HL Deb 06 April 1998 vol 588 cc579-83

7.30 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)

rose to move, That the order and draft orders laid before the House on 10th and 17th March be approved [27th Report from the Joint Committee].

The noble Baroness said: My Lords, the Merchant Shipping (Convention on Limitation of Liability for Maritime Claims)(Amendment) Order would enable the UK to ratify the 1996 protocol to amend the 1976 Convention on Limitation of Liability for Maritime Claims. The enabling power for the order is provided by the Merchant Shipping and Maritime Security Act 1997, which was passed by the previous Parliament with cross-party support.

The aim of the protocol is to increase the limits of liability set by the 1976 Convention on Limitation of Liability for Maritime Claims. Such an increase is necessary to reverse the effect of more than 20 years of inflation.

The UK was the first state to sign the protocol. The making of this order should ensure that we are also the first to ratify it. This would be fitting. It was at the UK's instigation that the IMO began work on the revision of the 1976 convention. The UK also played a leading role in the negotiations leading to the successful adoption of the protocol in 1996.

The 1976 convention entitles shipowners to limit their liability for certain general maritime claims. The applicable limit depends upon the type of claim and the gross tonnage of the ship. The Government believe that the long-standing principle of limited liability for general maritime claims remains valid, but on two conditions. First, the limits must be set at a level which ensures that most claimants should receive full compensation when they successfully sue a shipowner in respect of a general maritime claim. This order would ensure that this is the case when claims are brought in a UK court. Secondly, the right to limited liability must be balanced by a duty for the shipowner to take out effective insurance cover. We are pressing within the IMO for the adoption of measures to ensure that all shipowners meet this duty.

The order would provide increased protection for claimants without placing any undue burden on the UK shipping industry. The increased limits would apply to all claims considered by courts in the UK irrespective of the flag of the ship involved. They should not in themselves increase insurance premiums paid by owners whose ships are engaged in international trade. They may, however, result in a small increase in the insurance premiums paid by ships engaged solely in voyages within the UK. The precise amount of any increase is impossible to estimate, since the insurer should also have regard to the quality and track record of the ship when setting the premium. We take the view that this cost is justified by the need to update limits set in 1976 to provide proper protection to potential claimants.

Overall, the order will limit the limit of a shipowner's liability for general maritime claims by about two-and-a-half times. These limits are set in terms of the International Monetary Fund's special drawing right. For example, the 1976 convention sets a limit for claims other than those in respect of death and injury arising in respect of a ship of 50,000 gross tons of about 7.6 million SDR, or roughly £6 million. The 1996 protocol will increase this limit to about 18.2 million SDR, or some £14.5 million. Higher increases will be made for small ships. For instance, the corresponding increase for a ship of 500 tons will be from 167,000 to 1 million SDR.

These increases, like most of the provisions of the order, are determined by the terms of the 1996 protocol. There are three areas, however, where the 1976 convention and the 1996 protocol give states discretion. The order would enable the UK to take advantage of these three freedoms.

The first freedom relates to the Hazardous and Noxious Substances Convention 1996. This convention would establish a liability and compensation regime for damage caused by dangerous and polluting cargoes carried by ship. The regime is modelled on the existing international regime for oil pollution from tankers.

The 1996 protocol enables states to reserve the right not to apply the general limits of the 1976 convention to claims under the Hazardous and Noxious Substances Convention in order that claimants might obtain the higher compensation amounts available under that convention. The order will enable the UK to do this. The opt-out will come into effect automatically when the Hazardous and Noxious Substances Convention enters into force for the UK.

The limits set by the 1976 convention already do not apply to claims for loss or damage caused by oil pollution from tankers. There is a specific international regime for such claims.

The second freedom relates to small ships. States may set specific national limits for very small ships with a gross tonnage of less than 300 tons. At present the limit set for such ships under UK legislation is half that for ships of 300 tons. Consultation with interested parties demonstrated that while some favoured lower limits and others higher limits most agreed that we should retain the differential. This is therefore what the order would do.

The third freedom, perhaps of most interest to the House, relates to passenger claims. The protocol provides an opt-out clause allowing states to set higher limits, or unlimited liability, in respect of claims arising from the death of, or injury to, passengers. The order would give effect to this opt-out. This would not in itself have any effect on the amount of compensation available to meet passenger claims. The 1976 convention sets a global limit on all passenger claims arising from any particular incident. A separate convention—the 1974 Athens Convention relating to the carriage of passengers and their luggage by sea—sets a per capita limit; that is, a separate limit for each passenger.

At present the global limit set by the 1976 convention can further restrict the amount of compensation available under the Athens Convention. The protocol will prevent this. Moreover, as implemented by this order, the protocol would mean that the rules of the 1976 convention would cease to affect the method of calculating compensation payments for passengers. This would ensure that we have flexibility to make appropriate changes to the legislation implementing the Athens Convention. These changes could result from the work on the revision of the Athens Convention which is currently a top priority within the IMO.

However, as it might be some time before this work is translated into concrete measures, my department is also about to go out to consultation to seek views on what measures the Government might take in the interim.

I turn to the other two orders. The Hovercraft (Convention on Limitation of Liability for Maritime Claims (Amendment)) Order makes changes to the general limits of liability set for the owners of hovercraft under UK legislation corresponding to the changes made for ships by the merchant shipping order.

The purpose of the Hovercraft (Application of Enactments)(Amendment) Order is to complete the transfer from the Civil Aviation Authority of regulatory responsibility for hovercraft. The process of transferring such responsibility to the Maritime and Coastguard Agency began in 1997. This order completes the process. It is therefore part of a tidying-up exercise. It does not impose any burdens, financial or otherwise, on industry.

Moved, That the order and draft orders laid before the House on 10th and 17th March be approved [27th Report from the Joint Committee].—(Baroness Hayman.)

Lord Brabazon of Tara

My Lords, I am grateful to the Minister for her explanation of these complicated orders which we on this side of the House welcome. I congratulate the department on the clarity of the explanatory notes which accompany the orders. The Minister will be aware that I was critical of some notes in the past, but in this case I praise them.

As regards the hovercraft orders, I am glad that the final transfer from the Civil Aviation Authority to the Maritime Safety Agency is now complete. With these hovercraft orders we find ourselves in a somewhat peculiar position. In fact, there was an Act to deal with hovercraft back in 1968, but so far as I am aware there are only two services in the United Kingdom—one between Dover and Calais and the other one, of which I am an occasional user, between Portsmouth and the Isle of Wight. Therefore, we have a whole raft of legislation dealing with hovercraft which applies at most to four hovercraft in the whole of the United Kingdom.

Incidentally, should the noble Baroness choose to use a hovercraft on either of the services that I have mentioned, she will find that they have one thing in common: at neither of the destinations to which they go will she find any of her trunk roads. That is an issue which may or may not have been raised by the Isle of Wight in the past.

Having said that, the main purpose of these orders is to increase the liability, and we certainly support that move. I was slightly puzzled by the terms of the limits of the liability. While I appreciate that they do not refer to passengers of ships, I am slightly puzzled as to why and to whom the limits of liability under paragraph 4 of the merchant shipping order apply if it is not to the passengers. I should like to know also why the limits on my ability should be different according to the different size of the ship involved. Loss of life is loss of life whether in relation to a ship not exceeding 2,000 tons or a ship of up to 75,000 tons or more. That is rather puzzling and perhaps the noble Baroness will say something about that. The same applies to Article 6(1) of the hovercraft order.

Nevertheless, we support these orders. As I said on a previous occasion, should the Minister have an opportunity in future legislation to move these orders from the affirmative to the negative procedure, on this side of the House we would support that.

Baroness Thomas of Walliswood

My Lords, equally we have no particular points to raise on the orders. I am delighted that we are implementing them as speedily as we are because it is important to keep compensation to a rational level rather than relying on very old monetary values.

It is obviously desirable that we are able to deal with all merchant vessels of whatever origin in our own ports. There is an obvious advantage in having international agreements on this and I look forward to agreements also on insurance.

Viscount Simon

My Lords, I have just one query. Under the limitation of liability order in relation to hovercraft, in paragraph 1 of Article 6 various amounts of money are indicated for limited liability covering different circumstances. However, notwithstanding the words "any distinct occasion" I am unclear as to whether those amounts refer to the total liability or to a per capita liability. Perhaps my noble friend will clarify that.

Baroness Hayman

My Lords, I am grateful to noble Lords who have spoken in general support of the orders before the House this evening. As the noble Lord, Lord Brabazon of Tara, said, the main purpose of these orders is to increase liability. Noble Lords listening carefully may have noticed that I stumbled slightly and said "the order will limit the limit". In fact, I should have said that it will increase the limit of the shipowner's liability, which makes more sense.

The noble Lord, Lord Brabazon of Tara, is right to point out that currently there are only three hovercraft in service which carry passengers commercially but, nevertheless, we have a separate legislative regime for dealing with them. Therefore, in order to increase the compensation, that must be done through separate orders. I am glad that we did slightly better in the explanatory memorandum in this respect.

On the specific points which have been raised, I should say to my noble friend Lord Simon that, as I understand it, the limit of liability is global in that it sets a sum for liability with respect to all claims except those relating to passengers. Where there is death and injury to passengers, there is no limit set by the overall global figure except in so far as global figures in the orders are related to the number of passengers. But it is not the case that the amount available to individual passengers will be diminished by the number of passengers involved in an incident, if I can put it in that way.

The noble Lord, Lord Brabazon of Tara, raised a similar issue in relation to the differential between small and larger ships. The limits in respect of passenger claims are the same for all sea-going ships regardless of size. The limits set by the 1976 convention do not apply to claims arising from the death of seafarers employed under a contract governed by UK law. Therefore, the only claims arising from fatalities where the limits vary with the size of the ship are those involving seafarers employed under contract governed by foreign law and those involving persons outside the ship.

I note that the noble Lord, Lord Brabazon of Tara, may well say to me that they are still equal persons. In adopting the 1996 protocol, the international community recognised that the size of claims was not always directly proportional to the size of the ship. That is why the protocol will make significantly greater increases to the limits for small ships than it does overall. The minimum limits which apply to all small ships between 300 and 2,000 gross tons will be increased six-fold. That will at least provide a minimum safety net for claimants. I hope that that covers some of the points raised.

On Question, Motion agreed to.