Cosmotrade SA v Kairos Shipping Ltd & Ors

Cosmotrade SA v Kairos Shipping Ltd & Ors

Under current English law, a Limitation Fund cannot be constituted by a guarantee (such as a P&I Club guarantee) in the absence of specific statutory provision; it must be constituted by payment into court. The freezing injunctions should not be discharged as there remain assets and a real risk of dissipation, but the sums enjoined are to be reduced to the limitation figure plus reasonable costs and interest.

Parties
Applicant: Cosmotrade S.A.; Respondents: Kairos Shipping Ltd. & Ors.; Claimants (cargo Interests): Enka and Bechtel; Claimants (cargo Interests): Al Rashad & Others
Jurisdiction
England and Wales
Judgment Date
21 June 2013
Procedural Posture
Admiralty/commercial / Interlocutory Applications for Interim Declarations and Continuation/discharge of Freezing Injunctions
Outcome
Interim declaration refused; freezing injunctions continued with modifications.
Legal Topics
Limitation of Liability for Maritime Claims, Constitution of Limitation Fund, Freezing Injunctions, Interpretation of Merchant Shipping Act 1995, CPR Part 61, Adequacy of Security
Admiralty Commercial Law Arbitration Limitation of Liability for Maritime Claims Constitution of Limitation Fund Freezing Injunctions Interpretation of Merchant Shipping Act 1995 CPR Part 61 +1 more

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Parties

Cosmotrade S.A.

Applicant

Kairos Shipping Ltd. & Ors.

Respondents

Enka and Bechtel

Claimants (cargo Interests)

Al Rashad & Others

Claimants (cargo Interests)

Procedural Posture

Admiralty/commercial / Interlocutory Applications for Interim Declarations and Continuation/discharge of Freezing Injunctions

Legal Issues

  1. 1 Whether a Limitation Fund can be constituted by a P&I Club guarantee under English law and the 1976 Limitation Convention
  2. 2 Whether the ex parte freezing injunctions should be continued or discharged

Ratio Decidendi

Under current English law, a Limitation Fund cannot be constituted by a guarantee (such as a P&I Club guarantee) in the absence of specific statutory provision; it must be constituted by payment into court. The freezing injunctions should not be discharged as there remain assets and a real risk of dissipation, but the sums enjoined are to be reduced to the limitation figure plus reasonable costs and interest.

Court Disposition

Interim declaration refused; freezing injunctions continued with modifications.

Orders

  • Application for interim declaration that a Limitation Fund may be constituted by a P&I Club guarantee is refused.
  • Permission to appeal granted.