Stema Barge II: Will the LLMC be applicable to Remote Control Centre Operator?

The first line of defence for a shipping entity while facing potentially successful claims is the Convention on Limitation of Liability for Maritime Claims, 1976, lovingly and lazily known as the “LLMC”. The LLMC provides specific shipping entities the right to prevent their liability, from a particular shipping claim, to go beyond a certain internationally recognised limit. These special class of shipping entities are two: shipowners and salvors.[1] We are concerned with the first class i.e. shipowners. As any businessperson, who has had the pleasure of a maritime dispute, will tell you, the term ‘shipowner’ can be a reference to a multitude of parties within the labyrinth of commercial shipping.[2] In fact, claims often fail for the non-joinder of the correct party vis-à-vis the ship’s ownership.[3] It is thus purposive that the LLMC defined who is a shipowner, for the purposes of limiting liability. It states that the “owner, charterer, manager and operator of a seagoing ship” are the relevant roles that identify a ‘shipowner’.[4] It has been recognised that out of these roles, the role of an operator has not been the subject of judicial treatment.[5] That was till the dispute in Splitt Chartering APS & Ors v Saga Shipholding Norway AS & Ors [2020] EWHC 1294 (Admlty) (22 May 2020) which saw Mr. Justice Teare define the role of an operator for the purposes of bringing an action under the LLMC’s protection. It is going to be the aim of this note to analyse the judgment. Thereafter, this note will aim to address the question ‘Whether a Remote Control Centre (“RCC”) operator would be called an operator for the purposes of limiting liability?’. Professor Andrew Tettenborn had identified this possible correlation becoming more apparent, when in 2019 he wrote that an onshore control centre may fit the bill of an operator under the LLMC, if ‘entire control’ was delegated.[6]

Splitt Chartering APS & Ors v Saga Shipholding Norway AS & Ors [2020] EWHC 1294 (Admlty) (22 May 2020)

In this novel case which was packed with everything multiple contracts; international transit of goods; parties with different nationalities; related suits in different jurisdictions; collision; damage to undersea cables; namesake parties; you name it, the English & Wales High Court of Admiralty got the opportunity to define the meaning of the phrase “the operator of the ship”. The case arose from an action brought by RTE Reseau de Transport d'électricitié SA ("RTE") against the STEMA BARGE II for damage to its undersea cable that supplied electricity to England from France. In light of this action, the defendants moved the English & Wales High Court to limit their liability. The limitation action was no doubt a smart decision since RTE was claiming approximately Euros 55 million in costs and loss, whereas the limit of liability was approximately Euros 6.5 million.

It was accepted by the parties that two out of three defendants had clear roles, as under:

1.????It was admitted that Splitt Chartering APS, a Danish company, was the registered owner of STEMA BARGE II.

2.????It was admitted that Stema Shipping A/S, a Danish company, was charterer or operator of STEMA BARGE II.

3.????However, it was disputed that Stema Shipping (UK), a British company, was operator of STEMA BARGE II. In essence, the dispute was effectively to resolve the issue of whether Stema Shipping (UK) could be called an operator and thereby benefit from inclusion into the list of defendants allowed to limit their liability.

It seems that contractual relationships showcased in the case of STEMA BARGE II would be indicative of transactions where remotely operated vessels are involved. Specifically, in paragraphs number 25 to 34 the role of Stema Shipping (UK) in obtaining license(s) from the Marine Management Organisation ("MMO") is mentioned. This seems similar to the envisioned technical/operational involvement of a RCC operator in future transactions.[7]

Another distinctive feature which must be pointed out: in paragraph 36, the personnel of Stema Shipping (UK) were responsible for STEMA BARGE II and Charlie Rock. This kind of responsibility of operating multiple vessels is seen as one of the economic benefits of RCCs.?It must also be pointed out that much like de facto operators in existence, Stema Shipping (UK) held no clear contractual connection to the barge. At paragraph 38, the Managing Director of Stema Shipping (UK) accepts that Charlie Rock and another tug are chartered to them but STEMA BARGE II is not. To quote the judgment “Splitt was responsible for STEMA BARGE II”, thereby, making the role of Stema Shipping (UK) contractually obscure and unclear.

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Ordinary Meaning

It is in paragraph 99 where one finds the conclusion of the court on what is the ‘ordinary meaning’ of “the operator of a ship” in LLMC. It is stated this the ordinary meaning “embraces not only the manager of the ship but also the entity which, with the permission of the owner, directs its employees to board the ship and operate her in the ordinary course of the ship's business.” However, it is within the confines of this well-articulated judgment that one finds the tools of interpretation to apply this definition to a host of real-life scenarios where things are not as simple as to be governed by the ordinary meaning.

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Requirement of onboarding or physical presence

Emphasis must be given to the opinion in paragraph 74 where it is said that it may be impossible to widen the scope of meaning of ‘operator’ beyond the meaning of ‘manager’. This observation has been made specifically for a conventional merchant ship. Since in paragraph 110 where the judgment indicates a lack of accommodation and therefore, permanency, of onboard personnel; it becomes clear that boarding the ship is not a necessary ingredient in determining an operator’s role. Again, in paragraph 84 the Justice points out that the ‘physical’ aspect of a ship’s operation in article 2 is limiting in nature to the actual roles played by various entities whom article 1 seeks to cover. This limiting nature conflicts with the purpose of LLMC, that of encouraging international trade via ships and is hence, inapplicable to article 1.

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Nature of acts of an operator

In paragraph 79, the court points out that the role of an operator can be seen through a higher level of abstraction, one which “notion of management and control over the operation of the ship.”. This operation is in the nature of physical operation i.e. movement and functioning of the ship and its machinery. It is also pertinent to point out that the personnel whose actions were attributed to Stema UK were following manuals/check lists provided by Stema Shipping A/S (ostensibly) and reciprocally, issuing statements to them. In this way, the acts of Stema UK became those of actual doers and of Stema Shipping A/S those of command givers. In paragraph 72, the court accepts this difference in the nature of operating acts and managerial acts, respectively. In paragraph 111 the court points out that Splitt Chartering APS and Stema UK had no contract for the work on STEMA BARGE II although they had “real involvement”. This fits in well with the current commercial landscape in the shipping industry where SHIPMAN (Ship Management contracts) are in vogue, thus creating a balance of convenience in favour of finding the ‘manager’ but not so much for an ‘operator’.

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Consequences for RCCs

The conclusions which arise are that RCC operators having the structure of a commercial entity (proprietorships, companies, partnerships, etc.) will be able to seek refuge of the LLMC.

The lines of distinction for a RCC operator and a ship manager may be drawn more clearly and confidently. The theoretical division of commercial and technical aspects between the operator; the manager; the charterer; and, the shipowner; is easily applicable in practice for a RCC operator, basis the lack of a physical connection between the RCC operator and the vessel. Whereas for the other three entities this physical connection is apparent or is established through commercial contracts. In essence, the argument here is that the difficulty in distinguishing an operator’s role is only over-whelming when seen in the realm of conventional merchant ships and will become relatively easier to distinguish with RCCs. While not direct it would seem from a reading of paragraph 79 that the boarding requirement, as mentioned in the judgment’s definition of the operator, is not synonymous with physical presence on the ship but to a notion of management and control over the physical functioning of the ship.

However, only time and economic institutions will tell whether RCCs are able to restrict and whether it is effective for them to restrict their role to an operator and not to merge with the role of a manager. There seems to be some inclination in favour of the latter, BIMCO states that managers will “also provide the remote control centre and the personnel to operate the ship either ashore or on board”.[8] While this is a proactive step for new age shipping, the STEMA BARGE II makes it amply clear that RCCs do not need to be represented as agents/affiliates/sharing a common corporate structure of the managers to get the relief under LLMC.

What is more expedient to address is the question of assuming RCC personnel as ‘crew’. It is made apparent in paragraph 79 of the STEMA BARGE II that an operator has a “notion of management and control over the operation of the vessel” which is beyond physical operations of the vessel’s machinery. But in case the RCC personnel are considered to be crew, like in Maritime Autonomous Ship Systems (MASS) UK Industry Conduct Principles and Code of Practice (Version 4, November 2020), we may not require the assistance of the debate on ‘operator’ in the STEMA BARGE II since they will fall within Article 1(2) of the LLMC, as is made clear in the judgment.

Please note that this is an Author's Original Manuscript (pre-print).

This article has been accepted for publication in Lloyd's Maritime and Commercial Law Quarterly, published by Informa.

[1] Persons Entitled to Limit Liability, Article 1 (1), LLMC.

[2] An assertion which finds emphatic acknowledgement in the case we study ahead.?

[3] See the Introduction in, Paul Myburgh, “‘Possession’ and ‘Control’ of Ships: On the Outskirts of Admiralty” [2014] Journal of Business Law 667-688.

[4] Persons Entitled to Limit Liability, Article 1 (2), LLMC.

[5] Richard Williams, ‘Who Is an “Operator of a Seagoing Ship” for the Purposes of the 1976 Limitation Convention?’ (2020). Accessed at: https://iistl.blog/.

[6] Andrew Tettenborn, ‘Shipping: Product Liability Goes High-Tech’, New Technologies, Artificial Intelligence And Shipping Law In The 21st Century (2019).

[7] Maritime UK, MASS UK Industry Conduct Principles and Code of Practice 2020 (V4), Pg 85-87, November 2020. Accessed at: https://www.maritimeuk.org/.

[8] BIMCO, First Ever Standard Contract for Autonomous Ship Operation Underway, 06 November 2020. Accessed at: https://www.bimco.org/.