 of the Brussels I-bis Regulation only concerns the independent action brought by the ship owner against the party asserting a claim, and not a request for fund formation and limitation of liability. The Court of Rotterdam already has jurisdiction in these proceedings on other grounds. For this reason, it can be left open whether the jurisdiction of the Court of Rotterdam can also be based on article 9 Brussels I-bis Regulation.

The parties involved in this case were: a line corporation, based in Majuro, Marshall Islands; Marship MPP GmbH & Co. KG, established in Haren, Germany; and The Standard Club UK Ltd, London, United Kingdom, applicants in cassation, defendants in the conditional incidental appeal in cassation, versus Stolt Tankers BV and Stolt-Nielen BV, both based in Rotterdam.

The facts

In 2015 a collision between the tanker Stolt Commitment and the general cargo vessel Thorco Cloud took place on the high seas near Indonesia. As a result of this collision, the Thorco Cloud sank. The Stolt Commitment is owned by Stolt Commitment. Stolt Commitment had given the Stolt Commitment in bare boat charter to Stolt Tankers. Stolt Tankers holds the shares in Stolt Commitment. Both companies are established in Rotterdam. A Line cs are stakeholders in the Thorco Cloud. They brought an action for damages before the Norwegian courts against, among others, Stolt Tankers and Stolt Commitment. Stolt Commitment has instituted arbitration proceedings in Rotterdam against Stolt Tankers. Stolt Commitment has argued that under the bareboat charter agreement Stolt Tankers is obliged to indemnify Stolt Commitment for the damage the latter suffers and will suffer as a result of the collision and the related claims of the stakeholders in the Thorco Cloud.

In these proceedings Stolt Tankers requested limitation of its liability for all claims in connection with the collision, on the offer of a property and wreck fund to be established in the Netherlands. It has invoked the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the 1996 Protocol. The Convention and the Protocol are hereinafter jointly referred to as LLMC. The district court has limited Stolt Tankers’ liability for the claims relating to the wreckage fund for the time being to SDR14,318,424 and the claims relating to the wreckage fund for the time being to the same amount. The Court of Appeal confirmed the Court’s order.

The matter was then brought to the Supreme Court of the Netherlands for final decision.

The Supreme Court

The applicants section 3.1 turns against the opinion of the Court of Appeal that the LLMC does not contain a provision on jurisdiction. Article 11, paragraph 1 LLMC reads:

‘Any person held liable may constitute a fund in the courts or other competent authority in each State Party in which an action relating to actions for limitation is brought. […] Each fund thus constituted shall be exclusively intended for the satisfaction of claims in respect of which limitation of liability may be invoked’.

The interpretation of the provisions of the LLMC shall be based on the standards set out in articles 31-33 of the Vienna Convention on the Law of Treaties. The text of article 11(1) LLMC expresses that an application for the constitution of funds on the basis of the LLMC may be made to the court or other competent authority in the state bound by the Convention in which an action in respect of actions subject to limitation is brought. However, that text does not define in so many words the basis on which the court or other competent authority has jurisdiction to hear an application for funding on the basis of the LLMC.

This reading of the text of article 11, paragraph 1 LLMC is in line with the context of that provision (see art 10, paragraph 3 LLMC and art 14 LLMC). Nor does the LLMC contain any provisions on jurisdiction and recognition and enforcement. The fact that article 11, paragraph 1 LLMC does not have a rule of jurisdiction is confirmed by the LLMC’s travaux préparatoires. This is reason to assume that neither article 11, paragraph 1 LLMC nor any other provision of the LLMC determines on what basis the court or other competent authority referred to in article 11, paragraph 1 LLMC has jurisdiction to hear an application for the formation of funds on the basis of the LLMC. That jurisdiction should therefore be founded on a basis outside the LLMC, such as a convention, a regulation or the common law of the court or authority seized. The foregoing is without prejudice to the fact that article 11(1) LLMC restricts the power of the court or other competent authority to accede to a request for the constitution of funds on the basis of the LLMC by requiring that the court or authority in the state bound by the Convention institute proceedings in respect of actions subject to limitation.

In this context, it should be noted that in the Supreme Court’s decision of 20 December 1996, (Sherbro), it was considered that the concept of ‘litigation’ in article 11(1) LLMC should be given a broad interpretation. In the opinion of the Supreme Court, this concept also includes an application for the taking of legal measures by a party claiming to have a claim that is subject to limitation, such as, for example, an application for leave to make a prejudgment attachment with a view to recovering that claim or an application for an order for the preliminary examination of witnesses with a view to obtaining evidence for facts on which that claim may be based.

It should also be noted that on the basis of the prevailing view in the case law and literature of the countries bound by the Convention, it must be assumed that the commencement of arbitral proceedings can also be regarded as a lawsuit within the meaning of Article 11, paragraph 1 LLMC. Contrary to what the applicant argues, the Court of Appeal has not misunderstood the legal character of article 11 paragraph 1 LLMC as described above. The Court of Appeal has recognised that article 11 paragraph 1 LLMC is important for the possibility to limit liability through the intervention of the Dutch court and to the extent that it has the character of a jurisdictional provision. Consequently, the section cannot lead to cassation for lack of a factual basis. The applicant’s section 3.2 turns against the opinion of the Court of Appeal that article 9 of the Brussels I-bis Regulation can lead to the jurisdiction of the Dutch court with regard to a combined procedure for fund formation and limitation of liability.

Article 9 Brussels I-bis Regulation reads:

‘Where, under this Regulation, a court of a Member State has jurisdiction to entertain actions or proceedings in respect of liability arising out of the use or operation of a ship, that court or any other court substituted for it under the internal law of that Member State shall also entertain actions for limitation of such liability.’

According to point 34 of the recitals of the Brussels I-bis Regulation, there is continuity between (inter alia) the EEX Convention and the Brussels I-bis Regulation. It is therefore logical to use the explanatory report to the 1978 Accession Convention, OJEU 1978, L 304/1 (the Schlosser Report) to explain article 9 of the Brussels I Regulation in order to explain article 6bis of the EEX Convention. On this basis, although the ECJ has not yet ruled on this, it can be assumed for the time being that article 9 Brussels I-bis Regulation only relates to the independent claim that the ship owner brings against the person claiming a claim, and not to a request for fund formation and limitation of liability as referred to in article 642a(1) of the Dutch Code of Civil Procedure (DCCP) in connection with articles 8:750-759 of the Civil Code.

On the basis of the aforementioned interpretation of article 9 Brussels I-bis Regulation, the complaint is well-founded in so far as it has been decided in the opinion of the Court of Appeal that the Court of Rotterdam can derive jurisdiction from article 9 Brussels I-bis to take cognisance of Stolt Tankers’ application for fund formation and limitation of liability as referred to in article 642a, paragraph 1 DCCP in connection with article 8:750-759 of the Dutch Civil Code. However, the merits of this complaint cannot lead to cassation, because the opinion of the Court of Appeal that the Court of Rotterdam has jurisdiction in this case is correct.

To this end, the following is envisaged. If it is taken as a starting point (1) that a request for fund formation and limitation of liability as referred to in article 642a, paragraph 1 DCCP in connection with article 8:750-759 of the Dutch Civil Code falls within the material scope of the Brussels I-bis Regulation,12; and (2) that the jurisdiction provisions of article 4-8 of the Brussels I-bis Regulation lend themselves to application to such a request, the District Court of Rotterdam shall, pursuant to article 642a paragraph 1 DCCP in connection with article 4 Regulation Brussels I-bis be authorised to take note of the request of Stolt Tankers insofar as it is directed against Stolt Commitment as an interested party, since the latter party is domiciled in the Netherlands and the Stolt Commitment is not registered in the Netherlands. Furthermore, in that case, the jurisdiction of the District Court of Rotterdam to take cognisance of the application of Stolt Tankers insofar as it is directed against interested parties domiciled in another EU Member State is based on article 8’s opening words and under 1 Regulation Brussels I bis, now it can be assumed that the ‘close link’ required by that provision exists between that application and the application directed against Stolt Commitment.

This shall apply mutatis mutandis to the corresponding provisions of the EVEX II Convention. If it is taken as a starting point (1) that a request for fund formation and limitation of liability as referred to in article 642a paragraph 1 DCCP in connection with article 8:750-759 DCC does not fall within the material scope of the Brussels I-bis Regulation (and that of the EVEX II Convention); or (2) that the jurisdiction provisions of articles 4-8 of the Brussels I-bis Regulation (and the art 2-6 EVEX II Convention) do not lend themselves for application to such a request; and always (3) to the extent that such a request is directed against an interested party who is not domiciled in an EU Member State or in a state that is a party to the EVEX II Convention, the Court of Rotterdam will have jurisdiction on the basis of article 3 opening words and under a of the DCCP in connection with article 642a paragraph 1 DCCP, since Stolt Tankers is domiciled in the Netherlands and the Stolt Commitment is not registered in the Netherlands. In view of what has been considered above, the decision on the complaint referred to above may be based in the middle of whether the jurisdiction of the District Court of Rotterdam can also be based on article 9 Brussels I-bis Regulation. The Supreme Court therefore sees no reason to submit preliminary questions to the ECJ.

This follows rejection of the request for cassation.

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