LEGAL ASPECTS OF CREWS & CREWING James Trumble 5 Essex Court

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1 LEGAL ASPECTS OF CREWS & CREWING James Trumble 5 Essex Court From a legal point of view there are two distinct areas where the law is relevant to matters involving crew. The first is in relation to claims being brought by crew - most commonly against their employer, usually the owner of the vessel. The second is in relation to claims about the crew or crewing generally. A. CLAIMS BY THE CREW Claims by the crew are what most people understand as "crew claims". I propose to limit my observations to a purely legal point of view. Crew claims are claims for loss and damage suffered by persons employed to serve as crew on board a ship. They are many and varied and range in severity from very minor claims, such as a dispute about wages or overtime payments, to very serious claims for major personal injuries including death at work. They can broadly be grouped into two categories, injury claims and non-injury claims. Injury Claims There are many different types of personal injuries and like death, they can occur because of natural causes or as the result of work related accidents. I do not propose to go into detail as to the types of claims that can be suffered save to say that a considerable proportion are the result of natural causes, that is, from pre-existing medical conditions or medical problems which develop during the course of the seafarer's employment on board ship. This is why pre-employment medical examinations are very important and good medical screening during the crew selection process is something that can reduce injury or death arising from natural causes. Injury claims arising from work related incidents are perhaps the most common type of claims involving crew, and P&I Club claim handlers will tell you that they see many of these every year ranging from injuries involving ladders and gangways to incidents involving injury and death by falling objects, strains from lifting, pulling, pushing and holding etc. Non-injury Claims Claims in this category are predominantly about the amount of wages due including overtime and severance pay, and for loss and damage to personal effects. They are usually minor in amount but can give rise to litigation. Legal Aspects of Crew Claims Crew claims are invariably contractual in nature. Such claims are brought by the crew member (or by his dependants, in fatal accident claims), usually against the employer. It is necessary therefore to examine the crew contract and to identify the rights and obligations of the seafarer and employer under this contract. 1

2 The Employer Typically crew contracts provide for the employer, the other party to the crew contract, to pay compensation to the seafarer in the event of his personal injury and to his next of kin and dependent children in the event of his death. The employer is usually the ship owner, but can be the ship manager, and is rarely the company who signs the contract with the seafarer. This company is usually the crewing agent for the ship owner or manager and signs the contract in this limited capacity - that is, as agent only. Compensation for death & personal injury The right to compensation is usually limited to death and injuries sustained at work. For example, the Philippine Overseas Employment Administration Contract, or POEA Contract refers to "work related" injuries and death. Other crew contracts typically refer to injuries sustained "as a result of service on board" and death "whilst in the employment of the Company"', and often express provision is made to provide for injuries and death sustained when travelling to and from the ship. It is usual however for financial limits to be placed on the amount of compensation to be paid for death and personal injury claims. The amounts vary with the nationality of the seafarer and the jurisdiction governing the contracts but the ITF limits for example are: For death: US$ 78,750 to the seafarer's immediate next of kin; US$15,750 for each dependent child under the age of 18 - limited to a maximum of 4 children; For injury: A sliding scale depending on the extent of any permanent disability with a maximum limit for total, 100% disability of US$ 131,250 for officers and US$ 78,750 for ratings of AB and below. The contract typically provides for full payment of all medical and frequently dental expenses also for so long as necessary until the seafarer is declared fit again for work or until the extent of any permanent disability - and the corresponding level of compensation - is established. The contract also typically provides for repatriation where it is necessary for the seafarer to be signed off the ship for medical treatment; and for the payment of sick pay, usually at the seafarer's basic wage and for a specified maximum period of typically four months. In the case of death the contract may also provide for the repatriation of the body and occasionally also, for payment of a specified sum to cover the costs of burial. These rights to compensation, under the ITF Agreement, are payable regardless of fault and whatever the cause in cases of death, and regardless of fault in cases of accident resulting in personal injury. However, some crew contracts contain provisions to the effect that all rights to compensation are lost where the death or personal injury was caused by the wilful act or default of the seafarer himself. Whether such provisions are legally enforceable is another matter, save perhaps in the circumstances where the seafarer intended to harm or kill himself. 2

3 Compensation for other claims Typically the contract provides for repatriation and the payment of two months wages (ITF) by way of severance pay where the seafarer's employment is terminated because the ship is lost, laid-up, or sold. The contract will usually provide also for the seafarer to be compensated for the full value of any loss or damage to his personal effects up to a maximum limit, typically US$ 3,000 (ITF). Claims for unpaid wages Obviously the contract is evidence of the wages that should be paid and there are certain requirements in relation to severance pay dependant on the governing law etc. One legal aspect to consider in relation to unpaid wages however is that the crew have a maritime lien against the ship for unpaid wages which in most jurisdictions survives a change of ownership and gives rise to a right of arrest of the vessel. Procedure for resolving claims The contract will frequently include a clause detailing how claims and disputes are to be resolved - the "grievance procedure" - but it may not. It may refer to a Collective Bargaining Agreement (CBA) between the ship owner as employer and the Seafarers' Union, and the CBA will usually set out the grievance procedure. The grievance procedure may be detailed, as in the POEA Contract, or it may simply specify the courts and applicable law for any disputes. Where there is no applicable law and jurisdiction clause, the courts usually apply the law of the country with which the contract is most closely connected. It is usually presumed that this is the country of domicile of the seafarer, as often both he and the crewing agent will be resident there and the crew contact will be signed there. However, arguments can be made for saying that the law of the flag state should apply as that is the law governing the place for performance of the contract - on board the ship. Tort claims Occasionally crew claims are brought in tort, usually in an attempt to avoid the terms and conditions of the crew contract with a view to securing better levels of compensation. In circumstances where the seafarer's death or personal injury was caused partly or entirely by the negligence of other crew the seafarer may be able to bring a tort claim for negligence against them. More importantly, he will be able also to bring a tort claim against their employer where the employer is vicariously liable for their actions, or where the employer is personally liable for being negligent in not ensuring a safe place or system for the work in progress when the death or personal injury was sustained. The amount of compensation the seafarer can recover will then depend on the jurisdiction in which he brings his claim. 3

4 B. CLAIMS ABOUT THE CREW Claims about the crew are claims for loss and damage suffered by other persons and their property because of the acts and omissions - or human errors - of the crew. This part of the paper considers the legal aspects of such claims and how they can be avoided by proper crew selection procedures and proper training. When looking at claims about the crew it is useful to divide them into two categories: claims the crew were negligent, and claims the crew were incompetent. From a legal perspective the distinction is important for ship owners (and managers) who, as employers, can be held vicariously liable for the acts and omissions of their employees, the crew. With several third party claims (i.e. cargo claims) the ship owner can avoid liability for loss and damage arising from the crew's negligence in certain circumstances but any defences he might otherwise raise for such claims will be severely prejudiced in the event the crew are found to be incompetent. Claims the crew were negligent In what circumstances can crew members be said to have been negligent? There are a large number of legal cases dealing with negligence and I do not propose to set out the law in detail in this paper. The most common definition however is the "reasonable man test" propounded by Baron Alderson in Blyth v Birmingham Waterworks (1856) 11 : Ex 781. Basically what he said was negligence was the omission to do something which a reasonable man, taking into account the considerations which ordinarily regulate the conduct of human affairs, would do; or doing something which a prudent and reasonable man would not do. From a legal perspective, the duty of care expected of a person relates to the post which he occupies. In a seafaring context this means the duty of care expected of a Master is that to be reasonably expected of a Master; the duty of a Chief Officer is that to be reasonably expected of a Chief Officer etc. The standard of care required is a question of law but whether or not that standard has been attained in any given case is a question of fact for the court to decide having regard to all the circumstances of the case. In this regard the court is likely to take into account industry standards of conduct e.g. International Regulations for Preventing Collisions at Sea and the Code of Safe Working Practices for Seamen. To sum up, a seafarer will be negligent when performing any task or duty if he fails to meet the requisite standard of care i.e. he does not exercise the necessary skill to be reasonably expected from somebody of that rank when carrying out that task or duty. Claims the crew were incompetent What is incompetence and how does it differ from negligence? There is a fine line. A seafarer will be incompetent when he does not possess the necessary skill to carry out the particular task or duty whereas he will be negligent if he possesses the necessary skill but fails to carry it out. 4

5 From a legal perspective a seafarer can be incompetent because of:- or An inherent lack of ability (i.e. seafarer does not have necessary qualifications and experience to perform the particular task); A lack of adequate training or instruction (i.e. seafarer has never been trained to use the particular equipment on board); A lack of knowledge about the ship and its systems (i.e. unfamiliar with systems onboard); A disinclination to perform his job properly notwithstanding his qualifications (i.e. habitual failure to perform); A physical or mental disability or incapacity, e.g. drunkenness, drug use. Most allegations of incompetence concern an inherent lack of ability or adequate training or instruction in relation to the ship or its systems. Ships are becoming increasingly complex and owners need to adapt by implementing higher standards of training for their crews or face the consequences. The significance of incompetence as opposed to negligence Cargo claims Before we look at the significance of incompetence as opposed to negligence it is necessary to remind ourselves of the obligations owed by a ship owner or carrier to his cargo. As a general rule these obligations are either set out in the contract of carriage or they are applicable by virtue of some statutory legislation (e.g. the Carriage of Goods by Sea Act). The most common situation however is that The Hague or Hague-Visby or similar rules apply. These rules set out certain obligations on a ship owner - they provide that the carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:- Make the ship seaworthy; Properly man, equip and supply the ship; Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation. (Article III rule 1) The rules also set out a further non delegable obligation whereby the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods (Article III rule 2). Those are the obligations on a ship owner. They are however modified by certain rights under Article IV, whereby, in effect neither the carrier nor the ship owner shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence 5

6 on the part of the carrier. Article IV also sets out various circumstances where the carrier shall not be responsible for loss or damage to cargo, one of which is where such loss or damage results from an act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship (Article IV rule 2 (a)). There are of course other exceptions but there is no need to mention these in the context of crew negligence or incompetence. Turning now to the actions or inactions of the crew, it is important to bear in mind that an incompetent crew can render a ship unseaworthy. If, with the exercise of due diligence, the ship owner could have discovered or corrected the incompetence, or found properly qualified and competent crew, he risks losing any potential defences which may be available to him in relation to claims brought by cargo interests for loss and/or damage to their cargo where that loss or damage is attributable to crew incompetence. However, it has been established that the defence will not apply where the crew negligence arose in relation to the management of the cargo as opposed to the management of the vessel. Insurance claims It is also important to bear in mind that crew negligence is an insurable risk. The owner of a ship therefore can recover where his ship has suffered loss or damage as a result of crew negligence but he may not be able to recover where the cause of the loss is the fact that the ship has been sent to sea with an incompetent crew and the ship owner personally knew of this situation. Collision claims A high percentage of collisions are attributable to human error. If a vessel is damaged as a result of crew negligence then this is recoverable under the normal hull insurance provisions subject to what has been said above. If cargo on board is lost or damaged as a result of the collision or if cargo interests incur expenditure as a result of the collision then they can bring a claim against the owners of the vessel but subject to what is said above the owners should have a valid defence where crew negligence is established. The same goes in relation to claims by the owners and cargo of the other vessel involved in the collision except that the crew negligence defence will not be available to the cargo from the other vessel as this claim will be brought in tort. Industry standards and Due Diligence As stated above, when considering what constitutes negligence, the courts will take into account industry standards. It is vital that ship owners, operators and managers take these industry standards into account and adopt them when it comes to recruiting and training crew. If they fail to exercise due diligence in adopting these measures then there is a danger that the vessel could be found to be unseaworthy by virtue of having an incompetent crew on board. We have seen what that means for a ship owner. 6

7 In this section we look at the industry standards and consider this in the context of crew selection and training. (1) STCW Convention and ISM provisions The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (1978) ("STCW Convention") requires that all seafarers should be properly qualified for the position that they hold on board and that they should be able to communicate properly in English. A seafarer is required to undergo the necessary training at an approved institution and to have acquired the necessary sea time before he can sit the appropriate examinations for professional certificates; and to be medically fit and have a good command of the English language. Additionally, ship owners are now required in their ISM manuals to define the responsibility, authority and level of competence required of each crew member. (2) Crew Selection As regards crew selection, a ship owner must exercise due diligence to ensure that the crew they select are competent - they frequently delegate this duty to a manager who in turn delegates to a crewing agent. The bottom line however is that the owner is responsible if proper enquiries are not made or if certificates are not properly checked etc. The ship management contract usually contains a clause which obliges a ship manager to employ crew that meet a certain industry standard. It may be the case therefore that the ship management contract if entered into with a reputable manager will show that an owner has exercised due diligence with regard to crewing. However, the due diligence obligation also probably extends to a duty to ensure that a proper manager is appointed and that the functions of the manager (to employ competent crew) are being carried out. (3) Extent of Due Diligence As regards due diligence, we have seen that there is an obligation on the ship owner to exercise due diligence with regard to the employment of competent crew but the obligation goes much further than this. The ship owner also has an obligation to train the crew in the operation of the vessel and in this regard he must ensure that they are briefed and trained in relation to proper procedures such that they can cope with any reasonably foreseeable event. Ship owners are also obliged to deal with ISM and SMS procedures and new legislations such as the security code for ships and ports. For examples of the Courts approach in relation to due diligence see The Star Sea, The Torepo, The Farrandoc, The Makendonia, The Eurasian Dream. Summary What conclusions can we draw from the above? Simply put that in the shipping world the ship owner is faced with many problems, many of which can be brought about by his crew. The crew s actions or inactions can prejudice the shipowner s legal defence to a cargo claim and/or his hull cover. The answer is for the owners to ensure that they comply with their legal obligations when it comes to the employment, training and certification of their crews and to make sure that they attain the "standard" (as the Court sees it at the time) of the "reasonable'' ship owner. This standard however is not a fixed target but has developed over time such that shipowners now have to exercise greater care than ever when it comes to keeping their crews 7

8 trained and up to date with new developments. 8

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