The following article was written by Rajasingam Gothandapan, who is a partner at law firm Shearn Delamore & Co, elaborating on a 2016 case where a plaintiff brought a limitation action to limit its liability regarding pollution damage or loss in relation to a fuel oil spillage incident, on the basis that the incident had occurred by no act of omission of the plaintiff:
Plaintiff one was the owner of the vessel MT “Trident Star” (the vessel). On 24 August 2016, while the vessel was berthed at the terminal, a spillage of fuel oil carried on board the vessel as cargo occurred (the incident).(1)
On 7 November 2016, plaintiff one brought a limitation action pursuant to the Merchant Shipping (Liability and Compensation for Oil and Bunker Oil Pollution) Act (MSA) 1994(2) to limit its liability regarding pollution damage or loss in relation to the incident, in accordance with part I of the rst schedule to the MSA 1994, on the basis that the incident had occurred by no act or omission of plaintiff one.
On 17 February 2017, plaintiff one’s limitation action was allowed. On 21 March 2017, plaintiff one set up a limitation fund by depositing into court a security for the amount of 4,510,000 special drawing rights (or its Malaysian ringgit equivalent as at the date of constitution of the limitation fund) plus interest at the rate of 5% per annum from 24 August 2016 up to and including the date of the constitution of the limitation fund. The security was in the form of a letter of undertaking (LOU) dated 16 March 2017 issued by the insurer of the vessel, the Shipowners’ Mutual Protection and Indemnity Association (Luxembourg).
On 11 May 2017, the court further ordered for advertisements pertaining to the limitation fund be placed in two local newspapers. The advertisements provided that all persons claiming oil pollution damage or loss resulting from the incident should:
In response to the advertisements, within the time limit, 19 defendants entered the limitation action to claim for loss and damage from the plaintiffs arising from the incident. None of them disputed plaintiff one’s right to limit its liability.
In view of the possibility that plaintiff one’s liability to pay compensation could exceed the limitation fund,(3) plaintiff two (ie, the International Oil Pollution Compensation Fund 1992) was added to the action.
Subsequently, all the defendants’ claims were settled by plaintiff one on condential terms and all the defendants led their notices of discontinuance. No payment was made out from the limitation fund.
Plaintiff one’s application
Plaintiff one sought an order that the LOU be discharged and be returned by the registrar to plaintiff one’s solicitors for cancellation with liberty to apply. Plaintiff one also sought leave to discontinue the present action with no order as to costs. Plaintiff one submitted that the application herein required the invocation of the inherent jurisdiction of the court under order 92 rule 4 of the Rules Of Court 2012 as there was no provision for the discharge and release of the security that constituted the limitation fund.
The court held that the LOU should be discharged and returned to plaintiff one for cancellation, as they had settled all the claims made by the defendants without recourse to the LOU or the limitation fund. The time limit for bringing claims had also expired, as the advertisements had been published ve years previously and the time limit for making claims had expired 60 days after the publication of the advertisements. Thus, plaintiff one’s application was allowed and the action was discontinued.
For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.
(1) Rising Star Shipping Sdn Bhd & Anor v Pelabuhan Tanjung Pelepas Sdn Bhd & Ors  MLJU 1299
(2) Section 6(2) read together with section 7(1).
(3) Pursuant to section 19 of the MSA 1994 and by way of a court order dated 21 September 2017.
Editor’s Note: This article was originally edited by, and first published on www.lexology.com/commentary
Photo credit: Shearn Delamore & Co
Published: 10 February, 2023
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