A.7.1 Shipowner liability for illness and injury and P&I Insurance
Shipping is global and liability for illness, injury and death is formed from a complex web of international convention, contractual agreements and local and statutory law, which may sometimes conflict. This chapter provides a broad overview of the principle sources of shipowner liability and the insurance cover provided by Protection and Indemnity (P&I) Clubs that responds to that liability. Liability insurance for about 90% of the world’s commercial tonnage is provided by P&I Clubs (Source igpandi.org) - mutual insurance association that pool risks. Further information about P&I clubs is available in Ch 3.8.4.
Liability for illness and injury can arise in relation to the following different categories of people, who have different roles to play in relation to the ship:
- Persons other than crew or passengers that are carried on board such as pilots, repair gangs, stowaways and persons rescued at sea
- Persons that do not travel with the ship but work on it in port can also be injured or made ill by ship operations, for example, stevedores, surveyors, and port officials.
Liability to Seafarers
The Maritime Labour Convention 2006 (MLC) came into force on August 20, 2013. This international convention includes provisions that govern liability for the illness of, injury to, or the death of seafarers. The MLC consolidates and updates more than 68 international labour standards related to the maritime sector and aims to be globally applicable, easily understandable, and uniformly enforced. Title 4 of the convention imposes minimum standards for ship owner liability, or employer liability if employed by a crewing contractor, in respect of the financial consequences of illness and injury.
The minimum standards imposed by the convention must be met in seafarer’s contracts of employment, seafarer’s articles or collective bargaining agreements (CBAs). MLC minimum standards cannot be lowered. If they are not met, such contracts etc. cannot be recognised in countries that have ratified the convention and incorporated it into domestic law. However, if the relevant articles or CBAs do satisfy the minimum standards imposed by the convention, they will continue to govern the liability of the employer. Many employment contracts exceed the minimums required.
Liability under the seafarer’s contracts
Shipowners will normally agree legally binding contracts with seafarers and/or the labour organisations that represent them in the form of individual contracts of employment, seafarer’s articles of agreement or collective bargaining agreements (CBAs). Such contracts normally include not only the terms of the employment but also provisions establishing a right of assistance and financial compensation in the event of illness, injury or death.
The most common form of contract is based on Collective Bargaining Agreements (CBAs). Collective Bargaining Agreements are normally negotiated between a shipowner or a shipowners’ association and the corresponding national seafarers’ unions, many of which are affiliated with the International Transport Workers’ Federation (ITF).An important example is that which regulates the employment of Filipino seafarers. The Philippines supplies the largest number of seafarers to oceangoing vessels and the employment of such seafarers is subject to the minimum standards set out in the Standard Employment Contract of the Philippine Overseas Employment Administration (POEA). Employers are not permitted to reduce these statutory benefits including the amount of compensation that is payable in the event of death or personal injury and the dispute resolution forums for seafarer claims in the Philippines (Labor Arbiter, National Labor Relations Commission and the Filipino Courts) are normally very vigilant in seeking to protect the rights of Filipino seafarers.
The local legislation of the flag State will often protect certain fundamental labour rights including the duty of employers to provide a safe working environment, to restrict working hours and to ensure that compensation is available in cases of illness, injury or death. Local social security schemes may also oblige employers to take out compulsory insurance, frequently from a P&I club, to cover such obligations.
However, the matter can be more complicated in the event of a maritime casualty, since the shipowner may also incur liability under the statutory law of the following countries:
- The country where the seafarer is a citizen and/or is resident
- The country where the employer, shipowner, manager, or operator of the ship is domiciled or has their principal place of business
- The country where the incident, or the act which caused such incident, occurred
- The country where the crew member entered into the relevant employment contract
- The country designated to have jurisdiction in the contract of employment
In the final analysis, the law which will be applied, and the weight that is to be given to each source of law in any particular dispute, will depend upon the law of the country where the court or arbitration panel determining the claim is situated. Therefore, claims arising because of the illness of, injury to, or the death of seafarers may be subject to complex issues of international private law and result in much forum-shopping.
Liability to seafarers in the United States
The United States is not a signatory to the Maritime Labour Convention and under US law an injured or ill seafarer may be entitled to claim damages in tort or under statute in addition to his contractual remedies. The Jones Act, 1920 entitles a seaman, or his next of kin, to claim certain damages from his employer if the latter is guilty of negligence resulting in injury to, or death of, the seaman during the course of his employment. For the purpose of the Act a ‘seaman’ is any person who is employed on board the ship, which includes, in the case of cruise ships, hotel and catering staff.
US general maritime law also provides seafarers a right to ‘maintenance and cure’ meaning that in the event of illness or disability, the seaman is entitled to maintenance, a daily subsistence allowance, primarily for food and lodging, and cure, the right to receive whatever medical and other treatment that may be necessary. This is applicable until the crew member reaches the so-called stage of ‘maximum medical cure’, which is the point at which further treatment is deemed not to have further curative effect. Failure to pay maintenance and cure may expose the employer to punitive damages.
Furthermore, the seafarer may be entitled to claim damages if he is able to prove that the illness or injury was caused by the unseaworthiness of the ship or by the negligence of a third party, for example, the owners of another ship with which the carrying ship has collided. While some seafarer employment contracts attempt to limit the amount of compensation that is payable in the event of injury or death, such provisions may not protect the employer when liability is incurred under statute or the general maritime law.
Claims may be brought in US courts by seafarers or their next of kin who are not US citizens and not serving on US flagged ships if the incident which caused the injury or death occurred in US waters. The US courts are not automatically required to accept the case where there is a more appropriate forum for the claim. Jurisdiction may be challenged on the basis of forum non conveniens which requires the court to weigh certain factors to determine whether to maintain jurisdiction and allow the case to proceed. Traditionally, US courts look to the following eight factors:
- Place of the wrongful act
- Law of the flag
- Allegiance or residence of the injured seafarer
- Allegiance of the defendant shipowner
- Place where the contract of employment was made
- Inaccessibility of the foreign forum
- Law of the forum
- Shipowner’s ‘base of operations’
More recently, US courts also look carefully at the foreign seafarer’s employment contract and any choice of law/forum clause it may contain. In particular, if the employment contract includes an arbitration clause, a US court is likely to dismiss or postpone any action in the US pending the outcome of the foreign arbitration. For example, the POEA contract for Filipino Seafarers contains such a provision which means a US court is likely to require the seafarer to comply with his or her contractual remedies and arbitrate the claim in the Philippines according to the contract.
A.7.2 Liability to Passengers
The primary source of the legal relationship between a passenger and the carrier is the contract of carriage that in most cases is the Passenger Ticket Contract. However, contractual provisions may be superseded by international conventions, national statutes or the common law depending on the laws that are applied in any given forum. The terms and conditions that are included in the passenger ticket normally impose liability on the carrier for the death, injury or illness of passengers caused by the fault or neglect of the carrier, its employees or agents acting within the scope of their employment. These may be ’marine-type’ incidents such as collision, stranding, explosion or fire, or ‘hotel-type’ incidents related to guest cabins, catering, leisure services or entertainment. For marine-type incidents, fault is generally presumed.
Although the carrier is responsible for negligent acts of its employees, in the course of their employment that result in the injury to or illness of passengers, the passenger ticket may seek to exonerate the carrier from liability for services or activities not provided on board, for example, shore excursions.
The Athens Convention on the Carriage of Passengers and their Luggage by Sea, The Athens Convention, binds only those countries that have adopted it and applies to international carriage where:
- The ship is flying the flag of, or is registered in, a Convention State or
- The contract of carriage was made in a Convention State or
- The carriage commences or terminates in a Convention State
Countries in the European Union are subject to the Athens Convention. The United States is not a signatory but US courts have been prepared to enforce the provisions of the Athens Convention when the convention is incorporated into the passenger ticket contract by agreement.
The 2002 Protocol to the Athens Convention 1974 provides that the carrier is strictly liable in the event of the death of, or personal injury to, a passenger resulting from a ‘shipping incident’. These are defined as the ‘shipwreck, capsizing, collision or stranding of the ship, explosion or fire in the ship, or defect in the ship’. The carrier is liable unless they prove that the incident resulted from ‘an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character’ or ‘was wholly caused by an act or omission done with the intent to cause the incident by a third party.’ Where death or personal injury is caused by a non-shipping incident, the carrier is liable only if the claimant is able to prove that the death or personal injury has been caused by the fault or neglect of the carrier. Examples of common non-shipping related injuries would be slips and falls and illness caused by lack of proper hygiene in food preparation or swimming pools. In such cases, the burden of proof of negligence is on the passenger.
In any event, irrespective of the cause, the passenger has the obligation to prove the extent of the loss or damage, Liability of the carrier can be reduced, in whole or in part, if the carrier can prove contributory fault on the part of the passenger.
Carriers are required to maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution that is sufficient to underwrite the minimum limit of 250,000 per passenger and to provide documentary evidence in the form of a certificate attesting that insurance or other financial security is in force. Thus, for cruise ships carrying 5,000 passengers, the required certification of insurance would by 5,000 X SDR 250,000 (Special Drawing Rights). Such certificates will be provided by the International Group of P&I Clubs except for war and terrorism risks.
Liability for passenger injury, illness and death in the United States
Under the general maritime law of the United States a carrier owes a duty of reasonable care to passengers, but in many cases, there is a legal presumption that the carrier has been negligent, thereby requiring the carrier to disprove negligence in order to escape liability. Where the activity is uniquely maritime in nature, for example, when using tenders or gangways or engaging in safety drills, the carrier is subject to a more stringent duty of care on the basis that passengers require greater protection when engaged in activities that they would not normally encounter ashore. Nevertheless, passengers are required to exercise reasonable care for their own safety.
The United States is not a signatory to the Athens Convention. However, the Athens convention will apply to a claim by an American passenger, for example where a cruise begins or ends in a port within a signatory country. To cater for the different application of law, the major international cruise line ticket contracts include provisions stating which law will apply depending upon where the voyage embarks or disembarks. Under US law, terms included in the passenger ticket that limit the rights of passengers to bring claims cannot be enforced unless they have been brought to the passenger’s attention in a very clear and timely manner. For example, a clause in the ticket that requires the passenger to provide notice of a claim within a certain period and that require the passenger to make the claim in a particular jurisdiction will be prominent in passenger ticket terms. If a passenger has died on the high seas as a result of the negligence or other wrongdoing of the carrier, liability is governed exclusively by the provisions of the US federal statute, Death on the High Seas Act (DOHSA).
US law prohibits a carrier from contractually limiting its liability to passengers for injury or death due to negligence. Under the law of the United States the owner or charterer of a passenger ship that either is, or may become, engaged in voyages to or from US ports is required to provide a guarantee from an authorised insurer, surety company or other provider, for legal liabilities that he may incur for the death of, or for injury to, passengers or other persons who are carried on board during such voyages. The guarantee is to be provided to the US Federal Maritime Commission (FMC) and is normally supplied by the ship’s P&I club.
Vicarious corporate liability for shipboard medical malpractice in the United States
Companies act through their agents and employees and can be sued based on the negligent act of an employee or agent committed within the scope of the employment or agency. The corporation is not vicariously liable, however, for negligent acts of independent contractors. Doctors and other medical staff were considered independent contractors by the Fifth Circuit Court of Appeal in Barbetta v. S/S Bermuda Star, 848 F.2d 1364 (5th Cir. 1988). In 2014, the 11th Circuit Court of Appeal in a similar case found that the medical staff were agents and not independent contractors and thus the cruise line could be vicariously liable for their negligence. Franza v. Royal Caribbean Cruises, Ltd. 772 F.3d 1225 (11th Cir. 2014). The 11th Circuit includes Florida where many of the cruise companies are located and subject to suit and at least in that jurisdiction, the cruise line will be subject to suit based on vicarious liability.
A.7.3 Liability to Persons other than seafarers and passengers for injury or illness
People other than crew or passengers are often on board operating ships. Some persons are carried on board the ship during the whole or part of the voyage in order to provide services or are otherwise on board with the consent of the master, for example pilots, supercargoes, riding repair crew. Other persons may be on board despite the fact that this was not planned or that the Master did not originally consent to their presence on board, for example stowaways, migrants and refugees rescued at sea. Furthermore, some persons may be on board whilst the ship is in port because they have some function to perform for example stevedores, port agents, government and local officials, ship suppliers or even if they have no function to perform but are merely visiting the ship or seafarers on board. In general terms the shipowner has a duty of care to all of these categories of persons and, since there are no relevant international conventions, the duty may arise either solely or collectively under a contract for services, statute or common law.
The duty of care is not normally absolute since persons that are on board also have a duty to take reasonable precautions for their own safety and to comply with any safety instructions that may be made by the ship’s crew. The standard of care that is expected of them will often differ depending on the knowledge and experience that such persons are expected to have. For example, a technical person who has experience in ship operations is normally expected to exercise a greater degree of caution for his own safety than a family member who is visiting one of the seafarers.
 Ref. 46 U.S.C. Section 30509
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In common law countries, (essentially the UK and former English colonies including the USA) a tort is an act or omission that causes harm to another and amounts to a civil wrong for which the courts impose liability. The tort of negligence requires the claimant to prove that the defendant owed him or her a duty of care, that the defendant breached that duty and, as a consequence, the claimant suffered an injury. Injuries are compensated through monetary damages. https://www.law.cornell.edu/wex/tort