Financial Security in Cases of Abandonment: A Four-Month Limit for Unpaid Seafarers’ Wages?

Introduction

The International Labour Conference (ILC) at its 103rd session approved the first group of amendments to the Maritime Labour Convention (MLC), 2006. The amendments were agreed by the Special Tripartite Committee at its first meeting at the International Labour Organisation (ILO) in Geneva in April 2014 and entered into force in January 2017. The amendments concerned Regulations 2.5 and 4.2 which deal with the right to repatriation and the shipowners’ liability for sickness, injury or death of seafarers occurring in connection with their employment. In brief, the amendments inter alia set out requirements for shipowners to provide financial security to provide support for abandoned seafarers and to assure compensation in the event of death or long-term disability of seafarers due to occupational injury, illness or hazard. While an exhaustive overview of such amendments is beyond the scope of this blogpost, this blogpost aims to shed light into the operation of Standard A 2.5.2. of the MLC, 2006, as amended, paragraph 9 of which stipulates that the coverage provided by the financial security system when seafarers are abandoned by shipowners shall be limited to four months outstanding wages and four months of outstanding entitlements.

Issues

Let’s take a hypothetical case of seafarers being abandoned for 10 months. Seafarers contact the P&I Club for assistance, providing all the necessary documentation to substantiate their claim. The P&I Club’s claims handlers acknowledge receipt of the claim, check the validity of the financial security system, and investigate whether the shipowners have in fact failed to pay wages to seafarers. If the P&I is satisfied that the financial security system is valid and that the seafarers’ wages are outstanding, the P&I Club will pay four months of outstanding wages and take immediate action to repatriate the affected seafarers. Now, assuming that all the outstanding wages are of the same rate, no further questions arise. But what if the outstanding wages are not all of the same rate? If, for example, after the first four months, there has been a pay rise under the seafarers’ employment agreement.

In such cases, a further question can potentially arise as to how the limit of four months outstanding wages will be calculated. Should it be calculated based on the first four outstanding wages? Or is there a right to pick and choose which of such outstanding wages to form the basis for the calculation of such limit? If the latter is true, seafarers will be keen on calculating such limit based on the higher rate of such outstanding wages. On the other hand, the P&I Club will attempt to calculate such limit based on the lower rate of such outstanding wages. In the next section, this blogpost will explain what the relevant provisions of the MLC, 2006, as amended, provide.

The law

The relevant provision is Standard A 2.5.2 of the MLC, 2006, as amended. Paragraph 9 of this Standard states that:

‘Having regard to Regulations 2.2 and 2.5, assistance provided by the financial security system shall be sufficient to cover the following: (a) outstanding wages and other entitlements due from the shipowner to the seafarer under their employment agreement, the relevant collective bargaining agreement or the national law of the flag State, limited to four months of any such outstanding wages and four months of any such outstanding entitlements; […].’

If one looks at the wording of this provision, it can easily be ascertained that the actual text of the Convention does not give an answer to this question. Certainly, the use of the words ‘limited to four months of any such outstanding wages and four months of any such outstanding entitlements’ gives ample of space for arguments suggesting that the four months limit can be calculated by reference to any such outstanding wages, and not necessarily the first four outstanding wages.

However, it is not clear whether the specific wording was used with such flexibility in mind. The draft text of the amendments of Standard A 2.5.2. of the MLC, 2006, was based on the principles agreed at the Ninth Session (2-6 May 2009) of the Joint IMO/ILO Working Group on Liability and Compensation regarding Claims for Death, Personal Injury and Abandonment of Seafarers. During the negotiations, it was considered whether links should be drawn between paragraphs 2 and 9 of this Standard. Although this discussion took place in respect of the duration of the limitation period (it may be worth noting here that, initially, a limit of three months wages was suggested), it can still be instructive. In this respect, it was explained that the purpose of paragraph 2 is to identify when abandonment takes place, whereas paragraph 9 defines the scope of financial security to be provided in case of abandonment. Thus, it was concluded, it is necessary to allow for a time lapse between the recognition of the abandonment situation and the limitation of financial security.

Against this backdrop, it can be argued that the purpose of the said limit is to ensure that seafarers’ wages are fully paid up for the first four months since their abandonment. Bearing in mind that it is the seafarers who have to initiate the process with the P&I Clubs, it may also be worth noting here that such interpretation can assist with avoiding cases, although rare, where seafarers intentionally allow wages to continue to accrue.

Conclusion

In practice, it is highly unlikely that seafarers are owed only four months’ wages when they are abandoned by their shipowners. Thus, the possibility of different rates for wages or other entitlements cannot be precluded. Given the uncertainty of the wording of Standard A 2.5.2. paragraph 9 (a) of the MLC, 2006, amended, any conflicting arguments can easily be avoided if the purpose of this provision is clarified in future amendments.

The Prestige, 20 years on. CJEU reference may be withdrawn at last gasp.

The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain M/T “PRESTIGE” (No. 5) [2022] EWCA Civ 238 (01 March 2022),  concerns a reference to the CJEU by Butcher J, arising out of the longstanding litigation between Spain and the owners’ P&I Club in connection with the Prestige oil spill in 2002. The Club had appealed against an order registering the judgment of the Spanish Supreme Court on 28 May 2019. The appeal was fixed for a two-week trial from 2 December 2020 to determine (i) as a matter of law, whether the judgment entered by Hamblen J constituted a judgment within the meaning of Article 34(3) and, if not, whether that judgment and the arbitration award (and the res judicata to which they give rise as a matter of English law) could be relied upon and (ii) as a matter of fact and law, whether the Spanish Proceedings had breached the human rights of the defendants, including the Club.

Spain made an application seeking the reference of six questions to the CJEU (later adding a seventh) and invited  Butcher J to determine that application at the hearing of the appeal in order to be in a position to lodge any request with the CJEU before “the Brexit cut off”  with the end of the Implementation Period on 31 December 2020. On 21 December 2020 Butcher J then referred three issues to the CJEU.

“(1) Given the nature of the issues which the national court is required to determine in deciding whether to enter judgment in the terms of an award under Section 66 of the Arbitration Act 1996, is a judgment granted pursuant to that provision capable of constituting a relevant “judgment” of the Member State in which recognition is sought for the purposes of Article 34(3) of EC Regulation No 44/2001?

(2)  Given that a judgment entered in the terms of an award, such as a judgment under Section 66 of the Arbitration Act 1996, is a judgment falling outside the material scope of Regulation No 44/2001 by reason of the Article 1(2)(d) arbitration exception, is such a judgment capable of constituting a relevant “judgment” of the Member State in which recognition is sought for the purposes of Article 34(3) of the Regulation?

(3)  On the hypothesis that Article 34(3) of Regulation No 44/2001 does not apply, if recognition and enforcement of a judgment of another Member State would be contrary to domestic public policy on the grounds that it would violate the principle of res judicata by reason of a prior domestic arbitration award or a prior judgment entered in the terms of the award granted by the court of the Member State in which recognition is sought, is it permissible to rely on 34(1) of Regulation No 44/2001 as a ground of refusing recognition or enforcement or do Articles 34(3) and (4) of the Regulation provide the exhaustive grounds by which res judicata and/or irreconcilability can prevent recognition and enforcement of a Regulation judgment?”

At the time of making the reference Butcher J had not decided the Club’s human rights argument. That was decided against the Club in May 2021, after the end of the Implementation Period, and could not be referred to the CJEU. The reference, C-700/20, was heard by the CJEU on 31 January 2022 and the opinion of the Advocate General is expected on 5 May 2022, with the judgment of the CJEU to be delivered at any time thereafter.

The Club appealed the decision of Butcher J, and on 1 March 2022 the Court of Appeal held that Butcher J did not have the authority to refer the questions to the CJEU. The necessity test mandated in Art 267 of 267 of the Treaty on the Functioning of the European Union would only be satisfied if the European law question is conclusive of the issue which the national court has to decide on a particular occasion in accordance with its national procedure. The judge’s discretion as to whether to make a reference only arises once the test of necessity has been satisfied.  That was not the case here as Butcher J had not decided the human rights policy issue raised by the Club. Unless and until that issue had been determined against the Club, the questions referred could not be said to be conclusive or even substantially determinative of the appeal. The questions could have been resolved entirely in Spain’s favour, yet the Club could have won on the human rights issue. Looking at previous CJEU authority in Cartesio Oktato es Szolgaltato bt (Case 210/06) [2009] Ch 354 it was clear that as a matter of national law a reference can be set aside on appeal.

The Court of Appeal allowed the appeal and set aside the Judge’s order referring the questions to the CJEU. However, only the referring judge has jurisdiction to withdraw the reference. The Court of Appeal referred to Butcher J, pursuant to CPR 52.20(2)(b), the question of whether, in the light its judgment, he should withdraw the reference he made to the CJEU on 21 December 2020. The Court of Appeal indicated that the hearing should take place as soon as possible, and in any event in time for any decision to withdraw the reference to be effective.

UK bans Russian ships from entry to UK ports

As part of the UK’s sanctions against Russia following its invasion of Ukraine, Regulations 57 a-i of The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022 (SI 2022/203) took effect on 1 March 2022. These ban the entry into UK ports of

(a)a ship owned, controlled, chartered or operated by a designated person,

(b)a ship owned, controlled, chartered or operated by persons connected with Russia,

(c)a ship registered in Russia,

(d)a ship flying the flag of Russia, or

(e)a specified ship.

A ship is ‘controlled’ by “a person who is able to take decisions about its operation, including (but not limited to) decisions about the route the ship may take and the appointment of master or crew.

The Secretary of State may direct the UK Ship Registrar to terminate the registration of such ships and to direct harbour authorities to detain Russian ships at ports or anchorages.

The Secretary of State may also specify a ship for the purposes of the entry prohibitions provided the Secretary of State—

(a) has reasonable grounds to suspect that the ship is, has been, or is likely to be, involved in a relevant activity, and

(b) considers that it is appropriate for that ship to be specified, having regard to the purposes stated in regulation 4.

A ship is “involved in a relevant activity” if the ship is used for any activity whose object or effect is to contravene or circumvent, or to enable or facilitate the contravention or circumvention of, any provision of these Regulations.

The prohibition on entry does not, as yet, apply to Russian cargo although there have been incidents where dockers in the UK have refused to unload such cargo.

Canada also closed its port to Russian ships on 1 March. The European Commission has also proposed banning Russian ships from docking at European ports but there is currently opposition to this.

The Wall Street Journal has reported that an estimated 60,000 Russian and Ukrainian sailors are stuck at ports, with Russia providing over 10% of the global workforce for shipping.

Russia’s prime minister, Mikhail Mishustin, has said that nations that ban Russian ships from their ports could face retaliation.

Article 13.2 LLMC. Effect on LOU of owners establishing limitation fund in a different jurisdiction.

A maritime claim is brought before the courts of a state which applies the 1996 Protocol to the 1976 LLMC, and the owners P&I Club provides security based on the limits of the 1996 Protocol. However, the owners commence proceedings in another jurisdiction to limit by reference to the lower level in the 1976 LLMC which is in force in that jurisdiction? Do those proceedings affect the security provided by the Club? This was the issue which came before HH Judge Pelling QC in the High Court in Enemalta Plc v The Standard Club Asia Ltd [2021] EWHC 1215 (Comm)

The claim was for damage to an underwater connector cable, which caused a nationwide power failure in Malta. This was allegedly caused by a vessel, whose registered owners were a company domiciled in Singapore , and which was entered with the defendant P&I Club. The claim was brought in Malta which applies the 1996 Protocol and security was provided by owner’s P&I Club up to the limitation figure in the 1996 Protocol, and the LOU was subject to English law and exclusive jurisdiction of English High Court.

Owners then commenced proceedings in Singapore and sought to limit by reference to the lower level in the 1976 LLMC which applied in Singapore. Owners invited the Singapore court to order that on establishment of this fund any existing security given by or on behalf of owners should be released immediately. The claimants then requested the English High Court to make various declarations as to the validity of the LOU, irrespective of what the Singapore Court might decide. The defendant to these proceedings was the P&I Club and not the owner and the sole basis for the challenge to the High Court’s jurisdiction to make the requested declaration was that the Singapore Court had sole and exclusive jurisdiction to make an order art 13.2 of 1976 Convention.

Article 13.2 provides: “After a limitation fund has been constituted in accordance with Article 11, any ship or other property, belonging to a person on behalf of whom the fund has been constituted, which has been arrested or attached within the jurisdiction of a State Party for a claim which may be raised against the fund, or any security given, may be released by order of the Court or other competent authority of such State…”

HH Judge Pelling QC saw the instant case as the mirror image of the ICL Vikraman [2003] EWHC 2320 Comm, where an English domiciled Club provided a LOU, with a non- exclusive English jurisdiction agreement, to Cargo in Singapore to secure release of vessel arrested there. The UK was then party to 1976 LLMC, and Singapore not. Owners established their Fund in England and applied to the High Court to order the release of the  LOU under art 13.2 of LLMC. Colman J  held that although the owner was entitled to establish the limitation fund in England, the effect of Article 13.2 was that security located in Singapore did not fall within that article because Singapore was not a state party to the 1976 Convention and so that security would not be, or could not be, released

In the instant case, it was at least strongly arguable that an English court applying English law would conclude that the letter of undertaking should be treated as located in England. Therefore, the Singapore Court would have no jurisdiction to order its release, if that is what ultimately happened. The LOU would not be a security within the jurisdiction of a state party to the 1976 Convention. If the claimant succeeded in recovering a judgment in the Maltese proceedings for a sum in excess of the security that would be provided under the 1976 Convention in Singapore, the claimant would then seek to enforce its claim in England against the defendant under the letter of undertaking. By the terms of the LOU those proceedings would have to be brought in England and would be subject to English law. There was no principled reason why the court would not have jurisdiction to determine by declaration what would be the effect on the LOU of any order made by the Singapore Court under Article 13.2.

Although the Singapore Court had exclusive jurisdiction to make an order under Article 13.2 of the 1976 Convention, the present proceedings were concerned with the dispute between the claimant and the defendant as to the effect of any order made in the Singapore proceedings, commenced by or in the name of the vessel’s owner, on the liability of the defendant under its autonomous contract with the claimant. That was an issue that the parties had agreed should be determined exclusively by the English Court. Accordingly, HH Judge Pelling QC rejected the Club’s challenge to the jurisdiction of the High Court to hear the claim seeking declarations as to the continuing validity of the security provided under the LOU.

Athens Convention- Elaboration on key terms “defect in ship” and “fault”

Warner v. Scapa Flow Charters (No 2) [2021] CSOH 92

The pursuer was the widow of Mr Warner who tragically died in a technical exploratory diving trip on a wreck off Cape Wrath on 14 August 2012. The defenders facilitated the trip and skippered the boat (MV Jean Elaine). While walking in his cumbersome gear, including diving fins, preparing for a dive, Mr Warner fell off the deck of the vessel. This fall caused him, unknowingly, to suffer internal injuries. Stating that he was fit, he started his dive but during the dive he got into difficulties and made a rapid surface ascent due to the pain of his internal injuries. By the time he surfaced, his breathing apparatus was no longer in situ and he drowned.       

Mrs Warner brought an action for damages on behalf of her son. The action was within the scope of the Athens Convention 1974 (by virtue of the Carriage of Passengers and their Luggage by Sea (Domestic Carriage) Order 1987). It was argued that:

  1. Mr Warner’s injury arose from or in connection with a “defect in ship”. This meant under Article 3(3) of the Athens Convention that the carrier’s fault could be presumed.
  2. Even if not, the carrier was at fault as it failed to make adequate risk assessment.

The Outer House of the Court of Session held that the injury was not connected with or arose from a “defect in ship”. There was no evidence that the configuration of the deck defective. Also, it was pointed out that there were handrails that could have been put to sensible use, but at the time of the incident Mr Warner was not using them. The Court, however, held that the carrier was at fault in that he failed to recognise that the system of dive preparation he had set up or allowed to develop permitted or even encouraged divers to walk on deck in fins, and that was an inherently risky activity to the extent that consideration should have been given to putting in place mechanisms apt to eliminate it or at least bring it under control. Given the known risk of falls while walking in fins, particularly given the equipment worn by technical divers, and the unavailability of swift medical assistance on board, there should have been put in place proper precautions to mitigate the risk. Such precautions would have eradicating or minimising the risk of falling and Mr Warner would not have fallen at all, or it he did, he would not have  sustained a serious injury as he in fact sustained, because the force of any fall would probably have been broken by him holding on to a handrail or being supported by the onboard deckhand.  Accordingly, the defenders were liable to make reparation to the pursuer in terms of Art 3(1) of the Athens Convention 1974.               

What do we learn from the case?

The Athens Convention 1974 does not provide a definition for the term “defect in ship”. This means that determining whether an injury has occasioned from a “defect in ship” needs to be addressed by the national court. It is hard to suggest that the court’s handling of the matter in the present case is not satisfactory. That said, it should be noted that 2002 version of the Athens Convention provides a more rounded definition for this term. There, a defect in the ship has been described as “any malfunction, failure or non-compliance with applicable safety regulations in respect of any part of the ship or its equipment when used for the escape, evacuation, embarkation and disembarkation of passengers, or when used for the propulsion, steering, safe navigation, mooring, anchoring, arriving at or leaving berth or anchorage, or damage control after flooding; or when used for the launching of life saving appliances” (Article 4 of the Athens Convention 2002). Given that the main finding of the Court here was that the carrier failed in their risk assessment and there was no evidence that the deck’s configuration was defective, it is unlikely that a different outcome would have been reached even if Athens Convention 2002 had applied in this case.       

It is also left to the national law to determine what amounts to “fault” for the purposes of Article 3 of the Athens Convention 1974. This enabled the Court to adopt a flexible approach in determining whether the carrier was at fault for failing to make appropriate assessment of the risk. The Court initially focussed on a statutory duty to carry out a risk assessment of those on board under Regulation 7 of the Merchant Shipping and Fishing Vessels (Health and Safety at Work) Regulations 1997 but then moved its focus to general duty to exercise reasonable care for the health and safety of others onboard and a positive obligation to assess risk. This approach is in line with the general principles of tort law and a similar approach has been employed by British courts in the context of deliberating what amounts to “fault” under the Athens Convention- see Janet Dawkins v. Carnival PlC (t/a) P & O Cruises [2011] EWCA Civ 1237.

One positive development coming out of the case, especially for small maritime operators and their insurers, is that the Court found that a risk assessment was carried out by the skipper here although it was not written down or recognised as such (and of course although it was not adequate). This indicates that risk assessments need not to be formal affairs and a dynamic risk assessment carried out by the skipper or operator might be deemed to be adequate in some instances.            

For a comprehensive analysis of these issues see:

Carriage of Passengers by Sea: A Critical Analysis of the International Regimeby B. Soyer and G. Leloudas published

[2018] Michigan State University International Law Review, Volume: 26, Issue: 3, Pages: 483 – 535

This article has been cited with approval by the District Court of Columbia in Erwin-Simpson v. Berhard (DC DC, 2019).

Are there further risks for seafarers on the back of the amendments proposed by the UK government to the new Nationality and Borders Bill?

It is argued that, despite the recent amendments, the new Nationality and Borders Bill still raises concerns for seafarers who comply with their legal duty to save life at sea.

Introduction

Since its introduction to the House of Commons on 6 July 2021, the new Nationality and Borders Bill has attracted a lot of attention and has received fierce criticism for the changes it brings to the UK’s immigration and asylum system. What has not been widely known, however, is that the new bill will also change the provisions of the Immigration Act 1971 in relation to people smuggling offences in a way that can potentially criminalise seafarers who save the life of someone in distress at sea. With an amendment which aims to protect seafarers from any unfair prosecution being tabled by the UK government, not least thanks to the efforts of, and lobbying from, industry stakeholders, this blogpost attempts to explain why the new Nationality and Borders Bill matters for seafarers, what changes are proposed to the existing legislation, and what risks remain for seafarers.

Why does the new Nationality & Borders Bill matter for seafarers?

In the past few years, the world has witnessed an unprecedented humanitarian crisis. Millions of people are forced to leave their home countries in order to escape war, famine and poverty and many of them have no other option but to risk their lives, and cross some of the world’s busiest shipping lanes in small dinghies in their search for safety. It is within this context that, on various occasions, seafarers had to assist with rescues at sea. What is important to note, however, is that seafarers do not conduct these rescue operations only out of a moral obligation. There is a legal obligation to do so. Under Article 98 of the United Nations Convention of the Law of the Sea, 1982, the master and crew of a commercial ship have a duty to rescue people in distress at sea, and to bring them in a place of safety. Similar provisions are found in Chapter V of the International Convention for the Safety of Life at Sea, 1974, as well as in the International Convention for Salvage, 1989, Article 10 of which provides that ‘every master is bound, so far as he can do so without serious danger to his vessel and persons thereon, to render assistance to any person in danger of being lost at sea’ and that ‘State parties shall adopt the measures to enforce the duty set out in paragraph 1’. In fact, the UK has adopted relevant provisions, establishing that a master shall be liable of a criminal offence if he/she fails to comply with his/her duty to render assistance to persons in danger at sea and that the maximum available sentence would be two-year imprisonment or a fine, or both.[1] In effect, this means that any new provision that could make seafarers criminally liable for saving people in danger at sea would criminalise seafarers for doing what they are required to do by law!

Given that the English Channel is tuning into a popular crossing point for those who search for a better future,[2] and since its inherent dangers, the issues raised by the upcoming changes of the current legislation are not just of theoretical interest.

What did the Immigration Act 1971 provide?

Section 25A, paragraph 1 of the Immigration Act 1971, which represents the current law, provides that a person, who knowingly and for gain facilitates the arrival or attempted arrival in, or the entry or attempted entry into, the UK of an individual, and he/she knows or has reasonable cause to believe that the individual is an asylum-seeker,[3] commits a criminal offence. This could lead to a maximum sentence of 14-year imprisonment, to a fine or to both.[4] However, with the greater focus on the requirement for gain, seafarers assisting with rescues at sea according to their international maritime law obligations are well protected from the risk of being unfairly prosecuted. Unfortunately, it is argued, the latter will not be guaranteed if/when the proposed Bill is passed.

What is the Nationality & Borders Bill’s new provision for the offence of assisting asylum-seekers to enter the UK?

The Nationality & Borders Bill,[5] as introduced on 6 July 2021, proposed, pursuant to clause 38, two significant amendments in relation to the offence of facilitating the arrival in, or entry into, the UK of asylum-seekers under section 25A of the Immigration Act 1971. The first relates to the maximum potential sentence, an increase of which has been proposed from a 14-year prison sentence to life imprisonment. The second, and arguably the most important one, relates to the removal of the current requirement ‘for gain’ in order to commit such offence. This implied that a blanket criminal offence would be created, with no defences available, which could expose those seafarers who comply with their international maritime law obligation to save life at sea into criminal liability.

As a result, it was not surprising that the proposed amendments were not received well by social partners and organisations representing seafarers and the shipping industry, in general. In fact, Nautilus International and the UK Chamber of Shipping issued a joint letter to the UK government over the new Nationality and Borders Bill, in which they raised their concerns about the potential implications of the proposed bill in the long lasting problem of criminalisation of seafarers and requested the maritime minister and the shadow secretaries of transport and maritime to raise those concerns with the Home Secretary to ensure that sufficient assurances will be given that seafarers would not be liable for prosecution for complying with international maritime law.[6] In response to this letter, the Home Office Minister at the time Chris Phillip clarified that the new Nationality and Borders Bill would not target seafarers.[7] Although this response was reassuring, it was not found to be satisfactory, as it left the matter to be dealt with through policy guidance.[8] Thus, Nautilus International and the UK Chamber of Shipping issued a second letter, urging for those reassurances, namely that seafarers of commercial ships would not be  criminalised for rescuing distressed persons at sea and bringing them ashore in the United Kingdom, to be codified in legislation.[9]

After strong lobbying from Nautilus International and the UK Chamber of Shipping, in January 2022, the UK government finally confirmed that it has tabled an amendment to the new Nationality and Borders Bill which ensures that seafarers who are required by law to rescue people at sea will be adequately protected from criminal prosecution.[10] Indeed, the latest reprint of the new bill,[11] in clause 40, paragraph 4, introduces a defence for the offence of assisting asylum seekers to arrive in, or to enter into, the UK under section 25A of the Immigration Act 1971 that could be used by seafarers in those circumstances.[12] This defence is to be included as section 25BA in the Immigration Act 1971. Briefly, it provides that a person charged with this offence would not be liable if it is established that:

‘(a) the assisted individual had been in danger or distress at sea, and

 (b) the act of facilitation was an act of providing assistance to the individual at any time between –

  • the time when the assisted individual was first in danger or distress at sea, and
  • the time when the assisted individual was delivered to a place of safety on land.’[13]

From an evidentiary perspective, the defence will succeed, if the person charged with the offence adduces sufficient evidence of the relevant facts, and the contrary is not proved beyond reasonable doubt.[14] Finally, it should be mentioned that the defence will not be available in two circumstances, where the UK was not the nearest place of safety on land, and there was no good reason to deliver the assisted individual in the UK instead of to a nearer place of safety on land, and where the person charged with the offence was on the same ship as the assisted individual at the time when the individual was first in danger or distress at sea.[15] Thus, against this backdrop, a question remains as to whether the amendments proposed to the new Nationality and Borders Bill by the UK government award seafarers who rescue those in distress at sea with adequate protection.

What is the risk for seafarers?

Most certainly, the fact that the new Nationality and Borders Bill has been amended to include a defence for the offence of facilitating the arrival in, or entry into, the UK of asylum-seekers is a big success for seafarers and the shipping industry. However, some risks remain. For example, there is a question as to what would be considered as ‘sufficient’ evidence for the purposes of this defence. Furthermore, one should not overlook or underestimate the difficulties faced by seafarers when they are required to provide evidence in the context of criminal investigations in a foreign port.[16] Finally, it is unclear what the position of those seafarers involved in criminal investigations for rescuing people at sea would be. [17]

Under the shadow of these risks, seafarers may still find themselves in front of a dilemma as to whether to rescue those who are in danger at sea, and risk finding themselves caught in the middle of a criminal investigation process, or whether to disregard their responsibilities under international maritime law to save life at sea, with whatever repercussions this might have in the existing humanitarian crisis, and ‘save’ themselves from the risk of being unfairly treated. In order to avoid this, it is argued, further clarity and certainty is required. This can be achieved through policy guidance. Alternatively, the possibility of developing a code of practice to be followed by seafarers when attempting rescues at sea can be considered.

What happens next?

Having been passed by MPs in the House of Commons in December, the Bill is now being debated by the House of Lords and is due to go to committee stage on 27 January 2022, where a detailed line by line examination of the separate parts of the Bill will take place. During the committee stage, all suggested amendments will also have to be considered and votes on any amendments can take place before every clause of the Bill will be agreed to. At the end of the committee stage, the Bill will be reprinted with all the agreed amendments, and it will then move to report stage for further scrutiny.

Concluding remarks

It is beyond doubt that what Nautilus International and the UK Chamber of Shipping achieved was a big win for seafarers which highlighted how important is the role of industry stakeholders in forming public policy. However, there are still things that can be done to ensure that the ‘faith’ of seafarers, who comply with their legal obligations and save people at sea, will be more predictable if/when the new Nationality and Borders Bill is passed.


[1] Section 3, Part II, Schedule 11 of the Merchant Shipping Act 1995.

[2] It is estimated that, in 2021, more than 21,000 people crossed the English Channel, while the number of people crossing in 2020 was more than 40,000.

[3] Section 25A, paragraph 2 of the Immigration Act 1971 explains that, for the purposes of this section, ‘“asylum-seeker” means a person who intends to claim that to remove him from or require him to leave the United Kingdom would be contrary to the United Kingdom’s obligations under (a) the Refugee Convention (within the meaning given by section 167(1) of the Immigration and Asylum Act 1999 (c 33) (interpretation)), or (b) the Human Rights Convention (within the meaning given by that section).

[4] Section 25A, paragraph 4, read in conjunction with Section 25, paragraph 5 of the Immigration Act 1971.

[5] Bill 141 2021-22.

[6] ‘Nautilus and UKCS question migrant Bill that could criminalise seafarers’ (20 July 2021) available at < https://www.nautilusint.org/en/news-insight/news/nautilus-and-ukcs-question-migrant-bill-that-could-criminalise-seafarers2/> accessed 12 January 2022.

[7] ‘Union urges Nationality and Borders Bill legislative clarity’ (12 August 2021) available at <https://www.nautilusint.org/en/news-insight/news/nationality-and-borders-bill-clarity/ > accessed 12 January 2022.

[8] ibid.

[9] ibid.

[10] ‘UK Chamber of Shipping and Nautilus welcome government amendment on Nationality and Borders Bill’ (6 January 2022) available at < https://ukchamberofshipping.com/latest/uk-chamber-shipping-and-nautilus-welcome-government-amendment-nationality-borders-bill/ > accessed 12 January 2022.

[11] HL Bill 82.

[12] It may be worth noting that this defence will also be available for the offence of assisting unlawful immigration under section 25 of the Immigration Act 1971. 

[13] Clause 40, paragraph 4 of the Nationality and Borders Bill (HL Bill 82).

[14] ibid.

[15] ibid.

[16] Research has shown that the fear of criminalisation is one of the most important factors that drives seafarers away from working at sea. See, for example, Report for discussion at the Sectoral Meeting on the Recruitment and Retention of Seafarers and the Promotion of Opportunities for Women Seafarers (Geneva, 25 February–1 March 2019), International Labour Office, Sectoral Policies Department, Geneva, ILO, 2019.

[17] There is also a question as to what the position of the ship would be for as long as the investigations last.

Limitation — not everyone who operates a vessel is an operator

At least one P&I Club will, one suspects, be feeling rather rueful after this morning’s Court of Appeal decision in Splitt Chartering APS v Saga Shipholding Norway [2021] EWCA Civ 1880.

The Norwegian Mibau group undertook an operation for Costain, involving the transport and deposit of vast amounts of rock in the sea under Shakespeare Cliff near Folkestone. Getting the rock to the correct place involved towing a loaded dumb barge from Norway and anchoring it where the rock was to be placed. The barge was owned by one Mibau company, Splitt; for internal accounting reasons it was chartered to another such company, Stema AS, which also owned the rock. On arrival the barge was anchored, with a crew put on board employed by a third Mibau company, Stema UK. That crew took orders from, and acted on the instructions of, Stema AS.

Despite ominous weather forecasts, Stema UK’s crew assumed the barge could be safely left unmanned at anchor. They were seriously wrong. She dragged her anchor in a storm and sliced an underwater cable which proved costly to repair. The question arose whether, in a suit by the cable owners, Stema UK could limit its liability. Although clearly not an owner or charterer of the barge under Art.1(2) of the LLMC 1976, it argued that because of its de facto control at the relevant time it had been either a manager or an operator. The cable owners argued that it was neither.

Teare J held Stema UK entitled to limit. (See [2020] EWHC 1294 (Admty), noted in this blog here.) True, because it had lacked executive authority, being under the orders of Stema AS, it could not have been a manager. But it, or rather its employees, had undoubtedly been in physical control of, and had operated the machinery aboard, the vessel; and this meant that it counted as her operator within Art.1(2).

This was a commercially sensible result. It meant that the ability to limit stood to be fairly generously granted to any entity in physical control of a vessel; it also had the extra advantage that corporate groups would not be unduly prejudiced merely because for organisational reasons they chose to parcel out the functions of ownership and physical manipulation to different group entities.

Unfortunately it did not find favour with the Court of Appeal. Phillips LJ, giving the only judgment, took the view that just as an employee would not be an operator in his own right since he acted only on someone else’s orders, an entity physically operating a vessel as the catspaw of another entity was in the same position. It followed that because of its lack of authority to act on its own initiative without contacting Stema AS, Stema UK was liable in full since it was outside the charmed circle of those entitled to limit.

For what it is worth, with the greatest of respect this blog is inclined to prefer the reasoning in the judgment below. We see it as not only commercially rational but also more certain, in that making the status of operator dependent on an estimation of the amount of discretion allowed to an entity seems to encourage some hair-splitting arguments.

But no matter. As Phillips LJ pointed out, the effect of the Court of Appeal’s decision can easily be avoided by making sure that the people physically in charge of a vessel are seconded to, or otherwise technically employed by, the company with the serious decision-making power. No doubt, indeed, as this is being written P&I club lawyers will be sharpening their pencils with a view to drafting the necessary advice to members, and possibly even changes to the rules so as to back up that advice. As ever, a little discreet bureaucratic tinkering can pay big dividends.

Incorporation of charter terms into bills of lading. Is shipowner’s right to a general average contribution from cargo interests excluded?

The Polar ( [2021] EWCA Civ 1828) involved a claim by owners to recover cargo’s proportion of general average in relation to a payment to pirates who had detained the vessel in the Gulf of Aden. The cargo owners defended the claim on the ground that the shipowner’s only remedy in the event of having to pay a ransom to pirates was to recover under the terms of insurance policies, the premium for which had been paid by the voyage charterer.

The charter was on BPVOY 4 standard form, cl.39 of which provided a war risks clause which covered “acts of piracy”. There was also a Gulf of Aden clause which provided:

“Any additional insurance premia (including, but not limited to, those in respect of H&M, crew, P&I kidnap risks and ransoms), crew bonuses (which to be in accordance with the international standard) shall be for chrtrs account. Max USD 40,000 for charterer’s account for any additional insurance premium except for crew bonus which to be max USD 20,000 for charterers account.”

Six bills of lading were issued all of which incorporated the terms of the charterparty and five provided for general average to be settled under the York-Antwerp Rules 1974, with one providing for general average to be settled under the 1994 Rules. The insurance premium was just short of the $40,000 figure in the Gulf of Aden clause and the premiums were paid by the shipowner who was then reimbursed by the charterer.

The arbitrators on a determination of two preliminary issues found that: (1) the terms of the voyage charter, including in particular the war risks and Gulf of Aden clauses, were incorporated into the bills of lading; (2) the shipowner, on the true construction of the bills of lading and/or by implication, agree to look solely to its insurance cover under the war risks and/or K&R insurance in the event of a loss covered by that insurance.

On appeal Teare J held that the incorporating words in the bills of lading were wide enough to incorporate the war risks and Gulf of Aden clauses. However, the bills of lading holders were not liable for additional premium as it was not appropriate to substitute the “bills of lading holders” for “charterers” so as to impose a liability on them to pay the premium. As between the shipowner and charterers the parties had agreed that the shipowner would look to the insurers for indemnification in respect of losses under the Gulf of Aden clause and not to the charterer so that they were precluded from seeking a contribution from the charterer in respect of general average. However, the incorporated provisions of the charterparty did not have this effect as regards the bill of lading holders, who had not agreed to pay the premium.

The Court of Appeal has now upheld the decision. Males LJ, giving the judgment of the Court, noted that this was a weaker case than either The Evia (no 2) or the Ocean Victory for concluding that the shipowner had agreed not to claim a contribution in general average from the charterer. However, the question did not need to be decided, and the case could  proceed on the basis that there was an implicit agreement to this effect as between owners and charterers. As regard the bills of ladings, it was doubtful that the very wide words of incorporation were wide enough to encompass what was merely implicit in the express terms considered as a whole. To find in the bills of lading an agreement by the shipowner not to seek a general average contribution from the cargo owners, that must be because the express terms of the charterparty which are incorporated into the bills demonstrate that the same (or an equivalent) agreement was intended to apply also under the bills of lading.

Part of the additional war risks and Gulf of Aden clauses were prima facie incorporated into the bills of lading contracts, but the next issue was whether the requirement on the charterer to pay the premium should be “manipulated” so as to impose that obligation on the bill of lading holders. Males LJ found that is was not appropriated to engage in such manipulation. There was nothing in either the bills or the charter to say how liability for the premium would be apportioned between different bill of lading holders. The fact that neither the bills nor the charterparty addressed this question suggested that the bill of lading holders were not intended to be liable for the premium. However, the incorporation of these terms did serve a useful purpose as the basis on which the shipowner has agreed in the bill of lading contract that the voyage will be via Suez and the Gulf of Aden, without which there would be uncertainty as to the vessel’s route.

Cargo argued that the premium paid by the charterer could be regarded as paid for the benefit of the bill of lading holders on the basis that its counterparty would not seek contribution from them as the party for whose benefit the premium is paid in the event of an insured loss. Males LJ rejected the argument as the risks of piracy and the potential need to pay a ransom were foreseen by the parties to the bill of lading contract and dealt with expressly by them. There were no clear express words to rebut the presumption that the shipowner did not intend to abandon its right to a contribution from the cargo owners in general average. Any “implicit understanding” was not so clear as to show that this was what the parties intended, particularly as the charterer was not necessarily paying the whole of the additional premium which would be necessary to obtain the cover required.

 In this case both parties were insured against the risk of piracy and allowing the shipowner to claim would mean that each set of insurers would bear its proper share of the risk which it has agreed to cover. In contrast, if the bills of lading were construed so as to exclude a claim by the shipowner, the loss would be borne entirely by the shipowner’s insurers and  the cargo owners’ insurers would escape liability for a risk which they agreed to cover.

Article III(1) and IV(1) of the Hague Rules. Navigational errors by master in passage plan preparation before and at the beginning of the voyage.

Yesterday, the Supreme Court gave judgment in Alize 1954 and another (Appellants) v Allianz Elementar Versicherungs AG and others (Respondents) [2021] UKSC 51.

The case arose out of the grounding of the container vessel CMA CGM LIBRA on leaving the port of Xiamen, China, on a voyage to Hong Kong. The Admiralty Judge, Teare J, found that the vessel’s defective passage plan was causative of the grounding and that this involved a breach of the carrier’s seaworthiness obligation under article III rule 1 of the Hague Rules. The Court of Appeal upheld the decision. Owners contended that these decisions were wrong because the vessel was not unseaworthy and/or due diligence was exercised, and that any negligence in passage planning was a navigational fault which is exempted under article IV rule 2(a) of the Hague Rules.

Two issues were raised the appeal. First, is the carrier’s seaworthiness obligation under the Hague Rules subject to a category-based distinction between a vessel’s quality of seaworthiness, its attributes and equipment, or navigability and the crew’s act of navigating which concerns how the crew operates the vessel using those attributes? Second, what amounts to due diligence under article IV rule 1 of the Hague Rules? Has the carrier shown due diligence if it has equipped the vessel with all that is necessary for her to be safely navigated, including a competent crew?

The Supreme Court upheld the decisions of the Court of Appeal and the Admiralty Court. The carrier’s obligation under the Hague Rules was not subject to a category based distinction between a vessel’s quality of seaworthiness or navigability and the crew’s act of navigating. Given the “essential importance” of passage planning for the “safety … of navigation”, applying the prudent owner test, a vessel is likely to be unseaworthy if she begins her voyage without a passage plan or if she does so with a defective passage plan which endangers the safety of the vessel. The fact that the defective passage plan involves neglect or default in “the navigation of the ship” within the article IV rule 2(a) exception was no defence to a claim for loss or damage caused by the vessel being rendered unseaworthy before and at the beginning of the voyage as a result of that navigational  negligence. The vessel was therefore unseaworthy before and at the beginning of the voyage by reason of the defective passage plan.

The owners were unable to show that they had taken due diligence to make the vessel seaworthy. Their duty was non-delegable and the crew’s failure to navigate the ship safely was capable of constituting a lack of due diligence by the carrier. It made no difference that the delegated task of making the vessel seaworthy involved navigation. The carrier is liable for a failure to exercise due diligence by the master and deck officers of his vessel in the preparation of a passage plan for the vessel’s voyage, irrespective of the fact that navigation is the responsibility of the master and involves the exercise by the master and deck officers of their specialist skill and judgment.

Nineteen years on — the Prestige saga, continued

Nearly twenty years after the VLCC Prestige broke up and sank off the Galician coast, spreading filth far and wide, Spain and France remain locked in battle with the vessel’s P&I club Steamship Mutual. Put briefly, they want to make Steamship pay out gazillions on the basis of judgments they have obtained locally on the basis of insurance direct action statutes. Steamship, by contrast, refers to the Prestige’s P&I entry, and says that both states are bound by “pay to be paid” clauses and in any case have to arbitrate their claims in London rather than suing in their own courts.

The background to the latest round, The Prestige (Nos 3 and 4) [2021] EWCA Civ 1589, is that Steamship, having got a declaratory arbitration award in its favour substantiating the duty to arbitrate, which it has transmuted into a judgment under s.66 of the Arbitration Act 1996, now wants to take the battle to the enemy. It wants (a) to commence another arbitration claiming damages for breach of the original arbitration agreement, reckoned by the damages and costs represented by the court proceedings in France and Spain; (b) damages for those states’ failure to abide by the declaratory award; and (c) damages for failure to abide by the s.66 judgment. Spain and France resist service out on the basis that they are entitled to state immunity, and that the claims based on the award and the judgment must in any case fail.

The High Court held, in two different proceedings (see here and here), that sovereign immunity did not apply; that claims (a) and (b) succeeded; and that claim (c) failed because of the effect of the insurance provisions in what is now Articles 10-16 of Brussels I Recast (this being, of course, a pre-Brexit affair). Both sides appealed, and the appeals were consolidated.

On sovereign immunity the Court of Appeal have now sustained the judgment of non-applicability and as a result allowed claim (a) to go ahead. They have equally upheld the first instance judgment against Steamship on claim (c): although in name a claim under a judgment this is, it says, still in substance a claim by an insurer against its insured which, under what is now Art.14 of Brussels I Recast, can only be brought in the domicile of the latter. On claim (b), however, it has held (contrary to an earlier suggestion in this blognostra culpa, we can’t be right every time) that while the jurisdiction rules of the Brussels regime do not stand in the way, the claim is bound to fail. The award being merely declaratory, there can be no duty to perform it because there is nothing to perform, and hence no liability for disregarding it.

The arbitration will now therefore go ahead. Assuming it leads to an award in Steamship’s favour, Steamship will then no doubt seek New York Convention enforcement and/or get a s.66 judgment which they will oppose to any attempt by France and Spain to get judgment here, and doubtless also try to weaponise in order to get their Spanish and French costs back. (Meanwhile they may rather regret not having asked in the original arbitration proceedings for a positive order not to sue in France or Spain, rather than a mere declaration: but that’s another story.)

There’s little to add at this stage. But there is one useful further confirmation: s.9 of the State Immunity Act, removing state immunity in the case of a written agreement to arbitrate, applies not only to a direct contractual obligation to arbitrate, but also to an indirect duty to do so Yusuf-Cepnioglu-style. Useful to know.

Will France and Spain now come quietly, thus putting an end to this saga (which has already appeared in this blog here, here, here, here and here)? It’s possible, but We’re not betting. We have a sneaking suspicion that the events of November 2002 may well continue to help lawyers pay their children’s school fees for some little time yet.