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.                             

Classification societies are commercial — OK?

There is an easy side, and also a more wide-ranging and difficult one, to the CJEU’s decision last week in RINA SpA, Case 614/18, ECLI:EU:C:2020:349 on a point concerning the Brussels I Regulation.

Something over 14 years ago, a Red Sea ro-ro ferry, the Al Salam Boccaccio 98, sank with horrendous loss of life on a voyage between Duba in Saudi Arabia and Safaga in Egypt. She was registered in Panama and classed with Italian classification society RINA SpA.

A number of passengers sued RINA in its home state, Italy, for negligently certifying the vessel fit to sail, relying on what is now Art.4 of Brussels I Recast (the case actually concerned the previous 2001 jurisdiction regulation). RINA however had a trick up its sleeve. It pleaded sovereign immunity, on the basis that although it had been chosen and paid by the owners of the vessel, it had been acting on behalf of the Panamanian government. For that reason it argued that the Italian court had no jurisdiction over it in this respect, and that the Brussels Regulation was beside the point since this was not a civil or commercial matter. The Tribunale di Genova, faced with interesting issues of EU and public international law, understandably made a reference to the CJEU on the matter; was the claim covered by the Regulation?

The court, following the Advocate-General, had no doubt that RINA’s plea was misconceived. Even if the society had been acting for the Panamanian authorities in certifying the vessel so that those authorities in turn could, as the organs of the state of registration, give her the necessary clean bill of health, this was a matter governed by private law principles. According to the generally accepted rules of public international law, there was no way this could be construed as an act iure imperii; it was therefore covered by the Regulation.

It follows that in so far as it is sought to make a classification society liable for damage, loss or injury (a matter on which European and other legal systems differ considerably, and which we have no intention of going into here), lawyers can at least sleep easy on this point: as regards jurisdiction, it is simply a matter of looking up the relevant provisions of Brussels I Recast. It is a fair inference that the same also goes for other certification bodies (something likely to be relevant for international product liability cases) and probably state licensing bodies such as the CAA in so far as they are sued under private law provisions.

So much for the easy bit. Now for the harder one. Does this mean that state immunity law has now been quietly Europeanised as a matter of principle? This issue is not dealt with as such, and was explicitly left open by the Advocate-General in Para [106] of his opinion. The original Jurisdiction Regulation said nothing about it either; and although the Recast version adds a further few words to Art.1.1 saying explicitly that it does not apply to acts done iure imperii, this takes us little further.

The answer seems to be that we do have de facto Europeanisation, but only partly. RINA, read closely, says merely that in so far as Brussels I applies to an EU-based defendant, it is not open to a member state to apply a more generous home-grown version of state immunity and decline jurisdiction. It does not state the converse; namely, that if EU law regards a matter as covered by state immunity then an EU domestic court must not take jurisdiction at all. Why the case ended up in the CJEU in the first place is apparent only from a careful look at the facts: Italy indeed does as a matter of domestic law apply a very generous doctrine of state immunity, and it was this that the claimant sought, successfully, to sideline.

So for the moment – and, assuming Lugano or something similar to Brussels I applies after the transition period – English lawyers can breathe easy on this point too. There’s life yet in their well-thumbed copies of the State Immunity Act 1978.

PASSENGERS SUE CRUISE LINES FOR NEGLIGENCE OVER COVID-19 OUTBREAK

Ever since January 2020, it became evident that COVID-19 will place significant hurdles on cruise ship operators. The quarantine of approximately 2,500 passengers on board Diamond Princess off the coast of Japan that led to 700 confirmed cases of coronavirus was the first hard knock on the cruise industry. However, this was not enough to urge cruise ship operators to temporarily suspend their activities to minimise new transmissions on cruise vessels, or at the very least, to implement policies to prevent similar outbreaks.

Cruise ship operators continued their business as usual for more than a month. It was only mid-March, when some of the major cruise ship operators announced the voluntary suspension of scheduled cruises amid the severity of the public health crisis. Arguably, this delayed response on the part of cruise ship operators led to more passengers being exposed to COVID-19 with several passengers testing positive on cruise vessels around the world.

It now comes as no surprise that several claims have been brought against cruise ship operators over their response to COVID-19 outbreak. In early April, former passengers of the cruise ship Grand Princess filed lawsuits against the ship’s operators in federal courts of the US, claiming negligence on the part of the company in failing to ensure the health and safety of its passengers. The claims ask for compensatory and punitive damages for lost earnings, medical expenses and mental distress.

The Grand Princess departed on February 21 for a cruise from San Francisco to Hawaii. Before sailing to Hawaii, the ship made a 10-day round-trip to Mexico, and 62 passengers and more than 1,000 crewmembers continued on the voyage to Hawaii. On February 25, a man, who had been on the Mexico trip, died of the coronavirus. At this point, some members of the ship’s crew had already shown COVID-19 related symptoms. The Grand Princess turned back to the US mainland and skipped a planned stop in Mexico. On 5 March, passengers were quarantined in their cabins. However, COVID-19 had already been spreading on the ship, and 103 would ultimately test positive, with two passengers and one crew member now dead. On 9 March, passengers were moved into quarantine ashore.

The claims allege that the cruise ship operators were negligent in failing to inform Hawaii passengers that several passengers on the Mexico trip had shown COVID-19 related symptoms, failing to disinfect the ship thoroughly after the Mexico trip, and failing to screen passengers and crew before departing for Hawaii. In this respect, the claims mention that on the Grand Princess, the ship’s crew only asked passengers boarding the ship to ‘fill out a piece of paper confirming they were not sick’. The claims further allege that the cruise ship operators were negligent during the cruise in failing to inform passengers about the former passenger’s death and failing to quarantine passengers in their cabins on February 25.

Like in all personal injury claims, the liability of cruise ship operators for a passenger’s illness, injury or death will turn upon two legal questions. The first is whether the company was in any way negligent. In this respect, the claimants will have to prove that the ship operators did not exercise reasonable skill and care to ensure the health and safety of their passengers. On the facts, this may be possible, especially if it is proven that the company knew that several passengers on the Mexico trip had contracted COVID-19 and failed to disinfect the ship or at least to warn passengers boarding the ship in San Francisco.

The second is whether the company’s negligence caused the passenger’s illness. That is more problematic because it is hard to trace the exact moment when a person is infected with COVID-19. According to the official guidance of the WHO, the incubation period of COVID-19 (i.e. the time between catching the virus and beginning to have symptoms of the disease) ranges from 1 to 14 days, most commonly around 5 days. It is, thus, possible that some passengers had already been infected with COVID-19 when boarding the Grand Princess on February 21. Nevertheless, an argument may revolve around the fact that the company allowed 1,000 potentially infected people to share confined space with approximately 2,000 potentially uninfected passengers.

Assuming that both these questions will be answered in favour of the claimants, then a further question will arise as to whether the passengers of Grand Princess were in any way negligent in contracting COVID-19. If so, the company will be able to benefit from the defence of contributory negligence.

It is, thus, interesting now to see whether these claims will actually reach the courts or whether they will be settled in private.

The Athens Convention: uniformity rules – and quite right

Athens Convention time-bars are not the most riveting topic, but can be important. P&I clubs have little compunction in pouncing on inexperienced personal injury solicitors who miss the two-year time-bar and assume their clients have what is otherwise the normal three years to sue. But what happens when the claimant has the benefit of something that would delay the starting of the clock, such as a later date of knowledge, incapacity or even fraudulent concealment? Subject always to the absolute three-year Athens longstop, can they take advantage of this? Upholding the Inner House, the Supreme Court in a brief decision has now said they can, thus setting to rest doubts stemming from Higham v Stena Sealink Ltd [1996] 1 WLR 110.

The issue turns on the wording of Art.16(2), under which periods of “interruption” or “suspension” of a time-bar are governed by the law of the forum. These terms are normally used in connection with Continental systems’ long-standing habit of switching limitation periods on and off after they have started, rather like a malfunctioning Belisha beacon, on account of all sorts of matters such as ongoing negotiations. We don’t do that, being happy on occasion to delay the starting of the clock, but insisting that once it has started it ticks on to the bitter end. Can “interruption” or “suspension” cover this situation, that is a limitation clock that never starts, as against one that starts and then temporarily stops? The answer is Yes; the only exception is s.33, allowing the limitation period to be disregarded entirely if just and equitable, which clearly neither interrupts nor suspends anything.. And rightly so: Athens needs uniform interpretation, and a reading that took account of Continental modifications of the limitation period but not UK ones would be not only nit-picking but highly non-uniform. It would represent a kind of UK exceptionalism we can well do without.

Warner v Scapa Flow Charters (Scotland) [2018] UKSC 52 was, as readers no doubt noticed as a result of the reference to the Inner House, technically a Scots decision turning on the Scots law of prescription. But it is plainly just as relevant to our own Limitation Act 1980. Happy reading.