No strikeout for Bangladeshi ship scrapping claim: but don’t hold your breath

As we mentioned on this blog last August, these days you have to be careful who you sell an old ship to. In Begum v Maran [2021] EWCA Civ 326 MUK, the English managers of a Liberian ship fit only for scrap, helped arrange her sale to a buyer who paid fairly handsomely. That buyer proceeded (entirely foreseeably) to have her scrapped by a thoroughly dodgy outfit called Zuma in a dangerous and environmentally irresponsible way on a Bangladeshi beach. A worker engaged in stripping the hulk fell to his death. Prospects of recovery from Zuma being low, if for no other reason because of a local one-year statute of limitations during the running of which nothing had been done, his widow sued MUK as of right in England because of its domicile here, alleging negligence. Jay J decided that it was arguable that MUK had owed the man a duty of care, and that the local limitations law might be circumvented, and refused a strikeout. MUK appealed.

The Court of Appeal yesterday allowed the case to go ahead, though only very grudgingly and on a more limited basis than Jay J. The Court was particularly sceptical on the limitation point. Under Rome II, applicable to the claim as it predated Brexit (and still applicable to post-Brexit claims in its domesticated form), the law governing the claim – including on the subject of limitation – was Bangladeshi. This immediately defeated the claimant unless she could escape it. The judge had regarded as possibly plausible a contention that Art.7 of Rome II allowed her to invoke English law because her husband’s death had resulted from environmental damage caused by an event here – namely, MTM’s arrangements for sale of the ship. But this was dismissed on appeal as unarguable: rightly so, since this simply wasn’t an environmental case in the first place. But the court did see it as arguable – just – that the limitation period was so short that an English court might disapply it on public policy grounds under Art.26 of Rome II, and ordered a preliminary issue on the point.

On the substantive points, the widow argued either that MUK had owed her husband a duty of care on the principle of Donoghue v Stevenson [1932] AC 562, or that MUK’s sale of the vessel when it should have known that it was likely to be dangerously demolished had created an immediate danger to her husband’s life and thus engendered a duty in respect of the bad practices of his employers Zuma.

Giving the lead judgment, Coulson J was very sceptical on the first point. This wasn’t, he said, a case of a disposal of a dangerous thing, but rather the furnishing of an opportunity for a third party to be negligent in respect of a thing not inherently perilous. Whether this could give rise to a duty his Lordship thought very doubtful indeed – but still not quite implausible enough to justify an immediate strikeout. Our view is that the doubts were fully justified. We normally expect employers to look after their employees; to put a duty on third parties to police the behaviour of contractors they engaged in that respect is to say the least drastic. Should I really have to scrutinise or supervise the employment practices of the builder I employ to extend my house in case one of his workers is hurt? It seems doubtful.

On the second point, the difficulty (a considerable one) was the general rule that people were not generally made responsible for the wrongs of others, however foreseeable. But, said Coulson J, there were possible exceptions where the danger in question had been created by a defendant. And while it seemed unlikely that this would apply here, the law was not absolutely clear and the prospect of persuading a sceptical judge to recognise a duty of care wasn’t dismal enough to deny the widow the chance to argue the toss. Her prospects might be slim, but she was entitled to chance her arm.

This case will possibly be hailed in the liberal media as an advance in the campaign to make big business in Britain take responsibility for the activities of its dodgier partners abroad. But commercial lawyers know better than to engage in chicken-counting. Remember, the claimant here only avoided a strikeout by the skin of her teeth. Her chances of recovering much over and above a nuisance value or reputation-saving settlement remain, it seems fair to say, pretty slim.

Oh, and one more thing. The ability to sue a UK-domiciled company here as of right disappeared with Brussels I Recast in a puff of celebratory Brexit firework smoke at 2300 hours on 31 December last. It follows that, barring swift adherence by the UK to the Lugano convention (increasingly unlikely by all the indications), any future claimant basing their complaint on events in a far-off land with no ostensible connection to England will now also face the prospect of a forum non conveniens application. This may well have an appreciable chance of success. There is, after all, no immediately apparent reason why the English courts should act as the policemen of work practices worldwide, hoewever much sympathy we may feel for a claimant personally.

In short, the boardrooms of corporate Britain, and even more those of their liability insurers, may well see some sighs of relief, if not discreet socially-distant celebrations, in the next few days.

Environmental divergence starts now. EU gold plates the Basel Convention 2019 amendments.

The fourteenth meeting of the Conference of the Parties to the Basel Convention (COP-14, 29 April–10 May 2019) adopted amendments to Annexes II, VIII and IX to the Convention with the objectives of enhancing the control of the transboundary movements of plastic waste and clarifying the scope of the Convention as it applies to such waste. New entries relating to plastic waste were included.

The amendment to Annex VIII, with the insertion of a new entry A3210, clarifies the scope of plastic wastes presumed to be hazardous and therefore subject to the Prior informed consent procedure. The amendments came into force on 1 January 2021.

On 22 December the EU Commission decided to ban the export of plastic waste from the EU to non-OECD countries, except for clean plastic waste sent for recycling. By contrast UK exports of plastic waste will now be made under a new system of PIC, under which the importer has to agree to accept the waste, and has the opportunity to refuse it.

All the UK wants for Christmas is….Lugano

As 2020 draws to its end, two bits of good news in December. The first roll out of COVID-19 vaccines in the UK, and yesterday’s announcement of a free trade deal between the UK and the EU. However, commercial lawyers will be scanning the news for any announcement that the EU will now consent to the UK’s application to join the Lugano Convention 2007. However, even if that were granted today there would still be a three month delay before the UK joined the Lugano Club.

Article 72 of the Convention provides

3.   Without prejudice to paragraph 4, the Depositary shall invite the State concerned to accede only if it has obtained the unanimous agreement of the Contracting Parties. The Contracting Parties shall endeavour to give their consent at the latest within one year after the invitation by the Depositary.

4.   The Convention shall enter into force only in relations between the acceding State and the Contracting Parties which have not made any objections to the accession before the first day of the third month following the deposit of the instrument of accession.

So in the interim, the UK on 1 Jan 2021 would revert to common law on civil jurisdiction and enforcement of judgments as between itself and the Lugano parties, subject to application of the Hague Convention 2005 which comes into force with the UK as an independent signatory, rather than by virtue of the EU’s accession, on 1 January 2021.

However in November the UK and Norway agreed to extend and update their 1961 Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters, so that it will apply to the extent that, and during any period that, the 2007 Lugano Convention does not apply to the UK.

The agreement between the two countries 

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.

Scope

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.

Definitions

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.

Hague Convention 2005. After the transition period.

As expected the UK government has made a fresh declaration agreeing to be bound by the Hague Convention on Choice of Law 2005 in its own right from the end of the transition period at 11pm, UK time, on 31 December  2020. It states “With the intention of ensuring continuity of application of the 2005 Hague Convention, the United Kingdom has submitted the Instrument of Accession in accordance with Article 27(4) of the 2005 Hague Convention. Whilst acknowledging that the Instrument of Accession takes effect at 00:00 CET on 1 January 2021, the United Kingdom considers that the 2005 Hague Convention entered into force for the United Kingdom on 1 October 2015 and that the United Kingdom is a Contracting State without interruption from that date.”

It has also made a reservation under art 21 of the Convention that it will not apply the Convention to insurance contracts except as stated below.

(a) where the contract is a reinsurance contract;

(b) where the choice of court agreement is entered into after the dispute has arisen;

(c) where, without prejudice to Article 1 (2) of the Convention, the choice of court agreement is concluded between a policyholder and an insurer, both of whom are, at the time of the conclusion of the contract of insurance, domiciled or habitually resident in the same Contracting State, and that agreement has the effect of conferring jurisdiction on the courts of that State, even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State;

(d) where the choice of court agreement relates to a contract of insurance which covers one or more of the following risks considered to be large risks:

(i) any loss or damage arising from perils which relate to their use for commercial purposes, of, or to:

          (a) seagoing ships, installations situated offshore or on the high seas or river, canal and lake vessels;

          (b) aircraft;

          (c) railway rolling stock;

(ii) any loss of or damage to goods in transit or baggage other than passengers’ baggage, irrespective of the form of transport;

(iii) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, arising out of the use or operation of:

         (a) ships, installations or vessels as referred to in point (i)(a);

         (b) aircraft, in so far as the law of the Contracting State in which such aircraft are registered does not prohibit choice of court agreements regarding the insurance of such risks;

         (c) railway rolling stock;

(iv) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, for loss or damage caused by goods in transit or baggage as referred to in point (ii);

(v) any financial loss connected with the use or operation of ships, installations, vessels, aircraft or railway rolling stock as referred to in point (i), in particular loss of freight or charter-hire;

(vi) any risk or interest connected with any of the risks referred to in points (i) to (v);

(vii) any credit risk or suretyship risk where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risk relates to such activity;

(viii) any other risks where the policy holder carries on a business of a size which exceeds the limits of at least two of the following criteria:

          (a) a balance-sheet total of EUR 6,2 million;

          (b) a net turnover of EUR 12,8 million;

          (c) an average number of 250 employees during the financial year.

2. The United Kingdom of Great Britain and Northern Ireland declares that it may, at a later stage in the light of the experience acquired in the application of the Convention, reassess the need to maintain its declaration under Article 21 of the Convention.”

International Shipping gets closer to the rocks of the EU Emissions Trading System

Earlier this year this blog reported on the implications for international shipping of the EU ‘Green Deal’, the topic of two papers at the IISTL’s recent Colloquium.

Things are now moving on apace. On 16 September the European Parliament voted in favour of a 40% reduction in CO2 by 2030 for all maritime transport and for the inclusion of ships of 5000 grt and over in the EU Emissions Trading System (ETS), with the establishment of an “Ocean Fund” to run from 2022 -2030 to contribute to protecting marine ecosystems. The Parliament is now ready to start negotiations with member states on the final shape of the legislation.

Where the EU goes, the IMO may follow – on which note in another interesting development, on 25 September, the major charterer, Trafigura, have submitted a proposal to the IMO for a partial “feebate” system to decarbonise global shipping. Trafigura’s press release states, “We propose a self-financing system where a levy is charged on the use of fuels with a CO2-equivalent intensity above an agreed benchmark level, and a subsidy is provided for fuels with a CO2-equivalent profile below that level. It is now time to put a price on carbon emissions in the shipping industry Our own in-depth analysis and commissioned independent research indicates that the levy should be between $250-$300 per tonne of CO2-equivalent. While primarily bridging the cost gap between carbon intensive and low or zero carbon fuels, this partial “feebate” would also raise billions of dollars for research into alternative fuels and could help assist small island developing states and other developing countries mitigate the impact of climate change.”

Rather more than the $2 per tonne bunker levy for financing R&D into alternative green fuels that various shipowner organisations proposed earlier this year.

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Intransigent defendants: Prestige 4.0

Most parties who lose English court cases or arbitrations give in (relatively) gracefully. In the long and ongoing Prestige saga, however (already well documented in this blog: see here, here, here, and here), the French and Spanish governments have chosen to fight tooth and nail, something that is always apt to give rise to interesting legal points. Last Friday’s episode before Butcher J (SS Mutual v Spain [2020] EWHC 1920 (Comm)) was no exception, though in the event nothing particularly novel in the way of law emerged.

To recap, nearly twenty years ago the laden tanker Prestige sank off northern Spain, grievously polluting the French and Spanish coasts. Steamship Mutual, the vessel’s P&I Club, accepted that it might be potentially liable to direct suit up to the CLC limit, but pointed out that its cover was governed by English law, contained a “pay to be paid” clause and required arbitration in London. Nothing daunted, the French and Spanish governments came in as parties civiles when the owners and master were prosecuted in Spain, and claimed their full losses. The Club meanwhile protected its position by obtaining declaratory arbitration awards in England against both governments that all claims against it had to be arbitrated here; for good measure it then successfully transmuted these awards into High Court judgments under s.66 of the 1996 Arbitration Act (see The Prestige (No 2) [2013] EWHC 3188 (Comm). These decisions the French and Spanish governments blithely ignored, however; instead they took proceedings in Spain to execute the judgments they had obtained there.

In the present litigation, the Club’s claim (slightly simplified) was against both governments for damages for continuing the Spanish proceedings, based either on breach of the arbitration agreement, or in the alternative on failure to act in accordance with the s.66 judgments. The object, unsurprisingly, was to establish an equal and opposite liability to meet any claim asserted by the governments under their judgments in the Spanish proceedings.

The Club sought service out on the French and Spanish governments: the latter resisted, arguing that they were entitled to state immunity, and that in any case the court had no jurisdiction.

On the state immunity point, the Club succeeded in defeating the governments’ arguments. The proceedings for breach of the arbitration agreement were covered by the exception in s.9 of the State Immunity Act 1978 as actions “related to” an arbitration agreement binding on the governments. Importantly, Butcher J regarded it as unimportant that the proceedings did not relate to the substantive matter agreed to be arbitrated, and that the governments might be bound not by direct agreement but only in equity on the basis that they were third parties asserting rights arising from a contract containing an arbitration clause.

The proceedings on the judgments, by contrast, were not “related to” the arbitration agreement under s.9: understandably so, since they were based on failure to give effect to a judgment, the connection to arbitration being merely a background issue. But no matter: they were covered by another exception, that in s.3(1)(a), on the basis that the breach alleged – suing in the teeth of an English judgment that they had no right to do so – was undoubtedly a “commercial transaction” as defined by that section.

The judge declined to decide on a further argument now moot: namely, whether suing abroad in breach of an English arbitration agreement was a breach of a contractual obligation to be performed in England within the exception contained in s.3(1)(b) of the 1978 Act. But the betting, in the view of this blog, must be that that exception would have been inapplicable: there is a big and entirely logical difference between a duty not to do something other than in England, and an obligation actually to do (or omit to do) something in England, which is what s.3(1)(b) requires.

State immunity disposed of, did the court have jurisdiction over these two governments? Here the holding was yes, but only partly. The claim based on the s.66 judgments was, it was held, subject not only to the Brussels I Recast Regulation but to its very restrictive insurance provisions dealing with claims against injured parties (even, note, where the claims were being brought, as some were in the case of Spain, under rights of subrogation). Since the governments of France and Spain were ex hypothesi not domiciled in England, but in their respective realms, there could be no jurisdiction against them.

On the other hand, the claims based on the obligations stemming from the arbitration award were, it was held, within the arbitration exception to Brussels I, and thus outside it and subject to the national rules in CPR, PD6B. The only serious question, given that the arbitration gateway under PD6B 3.1(10) or the “contract governed by English law” gateway under PD6B 3.1(6)(c) pretty clearly applied, was whether there was a serious issue to be tried as to liability in damages. Here Butcher J had no doubt that there was, even if the governments were not directly party to the agreements and the awards had been technically merely declaratory of the Club’s rights. It followed that service out should be allowed in respect of the award claims.

Further than this his Lordship did not go, for the very good reason that he had no need to. But in our view the better position is that indeed there would in principle be liability under the award claims. If, as is now clear, an injunction is available on equitable grounds to prevent suit in the teeth of an arbitration clause by a third party despite the lack of any direct agreement by the latter, there seems no reason why there should not also be an ability to an award of damages, if only under Lord Cairns’s Act (now the Senior Courts Act 1981, s.50). Further, there seems no reason why there should not be a an implied obligation not to ignore even a declaratory award by suing in circumstances where it has declared suit barred.

For final answers to these questions we shall have to await another decision. Such a decision might even indeed come in the present proceedings, if the intransigence of the French and Spanish governments continues.

One other point to note. The UK may be finally extricating itself from the toils of the EU at the end of this year. But that won’t mark the end of this saga. Nor indeed will it mark the end of the Brussels regime on jurisdiction, since the smart money is on Brussels I being replaced with the Lugano Convention, which is in fairly similar terms. You can’t throw away your EU law notes quite yet.

Careful who you sell that ship to!

Safety in ship recycling has been a priority of the EU for more than seven years. Under EU Regulation 1257/2013, in force since 2018, there is a complex system of EU approval of ship recycling facilities, it being illegal to send an EU-registered ship for recycling to an unapproved facility (meaning as often as not a not-very-deserted beach in India or Bangladesh, where she is broken up essentially by hand). This Regulation is to be retained EU law post-Brexit, though from the end of this year it will be significantly narrowed, in that it will only apply to UK-registered vessels (i.e. pretty few).

But quite a lot of ship recycling is outside the regulation. A case in point was the Maran Centaurus, a vessel previously in the news as the victim of a high-profile Somali hijacking in 2009 that led to payment of a then-record ransom of about $7 million. Owned by Greek interests, at the end of her life she was reflagged to Palau and sold to a buyer for demolition, who in turn resold her to a beachside Bangladeshi concern. During demolition a worker operating in very dangerous conditions was killed. His widow rightly concluded that the demolishers were not worth powder and shot. She instead sued the owner’s managing agents, a UK company who acting under the owners’ instructions had arranged the sale, alleging that it should have been foreseeable that unless they took steps to ensure that the vessel ended up in the hands of responsible breakers she would be broken up — as she was — without any serious regard for worker safety. The agents denied fault and applied for a strikeout, on the basis that a seller of a ship owed no duty in respect of dangerous practices that might later occur in relation to her. This was not, they said, a case of damage caused by hazardous materials aboard the vessel injuring a worker: there was nothing more here than a sale indirectly to a person likely to have a less than satisfactory attitude to industrial safety.

This writer has quite a lot of sympathy for this view. But in Begum v Maran (UK) Ltd [2020] EWHC 1846 (QB) Jay J declined a strikeout, regarding it as highly arguable that, despite the vessel herself not being unusually hazardous, this was a case where the defendants had created a foreseeable risk of harm and as such potentially owed a duty of care to the worker concerned.

Note that this is not a holding that there was a duty of care: merely that the argument that there was one wasn’t a non-starter. Nevertheless, it should worry shipowners everywhere (and cause them to check on their insurance coverage). It might even extend further: for example, what of a shipowner who sells (or bareboat charters) a vessel to an operator known to have a dodgy safety record: the logic of the Maran case seems to apply here too, and if it is followed we cannot rule out liability in the seller or owner.

Admittedly the if might be a biggish one. We said that we had sympathy for the defendant’s argument. The chances are that this case will now settle so we won’t ever get a final answer here. But the defendants’ case is strong. The case for making owners responsible for policing the safety records of disponees is by no means obvious, any mote than it is obvious that in selling my car I should have to take care lest the buyer is a known drink driver. It may well be worth fighting this issue again if, as seems highly likely, it comes back to the English courts in another case.

Corporate due diligence legislation in the EU. Goodbye ‘should’, hello ‘must’?

Earlier this year, the final report of a study, prepared for the European Commission by a research group led by the British Institute of International and Comparative Law earlier this evaluated four regulatory options available at the EU level in terms of human rights due diligence:

option 1: no change;

option 2: new voluntary guidelines;

option 3: new reporting requirements; or

option 4: the introduction of mandatory due diligence requirements.

Option 4 was the preferred option and the study concluded that that any new law ought to be cross-sectoral and applicable to all businesses, regardless of their size. This now seems to be the view of the European Commissioner for Justice, Didier Reynders, who on 29 April 2020 announced that the EU plans to develop a legislative proposal by 2021 requiring businesses to carry out due diligence in relation to the potential human rights and environmental impacts of their operations and supply chains. The draft law is likely to be cross-sectoral and to provide for sanctions in the event of non-compliance.

It remains to be seen whether the UK intends to enact any similar legislation.