Clarification – who is the ‘operator’ of a vessel

Under the Limitation Convention 1976, shipowners (and salvors) are entitled to limit their liability for specified claims. The term ‘shipowners’ is defined as "the owner, charterer, manager or operator of a seagoing ship", but what constitutes an ‘operator’ has been open to interpretation.

The claimant, Stema UK, sought a declaration before the English Admiralty Court on a discrete point of law, namely whether it was entitled to limit its liability for damage caused to an underwater electricity cable by a barge, on the basis Stema UK was “the operator” of the barge at the time of damage and entitled to limit its alleged liability pursuant to Article 1 (2) of the Limitation Convention 1976 and section 185 of the Merchant Shipping Act 1995.

Stema UK averred that it was the operator of the barge in view of the factual matrix giving rise to the claim. The actions taken by Stema UK included placing their employees on the barge (the only persons on board at the time) to drop the anchor and to carry out other necessary work on the barge prior to the damage to the underwater cable.

The court provided helpful guidance on the meaning of “operator of a seagoing ship” under Article 1 of the Limitation Convention as follows: The ordinary meaning of "the operator of a ship" included the "the manager of a ship", but it also extended to include Stema UK who, with the permission of the owner, directed its employees to board the barge and operate her in the ordinary course of business.

The ordinary meaning of "the manager of the ship" was the person entrusted by the owner with carrying out the tasks involved in ensuring that a vessel was safely operated and the terms manager and operator were interchangeable. Mr Justice Teare expressed the view that “any attempt to draw a bright line between management and operation would be fraught with difficulty.”

The nature of Stema’s conduct in the operation of the barge was such that the court considered it could be described as the “operator”, bringing Stema UK within the regime under the Limitation Convention meaning, therefore, it was entitled to limit its alleged liability accordingly.