COVID 19. Lengthy delays for discharge of coal cargoes in two Chinese ports.

COVID 19 has caused numerous delays in loading and discharging at ports throughout the world. Sometimes we have seen total exclusion of ships from specified countries, as with the UK’s exclusion of all ships from Denmark for a time in November due to the ‘covid-mink’ scare, and with the brief exclusion by France of accompanied road freight from the UK shortly before Christmas.  

News has now come in of very serious delays in certain Chinese ports. Two Indian ships carrying coal from Australia are still waiting at anchorage for a very long time. The ‘Anastasia’ with 23 crew members on board arrived off Jingtang in Hebei Province on 13 June and the ‘Jag Anand’ with 16 crew members arrived off Caofeidian port on September 20. On New Year’s day India said it was looking at several options to repatriate the 39 Indian sailors on the two ships, including a crew change at sea or at a Chinese port. 

Can Independent Contractors be sued under the Athens Regime?

Sperling v. Queen of Nanaimo [2020] BCSC 1852 (CanLII)

Athens Convention Relating to the Carriage of Passengers and Their Luggage at Sea 1974 has been implemented into Canadian Law by the Marine Liability Act 2001. By virtue of Article 3.3 of the Athens Convention, a carrier is liable for the negligence of its “servants and agents”.

The plaintiff claims damages for personal injuries allegedly sustained when the Queen of Nanaimo, a ferry on which she was a passenger, hit the dock at Mayne Island BC on 3 August 2010. It is the contention of the plaintiff that she was thrown from a chair abroad the ferry and struck her head on a pole.  In addition to the owner and operator of the ferry, the present applicants, Ulstein Maritime Ltd and Rolls Royce Ltd, are named as the defendants in this action. They are alleged to have been involved in “the design, construction, installation, maintenance, service, inspection, refit and/or repairs of the operating systems, equipment and/or machinery of the ferry, including but not limited to those relating to its propulsion, breaking and or steering systems.”

The applicants (Ulstein) seek a declaration under r 9-4 of the Supreme Court Civil Rules that any liability they may have to the plaintiff is subject to a monetary limit of about CA$ 325,000 (the limit set by the Athens Convention 1974). Article 11 of the Athens Convention 1974 extends the benefit of the monetary limit to servants or agents of a carrier acting within the scope of their employment.

 Rule 9-4 of the Supreme Court Civil Rules stipulate:

…(2) If, in the opinion of the court, the decision on the point of law substantially disposes of the whole action or of any distinct claim, ground of defence, set-off or counterclaim, the court may dismiss the action or make any order it considers will further the object of these [Rules]…

If the application of Ulstein is successful, their liability and the extent of their liability would be determined under the Athens Convention 1974. This is an outcome that plaintiff wishes to avoid at any cost as bringing a personal injury claim with no limit to liability outside the Athens Convention regime against Ulstein would obviously yield serious advantages for the plaintiff in terms of litigation strategy.  

The key question, therefore, is whether Ulstein can be regarded as the “servant or agent” of the carrier for the purposes of the Athens Convention 1974. These terms have not been defined in the Convention and it is natural that when determining the meaning of these terms each contracting state will be tempted to defer to its legal system. This is precise what the applicants suggest that the Court should refrain from. It is the contention of the applicants that common law definitions of, and distinctions between servants/employees, agents and independent contractors should not apply to the interpretation of international agreements given that such agreements are meant to apply in multiple jurisdictions under many legal systems (a similar point was made in J.D. Irving Ltd v. Siemens Canada Ltd 2016 FC 69 at [260]).

The author has sympathy to this approach (as it promotes uniformity of the Athens regime) even though he is well aware of several cases where courts in contracting states have applied their national law in answering questions not addressed in the relevant international convention.

To advance their argument further the applicants argue that there is a distinction between contractors who repair or maintain a vessel, including installing necessary equipment, and those who manufacture or modify a vessel or its components. It is the contention of the applicants that the former are agents of the carrier while the latter are not. Applying this logic, the applicants suggest that they should be treated as the agent of the carrier for the purposes of the Athens Convention as their contract with the operators required them to maintain, service, inspect the vessel in addition to repair, design and install necessary parts.

The plaintiff, on the other hand, does not agree the extended definition of agency applies, and insists that common law definitions remain relevant.

The Honourable Mr Justice N Smith dismissed the application of the applicants under Rule 9-4 indicating that the ruling sought by the applicants would likely not be decisive or shorten the trial and it is a point of law that cannot be resolved without hearing evidence. He indicated that it would be for the judge to decide the nature of the relationship between the applicants and the operators, what work the applicants were engaged to perform.

It is fair to say that the issue of whether an independent contractor who is engaged in maintenance of the vessel can be regarded as an agent or employee of the carrier for the purposes of the Athens Convention is still an open one. It is submitted that at trial the court should attempt to maintain the objective behind extending the application of the Athens regime to the agents and employees of the carrier. In a technical sense, the applicants here do not seem to be an agent or employee of the carrier (under common law). However, if they are actively involved in maintaining the vessel’s systems as an independent contractor should their position be any different than an employee onboard responsible for maintaining the vessel? Put differently, if their activities have a significant impact on the passenger’s safety onboard the vessel, is it in the spirit of the Convention to leave them outside the Athens regime? It is expected that the judge will be able to shed light on the position of independent contractors who have an ongoing responsibility to maintain the vessel from the perspective of the Athens regime. Ultimately, the finding will be binding from the perspective of Canadian law. However, it will certainly be an analysis that will be put forward for consideration when the same issue arises in another jurisdiction that has implemented the Athens regime into its legal system.                             

Admiralty registrar refuses to unpick contractual incidents of bunker suppliers’ in rem claims.

In TRANS-TEC INTERNATIONAL SRL AND ANOTHER V OWNERS AND/OR DEMISE CHARTERERS OF THE VESSEL “COLUMBUS” [2020] EWHC 3443 (Admlty), Admiralty Registrar Mr Davison, on 17 December 2020, considered the meaning of “claim in respect of goods or materials supplied to a ship for her operation or maintenance” under the Senior Courts Act 1981, section 20(2)(m)

Various bunker suppliers claimed in rem against two vessels and also claimed additional sums sought for contractual interest, administrative fees and costs indemnity. The vessels had been sold and the actions were against the sale proceeds with a claim for default judgments. Other in rem claimants disputed the additional sums claimed and argued that these could only be brought in personam.

The additional sums were held to be recoverable under s.20 (m). The fees and interest were incidents of the contract and although the collection costs were further removed they too formed part of the contractual bargain.

Hi Ho ‘Silver’. Salvage and Sovereign Immunity.


As 2020 draws to a close, we have the first case on the application of the 1978 Sovereign Immunity Act to a claim for salvage, in Argentum Exploration Ltd v The Silver [2020] EWHC 3434 (Admlty) (16 December 2020), heard by Sir Nigel Teare acting as a judge of the High Court.

A UK company formed in 2012 for the purpose of locating and salving valuable shipwrecks lying at depths which up until then had precluded salvage claimed to have salved in 2017 silver bars worth US$43m from the wreck of the SS Tilawa which Japanese torpedoes sunk in the Indian Ocean on 23 November 1942. The bars are the property of the South African government which was intending to use them in 1942 for minting South African coinage and some Egyptian coinage.

South Africa asserted sovereign immunity and claimed the Receiver of Wreck should deliver the cargo to it without any salvage being paid. Section 1 of the State Immunity Act 1978 (“the SIA”) provides that “a State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act.” This is subject to various exceptions, in particular that in s.10(4) .

A State is not immune as respects—

(a) an action in rem against a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes; “

The key question was whether the bars of silver and the vessel carrying them were, at the time the cause of action arose, in use or intended for use for commercial purposes.

South Africa argued that cargo was not in use during the voyage, but this did not determine the question of state immunity because it remained to consider whether the cargo was intended for use for commercial purposes. Sir Nigel Teare had difficulty in accepting that there is a principled reason for state immunity from the court’s adjudicative jurisdiction in an action in rem claiming salvage where the state has chosen to have its cargo carried by sea pursuant to a contract of carriage just like any private owner of cargo and has therefore exposed itself to claims for salvage like any private owner of cargo. The cargo of silver was intended to be used for commercial purposes, because it had been bought from the Bombay Mint and shipped commercially, and its intended us as part of a sovereign activity of producing South African cargo did not affect its status as commercial cargo.

The character or status of the cargo in 1942 was relevant to the character or status of the cargo in 2017, and there was no reason to conclude that the character or status of the cargo in 1942 as a cargo used for the commercial purposes of a contract of carriage had changed by then. For the character or status of the cargo in 1942 to have changed by 2017 there must have been some decision by the South Africa to change it. There was none on the facts of this case.

Accordingly, Sir Nigel Teare found that the matter fell within the ‘commercial purposes’ exception in the SIA. This conclusion was consistent with the obiter approach of Gross J., in the Altair that the cargo in that case was a commercial cargo (in use for commercial purposes) because it had been bought and shipped commercially, notwithstanding that it was to be used as part of the Public Distribution System.

It was therefore unnecessary to consider whether, if, contrary to this conclusion, the cargo was not in use for commercial purposes it was intended to be used for commercial purposes. On the facts it was intended to be used substantially for the government or sovereign purpose of producing South African Union coinage which was a sovereign or governmental activity.

War Risks and Kidnap & Ransom in charter do not exclude GA claim for piracy under bills of lading.

The Polar [2020] EWHC 3318 (Comm) – HERCULITO MARITIME LIMITED v. GUNVOR INTERNATIONAL BV – involved an appeal pursuant to section 69 of the Arbitration Act 1996, in respect of a claim by shipowners against cargo owners under six bills of lading for general average  in respect of ransom payments made by owners to pirates. under the relevant bills of lading. The general average expenditure was the payment of a ransom to pirates to enable the release of the vessel so that she could complete her voyage.  Cargo owners contended that the GA claim was barred because the bills of lading incorporated the terms of the relevant charterparty under which the shipowners’ only remedy in the event of having to pay a ransom to pirates was to recover the same under the terms of a Kidnap and Ransom insurance policy and a War Risks policy taken out by the shipowners, the premium for which was, pursuant to the charterparty, payable by the charterers. Previous cases on incorporation had involved demurrage clauses and jurisdiction and arbitration clause. Incorporation of insurance terms and their possible constitution of a complete code excluding other remedies, such as claiming in GA, was a novelty.

The clauses were incorporated as directly germane to the loading, carriage and discharge of the cargo, but they provided  for payment of the premiums

by charterers and this language would not be manipulated so as to include bills of lading holders. Sir Nigel Teare, acting as a Judge of the High Court, held that “to substitute “bill of lading holders” for “Charterers” when reading clause 39 into the bills would be inconsistent with the obligation of the bill of lading holders to pay freight as per the charterparty as the price for the performance by the Owners of the contract of carriage. It would mean that the holders of the bills of lading, in the event that certain liberties were exercised by the Owners, had to pay may more than the agreed freight for the performance of the contract of carriage. Moreover, such additional sums would be unknown and unlimited.”  Similar provisions applied as regards kidnap and ransom insurance premiums payable under the Gulf of Aden clause.

As regards, the argument that the charter provisions on payment of the premiums constituted a ‘complete code’ excluding owners’ remedies in the event of piracy, this was certainly the position as regards the charterers. On the true construction of the charter the parties had agreed to look to the additional policies for the recovery of relevant losses and so the Owners were precluded by that agreement from seeking to recover that loss by way of a contribution in general average. However, as regards the position under the bill of lading, the only parts of the clauses in question which have been incorporated into the bills so as to bind the holders of the bills were the liberties conferred on the Owners not to complete the voyage or to depart from the usual or expected route. There was an important difference between the position under the Charter and the position under the bills of lading –  it could not be said of the bill of lading holders, as Lord Roskill said of the charterers in the Evia No.2, that theyhad paid the premiums not only for no benefit for themselves but without shedding any of their liability to contribute in general average in respect of losses caused by the additional insured perils. The point was not that the Owners had agreed to transit the Gulf of Aden at no cost to themselves, but that the charterers had agreed to pay for the insurance.

For these reasons the contract of carriage contained in or evidenced by the bills of lading did not contain an agreement by the Owners not to seek a contribution in general average from the holders of the bills from liability in respect of losses covered by the additional insurance taken out by the Owners.

The Third Group of Amendments to the Maritime Labour Convention 2006 Enters into force Later this Month

Later this month, the third group of amendments to the Maritime Labour Convention 2006 will be entering into force (26 December 2020). While these amendments have been discussed in a previous post on this blog , it may be worth reminding that they relate to Standard A 2.1, Standard A 2.2 and Regulation 2.5 of the Convention. The amendments ensure that a seafarer’s employment agreement (SEA) shall continue to have effect, wages and other contractual benefits under the SEA, relevant collective bargaining agreements or applicable national laws shall continue to be paid and the seafarers’ right to be repatriated shall not lapse for as long as a seafarer is held hostage on board a ship or ashore by pirates and armed robbers.

UK lifts embargo on vessels from Denmark in ‘Covid-mink’ crisis.

On 18 November the UK lifted its embargo on vessels from Denmark coming into UK ports which was imposed on 8 November. The new rules are:

Vessels and aircraft travelling directly from Denmark are not permitted to moor or land in England if they carry any passengers.

Aircraft and vessels which do not carry passengers (freight-only) will be allowed to land and moor in England as usual.

Any crew members who land or dock in the UK, who have been in Denmark in the 14 days before their arrival, must self isolate.

Crew members will only be allowed to enter (cross border control) if they are British nationals, Irish nationals or have the right to reside in the UK.

Climate change reduction and the IMO. What to expect from this week’s MEPC meeting.

Crucial measures to further reduce greenhouse gas (GHG) emissions from ships will be discussed by IMO’s Marine Environment Protection Committee (MEPC) met between 16-20 November to discuss measures to reduce further greenhouse gas emissions from shipping.

The IMO’s website notes that the MEPC is expected to adopt amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) to significantly strengthen the “phase 3” requirements of the Energy Efficiency Design Index (EEDI) – meaning that new ships built from 2022 will have to be significantly more energy-efficient. Those amendments were approved at the previous session of the Committee (MEPC 74) in May 2019. 

The MEPC will also discuss two further energy efficiency requirements comprising draft amendments which were agreed by IMO’s Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 7) in October, and would also apply to existing ships:

  • a new Energy Efficiency Existing Ship Index (EEXI) for all ships;
  • an annual operational carbon intensity indicator (CII) and its rating, which would apply to ships of 5,000 gross tonnage and above.

If approved at this session of the Committee, they could then be put forward for adoption at the subsequent MEPC 76 session, to be held in June 2021. Under MARPOL, amendments can enter into force after a minimum 16 months following adoption.

EU Parliament suggests civil liability regulation for artificial intelligence. Possible collisions ahead with IMO civil liability collisions?

On 22 October the European Parliament sent a draft regulation to the Commission for a new strict liability regime for operators of AI systems. Its salient features are.


Art 2

This Regulation applies on the territory of the Union where a physical or virtual activity, device or process driven by an AI-system has caused harm or damage to the life, health, physical integrity of a natural person, to the property of a natural or legal person or has caused significant immaterial harm resulting in a verifiable economic loss.


Art 3

(c)  ‘high risk’ means a significant potential in an autonomously operating AI-system to cause harm or damage to one or more persons in a manner that is random and goes beyond what can reasonably be expected; the significance of the potential depends on the interplay between the severity of possible harm or damage, the degree of autonomy of decision-making, the likelihood that the risk materializes and the manner and the context in which the AI-system is being used;

(d)  ‘operator’ means both the frontend and the backend operator as long as the latter’s liability is not already covered by Directive 85/374/EEC;

(e)  ‘frontend operator’ means any natural or legal person who exercises a degree of control over a risk connected with the operation and functioning of the AI-system and benefits from its operation;

(f)  ‘backend operator’ means any natural or legal person who, on a continuous basis, defines the features of the technology and provides data and an essential backend support service and therefore also exercises a degree of control over the risk connected with the operation and functioning of the AI-system;

(g)  ‘control’ means any action of an operator that influences the operation of an AI-system and thus the extent to which the operator exposes third parties to the potential risks associated with the operation and functioning of the AI-system; such actions can impact the operation at any stage by determining the input, output or results, or can change specific functions or processes within the AI-system; the degree to which those aspects of the operation of the AI-system are determined by the action depends on the level of influence the operator has over the risk connected with the operation and functioning of the AI-system;

(h)  ‘affected person’ means any person who suffers harm or damage caused by a physical or virtual activity, device or process driven by an AI-system, and who is not its operator;

(i)  ‘harm or damage’ means an adverse impact affecting the life, health, physical integrity of a natural person, the property of a natural or legal person or causing significant immaterial harm that results in a verifiable economic loss;

(j)  ‘producer’ means the producer as defined in Article 3 of Directive 85/374/EEC. (the Product Liability Directive)

Strict liability for high-risk AI-systems

Article 4

1.  The operator of a high-risk AI-system shall be strictly liable for any harm or damage that was caused by a physical or virtual activity, device or process driven by that AI-system.

2.  All high-risk AI-systems and all critical sectors where they are used shall be listed in the Annex to this Regulation…

3.  Operators of high-risk AI-systems shall not be able to exonerate themselves from liability by arguing that they acted with due diligence or that the harm or damage was caused by an autonomous activity, device or process driven by their AI-system. Operators shall not be held liable if the harm or damage was caused by force majeure.

4.  The frontend operator of a high-risk AI-system shall ensure that operations of that AI-system are covered by liability insurance that is adequate in relation to the amounts and extent of compensation provided for in Articles 5 and 6 of this Regulation. The backend operator shall ensure that its services are covered by business liability or product liability insurance that is adequate in relation to the amounts and extent of compensation provided for in Article 5 and 6 of this Regulation. If compulsory insurance regimes of the frontend or backend operator already in force pursuant to other Union or national law or existing voluntary corporate insurance funds are considered to cover the operation of the AI-system or the provided service, the obligation to take out insurance for the AI-system or the provided service pursuant to this Regulation shall be deemed fulfilled, as long as the relevant existing compulsory insurance or the voluntary corporate insurance funds cover the amounts and the extent of compensation provided for in Articles 5 and 6 of this Regulation.

5.  This Regulation shall prevail over national liability regimes in the event of conflicting strict liability classification of AI-systems.

Amount of compensation

Article 5

1.   An operator of a high-risk AI-system that has been held liable for harm or damage under this Regulation shall compensate:

(a)  up to a maximum amount of EUR two million in the event of the death of, or in the event of harm caused to the health or physical integrity of, an affected person, resulting from an operation of a high-risk AI-system;

(b)  up to a maximum amount of EUR one million in the event of significant immaterial harm that results in a verifiable economic loss or of damage caused to property, including when several items of property of an affected person were damaged as a result of a single operation of a single high-risk AI-system; where the affected person also holds a contractual liability claim against the operator, no compensation shall be paid under this Regulation, if the total amount of the damage to property or the significant immaterial harm is of a value that falls below [EUR 500](9).

Limitation period

Article 7

1.  Civil liability claims, brought in accordance with Article 4(1), concerning harm to life, health or physical integrity, shall be subject to a special limitation period of 30 years from the date on which the harm occurred.

2.  Civil liability claims, brought in accordance with Article 4(1), concerning damage to property or significant immaterial harm that results in a verifiable economic loss shall be subject to special limitation period of:

(a)  10 years from the date when the property damage occurred or the verifiable economic loss resulting from the significant immaterial harm, respectively, occurred, or

(b)  30 years from the date on which the operation of the high-risk AI-system that subsequently caused the property damage or the immaterial harm took place.

Of the periods referred to in the first subparagraph, the period that ends first shall be applicable.

Fault-based liability for other AI-systems

Article 8

1.  The operator of an AI-system that does not constitute a high-risk AI-system as laid down in Articles 3(c) and 4(2) and, as a result is not listed in the Annex to this Regulation, shall be subject to fault-based liability for any harm or damage that was caused by a physical or virtual activity, device or process driven by the AI-system.

2.  The operator shall not be liable if he or she can prove that the harm or damage was caused without his or her fault, relying on either of the following grounds:

(a)  the AI-system was activated without his or her knowledge while all reasonable and necessary measures to avoid such activation outside of the operator’s control were taken, or

(b)  due diligence was observed by performing all the following actions: selecting a suitable AI-system for the right task and skills, putting the AI-system duly into operation, monitoring the activities and maintaining the operational reliability by regularly installing all available updates.

The operator shall not be able to escape liability by arguing that the harm or damage was caused by an autonomous activity, device or process driven by his or her AI-system. The operator shall not be liable if the harm or damage was caused by force majeure.

3.  Where the harm or damage was caused by a third party that interfered with the AI-system by modifying its functioning or its effects, the operator shall nonetheless be liable for the payment of compensation if such third party is untraceable or impecunious.

4.  At the request of the operator or the affected person, the producer of an AI-system shall have the duty of cooperating with, and providing information to, them to the extent warranted by the significance of the claim, in order to allow for the identification of the liabilities.

National provisions on compensation and limitation period

Article 9

Civil liability claims brought in accordance with Article 8(1) shall be subject, in relation to limitation periods as well as the amounts and the extent of compensation, to the laws of the Member State in which the harm or damage occurred.

 There are also provisions regarding contributory negligence, Article 10, joint and several liability, Article 11, recourse for compensation, Article 12.

There are no carve-outs as regards existing civil liability conventions for maritime claims such as the CLC, Bunker Oil Pollution Convention, HNS Convention, which are strict liability based, and the 1910 Brussels Collision Convention which is fault liability based. This is in contrast to the exclusions contained in the 2004 Environmental Liability Directive whose territorial scope was widened with the 2013 Offshore Safety Directive. The current proposal applies to the “territory of the Union” which would encompass the territorial sea of Member States and, in the light of the ECJ’s decision in Commun v Mesquer, loss or damage manifesting on land from an oil spill in the exclusive economic zone of a Member State would come within the scope of the Regulation. As such, it has the capacity to conflict with existing strict liability conventions as enacted in national laws (see the priority of the regulation stipulated in art 4(5)) where autonomous vessels come into operation at MASS Levels 3 and 4, if these are regarded as ‘high risk’. If that were the case, collision liabilities involving such vessels would be dealt with by a strict liability regime, as opposed to the current fault based regime under the Brussels Collision Convention 1910.

His last bow. As Teare(s) go by.

On 5 October 2020, Sir Nigel Teare gave his last judgment in the Admiralty Court, in a three handed collision case involving a pile up of three laden bulk carrier vessels in the Suez Canal in 2018. The Panamax Alexander (PA) was the final vessel in an eight vessel southbound convoy that halted some two hours after the initial convoy vessel suffered an engine breakdown and blocked the canal. The other vessels had to take emergency anchoring and/or mooring action. The sixth and seventh vessels managed to do this. About fifteen minutes later PA collided with the first of these, the Sakizaya Kalan (SK) which led to PA and SK drifting downstream and colliding with the Osios David (OD), over an hour after the initial collision. For a few minutes all three vessels were locked together and a further two sets of collisions took place.

PA was held 100% to blame in failing to appreciate that there was a risk of collision and, not mooring earlier to avoid that risk of collision. These were causative breaches of Rules 5, 7 and 8 of the International Collision Regulations (Colregs).

Although OD was at fault in that she had failed to inform SK and PA behind of her intention to moor, that fault had no causative potency as the duty to inform was owed mainly to the vessel immediately behind, which had already stopped before the first collision. Were the subsequent collisions caused by the initial collision for which PA was wholly to blame? Teare J stated:

“That question of causation depends upon whether the effect of the first collision was continuing in such a way as not merely to provide the opportunity for the later collisions but as to constitute the cause of them. The courts have answered questions of this nature (which usually arise where there has been intervening negligence) by the use of metaphors. Was the hand of negligent navigator on board PA still heavy on SK and OD at the time of the later collisions? Were those on board SK and OD not free agents by reason of the hard necessities imposed on them by the first collision? Were those on board SK and OD still in the grip of the first collision? These metaphors and their source are described by Brandon J. in The Calliope at p.101. Such questions are to be approached in a broad common sense way; see p. 102.[298].”

Teare J concluded that the initial collision “not merely provided the opportunity for the later collisions but constituted the cause of” those subsequent collisions, even though they took place over an hour after that and recognized the difficulties faced by the master of SK and of OD on the horns of a dilemma created by the fault of PA. Accordingly, PA was found wholly responsible and liable for all the collisions.