From the Maritime Practice.

Passenger Ship Convention Sidetracked/Bunker Pollution Convention Prioritized

August, 2000

In the last issue of The Quartermaster we mentioned that the International Maritime Organization (IMO) Legal Committee was scheduled to meet in October of this year and would attempt to implement a Draft Protocol amending the 1974 Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea. Leading up to that meeting the Draft Protocol was nearly complete and it appeared that it would be the first priority of the Legal Committee. However, early in the course of the meeting it became apparent that consensus could not be reached on a number of important items, and, as a result, the Draft Protocol was taken off the Legal Committee’s number one priority status.

Among the reasons contributing to the shift in priority by the Legal Committee included the lack of consensus on two proposals supported by the International Group of P&I Clubs (IG). The first of these two proposals was a global liability limit of 90 million SDRs (approximately $122.4 million) per ship on the liability of the carrier for any one event. The second proposal by the IG sought the creation of a fund by the insurer in the event of a catastrophic accident where aggregate liabilities were likely to exceed SDR 90 million. These two proposals elicited many differing opinions from the delegates ranging from the belief that no global limit per accident should be allowed to the belief that a global limit might be warranted but at an amount other than SDR 90 million. As a result, the delegates failed to reach a consensus on either of these two items.

Additional areas where consensus was not achieved included the establishment of a limit of liability with regard to claims brought by individual passengers, and authorized jurisdictions for the proposed right of a direct action against insurers. Currently, the Convention limits the liability of a shipowner to any individual claimant to SDR 46,666 or approximately $58,300. An attempt was made to amend the Convention through a 1990 Protocol to raise this limit to about $238,000 per passenger, but this amendment has been ratified by only three countries and is not yet in force. There currently exists a split of opinion among the delegates as to whether this proposed limit is too high or too low.

As for the dispute pertaining to authorized jurisdictions for the proposed right of a direct action against insurers, the two jurisdictions currently provided in the Draft Protocol are the principal place of business of the insurer as well as one of the ship’s scheduled ports of call designated in the passenger’s ticket. While some delegates felt that this was a fair compromise, others felt that these jurisdictions were too limited and that the port of departure or arrival of a ship should be among the permissible jurisdictions for a direct action against an insurer.

Because of these disputes, it is unlikely that this Draft Protocol to the Athens Convention will reach a diplomatic conference in the 2000-2001 biennium.

The Committee, instead, turned its attention to the Draft Bunker Pollution Convention as its first priority. This proposed Convention would provide for liability of shipowners for pollution damage caused by the spill of a ship’s bunkers. While this type of liability is already covered under U.S. law (e.g., Oil Pollution Act of 1990, 33 USC ยงยง2701-2761), there is no free-standing international convention on pollution damage caused by the spill of bunkers. The 1990 CLC Convention concerning liability for oil spills cargo or bunker pollution covers only oil spills (including bunkers) from tankers.

Accordingly, there is general agreement on the need for a free-standing convention on bunker spill pollution that would be applicable to non-tanker vessels as well. The work of the Legal Committee was much more successful on this Draft Convention in that it resolved all of the outstanding substantive issues and submitted its Draft Convention to be approved for a Diplomatic Conference. At its meeting in mid-November, the IMO Assembly approved a Diplomatic Conference for this new Convention to be held in 2001.

In accordance with this Draft Convention, a shipowner is defined as the owner, the registered owner, the bareboat or demise charterer, the manager, and the operator. While liability for pollution damage will be joint and several as to all defined shipowners, only the registered owner will be required to maintain liability insurance. As in the CLC Convention, the Draft Bunker Convention contains a provision for compulsory insurance and provides for a direct action against the insurer. The Convention will be the sole basis for bringing claims for pollution damage caused by bunker spills, leaving open the possibility that a claimant could bring other types of claims, i.e., natural resource damage claims, under other international or national laws.

While the work on the Athens Convention was sidetracked somewhat, the IMO Legal Committee intends to treat it as its number one priority after the completion of the Bunker Convention.