The flaming “Big Kahuna”: Claim for Loss of Yacht in Greece Stifled by Limitation Claim in England
Zurich Insurance Company Limited (trading as Navigators and General) & Ors v Halcyon Yacht Charter LLP & Ors [2024] EWHC 937 (Admiralty)
Background
In September 2022, a fire broke out on the vessel ‘Big Kahuna’ at a marina in Corfu, Greece which spread to other vessels in the marina, including the ‘Halcyon’. The English insurers of Big Kahuna applied to the Admiralty Court of England and Wales for a limitation claim pursuant to the 1976 Convention of Limitation of Liability for Maritime Claims (the Convention). As at the time of the fire, the limitation on claims was around £530,000 in England, and £1.6 million in Greece. In December 2023, the owners of Halcyon brought a claim against the Big Kahuna in the Greek Courts for compensation for the loss and damage caused by the fire. The owners of Halcyon sought a stay of the insurer’s limitation claim on the basis of forum non conveniens, submitting that the courts of Greece were “clearly and distinctly a more appropriate forum for resolution of both limitation and the underlying substantive claims”.
Judgment
The Admiralty Court of England and Wales dismissed the application for a stay of the limitation claim on the following grounds:
The natural forum for the substantive claims was Greece, however the limitation claim was a separate and distinct claim. The amount of the limitation fund was an arithmetical calculation which was typically uncontroversial and the only other issue likely to arise in the limitation claim was whether Article 4 of the Convention would apply to avoid the limit in the case of deliberate or reckless acts. As there was no evidence to support the application of Article 4 there was no basis upon which to find that the Courts of England were an inappropriate forum.
It is commonplace for the limitation claim and underlying substantive claims to be tried in separate jurisdictions. The Court emphasized that “a shipowner is at liberty to choose his domiciliary court as the forum” to claim his right to limitation. If the proper forum was by default the jurisdiction in which the tort was committed, the shipowner’s choice would often be trumped contrary to the established practice.
There would be no “disorderly scenes” created by hearing the two claims in separate jurisdictions. Instead, it was held that a single, unitary limitation claim allows the orderly management and ranking of any possible claims against the fund that may be found by the Greek courts.
The Court rejected the assertion that the insurer was “forum-shopping”, as the insurer was English. Given that the Halcyon’s owner was also English, the English Courts were an appropriate forum.
Implications
In this case, the Court noted that the main driver for the stay application was the higher limitation of liability under Greek law at the time of the loss. This alone will not be sufficient to stay a limitation claim on the basis of forum non conveniens. Shipowners should consider other factors which may assist to argue that substantial justice cannot be achieved in the chosen forum, such as whether the limitation claimant has a legitimate connection to the forum or the availability of witnesses if there is an arguable defence under Article 4 of the Convention.
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