Proposals to amend the 1974 Athens Convention
Relating to the Carriage of Passengers by Sea
On
December 13th 1974 at an International Diplomatic Conference held in
Athens the final text was agreed for a Convention relating to the Carriage of
Passengers and their Luggage by (the Athens Convention for short ) The
Convention came into force in 1987 and it came in to force in April 1987.
At the 74th
Session of the IMO Legal Committee held in October 1996 a paper was submitted
by the UK Government proposing that owners of all ships should carry third
party liability insurance against all types of claim which might arise out of
the operation of a ship. By the time of
the 76th Session of the Legal Committee in October 1997 it had
become clear that it would not be possible to impose the proposed compulsory
insurance requirement unless there was also a well established liability
regime. In other words a shipowner
cannot be required to carry liability insurance unless it is possible to
identify what those liabilities are.
At that
stage the Legal Committee scaled down its ambitions and decided to work towards
an instrument which would require the owners of passenger carrying vessels to
carry third party liability insurance so as to ensure that the claims of innocent
passengers would be adequately secured and paid. It was further proposed that passengers should be able to pursue
their claims directly against the liability insurer. A third element of the proposal was that the limits of liability
contained in the 1974 Athens Convention should be substantially increased
bearing in mind the fact that limits which might have been adequate in 1974
will no longer adequate in the late 1990’s.
There
was, initially, some opposition to these proposed changes principally from the
International Group of P & I Clubs.
The International Group had two basic objections. Firstly the Group pointed out that most
passenger ship operators already carried P&I cover which ensured that
legitimate passenger claims were paid subject to the relevant limitation
regime. Secondly the Group protested
that granting a right of direct action against liability underwriters violated
the indemnity principle which is the basis of all liability insurance. In other words the liability insurer does not
insure the passenger claimant direct but, by the terms of the insurance policy,
agrees to indemnify the shipowner against any passenger claims which he may
have to pay (and has paid). In the
event the International Group did not press its opposition to the proposed
changes recognising that there is a general concern that passengers are not
properly protected and that the principle of indemnity had already been lost in
other international maritime law conventions such as the CLC 1969 where, for
the first time, claimants were given a direct right of action against liability
insurers.
As is
mentioned earlier in this paper the whole exercise began at the 74th
Session of the IMO Legal Committee in October 1996, 4 years on, it is worth
seeing where IMO now stands with this project.
It might
be thought that a Protocol to increase limits, require the shipowner to carry
liability insurance and to give claimants direct access to insurers would not
be a complex matter. However at an
early stage in discussions it was suggested (by Japan) that the opportunity
should be taken of reviewing the liability provisions of the Athens
Convention. Briefly the position, as
regards liability under the 1974 Convention, is that the shipowner is liable
for death or personal injury to a passenger if the incident causing the death
or personal injury occurs during the course of the voyage and is due to the
negligence of the carrier or his servants.
However, the Convention also provides that if the death or personal
injury occurs as a result of a maritime incident (shipwreck, collision,
stranding, explosion or fire or defect in the ship) there is a presumption that
the carrier or his servants have been negligent. This is only a presumption and the shipowner escape liability if
he can prove that the incident occurred without his negligence or that of his
servants. This has been referred to as
a “semi-strict” liability regime.
The
relevant Sessions of the Legal Committee were going on at the same time as the
aviation industry was busy reviewing the Warsaw Convention which covers loss of
life or personal injury to airline passengers.
The attention of the IMO Legal Committee was drawn to the fact that the
aviation industry was moving towards proposing strict liability on airline operators
for death or personal injury to passengers.
The Legal Committee was urged, therefore, at least to move some way
towards the position adopted in the aviation industry and to impose a much
stricter degree of liability on shipowners than they had been accustomed to
under the existing Athens regime.
It is
impossible at this stage to predict exactly what the final form of the Protocol
may be. However, the IMO Legal
Committee is working to a tight schedule to finalise this Protocol. There is a commitment from the IMO to make
funds and time available for a Diplomatic Conference some time in 2002 or 2003
at which the final text of the Protocol will, hopefully, be agreed. This means that to all intents and purposes
the wording of the Protocol must be agreed at the next Session of the Legal
Committee which is due to take place in London between October 8th
and 12th this year.
Current
indications are that the principle elements will be as follows:-
Liability and Limits
Where the
death or personal injury arises out of a shipping incident (the same definition
as in the 1974 Convention) the shipowner will be strictly liable up to a
specified limit per passenger. This
limit will not be agreed until the Diplomatic Conference but it is unlikely to
be lower than 100,000 SDRs nor higher than 250,000 SDRs. Additionally the carrier will be liable up
to a higher specified limit per passenger unless he can prove the incident
which caused the last occurred without his negligence. Again the higher limit will not be agreed
until the Diplomatic Conference but this is unlikely to be lower than a 175,000
SDRs per passenger nor higher than 500,000 SDR per passenger.
It should
be borne in mind that the liability and limitation regimes, which I have just
described above, apply exclusively to claims for death or personal injury
arising from a shipping incident. But
it seems probable that the Protocol, in its final form, will deal rather
differently with claims for loss of life or personal injury not arising from a
shipping incident. Delegates have in
mind, in this context, the slip or fall type of accident which arises from what
it might be described as the hotel functions of a passenger carrying ship. For this type of non-shipping incident the
carrier will probably be liable unless he can show that the incident arose
without negligence on his part or on the part of servants or agents. (Known as the reverse burden of proof).
If the
Protocol follows the format suggested above it will be seen that as regards
liability and limits the changes from the 1974 Convention are subtle but
important and mean that it will be more difficult for a shipowner to escape
liability for passenger claims.
Additionally the financial exposure will be substantially greater.
Compulsory Insurance
Shipowners
will be required to carry liability insurance or to otherwise prove their
financial ability to meet claims. This
will be achieved by requiring all passenger carrying ships to maintain
insurance or other financial security for claims up to an amount per passenger
specified in the Protocol. Currently
the compulsory insurance requirement is unlikely to be less than 100,000 SDR
per passenger nor more than 500,000 SDR per passenger.
The
compulsory insurance provisions of the Protocol are quite complex requiring, as
they do, carriers to obtain and carry on the ship a certificate attesting that
insurance or other financial security is in force in accordance with the
provisions of the Convention. These certificates
will have to be issued by the Flag State or by an appropriate authority
appointed by the Flag State.
Direct action against
Underwriters
The
compulsory insurance provisions of the Protocol also specify that any claim for
compensation may be brought directly against the insurer or the person
providing the financial security.
Whilst the are not happy with this provision the International Group of
P&I Clubs and the insurance market generally have accepted this situation.
The only
aspect of direct action which remains in issue concerns the right of the
insurer to defend direct claims. It
seems to be agreed that the insurer should be able to limit in accordance with
the terms of the Protocol even if the shipowner, by reason of his conduct, has lost
the right to limit. The insurer may
also use such defences as would have been available to the shipowner but
controversy remains as to whether the insurer should be able to use defences
which would have been available to him in a claim for indemnity presented by
the shipowner. In this context the
essence of the argument relates to the wilful misconduct defence which can
generally be invoked by an insurer against the insured shipowner when he seeks
indemnities for a claim. This remains
an issue which will need to be resolved at the next Session of the Legal
Committee.
Luggage
It seems
unlikely that there will be any change in the liability regime in relation to
luggage claims but it is probable that the limitation amounts will be increased
to take account of the loss in value of money since 1974.
This has
been a very quick review of the current state of play but it now seems probable
to that the essential elements of this Protocol to the Athens Convention are in
place and we may expect the final text of a Protocol to be agreed during the
course of the next couple of years. It
is worth noting that the Athens Convention itself did not come into force until
April 1987 i.e. 12˝ years after the text was agreed at the Diplomatic
Conference. The concern is that the
higher limits and complex compulsory insurance requirements might deter states
from ratifying the Protocol. If there
is any delay in ratification it is anticipated that several European States
will denounce the Athens Convention of 1974 and impose provision similar to
those contained in the draft Protocol as a matter of domestic law. Anyone interested in international
uniformity of maritime law would deplore unilateral action of this sort. This new domestic law would apply to vessels
flying the State flag and would probably also be extended to vessels calling at
State port.
Patrick Griggs
President of CMI
April 2001