SHIPPING and the LAWManaging the Risks

THE LIABILITY OF CLASSIFICATION SOCIETIES

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CLASSIFICATION SOCIETIES («CS») RECOGNISED ORGANISATIONS («RO»)

CLASS

SHIPOWNER

STATUTORY CERTIFICATION

SHIPOWNER FLAG STATE

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POTENTIAL CLAIMANTS

IN CONTRACT

OWNER (shipowner, manager)

FLAG STATE

IN TORT:

THIRD PARTY «USERS»:

•INSURERS•CHARTERERS•PASSENGERS •CARGO OWNERS•SHIP BUYERS •POLLUTION VICTIMS•OTHERS

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BASIS OF LIABILITY

•IN CONTRACT

•CONTRACTS WITH PROTECTIVE EFFECTS FOR THIRD PARTIES

•IN TORT

•CRIMINAL

•ADMINISTRATIVE (IT. LAW No. 231/2001)

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CS-RO DEFENSIVE ARGUMENTS

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•SOVEREIGN IMMUNITY

•NO LIABILITY?

•EXCULPATORY/LIMITATION CLAUSES

•STATUTORY LIMITATION

SOVEREIGN IMMUNITY («S.I.»)

WHAT DOES IMMUNITY MEAN?

THE CS/RO AS DELEGATE OF A STATE IN THE EXERCISE OF SOVEREIGN POWERS ENJOYS THE SAME RIGHTS OF THE DELEGATING STATE:

-IT CAN BE SUED ONLY BEFORE THE COURTS OF THAT STATE

-IT CAN AVAIL OF THE SAME DEFENCES

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SOVEREIGN IMMUNITY

WHY ARE CS/RO ENTITLED TO S.I.?

•STATES EXERCISE JURISDICTION OVER SHIPS FLYING THEIR FLAG AND ENSURE SAFETY AT SEA (UNCLOS ART. 94)

•ADMINISTRATIONS MAY ENTRUST INSPECTIONS TO ORGANISATIONS RECOGNISED BY THEM

•ADMINISTRATIONS IN EVERY CASE GUARANTEE COMPLETENESS AND EFFICIENCY OF THE INSPECTIONS (RULE 6 SOLAS ANNEX 1)

•CERTIFICATES ISSUED FOLLOWING INSPECTIONS SHALL BE ACCEPTED BY OTHER GOVERNMENTS (RULE 17 SOLAS ANNEX 1)

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S.I. AND CASE LAW

- The SUNDANCER US Ct of Appeal (2° Circ.) 15 Oct. 1994

- The SCANDINAVIAN STAR USDC (Florida) 4 June 1993

- It. State Auditing Court 28 Sept. 1992- It. Ct of Cassation 3 Dec. 1986- Ct of Appeal of Paris 2010 («Erika»)- French Ct of Cassation 2012 («Erika»)- It. Adm. CT (Tar) 2007- It. CT of First Instance Genoa 2012

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C.S. – R.O. LIABILITY

ARE THEY ACCOUNTABLE FOR DAMAGE (PHYSICAL – ECONOMIC) TO OTHERS (OWNER – THIRD PARTIES) ?

ARGUMENTS DEVELOPED BY COMMON LAW DECISIONS:

1.OWNERS’ NON-DELEGABLE DUTY TO PROVIDE A SEAWORTHY VESSEL

2.ORGANISATIONS WITH ONLY FLEETING CONTACT WITH AND BRIEF OPPORTUNITY TO OBSERVE THE VESSEL

3.CLASSIFICATION SOCIETIES SHOULD NOT BE THE INSURERS OF THE VESSELS THEY SURVEY

4.IMPORTANCE OF THE PUBLIC FUNCTIONS PERFORMED

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BASIS OF LIABILITY UNDER CIVIL LAW SYSTEM

DAMAGE (TO SHIPOWNER) FOR NON/INCORRECT PERFORMANCE OF CONTRACT (BREACH OF CONTRACT)

DAMAGE (OTHER THAN ECONOMIC) (TO THIRD PARTIES) ON THE BASIS OF A CONTRACT WITH PROTECTIVE EFFECT TOWARDS THIRD PARTIES (CASE LAW IN THE MATTER OF FINANCIAL ADVISORS – EXTERNAL AUDITORS – DOCTORS)

NEGLIGENT MISREPRESENTATION

GENERAL LAW OF TORT

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LIABILITY AND EXCLUSION/LIMITATION CLAUSES

1. TOWARDS WHOM?- CONTRACTUAL PARTY- THIRD PARTY RELYING ON PROTECTIVE EFFECT

OF THE CONTRACT

2. IN WHAT LIMITS?- EXCLUSION CLAUSE NOT ENFORCEABLE IN CASE

OF WILFUL CONDUCT – GROSS NELIGENCE- LIMITATION CLAUSE NOT ENFORCEABLE AGAINST

CLAIM FOR LOSS OF LIFE/PHYSICAL INJURY

3. EXCLUSION/LIMITATION OF RO VIS A VIS FLAG STATES (DIRECTIVE EC 2009/15 23.4.2009)

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STATUTORY LIMITATION - IARE CS PROTECTED BY LIMITATION RULE IN CURRENT

CONVENTIONS?

HAGUE VISBY (1924-1968) art. IV bis

Limitation available for «servant or agent of the carrier (such servant or agent not being an independent contractor)»

ROTTERDAM RULES (2012) art. 18-61

Limitation available for: •Carrier (C)•Any Performing Party (PP)•Master & Crew•Employee of C and PP•Other party performing any of the C’s obligations

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STATUTORY LIMITATION - II

LIMITATION OF LIABILITY FOR MARITIME CLAIMS (1976-1996) ART. 1-9

Limitation available for:•Owner, Charterer, Manager and Operator•Shipowner of ship rendering salvage service•Salvor not operating from a ship•Any person for whose act, neglect or default they are responsible

CIVIL LIABILITY CONVENTION (1969/1992) ART. III.4(b)

Limitation available for:

Any other person who, without being a member of the crew, performs services for the ship

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STATUTORY LIMITATION - III

IS IT DESIRABLE?

PREVENTION & COMPENSATION PRINCIPLES REQUIRE THAT THE WRONGDOER COMPENSATE THE DAMAGE

BUT•ECONOMIC EFFICIENCY REQUIRES TO AVOID MULTIPLE LIABILITY INSURANCE PREMIUMS•CS CANNOT BUY INSURANCE FOR UNLIMITED (OR VERY HIGH) LEVEL•MOST (IF NOT ALL) OTHER PLAYERS CAN ENJOY LIMITATION PROTECTION

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