European Union: Shipping Law 2018

Last Updated: 15 August 2018
Article by Ed Mills-Webb

Most Read Contributor in UK, November 2018

1 Marine Casualty

1.1        In the event of a collision, grounding or other major casualty, what are the key provisions that will impact upon the liability and response of interested parties? In particular, the relevant law / conventions in force in relation to:

(i)     Collision

The UK is party to the 1910 Collision Convention and also applies the 1972 Collision Regulations to all foreign ships within territorial waters and to all British ships around the world.  Both are implemented by the provisions of the Merchant Shipping Act 1995.

(ii)    Pollution

The key provisions in force in the UK relating to pollution are as follows:

  • The International Convention for the Prevention of Pollution (MARPOL) 1973 together with its 1978 and 1997 protocols.  MARPOL is the leading international convention dealing with the prevention of pollution of the marine environment by ships.
  • The International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992 which establishes the principle of strict liability for tanker owners for damage caused by spills of persistent oil from laden tankers and creates a system of compulsory liability insurance.
  • The Fund Convention 1992 and the Supplementary Fund Protocol 2003.  This provides for payment of supplementary compensation where the funds available under CLC 1992 prove insufficient.  Oil receivers in countries that are party to the 1992 Fund Convention are liable for the payment of this supplementary compensation.
  • The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001.  This convention is based on the CLC model (including compulsory insurance cover) and provides compensation to parties who suffer damage caused by spills of bunker oil when carried as fuel in ships' bunker tanks.

(iii)   Salvage / general average

The provisions of the International Convention on Salvage 1989 have been given the force of law in England by the Merchant Shipping Act 1995, though parties are permitted to expressly or implicitly exclude the convention.  Lloyd's Open Form, probably the most widely used international salvage agreement, is subject to English law and provides for arbitration administered by Lloyd's Salvage Arbitration Branch in London.

At present there is no international convention relating to General Average and under English Law it is subject to certain provisions in the Marine Insurance Act 1906 and common law.  In practice, the York-Antwerp Rules will apply contractually in most cases.

(iv)   Wreck removal

The Merchant Shipping Act 1995 grants wide-ranging powers to the relevant coastal authorities to intervene in relation to wrecks, including the power to remove, destroy or take possession of wrecks as necessary.  The owner of the vessel is subject to unlimited liability for the costs of wreck removal.

The Wreck Removal Convention Act 2011 implements the Nairobi International Convention on the Removal of Wrecks 2007 (WRC) which came into force in 2015.  Vessels of 300gt and greater that are registered in a WRC State Party or call at a port or offshore facility in a WRC State Party must carry on board a certificate attesting that insurance or other financial security is in force in accordance with the Convention.

(v)    Limitation of liability

The 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) as amended by the 1996 Protocol is in force in the UK.  The convention sets limits of liability based upon the tonnage of the vessel concerned.  As well as applying to shipowners, charterers, operators, managers, and salvors, under English law the benefit of limitation is also extended to slot charterers.  Amendments to the 1996 protocol (providing for significantly increased limits of liability) came into force in June 2015.

(vi)   The limitation fund

Article 11(2) of the LLMC provides that the "Fund may be constituted either by depositing a sum or producing a guarantee acceptable under the legislation of the State Party where the Fund is constituted" and this was given force of law by s.185 of the Merchant Shipping Act 1995.

Whilst the Civil Procedure Rules currently provide that "The Claimant may constitute a Limitation Fund by making a payment into court", the Court of Appeal has considered whether the use of a P&I Club LOU was acceptable for this purpose under relevant United Kingdom legislation and held that a suitable guarantee from a creditworthy provider is effective security and sufficient to constitute a Limitation Fund.

1.2        What are the authorities' powers of investigation / casualty response in the event of a collision, grounding or other major casualty?

The Secretary of State's Representative for Maritime Salvage and Intervention (SOSREP) has wide powers of intervention in relation to maritime incidents with objectives that include:

  • acting at the earliest point during a shipping or offshore incident to assess the risk to safety, to prompt the end of any such incident and to ensure that increasing risk is evaluated and appropriate measures taken to prevent or respond to escalation;
  • monitoring all response measures to significant incidents involving shipping and the offshore industry; and
  • if necessary, exercising ultimate control by implementing the powers of intervention, acting in the overriding interests of the UK and its environment.

The Marine Accident Investigation Branch (MAIB) carries out investigations aimed at determining the causes and circumstances of marine accidents with a view to reducing the likelihood of such accidents recurring in the future.  Accident investigations are conducted solely in the interest of future safety and the MAIB does not apportion blame, establish liability, enforce laws or carry out prosecutions.

The Maritime & Coastguard Agency (MCA) conducts prosecutions and vessel detentions relating to breaches of maritime legislation.  The MCA inspects foreign and UK flag commercial and fishing vessels to ensure compliance with international maritime conventions or domestic Merchant Shipping legislation.

2 Cargo Claims

2.1        What are the international conventions and national laws relevant to marine cargo claims?

The Hague-Visby Rules are incorporated into English law by the Carriage of Goods by Sea Act 1971.

The Carriage of Goods by Sea Act 1992 addresses the rights and liabilities arising under bills of lading, including title to sue.

2.2        What are the key principles applicable to cargo claims brought against the carrier?

The Hague-Visby Rules as enacted by the Carriage of Goods by Sea Act 1971 will apply in circumstances where the bill of lading is issued in a contracting State, or where the port of shipment is in the contracting State.  When claims arising under the bill of lading are determined in England according to English law, then the English Courts will apply the Hague-Visby Rules, notwithstanding that the terms of the bill of lading may provide for the application of the Hague Rules, since under English law the Hague-Visby Rules apply in specified circumstances as a matter of law.

Issues relating to title to sue in contract are largely governed by the Carriage of Goods by Sea Act 1992.  Prior to this Act the general rule was that in order to claim in contract the claimant had to be a party to the contract of carriage and the legal owner of the cargo.  COGSA 92 improved the position for claimants and applies to all shipments under bills of lading so that a party can sue in its own name provided it is the 'lawful holder' of the bill as defined in the Act, regardless of whether or not it is the cargo owner.

In some cases, the cargo claimant may find that he has no claim in contract against the shipowner (or other person) who was in possession of the goods at the time of the loss or damage.  This may occur because the buyer of the goods has, for some reason, not acquired the benefit of the bill of lading contract under COGSA 92 or perhaps because charterers' bills have been issued.  In such cases it may still be possible to establish a claim under the principles of tort or bailment for damage to the cargo, but such claims can raise complex issues regarding the ownership of the cargo at the time of damage.

In addition, it should be noted that under the Hague-Visby Rules, the defences provided in the Convention "shall apply in any action against the Carrier in respect of loss or damage to goods covered by a contract of carriage, whether the action be founded in contract or tort": non-contractual claims cannot therefore be used as an alternative to contract in order to circumvent the Hague-Visby Rules, where they apply.

2.3        In what circumstances may the carrier establish claims against the shipper relating to misdeclaration of cargo?

The issue of misdeclaration of cargo, whether as to weight or contents, is a problem that has received increased attention in recent years, particularly in relation to containerised cargo.  A number of high-profile incidents have illustrated the dangers of misdeclared dangerous cargo being carried below deck and have brought the potential liability of the shipper in such cases into sharp focus. 

In England the shipper is under a common law duty not to ship "dangerous goods" without the permission of the carrier.  Goods will be deemed dangerous in this context if they are likely to cause physical loss or harm to the ship or might lead to the detention of the ship.

Under the Hague-Visby Rules the shipper has clearly established obligations to the carrier regarding declaration of cargo.  Under Article III(5) the shipper is "deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars".

Article IV(6) of the Hague-Visby Rules provides further extensive rights to the carrier in relation to "goods of an inflammable, explosive or dangerous nature" carried without the consent of the carrier.  The carrier may, at any time before discharge, land, destroy or render innocuous the cargo without providing compensation to the shipper.  Furthermore the shipper is held liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment.

Recently the International Maritime Organization (IMO) has amended the Safety of Life at Sea (SOLAS) Convention to require that a packed container's gross weight be verified before the container can be loaded on board a ship.  The amendment to SOLAS Chapter VI requiring such verification came into force on 1 July 2016.  The MCA has published a Marine Guidance Note (MGN 534), clarifying that the UK is utilising existing auditable accreditation systems (such as Authorised Economic Operator, ISO 9000 and Enterprise Resource Planning systems) to manage certification of weight assessment under the new scheme, as well as existing weights and measures regulations.

3 Passenger Claims

3.1        What are the key provisions applicable to the resolution of maritime passenger claims?

The Athens Convention 1974 was incorporated into English law by section 183 of the Merchant Shipping Act 1995 and subsequently the 2002 Protocol to the Athens Convention entered into force in England on 23 April 2014.  The convention provides that a carrier under an international contract of carriage is liable for damages suffered as a result of the death or personal injury of a passenger, if the incident which caused the damage occurred in the course of the carriage and was due to the fault of neglect of the carrier or his servants or agents.  Fault on the part of the carrier is presumed, unless proved to the contrary, in cases involving shipwreck, collision, stranding, explosion or fire or defect in the ship. 

The 2002 Protocol increased the limit for carrier liability contained in the Athens Convention to 250,000 SDRs for each passenger's injury or death.  The 2002 Protocol also introduces limits of 2,500 SDRs per passenger per carriage for the loss of, or damage to, cabin luggage together with requirements for compulsory insurance of 250,000 SDRs per passenger.

4 Arrest and Security

4.1        What are the options available to a party seeking to obtain security for a maritime claim against a vessel owner and the applicable procedure?

The UK is party to the 1952 Arrest Convention and in general terms it is applicable in the UK.  English law provides that arrest proceedings may be commenced following the issuing of an in rem claim (a claim against a ship).  The right to bring proceedings in rem is governed by the Senior Courts Act 1981.  Section 20 of this Act lists a number of claims that may be brought in rem, and a ship arrested in respect of them.  The most notable include claims for loss of damage to goods carried on a ship, claims for damage done by or to a ship, claims relating to use or hire of a ship, claims for loss of life or personal injury and claims for salvage or arising from a collision.

The procedure for ship arrest in England is relatively straightforward and can be undertaken at short notice.  It is not necessary to provide counter security for the arrest though an undertaking to meet the expenses of the arrest incurred by the Admiralty Marshall must be provided.  It is possible to arrest sister ships in England where those vessels are owned, at the time the action is brought, by the same person who owned or demise chartered the vessel in connection with which (and at the time when) the cause of action arose. Associated ship arrests are not allowed in England, however.  Damages for wrongful arrest will only be awarded where it is proved by the owners of the arrested ship that the action was brought either with malice or gross negligence.

In cases where arrest is not available, it may be possible to seek a freezing injunction over assets in order to secure a claim.  A freezing injunction is an interim remedy which prevents a defendant from disposing of, or dealing freely with, assets (located in the jurisdiction of the High Court or, exceptionally, elsewhere) to avoid paying any future/current judgment.

4.2        Is it possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel?

Under English law, an arrest may not be made in relation to the supply of bunkers without a contractual link between the vessel's owner and supplier.  In relation to the problems that arose in the OW Bunker case, the contractual supplier (usually OW Bunker) had often sub-contracted the physical supply of bunkers to be carried out by a third party.  In such a case, the shipowner will usually have no contractual link to the physical supplier and therefore no in personam liability on which an arrest could be based.  On that basis there would be no right of arrest on behalf of a third-party physical supplier in England unless there were some additional evidence, such as that showing a previous course of dealing, sufficient to establish an intended contractual relationship.

4.3        Where security is sought from a party other than the vessel owner (or demise charterer) for a maritime claim, including exercise of liens over cargo, what options are available?

Under common law a shipowner may be able to rely upon a lien on cargo in respect of freight due.  Such a lien is usually exercised by refusing to discharge or release the cargo until payment is made and is therefore dependant on the shipowner having retained possession of the cargo.  This is commonly referred to as a 'possessory' lien.

Other liens can have their basis in contract, usually where a lien clause has been included in a charterparty that has been validly incorporated into the contract of carriage.  Such clauses can entitle the shipowner to exercise liens on sub-freight or sub-hire.  However, such clauses tend to be subject to strict interpretation by the courts so that, for example, any notice provisions must be strictly adhered to and any reference to 'sub-freight' will not necessarily be sufficient, without more, to also encompass sub-hire.

It should be noted that in some limited cases English law recognises categories of lien, known as 'maritime liens', which can be enforced against a vessel by means of an arrest even where there has been a change of ownership.  Claims of this type include those for damage done by a ship, salvage and the wages of Master and crew.

4.4        In relation to maritime claims, what form of security is acceptable; for example, bank guarantee, P&I letter of undertaking.

The practice of providing cash deposits as security for maritime claims in general has largely been superseded by P&I Club LOUs.  Under the Civil Procedure Rules (CPR) Part 61, where an in rem claim form has been issued and security sought, any person who has filed an acknowledgment of service may apply for an order specifying the amount and form of security to be provided.  The courts have approved the use of P&I Club LOUs in this context and also, more recently, in the context of establishing a limitation fund under the 1976 Convention on Limitation of Liability for Maritime Claims.

5 Evidence

5.1        What steps can be taken (and when) to preserve or obtain access to evidence in relation to maritime claims including any available procedures for the preservation of physical evidence, examination of witnesses or pre-action disclosure?

Under the CPR it is possible to seek an order for pre-action disclosure, subject to certain conditions, where it is considered by the court to be desirable in order to: dispose fairly of the anticipated proceedings; assist the dispute to be resolved without proceedings; or to save costs.

It is also possible to seek an order for specific disclosure seeking to direct a party to carry out a thorough search for any documents which it is reasonable to suppose may adversely affect his own case or support the case of the party applying for disclosure or which may lead to a train of enquiry which has either of these consequences and to disclose any documents located as a result of that search.

In relation to arbitration proceedings, S 44 of the Arbitration Act 1996 provides the court (subject to contrary agreement by the parties) with the same powers of making orders as it has in relation to court proceedings for the following:

  • the preservation of evidence;
  • making orders relating to property which is the subject of the proceedings or as to which any question arises in the proceedings:

    • for the inspection, photographing, preservation, custody or detention of the property; or
    • ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property; and
  • for that purpose authorising any person to enter any premises in the possession or control of a party to the arbitration.

5.2        What are the general disclosure obligations in court proceedings?

Under English law, disclosure is an important exercise which can often "make or break" a case, as the strength of each side's case can only be fully tested once the complete factual background to the dispute has been revealed.  Judges usually find that the contemporaneous documentation is the most reliable guide to what actually happened.  Disclosure also prevents any last minute surprises just before or during the trial.  In certain circumstances, the court may also impose penalties, which can range from costs consequences to contempt of court, if a party fails in its disclosure obligations.

Each party will be required to disclose to the other side documents upon which it will rely at trial, documents which adversely affect its case or support the other side's case and any specific documents which are required to be disclosed by the court.  Accordingly, documents will have to be disclosed even if they are harmful to either party's case or are confidential, if they are relevant to the issues.

A party must disclose all documents (whether originals or copies, or copies of copies):

a)     which are or have been in its control, including its physical possession;

b)     over which it has a right to possession; and

c)     which it has a right to inspect or take copies of.

Parties will also be required to list documents which fall within categories (a)–(c) even if they had but no longer have them.  So if documents have been lost or disposed of prior to litigation, it will be necessary to explain the circumstances in which they were lost or disposed of.

A "document" is anything which records information of any description.  It includes, for example, not only letters, faxes, file notes, memos and reports, but also hand-written notes, diary entries, log books, maintenance records and electronic documents, including e-mail and other electronic communications.

6 Procedure

6.1        Describe the typical procedure and timescale applicable to maritime claims conducted through: i) national courts (including any specialised maritime or commercial courts); ii) arbitration (including specialist arbitral bodies); and iii) mediation / alternative dispute resolution.

i)      Claims where the amount in dispute is more than £100,000 (or £50,000 if the claim is for personal injuries) are heard in the High Court and in the case of maritime claims this generally means the Commercial Court or the Admiralty Court.  In these specialist courts cases are heard by judges that have many years of experience in dealing with maritime and commercial law.  Certain proceedings must be commenced in the Admiralty Court and these include salvage and collision claims, limitation claims and, perhaps most importantly, proceedings for the arrest of a vessel.  Cases that fall within the specialist jurisdiction of the Commercial Court include those involving:

  • the export or import of goods;
  • the carriage of goods by land, sea, air or pipeline;
  • insurance and re-insurance;
  • the construction of ships; and
  • arbitration.

        Although cases heard in the Admiralty and Commercial Court are subject to the general procedural provisions set out in the CPR, these rules are explained and supplemented by the Admiralty and Commercial Court Guide to reflect procedures that are specifically tailored to the types of dispute dealt with in those courts.  Judges play an active role in case management. After commencement of proceedings and service of statements of case the court will hold a Case Management Conference (CMC) to discuss the issues in the case and its requirements, including disclosure, expert evidence and the potential for mediation.  If the matter proceeds towards trial then further supervision by the judge in the form of additional CMCs and a pre-trial review will take place.  It will typically take between 12 and 24 months for a matter to proceed to trial although this will vary according to the complexity and requirements of the case.  It is important to note that settlement is encouraged at every stage of the proceedings and in approximately 95% of cases a settlement is reached by the parties without need for a trial.

ii)     Arbitration is a common method of dispute resolution in shipping cases and many contracts provide for arbitration to take place in London subject to English law.  Specialist arbitrators in London provide a wealth of experience in resolving shipping disputes and many are members of the London Maritime Arbitrators Association (LMAA), which issues its own rules that are tailored to deal with small claims, fast and low-cost arbitration, intermediate claims and larger cases.  The LMAA has recently published new Terms and Procedures that will apply to arbitration proceedings commenced on or after 1 May 2017.

iii)    Mediation and alternative dispute resolution are actively encouraged by the Admiralty and Commercial Court and there is a large pool of qualified mediators with experience of shipping disputes that parties may utilise in England.

6.2        Highlight any notable pros and cons related to your jurisdiction that any potential party should bear in mind.

There is a great history and tradition of shipping dispute resolution in England.  This has resulted in the development of a body of law and expertise that provides unequalled guidance to parties seeking to assess the strengths and weaknesses of their case and to have their disputes resolved in a fair and transparent way.  Improvements in court procedure, including those relating to costs, are designed to ensure that all cases are dealt with efficiently and at a cost that is proportionate to the amount in dispute.

7 Foreign Judgments and Awards

7.1        Summarise the key provisions and applicable procedures affecting the recognition and enforcement of foreign judgments.

There are a number of reciprocal regimes that allow the enforcement of foreign judgments in English courts.  The most important of these are those governing European and Commonwealth countries.

European judgments are currently enforced under Regulation (EU) No 1215/2012 (the Recast Brussels Regulation).  The Recast Brussels Regulation has applied from 10 January 2015 to proceedings instituted on or after that date.  The 2001 Brussels Regulation (44/2001) will continue to determine the enforcement of judgments across EU Member States given in proceedings instituted before 10 January 2015.

The EU Regulations and the Lugano Convention as implemented into English law govern the recognition of judgments from European Community Member States as well as Norway, Iceland and Switzerland.  The procedure for enforcement of judgments from these countries is relatively straightforward unless (most commonly) they are shown to be contrary to public policy or irreconcilable with a judgment in dispute between the same parties in England and Wales.

Under the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933, judgments from Commonwealth and other reciprocating countries can be enforced by a process of registration of the judgment.

The Hague Convention on Choice of Court Agreements (Hague Convention) came into force in all EU Member States (except Denmark where entry into force is expected in September 2018) and Mexico on 1 October 2015.  Subsequently it was ratified by Singapore on 2 June 2016 and entered into force as between Singapore, the EU (except Denmark) and Mexico on 1 October 2016.  The Hague Convention will generally apply to the enforcement of judgments from Mexico and Singapore in the UK (or in any other Member State) where Mexico or Singapore (as appropriate) was designated in an exclusive choice of court agreement.

Enforcement of judgments from countries outside the scope of these arrangements may still be possible but will be subject to common law rules and is usually a more complex procedure.

7.2        Summarise the key provisions and applicable procedures affecting the recognition and enforcement of arbitration awards.

The United Kingdom is party to the 1958 New York Convention on the Recognition and Enforcement of Arbitration Awards.  As such, enforcement of awards from other contracting states is relatively straightforward.

Enforcement of awards from non-contracting states may still be possible, though less straightforward, under the Arbitration Act 1996 and under common law.

8 Updates and Developments

8.1        Describe any other issues not considered above that may be worthy of note, together with any current trends or likely future developments that may be of interest.

Whereas last year saw a number of significant decisions of the Supreme Court, including in The 'Ocean Victory' (safe ports) and The 'New Flamenco' (assessment of damages following repudiation of a time charterparty), 2018 also seems likely to be a significant year for maritime rulings in the UK.  We have already seen key decisions of the Court of Appeal handed down in The 'Aqasia' and The 'Maersk Tangier' regarding limitation issues relating to cargo claims (see the opening chapter to this Guide for full details) and can look forward to further significant cases, including likely rulings from the Supreme Court in Volcafe Ltd v CSAV (inherent vice and the burden of proof under the Hague and Hague-Visby Rules) and of the Court of Appeal in The 'Pacific Voyager' (the nature of a shipowner's obligation to proceed to the loadport with utmost despatch). 

Originally published in ICLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions