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.
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.
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.
President of CMI