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Passenger Solutions: War Blue Cards
Athens Advisory

January 2016

2002 Athens Convention Passenger Liability Regulation

The 2002 Protocol to the Athens Convention relating to the carriage of passengers and their luggage by sea, 1974 (2002 Athens Convention) has been adopted as a Regulation by the EU as a part of the Third Maritime Safety package, commonly as Passengers Liability Regulation (PLR) albeit with some further modifications and it seeks to deliver a uniform liability regime for passenger death and/or personal injury.

Application

The Convention will apply to international carriage where the flag state of the ship is a State Party to the Convention, the contract of carriage has been made in a State Party or the place of departure or destination is in a State Party.

The Protocol entered into force on April 23, 2014.

Key features:

  • The Protocol introduces compulsory insurance to cover the limits for strict liability under the Convention in respect of the death of and/or personal injury to passengers. The limit of the compulsory insurance or other financial security shall not be less than 250,000 Special Drawing Rights (SDRs) per passenger and has to be certified by a State Party to the specified limits.
  • The Protocol also introduces the right to direct action against the Blue Card guarantor and it requires a guarantor to accept liability for claims without the carrier having to have paid the claims first.
  • It establishes strict liability for losses resulting from shipping incidents of up to 250,000 SDRs (approximately US$ 360,000). Shipping incidents for the purpose of the Convention are shipwrecks, capsizes, collisions, groundings, explosions, fires and defects in the ship. If the losses are in excess of 250,000 SDRs, additional amounts up to a total of 400,000 SDRs (approximately US$575,000), per passenger can be recovered, unless the carrier shows that the damage was not caused by its fault. The fault of the carrier includes both the carrier’s personal fault and the negligence of its servants acting within the scope of their employment.
  • The Protocol introduces an opt-out clause that allows a State Party to regulate by specific provisions of national law the limit of liability for personal injury and death, provided that the national limit of liability, if any, is not lower than that prescribed in the Protocol.
  • It also provides that liability of the carrier for the loss of or damage to cabin luggage is limited to 2,250 SDRs per passenger, for loss of or damage to vehicles including all luggage carried in or on the vehicle is limited to 12,700 SDRs per vehicle and for loss or damage to other luggage is limited to 3,375 SDRs per passenger. The carrier and the passenger may agree that the liability of the carrier shall be subject to a deductible not exceeding 330 SDRs in the case of damage to a vehicle and not exceeding 149 SDRs per passenger in the case of loss of or damage to their luggage, such sum to be deducted for the loss or damage.
  • The defences provided by the Convention are limited to liabilities for damage caused by “war” incidents, by natural phenomena of exceptional, inevitable and irresistible nature and by acts wholly caused by intentional acts or omissions by a third party or by a nuclear incident.

Passenger Liability Regulation (PLR)

The European Union has adopted the EU Passenger Liability Regulation (EC) 392/2009 (PLR) which will enact the 2002 Athens Convention along with the IMO Guidelines in the EU Member states: PLR stretches the scope of the burden of liability upon shipowners.

The application of the 2002 Athens Convention under the PLR is extended to national carriage of passengers, effectively widening the scope of the 2002 Athens Convention which focuses on international carriage. So in due course, compulsory insurance requirements will be imposed on all vessels trading domestically within states of the European Union.

  • Sufficient advance payments must be paid out within 15 days from the time the person entitled to damages is identified. Such payments are not considered an admission of liability. The advance payment provisions apply to carriers flying the flag of a Member State or for damages occurring in a Member State.
  • The carrier is obliged to give out information regarding rights of passengers for compensation, the appropriate limits applicable as well as information of direct action against the insurer.

Insurers’ Response

There have been many discussions concerning the insurance arrangements that need to be in place under the terms of PLR, namely State certification of insurance up to 250,000 SDRs, supported by a Blue Card to be issued by the ship’s liability insurer. The traditional policy of the International Group (IG) of P&I Clubs is that they only issue Blue Cards and subject themselves to direct action claims in respect of international Conventions such as the Civil Liability Convention and the Bunkers Convention and not for national or regional liability legislation such as the PLR.

Following consideration by all International Group Clubs’ Boards, it has been agreed that IG Clubs will exceptionally be able to issue the required non-war risk PLR certificates in advance of 31 December 2012 for all vessels up to passenger capacity of 4,500 and that claims arising under the non-war Blue Cards will be poolable within the IG’s pooling and reinsurance arrangements, subject to the US$2 billion limit placed by the IG on passenger claims. In this respect, all IG Clubs have issued a circular to inform their Members accordingly.

War/Terrorism Limits – Achieving insurability

On October 2006 IMO adopted the Guidelines for the implementation of the Athens Convention to allow limitation of liability in respect of claims relating to war or terrorism to resolve problems in the implementation of the 2002 Athens Convention. The text of the agreed reservation states that the Government concerned reserves the right to and undertakes to limit liability to 250,000 SDRs per passenger or 340 million SDRs in total, whichever is lower for loss suffered as a result of death or personal injury to a passenger caused by named war or terrorism perils.

Implementation

The 2002 Convention provides that it will enter into force 12 months after being acceded to by ten Member States. However, the implementation of EU Regulation 392/2009 (PLR) on 31 December 2011 provided the impetus for the ratification of the 2002 Athens Convention. PLR entered into force on 31 December 2012 with varying dates of implementation in respect of domestic trade according to each State. The 2002 Athens Convention entered into force on April 23, 2014.