The Lady M was on a voyage carrying 62,250 mt of oil from Taman, Russia to Houston, USA under four bills of lading which were subject to the Hague-Visby Rules. On 14 May 2015, the chief engineer deliberately set fire in the engine room. The fire was put out within 36 minutes, however the main electrical switchboard was damaged beyond repair and the vessel being immobilised. This resulted in the owners ordering a salvage tug on LOF on 14 May 2015. On 16 May 2015, the salvage tug Tsavliris Hellas commenced towing the vessel to Las Palmas. The savage tug and the vessel arrived at Las Palmas in the evening of 31 May 2015. The salvors instituted arbitration against “The Owners of M.V. Lady M, Her Cargo, Freight and Bunkers”.

The shipowners and cargo owners settled the salvor’s claim separately. The cargo owners paid about USD3.8 million to the salvors and incurred an expense of about GBP46,000 in investigation and defence. The cargo owners brought the claim to recover the monies paid and spend in connection with salvage and for a declaration that they are not liable for general average contribution. In return, the owners brought a counterclaim for about USD560,000 for general average contribution.

At the High Court, two preliminary issues ordered to be determined, namely whether the chief engineer’s conduct amounted to barratry and whether if so Art IV(2)(b) of the Hague-Visby Rules exempted liability of the owner for that. On the first issue, Popplewell J held that the conduct of the chief engineer may or may not be barratry depending on his mental state at that time. On the second issue, his lordship held that Art IV(2)(b) was capable of exempting the owner for liability for fire barratrously or deliberately caused. (See Glencore Energy UK Ltd and another v Freeport Holdings Ltd (Lady M) [2017] EWHC 3348 (Comm) – High Court – Popplewell J)

On appeal, Simon LJ, with whom Coulson LJ and Sir Geoffrey Vos C agreed, upheld that that Art IV(2)(b) covers fire even if caused deliberately or barratrously as long as that happened without the actual fault or privity of the carrier. However, on the question, his lordship found that the fire was deliberately and barratrously caused by the chief engineer. The result was that the owners were exempted from liability to the cargo owners on the latter’s claim.