Passenger protection

THE cruise and ferry industry is big business. And it's getting bigger. Today, some of the world's largest cruiseships can carry more than 3,500 passengers alone. It's not surprising then that incidents such as the Herald of Free Enterprise and the Estonia have put passenger safety at sea firmly in the limelight.

Liability for the sea carriage of passengers is currently governed by the Athens Convention 1974. However, at the 74th session of the IMO Legal Committee in 1996, the UK submitted a paper suggesting that there should be a new convention requiring all shipowners to carry third party liability insurance to cover costs such as passenger claims. Although the committee recognised that 90 per cent of the world's shipping tonnage was insured through P&I clubs, and a further five per cent had other forms of security or insurance, there was, nonetheless, a need to close the gap and avoid unfair competition from uninsured shipowners.

It soon became apparent that such an instrument would not be feasible, so another solution was sought. The result was the Athens Protocol. Issued in draft in 1998, the protocol was designed to address three areas:

• The provision of financial security in respect of passenger claims including improved 'accessibility', i.e., passenger claimants should have the right of direct action against the providers of financial security/liability insurers
• A no-fault or strict basis for liability, possibly based on the revised Warsaw Convention on the Carriage of Passengers by Air
• An increase in the limits set out in the Athens Convention.

Since 1998, however, a number of bodies have come forward to voice their concerns over the content of the protocol. With October 2002 marking the deadline for the final draft of the protocol, there still appear to be a number of stumbling blocks in the way. So what exactly are the obstacles, and can they be overcome?

Probably the most striking feature of the protocol is the introduction of strict liability for loss of life and personal injury claims arising from 'shipping incidents'. Although the term 'shipping incidents' is yet to be fully defined, it is the liability limits that are causing the greatest controversy. The final limits for strict liability have not yet been set but the protocol proposes that not only are carriers liable up to this limit, but if the loss exceeds the limit they will be further liable unless they can prove that the loss occurred without their fault or neglect.

The P&I clubs have argued that the limits should be the same as those in the Montreal Convention, which are 100,000 special drawing rights (SDR) per passenger. The UK, however, is seeking something much higher. There is even talk of limits of 300,000 SDRs and above, which equates to more than $1.5bn for the biggest ships.

"One of the greatest problems facing the protocol is the selection of the right figures for these limits. With so many states involved, what is too low for one state may be too high for another," says Patrick Griggs, president of CMI and observer at the IMO Legal Committee meetings.

The P&I clubs also have a serious problem with capacity. "If the limits are too high, this could create too much exposure for one P&I club," says Griggs, who has been closely involved in the protocol from the outset. This could be particularly problematic for mutual clubs which cover a variety of vessel types. "With mutuality requiring all shipowners to contribute towards the claims of other members, exposing ordinary shipowners to the high risk posed by large passenger liners and ferries would be stretching the concept of mutuality close to breaking point," explains Griggs.

And the problems don't stop there. The protocol also proposes direct action against insurers, something the cruise operators are not too happy with. For many cruise operators, dealing with passenger claims is an important part of their customer service system and helps keep them in touch with their clients. Direct action will put responsibility for dealing with claims in the hands of the P&I clubs, taking this element of contact with customers out of the operators' hands.

With so many key obstacles in its way, will the protocol ever come into force? If approved at the diplomatic conference in October, the protocol will be deposited at the IMO for signature and ratification. But one other element yet to be defined is the number of ratifying states needed for the protocol to enter into force. As Griggs explains, "The figure for the number of required states is, traditionally, only inserted at the final stages of the diplomatic conference. The Athens Convention itself set a requirement of ten states and the assumption must be that the protocol will carry the same requirement."

The number of states required, however, could be academic. After all, the 1996 protocol to the 1976 Limitation Convention also required ten states but, five years on, still has only four signed up. This lengthy ratification process is nothing new to the maritime community, which is only too used to instruments coming into force after lengthy delays, and some time snot at all. With this in mind, a proposal has been put forward to include a rapid amendment provision within the protocol to ensure that any future changes of limits are implemented quickly and efficiently.

But it's not only the convoluted ratification process that is responsible for delaying the Athens protocol. Considering the potential impact of its proposals, it is somewhat surprising that it has taken so long for some sectors of the industry to speak out. For example, the International Council of Cruise Liners (ICCL), which represents sixteen of the world's leading passenger cruise lines, only began to take an interest last year, three years after the draft was first issued.

Only time will tell when the Athens Protocol 2002 will come into force. What is clear is that there are still some major stumbling blocks to overcome. Only through the co-operation of all those bodies concerned can the protocol come to fruition and the improvements it proposes be realised. In the meantime, the warning from Griggs is clear. "The international shipping community cannot afford to fail on this project," he says.

Patrick Griggs is president of the Comite Maritime International (CMI), observer at the IMO Legal Committee meetings and consultant at London law firm Ince & Co. CMI, which was established in 1897 to deal with the uniformity of maritime law, acts as a consultant to a number of UN agencies including IMO, UNCITRAL and UNCTAD. It is made up of national maritime law associations from 55 different maritime states.