What's in the box?

What's in the box?

LONDON law firm Lawrence Graham says major changes to documentary and legal practice are inevitable as the issue of what is in the container rises to the top of the security agenda. Writing in Shipping Lawgram, the newsletter of Lawrence Graham's shipping team, Charles Baker highlights how security concerns are building up political and industrial will and impetus to force through changes to traditional shipping practices which date from the general cargo era.

In the short term, charterers need to check that they have adequate arrest and detention clauses in place, so that the burden of delays due to security precautions are passed to the owners. Owners also need to look at off-hire cover and war risk cover, and ensure there are no gaps in their P&I war risks insurance, where clauses and cover have recently changed.

In the long term, owners may be forced to face up to having to know exactly what they carry. At present, shipowners load containers stuffed many miles from the ship and issue bills of lading with no real knowledge of what's in the box. They rely on clausing the bill as 'said to contain'. If it doesn't contain what it was said to contain, they can then avoid responsibility.

Stakes raised in new Athens Convention

COMPULSORY insurance to cover passengers on ships will become international law following a diplomatic conference held at the International Maritime Organisation (IMO) in October. Representatives from over 70 states attended the conference to discuss amendments to the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea 1974. The amendments, which also include a significant rise in the limits of liability, will be contained in a protocol to the convention.

IMO secretary-general William O'Neil says the 2002 protocol, when it comes into force, will provide a much-needed update to the 1974 convention. As the protocol will not come into force until 12 months after it has been accepted by ten states, he urges governments to ratify it as soon as possible. "For some time now it has been recognised that the limits of liability in the 1974 convention are no longer adequate to meet the needs of the international community," says O'Neil. "It goes without saying, however, that compensation, in adequate measure, must be provided for loss of human life and physical injury for all passengers travelling by sea."

Included in the new protocol are the following provisions:

• Carriers must maintain insurance or other financial security to cover the limits for strict liability under the convention in respect of the death or and personal injury to passengers. The limit of the compulsory insurance or other financial security shall not be less than 250,000 Special Drawing Rights (SDRs) per passenger on each distinct occasion.
• The liability of the carrier for the death of or personal injury to a passenger is limited to 250,000 SDRs per passenger on each distinct occasion. If the loss exceeds the limit, the carrier is further liable, up to a limit of 400,000 SDRs per passenger on each distinct occasion, unless the carrier can prove that the incident which caused the loss occurred without the fault or neglect of the owner.
• The liability of the carrier for the loss of or damage to cabin luggage is limited to 2,250 SDRs per passenger, per carriage.
• The protocol also includes an 'opt-out' clause enabling state parties to retain or introduce higher limits of liability, or unlimited liability, in the case of carriers who are subject to the jurisdiction of their courts.

A new procedure has also been introduced for amending the limits of liability under the convention so that any future increases can be achieved more readily.