Owners of the Cape Bari v Bahamas Oil Refining Company International Ltd

Peter MacDonald Eggers QC

The Cape Bari [2016] UKPC 20

On 25th May 2012, at 1318 hours, the vessel Cape Bari arrived at Freeport, Grand Bahama, with a view to berthing the vessel in order to load a cargo of ERHA crude oil at the facility owned and operated by BORCO.

At or soon after 1330 hours, two pilots boarded the vessel. The Master and the pilots exchanged information and the Master signed two agreements on behalf of the Owners. Both of these contracts were expressed to be governed by the law of The Bahamas.

Clause 4 of one of these agreements provided that “If in connection with, or by reason of, the use or intended use by any vessel of the terminal facilities or any part thereof, any damage is caused to the terminal facilities or any part thereof from whatsoever cause such damage may arise, and irrespective of weather [sic] or not such damage has been caused or contributed to by the negligence of BORCO or its servants, and irrespective of whether there has been any neglect or default on the part of the vessel or the Owner, in any such event the vessel and the Owner shall hold BORCO harmless from and indemnified against all and any loss, damages, costs and expenses incurred by BORCO in connection therewith.”

At or soon after 1350 hours, the vessel proceeded towards Sea Berth no. 10 and at approximately 1401 hours, the vessel collided with Sea Berth no. 10, causing substantial damage to the facility.

BORCO claims damages from the Owners in the sum of approximately US$22 million.
The Owners claimed that they are entitled to limit their liability for the said damage to approximately US$16.9 million, plus interest, pursuant to the Merchant Shipping (Maritime Claims Limitation of Liability) Act 1989 (Bahamas), which incorporated into Bahamian law the Convention on Limitation of Liability for Maritime Claims 1976.

BORCO denied that the Owners are entitled to limit their liability because the Owners contracted out of and thereby waived any right to limit their liability by their signed agreement.

On 9th August 2013, the Honourable Senior Justice Hartman Longley upheld BORCO’s submissions and held that the Owners were not entitled to limit liability by reason of their agreement.

On 22nd May 2014, the Court of Appeal of The Bahamas allowed the Owners’ appeal on the ground that it was not permissible for the parties to contract out of the statutory right of limitation under the 1989 Act and the 1976 Convention.

On 19th July 2016, the Privy Council dismissed BORCO’s appeal on the ground that the signed agreement did not contract out of the right of limitation. However, the Privy Council held that it was permissible for a shipowner to contract out of the right of limitation. Please view the judgment here.

 

Counsel for BORCO: Peter MacDonald Eggers QC

Date added: July 19th, 2016


Area of Expertise

Shipping, Admiralty & Transport