Shipowner Doun Kisen and the Japan P&I Club look to have dodged a bullet by avoiding more than two-thirds of a $90m damage claim for a crash last year at Busan.
The pair appears to have escaped punishing payouts after South Korean container terminal operator Pusan Newport and its insurers failed in a Hong Kong arrest lawsuit that sought to shift its legal action to a more claims-friendly jurisdiction.
By attempting to shift jurisdiction to Hong Kong, Pusan Newport and its insurers hoped to sidestep South Korea’s shipowner-friendly limitation of liability rules that would cap their claims to less than one-third of their total.
Doun Kisen’s 13,870-teu Milano Bridge (built 2018), on charter to Ocean Network Express, hit shore gantries and a moored containership while approaching the No 8 berth at Busan in April 2020.
Privately controlled Doun Kisen has a 90% share in the ship alongside Panamanian-incorporated minor shareholder Mi-Das Line.
The ship is insured by the Japan P&I Club, which faces a difficult 2020 claims year thanks to the Milano Bridge incident and the grounding of the 203,000-dwt Wakashio (built 2007) off Mauritius.
In June 2020, Pusan Newport arrested a different Doun Kisen ship — the 11,040-teu CMA CGM Musca (built 2009) — in Hong Kong, seeking security for the Milano Bridge claims.
The CMA CGM ship is related to the incident only through common ownership. But when it called at Hong Kong, that gave Pusan Newport and its insurers a shot at securing more of their claims.
Those claims came to about $91m, including $30m for damage to three movable gantry cranes and $61m for the cost of port interruption. But this does not include damage to other vessels.
Japan P&I issued a letter of undertaking to pay up to $82.6m depending on the result of the proceedings, corresponding to Hong Kong’s limitation regime. The ship was released, leaving the parties to litigate over the insurer’s money.
But in a May 2021 decision, the High Court of Hong Kong said the terminal must take its claim back to South Korea, where the accident happened and where witnesses remain.
‘This dispute has nothing to do with Hong Kong’
Last month, the same court reaffirmed that decision and rejected Pusan Newport’s appeal.
“It is fair to say that except for the fact that the sistership called at Hong Kong, this dispute has nothing to do with Hong Kong,” wrote judge Anthony Chan.
Limitations of liability in South Korea operate under different principles than in Hong Kong, and gave the plaintiff — at most — a shot at the $24m that had been paid into a Changwon District Court limitation fund in May 2020.
That is because the rules in South Korea follow the law of the flag — in this case Panama.
Chan admitted that the $58.6m gap between the South Korea limitation fund and the Japan P&I letter of undertaking was attractive, but it did not justify taking the claim to Hong Kong.
The shipowner was represented by Ince & Co and the terminal operator by Lau, Horton & Wise.
Doun Kisen and Japan P&I did not immediately respond to requests for comment.
Adam Corbett contributed to this article
