## Facts

- Mediterranean Shipping Co. S.A. Geneva (MSC) bareboat-chartered the container vessel *MSC Carla* from its owner, Rationis Enterprises Inc.
- POL-Atlantic (POL) and Atlantic Container Line AB (ACL) were slot charterers, booking container capacity on the vessel and issuing carriage documents for cargo carried in their slots.
- MSC, POL, and ACL executed a Vessel Sharing Agreement (VSA) that:
  - allocated vessel seaworthiness responsibility to MSC;
  - required POL/ACL to defend cargo claims brought against MSC relating to cargo carried under their slots; and
  - contained a London arbitration clause (London Court of International Arbitration) selecting English law and contemplating application of the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC 1976).
- During a trans-Atlantic voyage in November 1997, the *MSC Carla* suffered a catastrophic structural failure in heavy weather, broke apart, and cargo was lost or damaged.
- Cargo interests sued POL and ACL in U.S. federal court for cargo loss and damage.
- POL and ACL brought third-party indemnity claims against MSC, asserting contractual and fault-based responsibility tied to MSC’s obligations under the VSA.
- MSC and Rationis filed a U.S. Limitation of Shipowners’ Liability Act proceeding seeking to limit liability for the casualty; the district court consolidated the cargo cases with the limitation action.
- MSC moved to stay POL/ACL’s VSA-based indemnity claims and compel London arbitration; the district court denied the motion, keeping the indemnity claims in the consolidated limitation proceeding.

## Issues

1. Whether POL/ACL’s indemnity claims against MSC, based on the VSA, were required to proceed within the Limitation Act concursus and injunction or were exempt as “personal contract” claims.
2. If exempt from concursus, whether the court should stay the VSA-based indemnity claims and compel arbitration in London under the VSA’s arbitration clause.

## Decision

- The Second Circuit reversed the district court’s denial of MSC’s motion and remanded.
- The court held that POL/ACL’s claims asserted under the VSA arose from MSC’s “personal contract” and were therefore exempt from the Limitation Act concursus requirement.
- Because the claims were outside concursus, the court directed enforcement of the VSA’s London arbitration clause, requiring a stay of litigation of those claims in favor of arbitration.

## Legal Principles

- Claims arising from a vessel owner’s or charterer’s “personal contract” may be exempt from the Limitation Act concursus and its restraining injunction, even when related casualty claims are being administered in a limitation proceeding.
- Federal courts generally enforce arbitration clauses in maritime contracts and may stay court litigation of claims within the scope of a valid arbitration agreement.
- A pending U.S. limitation proceeding does not automatically override contractual dispute-resolution provisions governing inter-carrier contractual indemnity obligations.

## Conclusion

The Second Circuit treated the slot charterers’ VSA-based indemnity demands as personal-contract claims outside the Limitation Act concursus and required the district court to stay those claims and send them to London arbitration as the parties agreed, while the limitation proceeding could continue for claims properly within its scope.


Mediterranean Shipping Co. Geneva v. Pol-Atlantic, 229 F.3d 397 (2d Cir. 2000)