BENTLEYS, STOKES AND LOWLESS Specialists in maritime and insurance law COLLISION UNDER ENGLISH LAW

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1 BENTLEYS, STOKES AND LOWLESS Specialists in maritime and insurance law COLLISION UNDER ENGLISH LAW Nina von Stauffenberg, Solicitor/Rechtsanwalt VHT Training Camp 2008

2 COLLISION ACTIONS UNDER ENGLISH LAW Nina von Stauffenberg Solicitor/Rechtsanwalt, Bentleys Stokes and Lowless GATHERING INFORMATION One of the first steps for an English lawyer to consider when instructed in a collision claim is the collection of evidence. This entails the collection of witness evidence (from ship s crew and, if necessary, third parties) by way of interview. It also involves the collection of documents from the ship, the owner (for example ISM records), and any third parties who can assist, such as documents from vessel traffic control in areas where vessel traffic is monitored. This type of exercise will inevitably lead to the lawyer visiting the ship at the location of the collision or at the next port of call. LEGAL STEPS The first legal step will be to establish whether the English courts have jurisdiction over the claim in question. It is important to note that there are a number of international conventions, which deal with jurisdiction in a collision case. The most material are: 1. The International Convention Relating to the Arrest of Sea-Going Ships The International Convention on Certain Rules Concerning Civil Jurisdiction in Matters of Collision The Rhine Navigation Convention The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (The Brussels Convention 2008 BENTLEYS Nina von Stauffenberg Page 1 of 12

3 5. The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1988 (The Lugano Convention) 6. The Council Regulation (EC) No.44/2001 (the Judgments Regulations ) Regard must be had to the provisions of the Conventions when considering collision claims and jurisdiction. To the extent that they apply, their provisions must be taken into account when deciding whether proceedings should be commenced in personam or in rem. Both options are available under English law, a claim in personam being a claim against a person or company such as the shipowner, and a claim in rem being a claim against the vessel itself. It is not necessary for the purposes of this paper to consider the provisions of the Conventions in any detail. We will merely look at the circumstances under which both types of proceedings may be used. Claim in personam Section 22 of the Supreme Court Act 1981 provides that the court may not exercise jurisdiction in personam unless: 1. the defendant has his habitual place of residence or business within England or Wales, or 2. the cause of action arose within (effectively) territorial waters, or 3. the defendant is willing to submit to English jurisdiction, or 4. an action arising out of the same incident is or has in the past been dealt with by the High Court. This means conversely of course that where an action in relation to this incident has been brought in a court in another country the English courts cannot hear the matter until the foreign proceedings have been discontinued or have otherwise come to an end. An in personam claim form may be served within the territorial jurisdiction of the High Court. In certain cases and with the permission of the court it may be served outside the jurisdiction of the High Court BENTLEYS Nina von Stauffenberg Page 2 of 12

4 Claim in rem Where the claim is brought in rem the restrictions of s.22 above do not apply. An action in rem may be brought either against the ship in connection with which the claim arose, or against a sister ship. The right to bring an action in rem against a sister ship derives from the International Convention Relating to the Arrest of Sea- Going Ships 1952 (Art.3.1). Following a collision, the first consideration in order to commence proceedings in rem is that the res (i.e. the ship) which is the subject of the proceedings must be present within the jurisdiction of the High Court at some stage during the period of validity of the Claim Form (six months). This means that during that period the ship must be found within the territorial waters of England and Wales and the Claim Form must be served. An in rem Claim Form has to be served on the ship itself. It cannot be served outside the jurisdiction. The second condition is that there must be a maritime lien on the ship or a statutory right to proceed in rem. English law recognises four types of maritime lien, one of which is a claim for damage done by a ship for example in a collision. A maritime lien is a lien which attaches to the ship until it is discharged by being satisfied. The statutory right to proceed in rem is provided by section 21(4) of the Supreme Court Act In respect of the damage caused by a collision it provides that an action in rem may be brought in the High Court in respect of damage done by a ship (i.e. a collision) where the claim arises in connection with a ship and it is against the person who would be liable in an action in personam and who was at the time of the incident the owner or charterer, or in possession or control of the ship. It is evident therefore that in practice taking the in rem route is usually simpler. Most cases are therefore dealt with on an in rem basis rather than an in personam basis BENTLEYS Nina von Stauffenberg Page 3 of 12

5 Collision claims Collision claims are dealt with by the Admiralty Court, which is a division of the High Court. They have their own procedural peculiarities. Therefore, once English jurisdiction has been established, we need to determine whether the claim is a collision claim within the meaning of Part 61.2(1)(b) of the Civil Procedure Rules (CPR). Collision claims are all claims for damage or loss of life or personal injury arising out of either: 1. a collision between ships, or 2. one or more ships carrying out or omitting to carry out a manoeuvre, or 3. one or more ships failing to comply with the collision regulations (currently contained in the Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1996 (S.I. No 75) Procedural steps The procedural rules relating to collision claims are to be found in CPR 61 and its Practice Direction and also in the Admiralty and Commercial Court Guide. For an outline of the procedural steps involved in a collision claim, please see the flow chart provided at Appendix I. As in all other civil court claims in England, proceedings are commenced by the claimant issuing and serving a claim form on the defendant. The defendant then has 14 days in which to acknowledge service. If he fails to do so, the claimant can apply for a default judgment against him. What follows then, however, is a rather clever idea unique to collision claims. In order to ensure that the sequence of events leading up to the damage is not embellished by either party, the court under Part 61 of the Civil Procedure Rules (CPR) and the corresponding Practice Direction 61.4, requires both parties to file a collision statement of case. As this is done at the same time, the parties will not, at 2008 BENTLEYS Nina von Stauffenberg Page 4 of 12

6 the time of making their statement, know what the other party has said about the collision. The collision statement of case has to be done in a prescribed form, Form ADM3 (a copy of which please find attached as Appendix II) within 2 months of the Acknowledgment of Service Form being filed with the court by the defendant. If the defendant fails to file a collision statement the claimant may apply for default judgment against him. Form ADM3 contains a series of questions about how the collision occurred. The form also asks for details of any negligence claimed and any relief sought. The collision statement is verified by a statement of truth. A statement of truth given without an honest belief in its truth amounts to contempt of court and should therefore not be taken lightly. The parties will also be held to the information given in the collision statement. The contents of the statement can only be changed with leave of the court (Admiralty and Commercial Courts Guide N5.7). Such leave will only be given in exceptional circumstances even if the error is of a clerical nature only! (The MIRANDA (1882) L.R. 7 P.D. 185). Leave to amend will only be granted where the mistake is shown to have been a genuine, bona fide, mistake and that the party is not seeking to alter its initial case in response to the case put by the other side. If a party does wish to make alterations to the information given in the collision statement it has to seek leave either at the Case Management Conference or the trial. The collision statement of case is also the only opportunity of the parties to put their case in writing. No further pleadings are submitted by either side. Together with the inability to change the information contained in the collision statement of case, this makes it clear how important it is to make absolutely sure that the information contained therein is correct and that as much information as possible is available prior to drafting the statement. Once the collision statement of case has been filed, notice will be given to the other party that this has been done. Within 14 days of the last collision statement of case being filed each party must serve a copy on the other party. It should be noted that this is the first time that a party will see what the other has said about the events leading to the collision. It means both parties have had to give a blind account of events without knowing 2008 BENTLEYS Nina von Stauffenberg Page 5 of 12

7 what the other party would say. This is unique to collisions and unlike other civil proceedings both in England and Germany where the defendant only replies once he has seen the claimant s assertions. Within 7 days of the last collision statement being filed the claimant has to apply for a Case Management Conference (Admiralty and Commercial Court Guide N8.1(ii)). At least 7 days before the Case Management Conference the claimant and the defendant have to exchange Case Management Information Sheets and lodge them at court (Commercial Court Guide D8.5). The Case Management Information Sheet has to be in the form given in Appendix 6 of the Admiralty and Commercial Court Guide (a copy of which please find attached as Appendix III). It mainly contains questions as to the procedural steps to be taken up to trial, how many witnesses each party intends to call to give oral evidence at the trial, how long the parties estimate the trial to take, when they think they will be ready for trial etc. The aim is for the parties to agree a time-table where possible. There are also a series of questions concerning Alternative Dispute Resolution which are aimed at finding out whether this would be a realistic way of solving the dispute. The Case Management Conference is mandatory and it will usually take place on the first available date five weeks after the date for application above (Admiralty and Commercial Court Guide N8.1(iv). Case Management Conferences were introduced to speed litigation up by laying down a clear procedural time-table as early as possible and having an early hearing date at which any further procedural queries between the parties can be addressed. The court always encourages Alternative Dispute Resolution, usually by way of mediation, which is also aimed at the swift resolution of disputes. After the Case Management Conference the usual litigation steps follow as in any other civil litigation. These are: disclosure; exchange of witness statements; exchange of experts reports if any; meeting of experts if any; exchange of any supplementary experts reports and the preparation of trial bundles. For those unfamiliar with English court procedures it is worth mentioning that disclosure, a 2008 BENTLEYS Nina von Stauffenberg Page 6 of 12

8 feature unique to Anglo-American legal systems, involves the parties showing each other all of their documents with only a few exceptions such as any correspondence between a client and his solicitor. IN COURT A unique feature of the Admiralty court is the use of nautical assessors. They are appointed in accordance with the rules set out at Part 35 rule 15 of the CPR and at Rule N.14 of the Admiralty and Commercial Court Guide. At least 21 days before the appointment the court will notify each party of the identity and qualifications of the proposed assessors and inform the parties on what matters the assessors expertise is sought. The parties then have 7 days to object to an assessor. The assessors are usually two Trinity House Masters who are Elder Brethren of Trinity House. They will be experienced master mariners whose job it is to advise the court on matters of navigation and seamanship. Their role is however purely advisory, they do not decide the case, and the judge does not even have to accept their opinion as correct. The assessors are impartial and as such must refuse an appointment if they have ever been in the service of either party. They act in the place of expert witnesses on navigation and seamanship and the parties are therefore not allowed to call expert witnesses unless they have leave to do so from the court (CPR Rule 61.13). Although the assessors act as experts, there is no right to cross-examine them. The reason for this is because, unlike expert witnesses appointed by the parties, assessors are not at the service of the parties but at the service of the court. JUDGMENT The general rule is that liability will be divided between the parties in proportion to the degree of blame of each ship. For instance 60:40 or 100:0. Section 187 of the Merchant Shipping Act 1995 provides, in essence, that if two or more ships which need not necessarily collide as long as they somehow together cause a loss, such as in The BATAVIER III (1925) 42 T.L.R. 8 where a vessel 2008 BENTLEYS Nina von Stauffenberg Page 7 of 12

9 carried away her moorings after being passed by the other vessel at excessive speed - cause damage or loss to those ships, their cargo, freight or other property on board, then the liability to make good the damage or loss will be in proportion to the degree of fault. So if ship A is to blame 20% and ship B is to blame 80% then ship A will have to make good 20% of the proven claim of ship B, whilst ship B will have to pay for 80% of the proven claim of ship A. Where it is impossible to establish different degrees of fault, liability will be apportioned equally. It should be noted that section 187 does not apply where damage is done to any other property other than the ships involved, their cargo, freight or property on board these ships. So damage done for example to a jetty would not fall under this section (Manchester Ship Canal Co -v- Helgoy (1924) 18 Ll.L Rep. 191). Those who can be held liable under section 187 for damage are the owners of the ship. However, where the owners were not at the time of the incident responsible for the navigation and management of the ship, anyone who was so responsible, such as the charterers, may be held liable. However, the above provisions are subject to any laws to the contrary, including any rights to limit liability. They are also subject to contract law. If, therefore a bare-boat charterparty for example specifically excludes any liability of the charterers in the above circumstances, then the charterers cannot be held liable under section 187 and liability will fall back upon the owners. An important factor to keep in mind when liability is apportioned is that a vessel s contribution to the damage rather than the collision is relevant. After all, the collision itself is not the problem but the damage done by it. So for example, in The MARGARET (1881) 6 P.D.76 a vessel was found to be partly to blame even though she was moored to a buoy at the time of the collision and could therefore not have been to blame for the collision as such. However, she had her anchor hanging over the bow contrary to local regulations and the barge that struck her was holed by the anchor. She was therefore partly to blame for the damage. Where loss of life or personal injury has been caused by the collision the vessels at fault are jointly and severally liable for the damage under section 188 of the Merchant Shipping Act An innocent third party can therefore recover in full from any one of the liable parties BENTLEYS Nina von Stauffenberg Page 8 of 12

10 This is a good trick for people whose right to claim against the vessel on board of which they were at the time of the incident (ship A), is somehow restricted. Such a restriction may for example be contained in an employment contract or a passenger ticket. Such a person can avoid the exclusion by making their claim against the other vessel (ship B) involved in the incident and with which they do not have a contract restricting their rights. Provided the claim is in respect of loss of life or personal injury, the vessel which had to pay out (ship B) can recover anything that exceeds its proportion of liability from the other ship (ship A) under section 189 of the Merchant Shipping Act So far this is fair and reasonable. However, section 189 then goes on to provide that the paying ship (ship B) cannot recover any more from the other ship (ship A) than the loss of life or personal injury claimant could have claimed from that ship in the first place. The loss has therefore been passed on from the loss of life or personal injury claimant to another ship to avoid the claimant s contractual restrictions and that ship has not been able to pass the contractually excluded damage on and is now out of pocket. This is clearly an unsatisfactory result because the ship now out of pocket was never a party to the contract and should therefore not be the party ultimately bearing the loss. Claims by cargo owners against the carrying ship are generally excluded by the terms of the bill of lading (Hague/Hague-Visby Rules). However, owners of lost or damaged cargo are able to claim against the non-carrying ship and recover their loss to the extent of the liability of that ship. For instance, against a ship found to be 40% to blame they will be able to recover 40% of their provable losses. This claim is in tort as there is no contractual nexus between the cargo owner and the non-carrying ship. COSTS The traditional rule as far as the determination of liability is concerned is that each party is entitled to recover its costs of determining liability in the same proportion as it has been found liable. However, each party is entitled to recover in full the costs of proving its own claim (i.e. quantum of liability). In practice only 75%-80% of the real costs are recovered BENTLEYS Nina von Stauffenberg Page 9 of 12

11 However, the conduct of the parties will be taken into account as per CPR Part 44.3, so that a party may be penalised in costs where it is found to have falsified log books (The LORD NORTHCLIFFE (1926) 24 Ll.L.Rep.184) or has otherwise put up a false case (The ODEN [1989] 1 Lloyd s Rep. 280) or has disclosed contemporaneous documents only at a late stage (The PALLAS [1957] 1 Lloyd s Rep. 475). There also has been a very recent development in the award of costs in collision actions where there was no counterclaim by the defendant. In August 2008 in Krysia Maritime Inc v Intership Ltd ([2008] EWHC 188) the Admiralty Court decided that a claimant who had recovered 70% of its claim was in effect the party who had won at trial. For that and other reasons the claimant was awarded all of its costs rather than 70% of them. Although a number of reasons were cited for the decision the court said that there was no rule or principle applicable to collision cases, where there was no counterclaim, that a claimant who was at fault under s.187 of the Merchant Shipping Act 1995 should recover its costs in proportion to its liability. Settlement Offers One interesting costs device worth mentioning is that of making a formal written offer of settlement in accordance with CPR Part (10)-(12). The settlement offer can be made by either party at any time until 21 days before the start of the trial. However, the earlier it is made, the better the costs consequences for the party making the offer. The offer has to remain open for at least 21 days. After such time the offer may still be accepted but full costs will have to be paid to the offer or as from the date of expiry. If the offer is not accepted and the party who made the offer obtains an apportionment of liability at trial that is as good for him or better than the offer he made, then, unless the court considers it unjust to do so, can order special costs consequences. The reasoning is that the maker of the offer was clearly right to make the offer and that the other side ought reasonably to have accepted it. Unless the court considers it unjust, it will usually treat the parties in terms of costs as if the offer had been accepted at the last possible moment (i.e. 21 days after the offer was made). After the expiry of the offer the party who refused to accept it is made wholly responsible for all costs that followed as a result of their refusal to accept BENTLEYS Nina von Stauffenberg Page 10 of 12

12 Clearly, such an offer will not only put considerable pressure on the recipient of the offer, but it may also have a considerable cost benefit for the maker of the offer. There is however one word of warning. Where the party making the offer has for example offered 70% liability and costs in its favour but is awarded 90% at trial it will, according to the rules, only be able to recover 70% of costs up until the expiry of the offer. He will also have to pay 30% of the costs to the other side up until expiry of the offer even though, had he not made the offer he would only have had to pay 10% of the other party s costs. However, usually, and especially where an offer is made at an early stage of the proceedings, the costs benefits will still outweigh these drawbacks. APPEALS The apportionment of liability will only be interfered with by the Court of Appeal where it can be shown that the judge erred on the law or misapprehended a vital fact or for some other exceptional reason. The Court of Appeal s reluctance in interfering with decisions of apportionment is due to the fact that the apportionment of liability is a question of proportion and balance and will as such by its very nature be viewed differently by different people. The Court of Appeal and House of Lords will also have nautical assessors to assist them, just as the Admiralty court below them had. However, there is no hierarchy of assessors and those assisting the higher courts are not to be regarded as any better or any more authoritative than the ones assisting the courts below. The costs of an appeal will be born by the unsuccessful party. ENFORCEMENT It will be rare that that the courts will have to be involved in order to enforce judgments in collision actions. In the vast majority of collision cases the parties will either have reached an agreement as to jurisdiction or there will have been an arrest of the vessel establishing jurisdiction. Where an agreement was reached this would 2008 BENTLEYS Nina von Stauffenberg Page 11 of 12

13 in almost all cases have encompassed an agreement about the provision of security as well. Where an arrest took place either the vessel will stand as security, which can be sold in order to enforce a judgment or security would have been provided in order to obtain the release of the vessel. In all of these cases enforcement of a judgment can simply be made against the security provided. Where a party has made a payment into court as a means of providing security, such payment will be released against a court order only. Where the judgment debt has not been satisfied or a consent order for the release of the funds has been agreed between both parties the funds can be applied by the court to the satisfaction of the judgment debt BENTLEYS Nina von Stauffenberg Page 12 of 12

14 APPENDIX I

15 COLLISION PROCEDURE FLOW CHART Service of Claim Form by Claimants Acknowledgement of Service of Claim Form by Defendant within 14 days If Defendant fails to file Acknowledgement of Service and/or Collision Statement: Default Judgment Within 2 months Filing of Collision Statements of Case by Claimant and Defendant Notify each other that Collision Statements have been filed 7 days after last Collision Statement filed Claimant must apply for Case Management Conference (CMC) (Mandatory CMC first available date 5 weeks later) Within 14 days after last Collision Statement of Case filed copy to be served on the other party At least 7 days before Case Management Conference Claimant and Defendant exchange Case Management Information Sheet and lodge them at court. Case Management Conference First available date five weeks after due date for application above. (To fix timetable leading up to trial) Disclosure of Documents by both parties Exchange of Witness Statements Exchange of Experts Reports if any Meeting of Experts if any Exchange of Supplementary Experts Reports if any Trial Bundles (lodged at court at least 7 days before trial) Hearing before a judge in the Admiralty Court, often aided by Assessors Appeal to the Court of Appeal Appeal to the House of Lords

16 APPENDIX II

17

18

19

20 APPENDIX III

21

22

23

24 Bentleys, Stokes and Lowless, International House, 1 St Katharine s Way, London E1W 1YL t +44 (0) f +44 (0)

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