November 1, 2002
Compulsory insurance for passengers
Compulsory insurance to cover passengers on ships will become international law under amendments to the Athens Convention, adopted at a diplomatic conference at IMO Headquarters in London.The conference also raised the convention's limits on liability.
The amendments are contained in a protocol to the Athens Convention.
IMO Secretary General William A. O'Neil said that the 2002 Protocol, when it comes into force, would provide a much-needed update to the 1974 Convention.
Urging Governments to ratify the protocol as soon as possible, O'Neil said: "For some time now it has been recognized that the limits of liability in the 1974 Convention are no longer adequate to meet the needs of the international community. The 1990 Protocol, in the eyes of many States, suffered from the same defect. Therefore it never entered into force. It goes without saying, however, that compensation, in adequate measure, must be provided for loss of human life and physical injury for all passengers traveling by sea."
The new instrument will provide for adequate compensation for death and personal injury claims and claims for loss of or damage to luggage and vehicles.
"As with all IMO conventions," said O'Neil, "the aim of the Organization has been to create an internationally accepted regime so that the shipping industry does not become subject to a variety of individual national schemes. I am hopeful that with these new elements, this protocol will be widely accepted and quickly brought into force."
The Conference was attended by more than 70 States, many of which held differing views on what constitutes adequate compensation. Some delegations had proposed even higher limits. However, the Conference was able to achieve a compromise and a consensus on the final package of measures adopted, balancing the concerns of commercial insurance with the need to ensure adequate protection.
The slow rate of acceptance of the 1974 Convention (it has been ratified by 28 States) has been largely attributed to the low level of the limits of liability set in the original Convention and in its 1990 Protocol (which raised the limits but never entered into force).
As well as raising limits of liability for passenger claims, the Protocol also introduces other mechanisms to assist passengers in obtaining compensation, based on well-accepted principles applied in existing liability and compensation regimes dealing with environmental pollution. These include replacing the fault-based liability system with a strict liability system for shipping related incidents, backed by the requirement that the carrier take out compulsory insurance to cover these potential claims.
The limits contained in the Protocol set a maximum limit, empowering but not obliging national courts to compensate for death, injury or damage up to these limits.
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.
Entry into force The 2002 Protocol will enter into force 12 months after being accepted by 10 States,
Compulsory insurance A new Article 4bis of the Convention requires carriers to maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution, to cover the limits for strict liability under the Convention in respect of the death of 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 (SDR) (about US$325,000) per passenger on each distinct occasion. Ships are to be issued with a certificate attesting that insurance or other financial security is in force and a model certificate is attached to the Protocol in an Annex.
Limits of liability The limits of liability have been raised significantly under the Protocol, to reflect present day conditions and the mechanism for raising limits in the future has been made easier.
The liability of the carrier for the death of or personal injury to a passenger is limited to 250,000 SDR (about US$325,000) per passenger on each distinct occasion.
The carrier is liable, unless the carrier proves 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.
If the loss exceeds the limit, the carrier is further liable - up to a limit of 400,000 SDR (about US$524,000) per passenger on each distinct occasion - unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier.
For the loss suffered as a result of the death of or personal injury to a passenger not caused by a shipping incident, the carrier is liable if the incident which caused the loss was due to the fault or neglect of the carrier. The burden of proving fault or neglect lies with the claimant.
The liability of the carrier only includes loss arising from incidents that occurred in the course of the carriage. The burden of proving that the incident which caused the loss occurred in the course of the carriage, and the extent of the loss, lies with the claimant.
"Opt-out" Clause The Protocol allows a State Party to regulate by specific provisions of national law the limit of liability for personal injury and death, provided that the national limit of liability, if any, is not lower than that prescribed in the Protocol. A State Party, which makes use of this option is obliged to inform the IMO Secretary-General of the limit of liability adopted or of the fact that there is none.
Loss of or damage to luggage and vehicles - The liability of the carrier for the loss of or damage to cabin luggage is limited to 2,250 SDR (about US$2,925) per passenger, per carriage.
- liability of the carrier for the loss of or damage to vehicles including all luggage carried in or on the vehicle is limited to12,700 SDR (about US$16,250) per vehicle, per carriage. - liability of the carrier for the loss of or damage to other luggage is limited to 3,375 SDR (about US$4,390) per passenger, per carriage. - The carrier and the passenger may agree that the liability of the carrier shall be subject to a deductible not exceeding 330 SDR in the case of damage to a vehicle and not exceeding 149 (about US$220) SDR per passenger in the case of loss of or damage to other luggage, such sum to be deducted from the loss or damage.
Amendment of limits: The Protocol introduces a new procedure for amending the limits of liability under the Convention, so that any future raises in limits can be achieved more readily. Under the 1974 Convention, limits can only be raised by adopting amendments to the Convention which require a specified number of States' acceptances to bring the amendments into force. This has meant, for example, that the 1990 Protocol, which was intended to raise the limits, has not yet entered into force and indeed is being superseded by the 2002 Protocol.
The 2002 Protocol therefore introduces a tacit acceptance procedure for raising the limits of liability. A proposal to amend the limits, as requested by at least one-half of the Parties to the Protocol, would be circulated to all IMO Member States and al States Parties and would then be discussed in the IMO Legal Committee. Amendments would be adopted by a two-thirds majority of the States Parties to the Convention as amended by the Protocol present and voting in the Legal Committee, and amendments would enter into force 18 months after its deemed acceptance date. The deemed acceptance date would be 18 months after adoption, unless within that period not less than one fourth of the States that were States Parties at the time of the adoption of the amendment have communicated to the IMO Secretary-General that they do not accept the amendment.
Regional Economic Integration Organizations: For the first time in an IMO Convention, a regional economic integration organization may sign up to the Protocol. An article in the Protocol states that a Regional Economic Integration Organization, which is constituted by sovereign States that have transferred competence over certain matters governed by this Protocol to that Organization, may sign, ratify, accept, approve or accede to the Protocol. A Regional Economic Integration Organization which is a Party to this Protocol shall have the rights and obligations of a State Party, to the extent that the Regional Economic Integration Organization has competence over matters governed by this Protocol. Title of Convention The Protocol states that Articles 1 to 22 of the Convention, as revised by the Protocol, together with Articles 17 to 25 of the Protocol and the Annex thereto, shall constitute and be called the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 2002.
States who ratify the 2002 Protocol are required to denounce the 1974 Convention and its 1976 and 1990 Protocols, if they are Party to the 1974 Convention and those Protocols.
Conference Resolutions The Conference adopted the following resolutions:
Conference Resolution 1 - Regional Economic Integration Organizations The resolution notes that the 2002 Protocol to the Athens Convention allows Regional Economic Integration Organizations and their sovereign Member States to become parties to the Protocol and recognizes that States may, in the future, establish or become Members to various forms of regional economic integration organizations to which they may opt to transfer competencies or functions governed by treaties and exercise these in a shared manner. The resolution requests IMO to carry out a study of the issue, and, if found necessary, to develop appropriate provisions which may be considered in new treaties it may develop, or in amendments to existing treaties, when there will be a need for such provisions to be included so as to enable present and future regional economic integration organizations and their Member States to become parties to such treaties.
Conference Resolution 2 - Certificates of insurance or other financial security and ships flying the flag of a State under the terms of a bareboat charter registration The resolution addresses the fact that a number of States allow ships to fly their flag under the terms of bareboat charter, through which the bareboat charterer assumes all the duties and responsibilities of the owner for the operation of the ship whilst the ownership and encumbrances remain registered in another State which suspends the right of the ship to fly its flag. The resolution requests IMO to carry out a study of the issuing of certificates of insurance or financial security in these cases and, if found necessary, to develop appropriate guidelines.
Conference Resolution 3 - Framework of Good Practice with respect to carriers' Liabilities The resolution requests IMO to develop appropriate guidelines on the provision of insurance or financial security for compensation for claims for death of or personal injury to passengers which will establish an appropriate framework of good practice to ensure that all carriers take steps to maintain full insurance or financial security to meet their full level of liability provided for in the Protocol.
Notes: The Athens Convention of 1974 was designed to consolidate and harmonize two earlier Brussels Conventions dealing with passengers and their luggage and adopted in 1961 and 1967, respectively. The Convention established a regime of liability for damage suffered by passengers carried on a seagoing vessel. It declared a carrier liable for damage or loss suffered by a passenger if the incident causing the damage occurred in the course of the carriage and was due to the fault or neglect of the carrier. However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledge that such damage would probably result, he can limit his liability. For the death of, or personal injury to, a passenger, this limit of liability was set at 46,666 Special Drawing Rights (SDR) (about US$61,100) per carriage. As far as loss of or damage to luggage is concerned, the carrier's limit of liability varies, depending on whether the loss or damage occurred in respect of cabin luggage, of a vehicle and/or luggage carried in or on it, or in respect of other luggage.
The Convention has been in force since 1987. At present, 28 States are party to it.