MarIus

3.3.a Ensuring the efficiency of the statutory transport liability

The application of the maritime conventions on contractual liability pre-supposes that it may at least be argued that a certain type of contract of carriage has been concluded. Using the Hague Visby Rules 1968 (HVR 1968) as an example, the rules will apply, if the bill of lading is issued in a contracting state, provided the goods are carried from a port in a contracting state, or the bill of lading contains a Clause Paramount, see HVR Art. X.(1) HVR 1958, Art. X. See above, section 2.3.As such, the scope of application of the HVR 1968 is wide and does seem able to encompass both scenarios 1 and 2, rendering the owners’ protection under the unified system intact, as long as at least a part of the carriage may be seen as being carried out by a ship/vessel used for the carriage of goods, and the contract contains a sea-leg.

To be efficient, however, the existing system must ensure that the convention-based rules are not circumvented, e.g. by the claimant suing the owner in tort, or suing an entity other than the owner, towards whom the owner is liable in recourse, thereby causing the de facto circumvention of the owner’s contractual or statutory protection. This is not a novel problem, and the conventions offer some protection against this, either by indicating that no claim may be made apart from under the rules of the convention,(2) Athens Convention 2002, Art. 14.or alternatively by providing that if a claim is made in tort, the protective rules on limitation of liability etc. will still apply, both to claims against the carrier(3) HVR 1968, Art. IV bis (1); Hamburg Rules 1978, Art. 7(1).and to claims against the carrier’s ‘servants’ or ‘agents’, in cases where those entities are sued directly.(4) HVR 1968, Art. IV bis (2); Hamburg Rules 1978, Art. 7(3); Athens Convention 2002, Art. 11.In the following, HVR Art. IV bis will be used as an example.

Hague Visby Rules Article IV bis in extract

1. The defences and limits of liability provided for in these Rules shall apply to any action against the carrier in respect of loss or damage to goods covered by a contract of carriage, whether the action be founded in contract or in tort.

2. If such an action is brought against a servant or agent of the carrier (such servant or agent not being an independent contractor), such servant or agent shall be entitled to avail himself of the defences and limits of liability which the carrier is entitled to invoke under these Rules. […]

Looking at scenario 1, the remote controlling of the vessel performs a service directly linked to the performance of the contract of carriage, indicating as a starting point that those provisions in the conventions should continue to be applicable. Certainly, if the entity performing the remote control is still a part of the owner’s company structure, the fact that the service is rendered from ashore does not, to this writer, provide any rationale for a different approach. However, the provision indicates that the protection from circumvention of the convention by direct action in tort only applies to servants and agents, and not to independent contractors. It follows that if the navigation has been outsourced to an entity outside the owner’s company structure, such independent contractor could in principle be left without the protection otherwise offered by HVR Art. IV bis (2). To this writer, the navigation of the vessel is such a fundamental part of the carrier’s obligation towards the cargo interest that it would require very specific wording in the parties’ contract to indicate that the entity navigating the vessel during the performance of the contract is not doing so on behalf of the carrier – as his/her servant or agent. This is also the starting point of the Danish and Norwegian Maritime Codes sec. 285(1) which indicate that the carrier is liable for the whole carriage even if the carrier has outsourced the journey or a part thereof to a sub-carrier. It follows further from sec. 285(2), that it would require specific wording in the contract indicating both the named sub-carrier and the part of the voyage carried out by same sub-carrier, for the Carrier to contractually exclude liability for incidents occurring while the goods are in the custody of the sub-carrier. Considering these strict criteria for outsourcing the liability for the carriage or part of it in its entirety, it must reasonably be assumed that the possibility for outsourcing the liability for the navigation itself is even narrower. From the contractor’s point of view, this entails the advantage that the protection of the Hague Visby Rules would still apply to it. However, the wording does allow for independent contractors to be excluded from the protection of Art. IV bis (2), and the issue awaits settlement in case law.(5) The definition of who is the carrier and who is the sub-carrier and the legal issues connected with this is not finally settled in the HVR but must be decided taking into consideration as well the relevant rules of maritime and contract law in the applicable law. See further on these issues in Scandinavian law T. Falkanger in MarIus 502, SIMPLY 2017, p. 87-102.

3.3.b Ensuring or extending the protection of the maritime unified systems by contractual provisions

In addition to the protection provided by the conventions, carriers will often insert provisions into their standard conditions of carriage in order to maintain or strengthen the protection of the carrier and his/her servants/agents. In contracts of carriage of goods, the problem is normally solved by inserting both a Clause Paramount and a Himalaya Clause in the Bill of Lading. The Clause Paramount will direct any claim to be settled by the Hague Rules 1924(6) International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, 1924, and International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, 1968.or Hague Visby Rules 1968.(7) See Conlinebill Cl. 3(a), Congenbill 2016, Cl. 2, 2^nd sentence.The primary purpose of the Himalaya Clause, on the other hand, is – similarly to the above – to ensure that none of the carrier’s ‘servants’ are sued due to the performance of the carrier’s contract with the cargo owner/merchant,(8) See International Group of P&I Clubs Himalaya Clause 2014, litra b.and – if such ‘servants’ are sued nonetheless – to ensure that they are encompassed by the same bases, exclusions, and limits of liability as are offered to the carrier under the contract.(9) International P&I Club Himalaya Clause 2014, litra c.In the following it will be investigated whether those clauses are still appropriate when confronted with the novel technologies here discussed.

The latest standard version of the Himalaya Clause is from 2014, and defines the carrier’s ‘servants’ in the widest possible terms to include realistically any direct or indirect contract helpers of which the carrier may have availed itself:

International Group of P&I Clubs Himalaya Clause 2014 in extract

1. For the purposes of this contract, the term “Servant” shall include the owners, managers, and operators of vessels (other than the Carrier); underlying carriers; stevedores and terminal operators; and any direct or indirect servant, agent, or subcontractor (including their own subcontractors), or any other party employed by or on behalf of the Carrier, or whose services or equipment have been used to perform this contract whether in direct contractual privity with the Carrier or not. [My emphasis].

Looking at the wording of the clause, it will certainly cover a company or entity, remotely navigating or otherwise controlling the vessel (scenario 1). Such an entity might not be considered a “manager” or an “operator” in the traditional sense, as those terms have often been used to describe the technical or mercantile operation of the vessel in general, rather than the specific act of navigating/actually controlling it. Still, the addition of “… any direct or indirect servant … or subcontractor …” to the clause indicates that the clause does not limit itself to any specific type of servant or subcontractor. The clause must therefore also be expected to be effective in cases where the owner/carrier has outsources the navigation of the vessel to a land-based entity, remotely controlling the vessel. If a court were to find that the entity operating the land-based crew is not directly covered by the HVR 1968, Art IV bis (2), the operator might be able to claim the protection of the Himalaya Clause instead.

Turning to the last sentence of the Himalaya Clause, litra a, it is noteworthy that it extends the scope of the clause to cover also entities “… whose services or equipment…” are used by the carrier to perform the contract with the cargo owner/merchant. This applies even if the party providing the service or equipment is not in a contractual relationship with the carrier. Coding for AI-based autonomous vessels or autonomous devices integrated in the vessel (scenario 2), for which the producer may be liable on the basis of product liability or similar rules, could be covered by such wording. This is especially apt in cases of the running maintenance of such systems and may also be relevant in case of partial retrofitting. Seemingly, we still await specific case law on this issue, however it would be in keeping with the underlying principle expressed by the House of Lords in the Muncaster Castle(10) (1961) 1 Lloyd’s Law Reports 57. In the case, the error of a shipyard during repairs caused the cargo to be damaged. The carrier was considered liable for the damage as towards the cargo interest.to include such service to the vessel in the carrier’s sphere of liability and, consequently, include the provider of such service within the protection offered by the Himalaya Clause. Still, the Himalaya Clause has its limitations, and the emphasis in the clause that the servant in question should assist the carrier in performing “… this contract …” would indicate that a ’servant’ providing services that are disconnected from the everyday running of the vessel, such as the original design and development of an AI-system, is not covered by the clause.

Himalaya Clauses may of course be worded differently from the above example, which may lead to a different analysis.(11)See for an overview of examples, N. Gaskell et all, Bills of Lading: Law and Contracts, Routledge 2014, p. 383 ff.Furthermore, the underlying rules on privity of contract in the applicable law may curb its application.(12)For a comparative view see B. Zeller, “Himalaya v. Privity: Protecting Third Parties to Shipping Contracts, (2017) 20 International Trade and Business Law Review, 33-175.The Himalaya Clause will therefore give rise to different considerations in different jurisdictions and is rather frequently subject to challenge as to its scope and proper application in a given case.(13)See further on this issue for an English perspective: N. Gaskell et all, Bills of Lading: Law and Contracts, Routledge 2014, p. 392 ff. For a US law-based perspective see e.g., M. Stando, “Clause for Concern? The Flawed Expansion of the Himalaya Clause and the Rise of the Circular Indemnity Clause in the United States”, Tulane Maritime Law Journal 44, No. 2 (2020), 323-344, on p. 325 ff.Therefore, no wholesale analysis may be provided here. However, in keeping with what is stated above under section 3.1.c, it is suggested that here too, the point of analysis should be whether the act or omission giving rise to the claim must be considered to fall within the carrier’s ordinary cause of business.(14)See e.g T. Solvang, ”Shipowners’ vicarious liability under English and Norwegian law”, MarIus No. 571, p. 38.