THE MERCHANT SHIPPING (CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS) (AMENDMENTS ORDER 1998).
This SI aims to give effect to the 1996 Protocol to the International Convention on Limitation of Liability for Maritime Claims 1976. At this stage the Protocol has not been ratified by the United Kingdom and has not entered into force internationally. This SI will enable the United Kingdom to give affect to the Protocol as soon as it comes into force.
The mechanism for giving effect to the Protocol involves amendments to the text of the 1976 Convention as set out in part 1 of Schedule 7 to the Merchant Shipping Act 1995 and by amendment to part II of Schedule 7 (Provisions having effect in Connection with Convention).
The increases in the limitation amounts contained in the Protocol require little comment. The increases for general maritime claims were not as high as had been anticipated partly because of the setting up of a separate fund for HNS claims. The purpose of this note is to examine the changes which will be introduced in relation to passenger claims.
A new paragraph 2 A of Part II of Schedule 7 provides that paragraph 1 (a) of Article 2 shall have effect as if the reference to "loss of life or personal injury" did not include a reference to loss of life or personal injury to passengers of sea going ships". The purported intention of this provision is to ensure that where passengers are killed or injured on a seagoing ship the shipowner should not be allowed to limit liability under the LLMC 1976 but his rights and liabilities should continue to be governed by the Athens Convention. On the other hand the claims of passengers of non seagoing ships should continue to be covered by the LLMC 1976.
It has always been my understanding that Article 2 (1) (a) related only to personal injury claims from non-passengers. For example in a collision case where crew or passengers on ship A are injured or killed their claims against the owners of colliding ship B would be subject to global limitation under LLMC 1976. It seems to me that there is a real danger with this amendment to Article 2 (1) (a) that the owner of the colliding ship B may not be able to limit liability at all if he is sued by a passenger on ship A (though he would still be able to limit under the LLMC 76 in respect of claims for loss or damage to property viz luggage). The drafters of the Statutory Instrument cannot have intended this result or if they did they are going well beyond the scope of the provisions of the Protocol.
Article 7 of the LLMC 1976 will undergo two significant changes. Firstly the Units of Account for purposes of calculating the global limitation fund will be increased from 46,666 to 175,000 multiplied by the number of passengers which the ship is certificated to carry. This represents an increase by a factor of approximately 4 and is clearly justified having regard to the drop in the purchasing power of the currencies which go into the SDR basket, since the limits were fixed in 1976. Secondly the words "but not exceeding 25 million of account" are removed from Article 7. This appears to represent a major increase in the exposure of operators of cruise ships and ferries. It is not unusual for a cruise ship to be certificated to carry a thousand passengers and at 175,000 SDRs per passenger, a global fund for passenger claims of 175 million SDRs would thus be available (at least in theory) under the new regime. If the cap of 25 million SDRs had been maintained, the fund would remain capped at that amount. For the operators of cruise ships and large ferries this would represent a significant additional exposure. It has been calculated that vessels certificated to carry more than 145 passengers would (again in theory) be effected by the removal of the cap. These changes contained in the Protocol are faithfully put into effect by the draft SI.
The effect of this dramatic change has, however, been nullified under the U.K. law. The Protocol (by adding paragraph 3 bis to Article 15) provides that a State Party may "regulate by specific provisions of national law the system of liability to be applied to claims for loss of life or personal injury to passengers". This provisions was inserted in the Protocol at the request of the Japanese who for their own domestic purposes wished to do away altogether with the right to limit in respect of passenger claims. In reliance on Article 15 3 bis the U.K. Government has by paragraph 6 (1) of the revised part II of schedule 7 to the MSA 1995 provided that the revised article 7 of the Convention does not apply in respect of seagoing ships but does apply to non-seagoing ships but as though it provided for a per capita limit of 175,000 units of account, rather than a global fund based on the number of passengers which the ship is certificated to carry. It seems to follow that the increases in the Article 7 limits and the removal of the cap introduced by the Protocol will have no practical application in the U.K.
The scheme of things is clear. Passengers on non-seagoing ships shall have their claims governed by the LLMC 1976 but amended in such a way as to give a 175,000 SDR limit per passenger rather than the global fund that was available for example, to the passengers on board the Marchioness. The claims of passengers on sea going ships will be subject to the per capita limits (46,666 SDRs at present but 175,000 SDRs if and when the 1990 Athens Protocol comes into force and in any event 100,000 SDRs for U.K. carriers) contained in the Athens Convention 1974. The only doubt which remains relates to the claims of those individuals who happen to be passengers on ship A who choose to pursue a claim against the non carrying vessel. It seems to be a possibility that the Statutory Instrument as drafted will deprive the owner of the non-carrying vessel of the right to limit.
It is, perhaps, a little curious that the U.K. Government has bothered to amend Article 7 by increasing to 175,000 SDR per passenger the amount which is to be used in calculating a global limitation fund (and by removing the 25,000,000 cap), when, by paragraph 6 (I) of the revised part II of schedule 7, the whole concept of global limitation is removed in relation to passengers. It would have been more straight forward to leave out the new 2a of Part II and simply to rely on paragraph 6(I) of the revised Part II. Paragraph 2A of Part II is likely to cause some confusion.