Subject: Athens Correspondence Group (IMO Legal Committee): The 15 September Athens Paper

From: Erik Røsæg

Date: Thu, 12 Oct 2006

 

 

 

Dear Correspondents,

In order to facilitate the final stages of the preparation for LEG 92 in Paris, I have attempted to point out the main differences between the Norwegian paper 11 August and the UK/Norway/ICS/ICCL paper 15 September.

The other Norwegian paper 15 September, the one that is drafted by
Marsh, relates in the same way to the two above documents. That paper
explains the details of the war insurance that both solutions depend on.

It is no secret that Norway prefer the 15 September paper, because that
will make implementation smooth. Still, we fell that it is only fair to
say that also the 11 August solution is workable. But implementation will be more difficult, as it does not have industry support.

So to the differences:

SUBSTANCE
The only difference in substance between the 15 September and the 11
August papers is that the 15 September paper caps terrorist related
liabilities in about the same way as the insurance is capped.
It does not include provisions on global limitation.

The purpose of this is:
-To obtain the support for the scheme from the Industry, so that P&I
will issue certificates (except for the largest ships, where commercial
insurance will have to be bought).
-To avoid a reference to global limitation, which states that already have abolished global limitation for passenger claims may find problematic.

Please note that even with capping, the liability of the carrier is
substantially increased in terrorism related incidents.

The reason why this capping is the key to the compromise is that it will
remove some of the pressure from the war market. Therefore, the
non-passenger shipowners will see less increase in their war premiums.
This have again made them more willing to support the issue of Athens
insurance certificates by the clubs (where they have the majority).

The capping is well within the Vienna Convention on the Law of Treaties
art. 19 (http://www.walter.gehr.net/wvkengl.html).


FORM
Many of the substantive provisions from the Guidelines are now repeated
in the Reservation itself, as this was thought this to be better from drafting point of view. The wording has been altered some places to improve clarity.

BINDING
One has generally worded the reservation to say that the States Parties
not only obtain a right to depart from the wording of the Convention by
the reservation, but also undertakes to do so (in relation to the other
States Parties). This is a confidence building measure vis-à-vis the
Industry. Please note, however, that this undertaking does not prevent a
State party from withdrawing the reservation and thereby free itself
from the undertakings (para 1.13).


COMMENTS TO THE PARAS OF THE 15 SEPT DRAFT GUIDELINES

1.2
This is the main capping provision. The reference to "paragraph 1 or 2
of Article 3" means that both strict and negligence liability is capped.
The reference to para 2 of the Guidelines is to the definition of the
capped war/terrorism risks.

1.3
The point with the reference to para 2.1.1. of the Guidelines is to free
the carrier from terrorist-related biochemical risks. The carrier is
not exempted from other risks that the insurer is exempted from.

The point of the reference to para 2.2.2 of the Guidelines is to make
sure that the USD 500 mil per ship find can be distributed equitably
between all claimants, in the same way whether the carrier or the
insurer is sued.

1.4
This is a series of consequential points, to make sure that e.g. the
performing carrier will not be left with greater liability than the carrier.

1.5
This is to clarify that the intention really is to reduce the liability
as set out in the Convention, but not, e.g. the rules for breaking
liability.

1.6
This is capping of the insurance, similar to the 11 August paper.

1.7
This is the same thing once more.

1.8
This is a plain reference to the Guidelines; that they will be followed.

1.9
This is a variation of para 1.5 in the 11 August paper.

1.10
While the starting point in the 11 August draft was the certificates,
the starting pint in this draft is the liability. Therefore, the
certification issues are dealt with as a consequence, in the end.

In this clause there is a catch all-provision similar to para 1.2 of the
11 August paper.

1.11
This is similar to the 11 August paper.

1.12
This is similar to the 11 August paper.

1.13
This is a general duty to either follow the Guidelines or to withdraw
from the system. The effect of para 2.1.4 of the 11 August paper would
be the same - if you do not follow the Guidelines, the insurance will
not apply.

In the remaining paras of the Guidelines, there are just minor
adjustments of the text.

Kind regards,
Erik

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