X-Press Pearl – Admiralty Court clarifies slot charterers’ right to limit

Posted: 07/02/2025

In SEA Consortium Pte Ltd v Bengal Tiger Line Pte Ltd (The X-Press Pearl) [2024] EWHC 3174 (Admlty), the English Admiralty Court has provided clarification on the scope of article 1(2) of the Convention on Limitation of Liability for Maritime Claims 1976 – which recognises shipowners as persons who may limit their liability to include ‘the owner, charterer, manager and operator of a seagoing ship’. 

Mr Justice Baker expanded on the decision of Mr Justice Teare in The MSC Napoli [2009] 1 Lloyd's Rep 246 by concluding that all three parties: – Bengal Tiger Line Pte Ltd (BTL); MSC Mediterranean Shipping Company (MSC); and Maersk A/S (Maersk) – qualified as ’shipowners‘, albeit there was no requirement for them to pay for space that they did not, in fact, use. 

Background

On 20 May 2021, the container ship X-Press Pearl, owned by EOS RO Pte Ltd – the fourth claimant – caught fire in Colombo, Sri Lanka and sank approximately twenty days later, resulting in the total loss of both ship and cargo.

At the time of the casualty, the vessel was subject to various contractual arrangements, which included: 
i.    a bareboat charterparty to the fifth claimant, Killiney Shipping Ltd; and 
ii.    a time charterparty to the first claimant, Sea Consortium Pte Ltd, which led to further contractual arrangements:  
      a.    a transport services agreement with Maersk;
      b.    a fixed slots contract with BTL; and
      c.    a written connecting carrier agreement (CCA) with MSC.

The MSC Napoli 

In their submissions, Maersk, BTL and MSC relied on Mr Justice Teare’s reasoning in The MSC Napoli to the effect that each was a ‘… charterer … of a seagoing ship’, without any requirement that they should have a right to use or control the entire cargo carrying capacity of the ship. In that case, Mr Justice Teare had addressed whether certain slot charterers, with consideration payable for the slot allocation whether used or unused, were ‘shipowners’ as defined by article 1(2) of the 1976 convention, and thus entitled to limit their liability. He had noted 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’. 

Mr Justice Teare accordingly held that the slot charterers in question were each a ‘charterer…of a seagoing ship’, even though they did not have the right to use or control the entire vessel. 

He further concluded that, as a matter of ordinary language, there was no reason to say that a ‘charterer’ in article 1(2) did not include a slot charterer, since treating them as outsiders would discourage the use of slot chartering, a well-established and efficient way to organise the carriage of goods since the late 1960s.

The X-Press Pearl decision 

In The X-Press Pearl, the Admiralty Court held that each of Maersk, BTL and MSC were ‘charterers’ within the meaning of article 1(2) of the 1976 convention and therefore fell within the ambit of those who may limit their liability. 

Mr Justice Baker supported the judgment in The MSC Napoli, and stated that it should normally be sufficient for a party to be considered an article 1(2) ‘charterer’ if its relevant contract obliges the owner to make part of the vessel’s capacity available to that party for the carriage of goods, which the owner has contracted, or will be obliged to contract, to undertake as carrier. 

At paragraph 19, he stated: 

‘A party to whom space on a vessel is contracted for the performance by it, delegated to the vessel, of its contractual obligations as carrier, will generally be an Article 1(2) ‘charterer’, given the ordinary connotation of that word and the purpose of the Convention.’

He concluded that the particular contractual arrangements under which a supposed charterer enjoyed the services of the ship in question will always need to be examined before a decision can be reached on whether they are indeed within the article 1(2) definition, and went on to consider the precise contractual arrangements entered into by Maersk, Bengal Tiger Line, and MSC.

BTL

BTL had entered into a fixed slots contract with the first claimant under which Sea Consortium Pte Ltd agreed to provide 250 TEU slots, payable for US$445 used or not used per round voyage. 

Mr Justice Baker found that the fixed slots contract was materially identical to the slot charters considered by Mr Justice Teare in The MSC Napoli, and therefore BTL was straightforwardly an article 1(2) ’charterer’.

MSC

MSC was using the time charterers as a feeder service to connect one of its linear routes to more remote ports, and it entered into the CCA to govern that feeder service. Under the CCA with Sea Consortium Pte Ltd, it agreed to receive 50 TEU slots per week, and was obliged to pay US$175 per TEU for each slot used.

The only difference between the CCA and the slot charters in The MSC Napoli was the lack of any obligation upon MSC to pay for unused slots, which was regarded by Mr Justice Baker as irrelevant, and thus MSC still fell within the article 1(2) definition.

Maersk

Maersk was using the first claimant’s services in a similar way. It had entered a written transport services agreement with Sea Consortium Pte Ltd under which the latter provided ‘Transport Services’ to Maersk. Clause 8.1 of the agreement required Maersk to pay ‘for its Transport Services rendered’, and that Maersk would not be liable to pay for anything except services as ordered. Whilst these provisions appeared to treat Maersk as a shipper rather than a ‘charterer’, the court found that the agreement could fairly be characterised as a contract to hire slots on the vessel from time to time including on the casualty voyage. Accordingly, Maersk was a ‘charterer’ for the purposes of article 1(2).

Comment 

The decision provides further helpful clarification as to what constitutes a ‘shipowner’ under article 1(2) of the 1976 convention. The court has now expanded on the judgment in The MSC Napoli to include even non-vessel operating common carriers as shipowners under the convention, subject to the specific terms of their agreements.

Mr Justice Baker has identified that the proper approach to determining whether a party should fall within the article 1(2) definition is by looking to the substance of the underlying contract, rather than the labels given to parties, and reconfirmed that there is no requirement for charterers to pay for space they do not in fact use.

This article was co-written with Eleni Meletlidou, paralegal in the marine, trade and energy team.

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