On March 6, 2011, two big ships—THERESA LIBRA (a tanker) and MSC PAMELA (a container ship)—bumped into each other in the South China Sea. Five days later, the owners agreed that any fight about money would be decided by the English court, using English law. After both sides looked into what happened, they made a clear deal on October 25, 2012: MSC PAMELA was 75% at fault and THERESA LIBRA was 25% at fault. The deal also said something very simple: each side “shall pay” its share of the other side’s proven losses, and if they couldn’t agree on amounts, a court officer (the Admiralty Registrar) would figure it out.
As the lawyers traded receipts and numbers, the two-year deadline for starting a lawsuit after a ship collision (March 6, 2013) came and went. MSC PAMELA’s side filed their claim before the deadline (January 28, 2013). THERESA LIBRA’s side filed a bit late (April 8, 2013). MSC PAMELA’s side then tried a classic defense: “You missed the time limit, so your claim is blocked.”
The judge looked at the words the parties had already signed. If you promise “shall pay,” that means you will pay your percentage once the loss amount is known. Letting one side escape by saying “too late!” would clash with that promise. In simple terms: you can’t both promise to pay and, at the same time, keep a secret trapdoor to avoid paying because the clock ran out. The judge also explained that, even if that reading were wrong, he would still give extra time because the delay was short (just over a month), both sides were busy working out the numbers after agreeing fault, and no one was hurt by the small wait. He also allowed the company that was operating MSC PAMELA under a bareboat (demise) charter to be added to the case, since the liability and the “shall pay” promise applied to them too.
Here is the court’s result, stated plainly to wrap up. The High Court (Admiralty) held that the October 25, 2012 liability agreement—especially the “shall pay” wording—meant neither side could rely on the two-year time bar against the other. THERESA LIBRA’s late filing did not kill its claim. Even if that interpretation were wrong, the judge said he would extend time because responsibility had already been fixed at 75% (MSC PAMELA) and 25% (THERESA LIBRA), the parties were sensibly exchanging proofs, the delay was small, and there was no unfairness. The judge also let the demise charterer of MSC PAMELA be added as a defendant. Bottom line: MSC PAMELA’s side must pay 75% of THERESA LIBRA’s proven losses and 75% of the agreed liability-determination costs, with interest; if the sides can’t agree on the exact amounts, the Admiralty Registrar will assess them.
