LEG IS LATI ON MERCIUNT SHIPPING (LIABILITY OF SHIPOWNERS AND OTHERS) ACT, 1058

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1 LEG IS LATI ON MERCIUNT SHIPPING (LIABILITY OF SHIPOWNERS AND OTHERS) ACT, 1058 TEE Merchant Shipping (Liability of Shipowners and Others) Act, 1058, gives effect to the International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships, signed in Brussels on October 10, 1957 (Cmnd. 858). The conference at which the Convention was negotiated also discussed two other conventions-one concerning the landing and maintenance of stowaways, and the other concerning liability to passengers-but neither came to fruition. The efforts of the draftsman of the new Act, who recast the Convention in terms suitable for the statute, are evident, for example, from the following quotations. The Act says in section 1 (1): the number by which the amount substituted by paragraph (a) of this subsection is to be multiplied shall be 800 in any case where the tonnage concerned is less than 800 tons. The Convention had expressed the rule thus (Art. 8 (5) ): For the purposes of ascertaining the limit of an owner s liability... the tonnage of a ship of less than 300 tons shall be deemed to be 300 tons. The Act makes section 503 of the Merchant Shipping Act, 1894, as variously amended, conform with the Convention. The most important change-which also received the greatest publicity at the time when conference proceedings were reported in the Press-relates to the calculation of the limited amount which a ship operator has to pay in damages. British law-the relevant Part of the 1894 Act was imperial in scope (see s. 509)-had provided that personal claims could be limited to 15 per ton and property claims to 8 per ton, amounts fixed over 100 years ago and long unduly favourable to the shipowner. In future, the figures will be 3,100 and 1,000 gold francs, respectively, one gold franc to be a unit of 654 milligrams of gold of millesimal fineness 000 (s. 1 (1) and (2)). The Minister of Transport and Civil Aviation has power to specify sterling equivalents from time to time (s. 1 (3))) and he has done so by the Merchant Shipping (Limitation of Liability) (Sterling Equivalents) Order, 1058, the respective equivalents being 78 8s. 10-5/32d. and 28 18s d. The Convention also provides (Art. 3 (1) (c)) that where liability arises in respect of both personal and property claims, 2,100 out of the 3,100 gold francs pcr ton shall be appropriated to personal claims; where this does not satisfy the personal claimants, the latter shall share in the balance rateably with the property 042

2 Nov LEGISLATION 648 claimants. The Act contains no express reference to this, and the Sterling Equivalents Order specifies no equivalent for 2,100 gold francs, but it can, of course, be calculated with the help of the two equivalents specified in the Order. British case-law before the 1958 Act provided for such marshalling y9 of the limitation fund, laying down that in the event of mixed claims E7 per ton should be reserved for personal claimants (The Victoria (1888) 18 P.D. 125). It should be observed that the old and the new ratios vary; the old 7 is just under half, while the new 2,100 gold francs is about twethirds of the total. The Convention (Art. 4) provides that the rules relating to the... distribution of the limitation fund, if any... shall be governed by the national law of the State in which the fund is constituted. It seems clear that United Kingdom courts (6s. 10, 11) will apply the new ratio. The new Act compels them to appropriate 1,000 gold francs to property claimants, just as the old Act compelled them to appropriate 8 out of the 15 to them. The old ratio left 7 and the new Act leaves 2,100 gold francs for the exclusive use of the personal claimants. A minor point worth mentioning is that for personal claims ships under 800 tons shall be deemed to be of 800 tons, thus increasing the liability of small ships for loss of life and personal injuries (8. 1 (1)). The Convention (Art. 8 (5)) lays this down also for property claims, but the Protocol to the Convention allows members to make alternative provision, and Britain has exercised this right. The Convention has also removed a discrepancy between British and most other laws. The latter calculated the limitation fund by reference to the value of ship and freight, the old fortune de mer principle (e.g. s. 486 of the German Commercial Code). The British method of calculation, adopted in 1862, has now been generally accepted; it is clearly preferable because the value of ship and freight must needs vary considerably, with the result that the degree of compensation is made dependent on fortuitous circumstances.l The next point concerns the person who is entitled to limit his liability. Legislation amending the 1894 Act, which confined the privilege to owners, had extended the right to charterers by demise, hirers and others. The new Act (8. 8 (1)) extends the privilege to c6any charterer and any person interested in or in possession of the ship, and also to persons employed by any of the former 1 The principal reason why the ship and freight basis was abandoned in the first place was, however, different. As Mr. Milner Gibson, then President of the Board of Trade, explained when moving the second reading of the Merchant Shipping Bill, 1862 (Howard, series 8, vol. 165, p. 1933), the old law favoiired the owner of an old and poorly-maintained ship and discriminated against the owner running a new and well-maintained vessel. Accordingly, the Merchant Shipping Committee had recommended 15 per ton as the measure for limitation.

3 644 THE MODERN LAW R.EVIEW VOL. 21 (s. 3 (2)). Even under the old law limitation was possible in respect of uncompleted ships. This provision has been adapted to modern shipbuilding techniques, which include prcf abrication, by including part of a ship )) (6. 4 (1) ); this term may give rise to difficult problems of interpretation. For British ships the privilege has also been extended to ships not yet ) registered (s. 4 (2) ), in other words, not to ships which need not be registered at all. Ships arrested may be released on a cc guarantee being furnished. The release shall be ordered if the guarantee is furnished in the relevant port, and this port is situated in a Convention country. The relevant port is the port of call after the casualty or the port of disembarkation or discharge (s. 5). Persons and property not on board the ship which is liable in damages ( (1) (c) and (d)) have been redefined (s. 2 (1))) and crew on board or other employees of the ship at fault have been given an important additional right. If their contract of service is governed by a law other than that of the United Kingdom, and the proper law does not provide for limitation, they are entitled to full compensation; if the proper law fixes limitation at a higher rate than provided by United Kingdom law, claimants can rely on that higher limitation (s. 2 (4) ). The Convention deals only with limitation of liability (s. 508 of the 1894 Act), but the new Act also amends the provisions relating to exemption from liability (s. 502). Without this amendment an illogical distinction would have been introduced in English law. Previous British amending legislation had extended the meaning of shipowner uniformly in respect of exemption and limitation, and the 1958 Act follows this precedent (s. 8 (8)), so that now any charterer, not only a charterer by demise, can claim exemption in respect of fire and of loss of or damage to valuables. The new Act also extends the right of exemption to non-seagoing ships (s. 8 (1)). Finally, attention should be drawn to a few points in the Convention, which have not been expressly included in the 1958 Act. The owner can set off against the claimant any claim against the latter arising out of the same occurrence (Art. 1 (5)); this right has long been part of general English law. The burden of proof whether or not the shipowner himself was at fault or privy to the occurrence giving rise to the claim shall be determined by the Zex fd (Art. 1 (6)); this, too, follows from the English rules on conflict of laws. The act of invoking liability shall not constitute an admission of liability (Art. 1 (7))) but note that where a ship has been released in accordance with section 5 (1)) the successful applicant is deemed to have submitted to the jurisdiction of the court. All that has been said about limitation of claims against ships applies mutatis mutandis to claims against harbour, dock and

4 Nov LEGISLATION 645 conservancy authorities, who were given the right to limit claims against themselves by the Merchant Shipping (Liability of Ship owners and Others) Act, 1000, including docks which are Crown property (8. 8 (5) of the 1958 Act, which amends 8. 5 of the Crown Proceedings Act, 1947). 0. C. GILES. THE Act is of some interest from the point of view of the conflict of laws. The attention of specialists in this subject should be directed towards section 2 (8). It has hitherto been the law that the exclusion of liability under section 502 and the limitation of liability under section 508 of the 1894 Act applied within the limits set by the statute itself, i.e., the former, to all British ( seagoing ) ships and the latter to all ships. Hence, in an English court, section 508 had to be applied, irrespective of all principles of the conflict of laws, as part of the lex fm, even though the relevant contract might be subject to foreign law or the locus delicti might be abroad. (See Dicey, Conflict of Laws, 7th ed., p. 757, note 86; p. 960,.note 8.) On principle this remains true, but section 2 (4) of the Act creates an exception. Where the claim arises in respect of personal injuries (fatal or otherwise) or loss of or damage to property or infringement of rights of an employee of the person liable, it is governed by the proper law of the contract of service if this is more favourable to the employee. Thus the limitation set by the lea: fori is only the lower limit of what, e.g., an injured seaman will get by way of damages from the shipowner. If the proper law of his contract is more generous to him he can rely on it. This is a matter of principle in that for the first time personal injury claims between servant and master are characterised for conflicts purposes as contractual (whereas English domestic law classifies them as delictual), a characterisation in line with that prevailing in most foreign countries. No corresponding change, however, has been made in the application of section 502 of the 1894 Act, even as regards the effects of the crew, because section 502 was not within the Convention. It is further to be observed that, on principle, the Act considers the date of the judgment as the relevant date in translating into sterling the gold francs amounts specified in section 1 (1). It is only where the person liable has made a payment into court that, by section 1 (4), a subsequent change in the gold francs value of the pound can be disregarded, and this only where sterling has appreciated, not where it has depreciated. The matter is not likely to be of very great practical importance, but is it not indicative of a policy quite different from that which has prompted the courts so strongly to insist on the breach-date rule when converting foreign money into sterling (see Dicey, Conflict of Law, 7th ed., Rule 177)? It is true that, under the Act, the obligation is a

5 646 THE MODERN LAW REVIEW VOL. 21 sterling, obligation (provided the Minister has exercised his power under section 1 (8)) nnd the foreign currency is in calculatione, not in obligatione. But this does not affect the principle, Lastly, specialists in the conflict of laws will not fail to notice the remarkable case of statutory implication of submission to the jurisdiction under section 5 (I), and the anticipatory effect of a foreign judgment in futuro under section 7 (1). 0. KAEN-FBEUND.