A marine services company has failed in its attempt to limit liability for damage caused when a research vessel toppled in a Leith dry dock, after the Outer House held that it had not relevantly established jurisdiction and could not constitute a limitation fund before any claims had been raised against it.
Jurisdictional Rejection
Lord Lake held that Dales Marine Services Ltd’s action was in substance an attempt to invoke statutory protection under section 191 of the Merchant Shipping Act 1995 rather than proceedings seeking decree against any person. Lord Lake, who presided over the case, concluded that the jurisdictional provisions relied upon by Dales did not apply because the company was seeking immunity from potential claims rather than asserting a legal right or entitlement.
Court Ruling and Incident Overview
The incident occurred on 22 March 2023 involving the research vessel Petrel, which was undergoing maintenance at the Imperial Dock in Leith. The dry dock had been drained, with the vessel resting on keel blocks and shores positioned between its sides and the dock walls. According to Dales’ averments, about 8.22am some of the shores gave way and the Petrel toppled onto its starboard side. It was averred that the incident caused damage to the vessel, property aboard it and the dock. Another vessel, the MRV Scotia, was also in the dry dock behind the Petrel and could not be moved until the dock was re-flooded.
Dales averred that it had management and control of the dock and was entitled under section 191 of the 1995 Act to limit its liability for losses arising from the incident. That provision extends limitation to harbour and conservancy authorities as well as owners of docks, including persons having control and management of a dock.
The company sought declarations that it was entitled to limit its liability and as to the amount of that limit, together with authority to establish a limitation fund under the Convention on Limitation of Liability for Maritime Claims 1976. It also requested orders requiring interested claimants to lodge claims against the fund, staying related proceedings elsewhere, and ultimately distributing the fund among those entitled to it.
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Defenders Challenge Jurisdiction and Substance
The first defender was the United States of America as owner of the Petrel. Oceaneering International Incorporated, with whom Dales had contracted to perform work on the vessel, was the second defender. The Scottish ministers, as owners of the MRV Scotia, were the third defenders. All three challenged the competency or relevancy of the basis upon which the Court of Session’s jurisdiction had been invoked, seeking dismissal at debate. They argued that schedule 8 to the Civil Jurisdiction and Judgments Act 1982, which Dales relied upon, did not apply because schedule 9 excluded “proceedings which are not in substance proceedings in which a decree against any person is sought.”
Lord Lake agreed with the defenders. He observed that questions about the procedural form chosen by Dales were not determinative – what mattered was the substance of the proceedings. He said: “The ‘substance’ of the action here is that the pursuer seeks protection from claims which it has averred may be brought by the other parties.
They are seeking to establish an immunity rather than a right or an entitlement.” Although some of the orders sought would operate against third parties, the judge regarded those as procedural mechanisms through which Dales hoped to obtain statutory protection. He concluded that the action therefore fell within the schedule 9 exclusion and that schedule 8 did not apply. “The effect of the orders sought,” Lord Lake stated, “is ultimately to achieve resolution of claims against the pursuer in the context of limitation of their liability rather than seeking a decree against any of the defenders.”
Court Rejects Alternative Jurisdictional Arguments
Lord Lake also considered Dales’ alternative jurisdictional arguments. The company had relied on paragraph 2(c) of schedule 8, which permits proceedings relating to delict or quasi-delict to be brought where the harmful event occurred. There was no dispute that the Petrel incident occurred in Scotland. However, Lord Lake held that the present proceedings could not properly be characterized as relating to delict or quasi-delict. He noted that the jurisdictional exception required a restrictive interpretation and ordinarily concerned proceedings raising an issue as to a defender’s liability.
By contrast, Dales sought to limit possible liabilities arising on potentially different bases, including contract, delict, and statute. The judge said the company’s contention that the place of the harmful event was the most appropriate rule “appeared to be a submission as to what it was considered the law ought to be rather than what it is.” Consequently, a section 191 claim seeking limitation across different kinds of liability did not fall within the delictual jurisdiction provision.
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Dales also sought to rely on the Scottish ministers as an “anchor defender,” arguing that the presence of one Scotland-domiciled defender permitted the United States and Oceaneering to be convened in the same proceedings where the claims were closely connected. Lord Lake rejected that basis of jurisdiction, noting that the unusual feature of the action was that Dales was not asserting claims against any of the defenders. Instead, the defenders were parties who might themselves have claims against Dales which the company wished to subject to limitation. The Scottish ministers had expressly disavowed any claim of the kind which Dales sought to limit.
Lord Lake observed that if a defender denied having such a claim, “they have no interest in the issue of whether liability should be limited still less any claim.” He also held that potential contractual claims concerning delayed redelivery of the MRV Scotia would not fall within the statutory limitation sought, while alleged losses resulting from a later discontinuation of power arose on a different occasion from the toppling of the Petrel.
The judge additionally considered that permitting jurisdiction to depend on the domicile of any party which happened to suffer loss would undermine legal certainty, as foreign defenders could not reasonably foresee in which jurisdictions they might be sued. Therefore, the Scottish ministers could not found jurisdiction over the other defenders.
Fund Cannot Be Established Without Claims
The second defender advanced a separate relevancy challenge concerning Dales’ attempt to constitute a limitation fund. Article 11 of the 1976 Convention, incorporated for dock owners by section 191(6), provides for a limitation fund to be constituted in a state in which legal proceedings have been instituted in respect of claims subject to limitation. No such proceedings had yet been raised against Dales. Lord Lake accepted that Article 11 could not simply be applied literally to dock owners in every respect, as their limitation rights arose through domestic legislation rather than directly as parties to the Convention.
Nevertheless, the provision had to be read as permitting a fund to be established once relevant proceedings had been commenced. The judge stressed that this restriction concerned only establishment of a fund and did not prevent a dock owner from invoking limitation in response to a claim once one was made. Lord Lake accordingly sustained the defenders’ pleas to the relevancy of the action.