What is the UK limit of liability for wreck?

Surprisingly, a shipowner’s rights to limit liability in respect of claims against a wreck are not clear under UK law. Although the ambiguities in question were pointed out at an early stage, the position remains unresolved. This article considers the applicable treaties, legislation and views of eminent authors to demonstrate that the position is unresolved.

The treaties

The position is ultimately defined by the treaties to which the UK is a party, namely the conventions on shipowners’ limitation of liability generally and the wreck convention.

The UK is currently a party to the 1996 Protocol to the International Convention on Limitation of Liability for Maritime Claims 1976. In becoming a party, the UK denounced the 1976 Convention to which it had previously been a party since 1 December 1986. The 1996 Protocol entered into force in the UK on 13 May 2004.

In connection with the ratification of both the 1976 Convention and the 1996 Protocol, the UK notified the depositary, the International Maritime Organization, that it reserved its right not to apply rights to limit liability to claims falling under article 2(1)(d) of the Convention. There has been no withdrawal of that notification. Article 2 is in identical form in both Conventions, and reads, with emphasis added:

“Claims subject to limitation

1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

[(a) – (c)] …

(d) claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship;

(e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship …”

Reservations are permitted against the Convention. Article 18 reads:

“Article 18. Reservations

1. Any State may, at the time of signature, ratification, acceptance, approval or accession, reserve the right to exclude the application of Article 2, paragraph 1(d) and (e). …”

The amending Protocol also permits this same reservation. The UK has availed itself of this option. As a result of this reservation, it is not bound by international law to ensure by domestic legislation that claims such as under article 2(1)(d) are subject to limitation. The reservation was made both under the original Convention and when ratifying the Protocol.

As for the Nairobi International Convention on the Removal of Wrecks 2007, it entered into force in the UK on 14 April 2015. This Convention does not contain any provisions on limitation of liability, except to recognise that states may wish to apply other Conventions on limitation of liability to claims in respect of wreck:

“Article 10. Liability of the owner

1. Subject to Article 11, the registered owner shall be liable for the costs of locating, marking and removing the wreck under Articles 7, 8 and 9, respectively, unless the registered owner proves that the maritime casualty that caused the wreck:

(a) resulted from an act of war, hostilities, civil war, insurrection, or a natural phenomenon of an exceptional, inevitable and irresistible character;

(b) was wholly caused by an act or omission done with intent to cause damage by a third party; or

(c) was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.

2. Nothing in this Convention shall affect the right of the registered owner to limit liability under any applicable national or international regime , such as the Convention on Limitation of Liability for Maritime Claims, 1976, as amended.” [Emphasis added.]

The right to limit liability for claims against wreck under UK law therefore depends on whether the enabling legislation giving force to the 1996 Protocol has given effect to the reservation against article 2(1)(d).

The legislation

The relevant provisions are contained in the Merchant Shipping Act 1995. Section 185(1) of that Act provides:

“The provisions of the Convention on Limitation of Liability for Maritime Claims 1976 as set out in Part I of Schedule 7 (in this section and Part II of that Schedule referred to as ‘the Convention’) shall have the force of law in the United Kingdom.”

Part I contains the text of the 1996 text of the Convention in full, without omission of article 2(1)(d). In principle, the full Convention therefore has the force of law. However, section 185(2) of the Merchant Shipping Act states that Part I of the Schedule is subject to Part II.

Part II, para 3, headed “Claims subject to limitation” reads as follows:

“(1) Paragraph 1(d) of article 2 shall not apply unless provision has been made by an order of the Secretary of State for the setting up and management of a fund to be used for the making to harbour or conservancy authorities of payments needed to compensate them for the reduction, in consequence of the said paragraph 1(d), of amounts recoverable by them in claims of the kind there mentioned, and to be maintained by contributions from such authorities raised and collected by them in respect of vessels in like manner as other sums so raised by them.

(2) Any order under sub-paragraph (1) above may contain such incidental and supplemental provisions as appear to the Secretary of State to be necessary or expedient.” [Emphasis added.]

There appears to be no such order at present. The conclusion must therefore be that the provision does not apply, and that wreck claims are not currently subject to limitation in the UK. This contradicts the Explanatory notes to the Wreck Removal Convention Bill as introduced in the House of Commons on 30 June 2010 [Bill 18], where para 24 reads:

“The right to limit liability under section 185 (limitation of liability for marine claims), which gives effect to the Convention on Liability for Marine Claims, is preserved.”

To confuse matters, the header “Claims subject to limitation” in Part II of Schedule 7 is followed by another header, “Claims excluded from limitation” above para 4, which deals with claims for damages related to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (the HNS Convention). Considering the combination of headers (“Claims subject to limitation” and “Claims excluded from limitation”), it appears clear that the intention of the legislator was that HNS claims should be excluded from, but wreck claims should be subject to limitation.

Other sources: comments on the provisions

These observations are not new: the discrepancy has been pointed out by others. A letter from the British Maritime Law Association dated 24 July 2008 and signed by the association’s then Secretary/Treasurer Andrew Taylor is available online. 1 In the letter, it is noted a propos para 3(1) of part II of Schedule 7 to the Merchant Shipping Act 1995:

“The effect of this provision is that the owner of a ship is not in English Law entitled to limit its liability under the Merchant Shipping Act for the cost of wreck removal.”

The BMLA letter goes on to offer a solution:

“However it is, in the view of the BMLA working group, arguable that the provisions relating to compulsory insurance and direct action for the recovery of such costs are equivalent to the setting up of a fund envisaged by the above paragraph.”

If additional support were needed, other authors have noted the same discrepancy. Aengus Fogarty, the author of Merchant Shipping Legislation, 3rd Edition, 2017, Informa Law, makes a similar observation at para 15.171:

“Article 2(1)(d) of the Convention is not yet applicable as no fund has yet been established under paragraph 3 of Part II of Schedule 7. Accordingly, statutory claims by harbour and conservancy authorities for wreck removal expenses are not yet subject to limitation of liability. It is arguable that non-statutory claims for wreck removal expenses in circumstances similar to those in The Putbus, 2 supra, and The Arabet, 3 supra, are excluded from limitation by virtue of this paragraph: see Limitation of Liability for Maritime Claims …” (Footnotes with references added.)

The work referenced at the end of the quote is Griggs et al, Limitation of Liability for Maritime Claims, 4th Edition, 2005, Informa Law. This work, best known as Griggs, contains a commentary to the Limitation Convention. The Commentary to article 2(1)(d) of the Convention posits – undoubtedly correctly – that the government’s policy behind the reservation to the Convention was that harbours and other facilities should not shoulder the costs for wreck removal. That concern pertains particularly to wreck removal undertaken pursuant to statutory powers. The authors of Griggs go on to say:

“it appears that as a result of the wording in the introductory paragraph to Article 2, to the effect that the listed claims are to be the subject of limitation ‘whatever the basis of liability’, the reservation exercised by the United Kingdom may have inadvertently taken out of limitation in the United Kingdom any claims (whether statutory or otherwise) relating to wreck removal, including claims for recourse, provided that the liability does not relate to remuneration under a contract with the person liable).” 4

The apparent effect that claims for wreck removal expenses against other parties are not subject to limitation as a result of the legislation is confirmed by these eminent authors, and described as “inadvertent”.

Comment

The effects for insurers are important: they are said in the Wreck Removal Convention Act 2011, section 255P, sub-section (5) to have the same rights to limit liability as their insured:

“The insurer may limit liability in respect of claims made under this section to the same extent as the registered owner may limit liability by virtue of section 185 (or would be able to limit liability by virtue of that section if it were not for paragraph 3 of Part 2 of Schedule 7).” (Emphasis added.)

But what does “to the same extent” mean? The position appears to be a door to litigation, waiting to be knocked down.

Dr Johanna Hjalmarsson

Informa Associate Professor in Maritime and Commercial Law

This article was first published in Shipping & Trade Law 2017 (17) 10 pp 3-5 and is reproduced here by kind permission of the publisher.

Available at: https://www.shippingandtradelaw.com/shipping/liability/what-is-the-uk-limit-of-liability-for-wreck-127949.htm (registration required) and https://www.i-law.com/ilaw/doc/view.htm?id=385574 (paywall)

Footnotes

1 The letter is available at www.bmla.org.uk/documents/2011/ltr_DfT_re_Nairobi_Convention_Wreck_Removal.doc (accessed on 20 December 2017).

2 [1969] 1 Lloyd’s Rep 253.
3 [1963] P 102.
4 Griggs, chapter 3, commentary to article 2(1)(d).

Brands and ecommerce platforms: a tainted relationship?

What has happened to online ecommerce platforms? Over the past few months news reports have multiplied – or, perhaps, their underlying issues have acquired greater visibility – that brand owners have been increasingly voicing criticisms against, sued, or discontinued sales on ecommerce sites. In particular, after the criticisms made against Alibaba, it seems that Amazon is now making the headlines.

Let’s have a quick look at what has happened over the past few months.

Court actions

First, there have been legal proceedings being brought by trade mark owners, claiming a direct responsibility of Amazon in the sale of counterfeits or invoking a right to prevent sales on such platform.

An example of the former is the lawsuit filed by Daimler against Amazon in late 2017 in the US District Court for the Western District of Washington at Seattle. The well-known German car manufacturer argues that Amazon is directly responsible for the “offer for sale, sale and distribution of wheels which blatantly copy issued design patents in various distinctive and artistic wheel designs owned by Daimler” under the Lanham Act (§ 1051 ff), the US Patent Act (§ 1 ff), and Washington State statutory and common law.

As explained on Forbes here, this is not the first time that a trade mark owner is seeking to have the direct liability of Amazon established. However, back in 2015 a 9-member jury in the same court that has now been asked to rule on the lawsuit filed by Daimler held that Amazon was not liable for the sale of counterfeit Milo & Gabby (now JoliMoli) animal-shaped pillows.

If the case brought by Daimler ended with a finding of liability for Amazon, that would likely have a significant impact on the liability of platforms allowing third-party listings, and set a different approach to platform liability in the US.

As readers knows, the particular issues surrounding platform liability have been at the centre of attention also in Europe.

Reference in the online trade mark realm goes instinctively to the landmark decision of the Court of Justice of the European Union (CJEU) in eBay, C-324/09, in which the highest EU court clarified that the safe harbour for hosting providers within Article 14 of the E-Commerce Directive does not apply to “an information society service [which is] aware of facts or circumstances on the basis of which a diligent economic operator should have identified the illegality in question and acted in accordance with Article 14(1)(b) of Directive 2000/31.” [para 120]

More recently, the CJEU appears to have pushed the liability of platforms even further than the realm of safe harbours (hence, scenarios of secondary liability) by holding that a platform may be even directly (primarily) liable for third-party infringements. It has done so in the copyright context, especially in the recent Filmspeler decision [hereand – even more clearly – in the Ziggo ruling [here].

If we remain in the EU context, the issue of platform liability is not the only aspect that has been touched upon in relation to ecommerce platforms. Readers will in fact remember the recent judgment in Coty Prestige, C-230/16 [here], in which the CJEU tackled the compatibility with EU competition rules of selective distribution agreements for luxury brands, including clauses that would prevent resellers from distributing branded products via Amazon. The CJEU provided an interpretation of relevant EU provisions that allows – at certain conditions – trade mark holders from preventing distribution of their goods via platforms of this kind.

Discontinued sales

In parallel with court actions, other brands have recently announced their intention to discontinue sales on Amazon, over issues of counterfeiting and allegedly excessive discounts.

In a timeframe of just a few weeks, this has been for instance the case of Birkenstock and Italian publisher E/O, respectively.

Shoe producer Birkenstock announced that as of 1 January 2018 it would terminate its business relations with Amazon, on grounds that

“there have been a series of violations of the law on the Marketplace platform operated by Amazon which the platform operator has failed to prevent of its own accord. On a number of occasions, BIRKENSTOCK lodged a complaint that counterfeit products of poor quality which infringed BIRKENSTOCK’s trademark rights and misled the consumers regarding the origins of goods were being made available on the platform.

Putting the issue of legal obligations aside, BIRKENSTOCK is of the opinion that an integral part of a trusting business relationship is that, upon being first notified as the operator of the Marketplace platform of such a breach of the law, Amazon would, of its own accord, do everything within its power to prevent this type of and similar infringements. To this day, no binding statement has been made to the effect that no more counterfeit BIRKENSTOCK products would be offered for sale through the platform.”

A couple of weeks ago also E/O [the Italian publisher of Elena Ferrante’s books, amongst others] announced that it would no longer sell on Amazon, on consideration that the discounts requested by the ecommerce provider would be excessive. It is not the first time that a complaint of this kind is made by the publishing industry.

What’s next?

In all this, what does the future hold?

On the one hand, it appears that brand owners’ complaints may result in the adoption of new approaches towards responsibilization and liability of online platforms.

This could occur not just at the court level, but also by means of initiatives of policy- and law-makers. In Europe, for instance, the issue of platform liability, notice-and-stay down obligations (including filtering), as well improved enforcement tools are currently central items to the agenda of the EU Commission and legislature. In the first half of 2018 it is expected that the Commission will unveil further legislative proposals in this area, under the umbrella of its Digital Single Market Strategy.

On the other hand, platforms like Amazon may not rely just on partnerships with brand owners or the making available third-party offerings but, rather, increasingly invest on the making available of their own offerings. In this sense, the trend in fashion seems to be already reality. As noted by The Fashion Law, Amazon has in fact been working on and launched a number of in-house collections that have been already finding success among consumers, “particularly in light of the current retail environment, when brand loyalty is low, consumers are overly price/value conscious, and branding is simply not as significant a player as it used to be.”

In this sense, the general trend seems to be towards a configuration of platforms’ activity as no longer – or just – passive hosts of third-party offerings but, rather, active providers of own offerings. What should the legal treatment of this evolving and evolved scenario be? While the functioning of the internet must be safeguarded [as was also recently stressed by the German Federal Court of Justice, here and herethe questions that lie ahead and require a response are whether new rules are needed, existing rules should be applied differently … or what else?

[This post was originally published on The IPKat on 4 January 2018]

Professor Nield published in January issue of Modern Law Review

Professor Sarah Nield’s article, co-authored with Professor Sue Bright and Professor Sarah Blandy, and entitled ‘The Dynamics of Enduring Property Relations’ will be published in the January issue of the Modern Law Review.  Since its foundation over seventy years ago, The Modern Law Review has been providing a unique forum for the critical examination of contemporary legal issues and of the law as it functions in society. The Review today stands as one of Europe’s leading scholarly journals.

The article proposes a new way of looking at consensual property relationships in land that recognises both the temporal and spatial dimensions of land. The dynamics approach reflects the fact that most property relationships are lived relationships, affected by changing patterns and understandings of spatial use, relationship needs, economic realities, opportunities, technical innovations, and so on. Although evolving responsively to accommodate changing uses and new rights-holders, these relationships are nevertheless sustained and enduring. The dynamics lens acknowledges the diverse range of legal, regulatory, social and commercial norms that shape property relations and explores how far the enduring, yet dynamic, nature of property relations is taken into account by a range of decision-makers.

Further details are available at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1468-2230.”

Irish housing law violates tenant’s human rights

On the 23 October 2017, the European Committee of Social Rights handed down its decision in International Federation for Human Rights (FIDH) v. Ireland Complaint No. 110/2014. The decision is available here. On the main ground, the Committee found that Irish housing law violates the right of families to adequate housing under Article 16 of the Revised European Social Charter. The declaration is notable in several respects and is significant, both nationally and internationally. This blog post will engage with some of the issues raised by the complaint however it will also offer some insight into the way this complaint came about and how back in 2012, as a recent graduate, I came to be involved in the complaint.

The Revised European Social Charter

The collective complaint system relates to the Revised European Social Charter, which was established in 1961, and revised in 1996, by the Council of Europe to support the (more famous) European Convention of Human Rights (ECHR). Broadly speaking, while the ECHR enshrines civil and political rights, the European Social Charter enumerates social and economic rights. The logic behind the Social Charter can be explained by borrowing a line from Franklin Delano Roosevelt. In 1944, Roosevelt outlined, in relation to the proposed second Bill of Rights which sought to enumerate economic and social rights in the United States, that “individual freedom cannot exist without economic security and independence”. The European Social Charter sets out human rights to education, health, housing, etc. While 43 out of the 47-member States of the Council of Europe are parties to either the Charter or the Revised Charter, it has not been incorporated into domestic law in the way that the ECHR has been. The rights are not directly justiciable, however the considerable jurisprudence of the Social Charter is nonetheless of growing influence in informing the development of European human rights norms.

The collective complaint process

By international standards, the rights enumerated by the European Social Charter are remarkably sophisticated. Much of this can be attributed to the system of enforcement which through a system of national reports by ratifying states and, in particular, a novel collective complaint system, generates a growing corpus of human rights standards. Certain national and international bodies including national tenants/landlord’s associations, international human rights agencies, etc. have locus standi to bring a collective complaint alleging that some aspect of national law violates the human rights of a collection of individuals in that country. Once a complaint is submitted, it must be deemed admissible (a relatively straightforward threshold) and then it proceeds to the European Committee of Social Rights which, after a hearing, makes a decision on the merits of the case. There is no national tenant’s association in the Republic of Ireland, instead this complaint was brought via the FIDH (International Federation for Human Rights). The moving force behind the whole effort was a group of local authority tenants who were concerned at the conditions of local authority housing and the lack of effective legal remedies governing housing condition and repair. The complaint was organised by Community Action Network (CAN) with the support of Ballymun Community Law Centre, and The Centre for Housing Law, Rights and Policy at NUI Galway. The complaint was funded by the Free Legal Aid Clinic and the Irish Human Rights & Equality Commission.

Getting involved in co-operative research projects

My involvement stems from my work with Dr Padraic Kenna at The Centre for Housing Law, Rights and Policy. I had graduated from the LLB programme at NUI Galway in the summer of 2011 and had taken Dr Kenna’s Housing Law, Rights and Policy module in my final year. This module combined cutting edge research led teaching with a real practical edge and really spurred my academic interest in this area of the law. This experience was exceptionally useful in putting together a successful application when a graduate position opened up on a housing law and policy human rights project in 2012. I was responsible for working with colleagues in Dublin and Galway to identify areas of Irish housing law which were potentially in violation of the Charter and to collect and organise materials which would support the development of a collective complaint. The main issues including the poor housing conditions of local authority housing and in particular the tenant’s lack of effective rights in relation to housing condition, repair, security, dispute resolution etc.

The difficulties in making a complaint

Part of the difficulty for tenants in bringing the complaint was the lack of meaningful statistics. The last state survey of local authority housing condition was in 2002. The complaint was only made possible by tenants systematically collecting and cataloguing evidence of poor housing for years. This was a huge effort but was vital to the ultimate success of the complaint on the main ground. The achievement of CAN is even more remarkable given that there is no state support of tenants’ associations in Ireland, unlike most of the countries of the EU where national tenants’ associations play a vital role in developing renting law & policy e.g. Sweden, Italy, etc. At the end, I had helped put together a skeleton draft which focused on a wide range of areas including local authority housing, as well as homeless legislation, and the housing law governing traveller accommodation. This was the end of my involvement at this stage and I then took up a Tenlaw research fellowship at the University of Southampton. However, I became involved once again in 2016, after the complaint had been deemed admissible and the state had responded by making a submission on its merits. Together with Dr Padraic Kenna, I helped draft the response to the State’s arguments.

The decision on the merits

In 2017 the Committee issued a decision finding that Irish housing law violates the right of families to adequate housing under Article 16 of the European Social Charter. While the Committee found a violation on the main ground i.e. inadequate housing conditions, the decision was disappointing in some respects, most notably in relation to the lack of effective legal remedies available to tenants. The difficulties facing local authority tenants are acute. For local authority tenants, their landlord is also the regulator of housing standards. Because the local authority is legally incapable of serving enforcement notices on itself, it is effectively impossible for local authority tenants to seek enforcement of the statutory housing quality standards. This puts local authority tenants at a remarkable disadvantage relative to private tenants who not only can seek enforcement of these standards by the local authority, they also have access to the low cost and relatively quick dispute resolution framework of the residential tenancies board. Because local authority tenants are in theory able to take their landlord to court over poor housing conditions, the Committee were prepared to reject the argument that local authority tenants were denied effective remedies. However, given the high costs involved in pursuing legal action and the general lack of legal aid available to tenants, this reasoning is somewhat unreal and the highly disappointing. Following the decision, the State must submit a report outlining what actions have been taken to address the violations identified in this complaint.

Comment

Throughout my time working on the complaint, I had the opportunity to meet with local authority tenants and listen to their views and contributions. This was remarkably insightful, and the contributions of tenants played a major role in directing the arguments made and also supporting those arguments. One of the recurring themes of the meetings I attended, was the sense of how disempowered local authority tenants were made to feel by Irish housing law in various respects. While the collective complaint system is imperfect, it can provide a valuable means for drawing attention to, and forcing recognition, of the real difficulties experienced by many households. The European Social Charter provides an exceptionally useful framework for evaluating national legal standards and seeking to develop best practice. Looking back on my experience working on the project, I feel incredible fortunate to have worked with such an exceptional team of tenants, community organisers, housing professionals and academics. My advice to recent graduates, or those interested in working in this field, is to get involved in these types of co-operative projects wherever possible. While not essential, it can be extremely helpful to have studied modules in the field of housing law, renting law, human rights etc. Exploring the modules options available and making contact with academics involved in those modules can be exceptionally helpful in identifying research opportunities which are off the beaten track.

The author: Mark Jordan is a lecturer in Land Law at the University of Southampton. For more information see here.