Merchant Shipping Bill [H.L.] (Hansard, 18 December 1980)

§ Lord Trefgarne
My Lords, I beg to move that this Bill be now read a second time. The object of this short, essentially technical, Bill is to enable the United Kingdom to ratify protocols to two international conventions in the maritime field. The first of these conventions is the 1957 International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships. It establishes overall "global" limits to shipowner's liability, according to the size of ship involved, in respect of claims rising from maritime incidents. The legislation implementing this convention in the United Kingdom is the Merchant Shipping (Liability of Shipowners and Others) Act 1958.
The second of the conventions is the 1924 International Convention for the Unification of certain Rules of Law relating to Bills of Lading as amended 1231 by the 1968 Protocol thereto. This convention, as amended, is commonly referred to as the Hague-Visby Rules. These rules establish the carrier's minimum obligations, his maximum immunities, and the limit of his liability in respect of the carriage of goods by sea. The rules are given effect to in this country by the Carriage of Goods by Sea Act 1971.
In both of these conventions there are provisions defining limits to the liability of shipowners or carriers in terms of gold francs, which used to be the standard international unit of account for such purposes. However, with the abandonment of an official price of gold, it has become clear that gold can no longer provide a satisfactory basis for the uniform application of limitation amounts in all countries. There is thus a need for an alternative unit of account to replace the earlier gold-based unit.
The solution adopted by the international community has been to substitute the special drawing right of the International Monetary Fund as the new international standard unit of account, and to introduce amendments to existing conventions in a neutral way so that initially at least there would be no effect on the actual limits themselves. Since 1975 international transport conventions have progressively been revised on this basis, with protocols being agreed upon for adoption in the usual way. The two Protocols with which this Bill is concerned were negotiated in the light of what has now become the international standard approach, and they were adopted at a conference held in Brussels in December 1979.
The purpose of the Bill is therefore quite simply to implement the provisions of the two Protocols I have referred to; that is to substitute the special drawing right of the International Monetary Fund for the gold franc as the unit of account in which limits of liability are expressed, with no significant change to the values of the actual limits themselves.
I have already indicated that the changes made by the two Protocols concerned are exactly in line with what has become standard international practice in this respect, and I should perhaps observe that similar amending legislation has already been introduced in the United Kingdom, in respect of other transport conventions, through provisions in the Merchant Shipping Act 1979 and the Carriage by Air and Road Act 1979.
Although the new procedure for converting from gold to special drawing rights and from special drawing rights to national currencies has been agreed internationally, the new arrangements are not yet generally in force, and differences in practice have regrettably developed in some countries. As a result there is now some uncertainty, and no absolute uniformity of practice in the interpretation of the old gold-based limitation amounts. We have no problem in the United Kingdom since we make sterling equivalent orders from time to time which give the value of limitation amounts calculated according to the internationally accepted method. But some other states have not adopted a similar expedient. Consequently there have been instances of United Kingdom shipowners and insurers being faced in actions abroad with limitation amounts based on the very significantly higher free-market price of gold.
1232 Current uncertainty as to the value of gold-based limits is considered most undesirable by the international community generally, and by United Kingdom commercial interests in particular. International adoption of the protocols will remove this problem, and early United Kingdom ratification will encourage their entry into force. In view of the modest entry into force conditions applicable to these Protocols, in one case 6 states and in the other 5, United Kindom ratification will be a significant contribution to this end. The shipping industry, through the General Council of British Shipping, has strongly urged the Government to ratify the Protocols as soon as possible.
As well as making changes directly by the Protocols, the Bill similarly introduces the change from gold to special drawing rights in connection with the limitation of liability of dock owners, canal owners, harbour authorities and conservancy authorities. This exension has been included in the Bill as so to maintain the parity of treatment as regards limitation amounts that has been a continuing feature of United Kingdom legislation since the turn of the century. Again, of course, there is no change in the limits themselves apart from some insignificant rounding.
Although it is expected that the 1957 convention will in due course be superseded by the 1976 London Convention on Limitation of Liability for Maritime Claims, for which United Kingdom implementing legislation was included in the Merchant Shipping Act 1979, it is not yet known when this latter convention will enter into force. The Protocol will therefore serve a useful purpose in the meantime, not only in this country but also in others where the 1957 convention may remain in force for longer. Any replacement of the Hague-Visby Rules is likely to be further in the future, and the relevant Protocol is therefore likely to operate for a considerable number of years.
I turn to the detailed provisions of the Bill. Clause 1 effects amendments to the Merchant Shipping Act 1894 and the Merchant Shipping (Liability of Shipowners and Others) Act 1900, in both cases as amended by the Merchant Shipping(Liability of Shipowners and Others) Act 1958, in order to substitute special drawing rights in the limitation provisions of those Acts and to specify the date on which conversion should be effected. Clause 2 of the Bill makes similar amendments in respect of the Carriage of Goods by Sea Act 1971. The third clause specifies procedures for converting from special drawing rights into Sterling similar to the procedures in other United Kingdom legislation involving special drawing rights. Clauses 4 and 5 deal with the territorial extent of the Bill and other supplementary provisions.
Despite the essentially technical nature of the Bill, it deals with an issue of very considerable commercial importance to British maritime interests and has their strong support. I commend the Bill to your Lordships. I beg to move.

§ Lord Wells-Pestell
My Lords, with permission, I will speak on behalf of my noble friend Lord Underhill, who would normally be dealing with this matter but who at the moment is having a medical consultation. There is little I need say. Although it is a small Bill, 1233 it required the explanation which the Minister has given, over and above the Explanatory Memorandum. Our inquiries into the matter show that this is a highly desirable measure, as well as being relevant in relation to the Acts referred to in Clauses 1 and 2. We welcome the Bill, as it will enable the Government, as the noble Lord said, to ratify the 1979 Protocols to the two relevant international conventions. The substitution of gold francs by IMF drawing rights and the eventual conversion of those units into sterling is common sense. We are pleased to note that the Council of British Shipping considers that it would be an advantage to all sectors of the transport industry if the protocols were to come into operation as soon as possible, and I ask the Government to bear that in mind. We have no reservations about the Bill and give it our support.

§ Lord Trefgarne
My Lords, I am greatly obliged to the noble Lord for that welcome to the Bill.

§ Lord Trefgarne
My Lords, perhaps I might say, with permission, that my noble friend Lord Belstead, who is to take the next business, is temporarily not in his place. I fear, therefore, that I must ask your Lordships to adjourn for a few moments to enable him to get here. I therefore beg to move that the House do now adjourn during pleasure for five minutes.