Cruise and ferry matters

Contents

• Crew risk management programme
• Foreign-flagged ships and the US Disability Act
• Disabled passengers
• Increased UK personal injury awards
• Important US legal developments
• Disembarkation procedures
• The hidden menace - legionnaires' disease
• The Athens Convention
• UK immigration fines - the battle continues
• Special cover for passenger ships

Crew risk management programme - benefits for all shipowners

The Programme began as a pilot project in August 1996 with several hundred seafarers and three clinics in Manila. The Programme, with a well-developed network of clinics in ten countries, has performed in excess of 30,000 examinations. Work is now going on world-wide to set up clinic facilities in response to Members’ requests.

From its initial investigation, the UK Club found there were huge inconsistencies in the standards used by the clinics for pre-employment medical examinations. What concerned the Club more was the fact that the examination did not extend sufficiently to screen out pre-existing conditions that would impact on a shipowner's liability to pay compensation. The consequences for a shipowner are drastic; exposing him to a potential liability of hundreds of thousands of dollars under the contractual obligation. In the worst case scenario, the civil liability could amount to millions of dollars. The Club believed it could assist its Members to overcome the problems by designing a universally accepted standard medical examination form, using professionally run clinics. Participating clinics have to be satisfied that no disease or condition is present in crew applicants which could be aggravated by working at sea or which represents an unacceptable health risk to the individual or to others.

The Programme is essentially self supporting with no direct costs falling on UK Club members who do not participate. Costs are important, but they should not be the prime concern. What is important, is that there should be a consistency in examination standards, sufficiently high enough to protect a shipowner from claims arising from pre-existing medical conditions. Of the 32,543 examinations performed to date, there were 1,023 cases which found crewmembers to be ‘unfit for duty’. The more common causes for rejection include hearing loss, heart diseases, hepatitis B, liver disorders and tuberculosis. The number of rejected cases represents 3.14% of the total sample. This is a significant improvement compared to the findings of the previous years. This is partly because candidates are more self selecting. More importantly, the findings are testimony that the Programme has achieved its primary aim of screening out pre-existing medical conditions.

The Club is now extending the Programme to the direct management of medical treatment undertaken by sick crewmembers invloved in the Programme. This involves monitoring the treatment process to ensure the most appropriate and cost-effective treatment is prescribed.

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Foreign-flagged ships and the US Disability Act

"Foreign-flagged ship operators run the risk of being subject to lawsuits seeking the immediate modifications of their ships and the possibility of conflicting injunctions being issued depending on where the lawsuit is brought"

The Americans with Disabilities Act (ADA) was enacted by the US Congress in 1990 and was intended to create enforceable standards addressing discrimination against individuals with disabilities. The ADA governs issues of employment in the hiring of disabled individuals; issues in public transportation provided by state and local agencies; and the goods, services, and transportation provided by private commercial entities. Title III, concerning private commercial entities, is of specific relevance to the cruise and ferry industry and has recently been the subject of litigation in the US.

Last June, the United States Court of Appeals for the Eleventh Circuit, which governs the State of Florida, in Stevens v. Premier Cruises, held that the ADA applies to foreign-flag ships embarking US passengers in US waters. The plaintiff, Tammy Stevens, was a passenger confined to a wheelchair who purchased a cruise onboard a ship registered abroad and owned and operated by a foreign company. The travel agent who purchased the tickets for Stevens claimed to have been assured by the cruise line that the cabin would be wheelchair accessible. Once onboard, Stevens claimed her cabin was not sufficiently accessible and that many public areas of the ship were inaccessible to wheelchairs. On appeal, the Eleventh Circuit concluded that courts could apply Title III of the ADA to claims by US passengers travelling on ships in US waters. The court's holding quickly resulted in a flurry of ADA litigation by passengers against foreign-flag shipowners, including numerous suits filed by at least one disability advocacy group in Miami, the hub of the US-based cruise industry.

The suits filed against cruise lines typically allege Title III violations by claiming the ships are not sufficiently accessible to persons with disabilities. The primary relief sought in these cases is an injunction ordering each cruise line to reconstruct its ships to make them more accessible to and usable by individuals with disabilities, to the same extent required by the ADA in shoreside buildings in the United States. The suits ask that the ships be removed from service until the requested modifications are completed. Finally, these suits provide for an award of attorney's fees to the prevailing party.

The obvious problems with these lawsuits is that a ship is not a shoreside building. At the time the ADA was passed, Congress directed the United States Departments of Transportation and Justice to enact specific regulations establishing accessibility standards to give the Act meaning. To date, however, no such regulations have been promulgated for ships. More importantly, both departments have stated that the regulations governing shoreside buildings and transportation facilities, adopted by the departments, do not apply to cruise ships. Yet these are the same regulations that lawsuits are being based on. The Department of Transportation even stated that further study was necessary because it “lack[ed] sufficient information to determine ... reasonable accessibility requirements for various kinds of passenger vessels”, and that first it would need to determine whether any treaty provisions, such as those embodied in the Convention for the Safety of Life at Sea (SOLAS), might conflict with the ADA and its regulations.

In 1998 a Passenger Vessel Access Advisory Committee (PVAAC) was appointed to make initial recommendations for ship accessibility, design, construction, and barrier removal. The PVAAC is comprised of members representing a broad spectrum of expertise, including, naval architects, cruise line officials, charter boat operators, transportation regulators, port authorities, disability advocates, and the International Council of Cruise Lines. The PVAAC undertook the process of studying the issue, inspecting various ships, and considering accessibility options and feasibilities, and recently issued a final report which is now being reviewed by the government agencies responsible for specific shipboard accessibility regulations. However, to date, no applicable guidelines have been promulgated for ships.

In the recent case of Deck v. American Hawaii Cruises, Inc., the District Court in Hawaii was asked to reconcile these recent lawsuits with the lack of applicable guidelines. The Court ruled that the ADA could not be applied to claims based on the ship's construction or alleged failure to make physical alterations as no guidelines exist advising shipowners what level of accessibility would comply with the law. However, the Court allowed the plaintiff to continue a lawsuit alleging discrimination based on conduct of the cruise line, such as discriminatory policies or practices.

Similarly, in a recent Florida case against Disney Cruise Lines, a Federal trial court held that the ADA could not be applied to claims based on the ship's construction or alleged failure to make physical alterations, in the absence of guidelines. However, this exact same position was recently rejected by another Federal trial court, also in Florida, in cases against Holland America and Costa.

Because regulations do not yet exist for ships, and especially because such regulations involve issues of international shipboard design, safety, and construction standards involving the peculiar technology of travel by sea, no court is properly equipped to fashion injunctive relief without guidelines and no operator can determine what will be deemed legal compliance. An injunction issued by one court would have no preclusive effect upon any other plaintiff suing the same cruise line in a different jurisdiction. The need for uniform regulations is particularly essential for ships, because they travel to multiple jurisdictions, reposition seasonally, and carry citizens from countless states. Moreover, until final regulations are enacted, a shipowner ordered to make modifications will likely be faced with conflicting requirements in the future when regulations are enacted.
Unfortunately for the foreign-flagged shipowners of passenger ships visiting the US, until such time as regulations applicable to passenger ships are enacted or an appellate court resolves this dispute amongst the courts, foreign-flagged ship operators run the risk of being subject to lawsuits seeking the immediate modifications of their ships and the possibility of conflicting injunctions being issued depending on where the lawsuit is brought.

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Disabled passengers

The carriage of disabled passengers on ferries and cruise ships is an issue which is creating difficulties for the industry world-wide. Without international regulations, and few, if any, national requirements tailored to ship operators, the shipowner is faced with a dilemma. It is accepted that physically challenged people have as much right to enjoy their services, as the able bodied. Indeed they are a sector of the wider target market. Society is demanding that any barriers that do exist are removed as they are viewed as discriminatory. The disabled themselves have greater expectations, and are less prepared to accept restrictions upon their activities imposed by others, as against the true limits of their disability. The shipowner has to be pro-active in identifying measures that they can take, at the design stage if they have the opportunity of a new building, or during subsequent re-fits. Failure to do so will expose them to potential litigation, both on the basis of accidents caused by a failure to act and, potentially, discrimination. They will also find themselves a long way behind the game, and facing the need for expensive and disruptive alterations, when regulations governing the shipping industry, and applicable to their area of trade, are indeed produced.

Even without regulations or guidelines, there are four areas onboard which should be addressed:

• Suitability of cabins / staterooms for the disabled.
• Ease of access to all public areas, and use of the facilities provided.
• Safety in boarding and disembarking procedures.
• Action in the event of an emergency.

There is the greatest, and most legitimate, concern on the part of the industry when the issue of coping with disabled passengers in the event of an emergency is considered. Passengers with mobility restrictions, sensory disabilities, and mental incapacity are at significantly greater risk when there exists a need for quick, life-saving decisions and action. Carriers are often faced with hostile reactions when requiring an able-bodied carer to travel with a disabled passenger in order to assist them at the time of an emergency. That action being viewed as discriminatory. The carrier simply cannot cater for, nor should they assume, the need for a crewmember to have particular responsibility to assist a disabled passenger at the time of an emergency. Such a system is bound to fail at the critical time, with disastrous results.

There needs to be a sharing of responsibility between the disabled passenger, the groups representing their interests, and the maritime passenger operators. Whilst respecting the individual’s right to not be discriminated against, the individual passenger needs to recognise the peculiar nature of maritime transport, not least the many and varied international regulations governing the construction of ships which often set restrictions clearly at odds with the needs of the disabled passenger. If shipowners show a willingness to discuss the issue with groups representing disabled passengers, so that they can better understand each other’s difficulties and aims, they will no doubt achieve a result long before, and probably with greater practical application, than will be forthcoming from the intervention of governmental bodies.

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Increased personal injury awards expected in the UK

On 27 June 2001, the Lord Chancellor announced a reduction in the discount rate from 3% to 2.5%. The discount rate is used to determine multipliers for future loss of earnings and pensions in personal injury, fatal accident and some employment claims. The change will increase the size of personal injury awards involving substantial future loss of earnings claims.

laimants awarded lump-sum awards for future losses are expected to invest their damages to provide for their future needs. The discount rate reflects the rate of return a claimant could expect if he invested in low risk index-linked UK Government gilts. The rate is used in actuarial tables that allow the courts to calculate the level of future damages.

A rate of 3% has traditionally been applied. Claimant representatives have campaigned for a rate of 2% or even lower.

As a result of his deliberations the Lord Chancellor has now fixed a rate of 2.5%. The courts will however have the power to apply a different discount rate if necessary. We envisage that very special circumstances will need to apply for the court to depart from the Lord Chancellor's rate. Further he has indicated that the rate will apply for the foreseeable future. He will not be amenable to rate changes unless there are significant changes in fiscal circumstances.

The effect of the change can be seen in this example (see table), where a 25 year-old female ship's purser suffers very serious injuries onboard a ship as a result of a marine casualty. It is likely that she will only be able to carry out part-time work from now on. Her annual loss of income is calculated at £25,000 per annum. She would normally have retired at 65 but for the accident.

Claimants in particular with significant claims for loss of future earnings, will feel the full effect of the rate change, almost all awards for personal injury claims will however be increased as a result of the change.

Multiplier to retirement at discount rate 3%	23.10	Loss of earnings award	£25,000 x 23.10 = £577,500
Multiplier to retirement at discount rate 2.5%	25.00	Loss of earnings award	£25,000 x 25.00 = £625,000
		Increase in award	£47,500

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Important legal developments in the USA

An American legal correspondent draws our particular attention to legal developments in the United States of America that will be of interest to our readers with American connections, cruise and ferry operators and those Members who find themselves subject to American jurisdiction for whatever reason.

How much can foreign workers expect as their pot of gold under foreign law?

We all know foreign oil workers and seamen (and their counsel) love American juries and the generous damage awards that can potentially make them rich beyond their wildest dreams. Accordingly, they file suits in federal and state courts in the United States to try to force defendants to pay monetary damages many times greater than they would earn in their lifetime if they continued to work from their home countries.

The Court of Appeals for the Fifth Circuit recently rendered two decisions which dramatically change a foreign worker's rights under US law, even if he can reach the promised land of a US court. When read together, these decisions stand for the proposition that:

• a foreign worker injured in a maritime accident can only pursue a claim for his personal injury in a US court based on foreign law, such as the law of his homeland, not the Jones Act, or general maritime law of the US, and;
• a foreign worker injured on a US-flag ship in foreign waters may be relegated to recovery under the law of his origin.

Punitive damages are alive and well in maritime personal injury death claims

Just when you thought it was safe – They're back. Punitive damages are intended to punish defendants, and they can certainly do that even if a judgement is not awarded. Problems for members are sometimes caused because:

• There are often exclusions for punitive or exemplary damages in insurance policies;
• Punitive damage claims can create coverage conflicts between insurers and their insured and require additional counsel; and
• The insured may have difficulty assessing the true risk of punitive damage exposure.

Based upon Miles, many courts found that non-pecuniary/punitive damages were not recoverable in personal injury and wrongful death actions by seamen and non-seamen. Maritime interests may have incorrectly assumed that punitive damages are no longer allowed in admiralty claims as recent decisions by a Federal court in New York and a State appeals court in Louisiana, have held that punitive damages are alive and well in maritime personal injury death claims, and in maritime property claims.

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Disembarkation procedures

It has long been the position that a carrier owes a common law duty to take reasonable care for the safety of passengers onboard the ship. A recent case handled by the Club serves to illustrate this point.

A passenger was returning to her coach in the ship's car deck on arrival at the ship's port of destination. She was accompanied by her two children and her male companion. As she made her way along the car deck towards her coach other vehicles, including articulated vehicles, were in the process of being discharged. The passenger walked along the side of an articulated vehicle being discharged. Unfortunately, the rear of the vehicle trapped the passenger against the bulkhead on the port side of the walkway. The passenger suffered serious injuries and was lucky not to have been killed. Perhaps not surprisingly, she subsequently developed psychiatric problems as a result of the accident.

This incident caused the shipowner to review its disembarkation procedures onboard.

On arrival at the ship's port of destination, a formal announcement of disembarkation was made over the ship's tannoy. The announcement included words to the effect that coach passengers were required to return to their coaches by the (colour) stairway. The post-accident investigation revealed that the passenger had used the wrong stairway to the car deck area. Consequently, she was on the wrong side of the ship in relation to her coach when the accident occurred. The ship's car deck crew accepted that it was a reasonably common occurrence for foot passengers to descend to the car deck on the wrong side or at the wrong end of the ship and be wandering up, down or across the car deck in search of their vehicles.

The signage on the stairways leading to the car deck area was open to criticism. The signage was colour-coded, but, unfortunately, it was apparent that the colours used could easily be confused by passengers. Colour signs on the ship's stairways have now been altered to avoid possible confusion during disembarkation.

At the time of the incident, disembarkation of vehicles was also under the control of a single crewmember. This crewmember was responsible for the disembarkation of seven lanes of vehicles. The system was also open to criticism as, clearly, one person could not safely supervise disembarkation.

Since the incident, the local authorities have insisted that the shipowner has a crewmember positioned, looking along each walkway to port and starboard from the disembarkation end, so that they can signal to the deck officer should there be any difficulties whilst vehicles are disembarking. It is hoped that these simple precautions will help to avoid similar accidents occurring in the future.

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The hidden menace

A suspected outbreak of legionnaires' disease onboard ship

If you must have an embarrassing incident associated with your ship, why not do it in style? How about Sydney, seven days before the Olympics and, to make things more interesting, three days before the start of a charter as a floating hotel for several hundred television sound and lighting engineers and others of that ilk?

One Member found themselves in that position and called on the Club for assistance. A specialist was contacted and flew out with his colleague slightly less than twenty hours later.

They met the ship as she steamed in to Sydney at 3am on Sunday morning. The New South Wales Health Department had boarded her between Noumea and Sydney on the Saturday afternoon to carry out an investigation, worked through the night and were ready to brief the captain and owner by half past eight:

• there were formal diagnoses of legionnaires’ disease but there could be no second opinion, as the doctor and patients were 1226 miles away in a hospital in Noumea;
• there was a pattern of infection which did not fit legionnaires’ disease as well as it did influenza (which was common in Sydney at the time) but there were formal diagnoses of legionnaires’ disease;
• the inspection indicated that the risk of catching legionnaires’ disease from the ship’s water systems was low but there were formal diagnoses of legionnaires’ disease and no other credible source.

The one thing which was not complicated was that it was clearly necessary to act preemptively: before any questions over the diagnoses were resolved; before the New South Wales Health Department made a declaration on the safety or otherwise of the water onboard; before the newspaper ran another story; before the charter was cancelled; long before laboratory analysis could ascertain if the water was contaminated and, most importantly of all, before anyone else (or anyone at all) caught legionnaires’ disease. The Club specialists therefore suggested a strategy.

• carry out a detailed and complete assessment of the risk of catching legionnaires’ disease from the ship.
• To disinfect the water systems to eradicate any existing legionella bacteria.
• To draw up and implement a scheme of precautions to control any future risk of catching legionnaires’ disease.
• To draw up and implement a scheme of precautions to guard against viral infection such as influenza.

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The Athens Convention

REVISION UPDATE

By way of an introduction a Conference, convened in Athens in 1974, adopted the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974. The Convention was designed to consolidate and harmonise two earlier Brussels’ Conventions dealing with passengers and luggage and adopted in 1961 and 1967 respectively. The Convention establishes a regime of liability for damage suffered by passengers carried on a seagoing ship.

It declares 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. 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.

Internationally, the Athens Convention has still not achieved widespread acceptance. To date, only twenty six states are party to the Convention, including only six european states (Belgium, Greece, Luxembourg, Spain, Republic of Ireland and the UK) although many other states have adopted provisions into their law. Notable among the states who do not recognise the Athens Convention within their national law are the scandinavian countries, the United States and Japan.

In recent times there have been a number of initiatives within IMO to introduce a new Protocol to the Athens Convention which deals with the liability of carriers for death and injury claims to passengers. The Athens Convention initiatives are the latest advanced by a number of states in recent years in their efforts to introduce compulsory insurance in respect of shipowners' liabilities. The motives for these initiatives have varied from a desire to secure claimants' rights to the belief that the introduction of compulsory insurance would have the effect of raising ships' standards generally. Initially, the Legal Committee of IMO sought to introduce compulsory insurance for all ships, but this approach foundered when it became apparent that the goal was impossible without the framework of a general convention governing all shipowners' liabilities.

It is against this background that the revision of the Athens Convention must be seen. The limit of liability for individual claims in the original 1974 Athens Convention (SDR46,666) is regarded by many states as too low; the limit was therefore increased by the 1990 Protocol to the Athens Convention to SDR 175,000. However, this Protocol is not yet in force. Even a per capita limit of SDR 175,000 on any individual passenger claim might be considered unreasonably low by some governments in the context of current awards for serious personal injury. Within the IMO Legal Committee suggestions of SDR 175,000, SDR 300,000 and even SDR 1,000,000 have been made. However, the Legal Committee is not seeking only to increase the per capita limits under the Athens Convention. Owners of passenger ships would be required to provide evidence of financial security up to their limit of liability.

Therefore, if as seems likely, compulsory liability insurance is required, this will have a bearing on the level of cover which the Clubs can provide: both Clubs and reinsuring underwriters may have to take a different view on the policy with regard to reserves when taking into account claims which arise by way of anticipatory guarantee.

The most recent meeting of the Intersessional Working Group was held in March with the object of agreeing a final text of the Protocol at the October session of the Legal Committee for submission to a Diplomatic Conference, possibly in 2003. It seems likely that if the Legal Committee does not succeed in producing a final text that is acceptable to states, attempts will be made to produce regional solutions. Because of the obvious importance of any changes to the Athens Convention, any further developments will be reported in future editions of Loss Prevention News.

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UK immigration fines

The battle continues

A reminder of the assistance available to Members

Unfortunately, many of the Club’s Members, in particular those operating ro-ro ferries, through no fault of their own are still falling foul of the Immigration (Carriers Liability) Act 1987, henceforth known as the CLA, despite their best efforts to conform to the regulations. This onerous legislation is borne by our ro-ro passenger operators on entering UK ports, where illegal passengers are detained by the authorities because they are found to be travelling without the correct and/or acceptable documentation. Other Members have also been subjected to various penalties as found under this particular legislation, where individual crewmembers and/or their families have been found to contravene the regulations, albeit a minor irregularity. This problem is very much on the increase and we see no end in sight for our beleaguered Members.

Offences under CLA are often thought of as being based on the doctrine of ‘strict liability’, as found under UK law, where liability arises if the harm to be prevented takes place, whatever care and precautions have been taken, as in these particular cases, by the Club’s Members. There are however certain, though limited, defences to liability.

The most common penalty to be faced by the Member, despite having no direct involvement in the commission of the offence, is a fine of £ 2000 per incident, under the terms of the CLA. A further penalty that may have to be faced by the Member after being found liable under the CLA, is under the ‘Immigration Act 1971, Directions to Remove a Person or Persons’. This particular piece of legislation, in essence, holds the offending ‘carrier’ responsible for the cost and/or making the arrangements for, the removal from the UK of the person detained under the CLA, should he or she be refused leave to enter the UK. It should be noted that ‘removal directions’ may be issued by the Home Office, weeks, months and even years after the attempted illegal entry to the UK.

All is not bad news however, over the years the Club's managers, acting on behalf of the membership, have had a large number of successful appeals against penalties imposed on Members by the UK Home Office Immigration Service. With the assistance of a ‘specialist consultant’ we are able to advise Members who find themselves subjected to penalties instigated against them under the CLA. We therefore, once again, advise all Members to contact the Club's managers immediately should they find themselves facing allegations instituted by the UK Home Office Immigration Service.

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Special cover for passenger ships

UK P&I CLUB RULE 4

Cruise and ferry Members often face a number of third party liabilities that are not usually covered under the normal Club rules. Members should note however, subject to terms and conditions, an owner may be insured against a number of different risks, as set out below, as may be appropriate to his interest in an entered ship or to his operations as an owner. For example in the case of operating cruise and ferry ships, an owner of a passenger ship may be insured against any of the following risks upon such terms and conditions as may be agreed by the Managers in writing:

- liability for loss of or damage to the effects of any passenger or personal injury, illness or death of any passenger and hospital, medical or funeral expenses incurred

- The liability to pay damages or compensation to passengers intended to be carried onboard an entered ship arising as a consequence of a casualty to that ship, including the costs of travel and maintenance, and finally

- The liability to pay damages or compensation to passengers for breach of contract or warranty in respect of failure to provide facilities onboard or in connection with a voyage onboard an entered ship in accordance with the owner's legal obligations.

There are, as you would expect, a number of notable exclusions and particular conditions to be met by owners availing themselves of this 'special cover'. Cruise and ferry Members interested in taking out special cover for any of their ships should therefore contact the Club’s managers or their broker for further details.