Owners of sunken MSC Elsa-3 ship move Kerala High Court to limit their liability to USD 14 million

The owners, charterers and shipping company which operated MSC Elsa-3, the ship which recently sank off the coast of Alappuzha in Kerala, have moved the Kerala High Court seeking to limit their liability arising out of maritime claims to USD 14 million [Elsa 3 Maritime Inc. & Ors. v. Saji Surendran & Ors.].

MSC Elsa-3, a Liberian flagged container vessel, was en route from Vizhinjam to Kochi and reportedly carrying diesel, bunker oil, calcium carbide (a reactive chemical) and plastic nurdles, when it capsized in Indian territorial waters on May 25.

The incident triggered widespread marine pollution, oil slicks and contamination of the Kerala coastline, severely impacting the environment, fisheries and public health.

Since then, multiple private entities who had cargo onboard as well as the State government, have filed admiralty suits against MSC Mediterranean Shipping Company SA, the owner of MSC Elsa-3.

The State invoked Section 4 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 to seek compensation of ₹9531.11 crores plus interest out of which ₹8,626.12 crores is for pollution damage, ₹378.48 crores for environmental restoration and ₹526.51 crores for economic losses suffered by fishermen and coastal communities.

Three sister vessels of MSC Elsa-3 have since been detained on orders from the High Court to protect the claims of the plaintiffs in these suits.

Now, Elsa 3 Maritime Inc, Multi Container Management SA, and MSC Mediterranean Shipping Co. SA which are the owner, bareboat charterer, and operator of MSC Elsa-3 respectively, have moved the High Court under the provisions of Part XA of the Merchant Shipping Act, 1958 and the the Merchant Shipping (Limitation of Liability for Maritime Claims) Rules, 2015 to limit the liability out of the loss and damage of property caused due to the sinking.

Seven plaintiffs who have already filed admiralty suits for recovery of losses have been included as defendants in this suit. An eighth defendant has been added to cover all potential claimants who may file suits over this incident in the future under the header "all persons claiming or being entitled to claim damages".

The principle of limited liability for maritime claims allows shipowners and certain other parties to limit their financial responsibility for maritime accidents to a specific amount, regardless of the actual damages incurred. The limits are calculated in units of account based on the tonnage of the Vessel.

While the final amount will depend on the US dollar exchange rate on the day the fund is constituted or deposited, as per the current rate, the limitation fund will be for $14, 293,233.79 (USD 14.2 million), the plaintiffs submitted.

The plaintiffs have sought orders from the Court for declaring that they are entitled to limit their liability and have also sought directions to permit them to constitute a limitation fund by depositing the amount in US Dollars or Indian Rupees with the Registrar General of the High Court.

They have also sought a decree of permanent injunction to restrain the defendants from initiating or continuing any proceedings against the plaintiffs arising out of the sinking of MSC Elsa-3.

Today, Justice S Easwaran directed that the suit be numbered and listed for admission.

Senior Advocate Prashant S Pratap and advocate Pranoy Kottaram appeared for the plaintiffs.