Jonathan Hare, Skuld, reports from the latest IMO Legal Committee Meeting - October 2006
The implementation of the Athens Convention on Passenger liabilities has been complicated by the need to find a solution to insurance for terrorist liabilities. In short, the problem is that the Convention leaves open the possibility of carriers being found liable for terrorist acts. Standard P&I cover treats terrorism in the same way as war, namely by excluding cover. The clubs have therefore been unable to confirm that they will provide cover or the insurance certificates which are required under the Convention.
The industry has strongly argued that carriers should as a matter of policy be exempt from liability arising from terrorist acts. This has been rejected by governments. However, it has at least been acknowledged by states that carriers’ liability should be limited to levels which are insurable.
The Legal Committee of the International Maritime Organisation met in Paris last week and accepted a solution put forward jointly by the Norwegian & UK governments, supported by two shipping industry organisations, ICS and ICCL. Carriers will be liable for terrorism subject to a limit of 250,000 Special Drawing Rights per passenger, equivalent to about USD 370,000, subject to an overall limit of SDR 340 million (approximately USD 500 million). The insurance certificates for this risk will be issued by a specialist COFR provider rather than the clubs. Marsh Ltd has confirmed to IMO that it will be able to ensure that the necessary insurance and guarantees will be in place when the Convention comes into force.
An IMO Reservation and Guidelines have been agreed which set out in detail how the Convention is to be ratified in such a way that the original provisions of the Convention will be modified to give effect to this scheme. Two insurance certificates (“blue cards”) will be required, one for terrorism issued by a special purpose guarantor and one for the remaining “non-war” P&I risks. Flag states will then issue a single Certificate which will confirm that the required insurance is in place and distinguish between the two categories of cover.
The Convention has to date been ratified by four states(1). It will come into force twelve months after ratification by ten states. The European Parliament and Council are currently considering a proposed regulation on passenger liability which would incorporate the provisions of the Convention and extend its scope to domestic transport and inland waterways. Member states will therefore co-ordinate efforts in relation to ratification.
(1) Albania, Latvia, St Kitts & Nevis and Syria.