AUSTRALIAN ports have welcomed an increasing number of passenger vessels over recent years. According to Susan Bonner, the vice-president and managing director, Australia and New Zealand of Royal Caribbean Cruises, when the vessels Celebrity Eclipse and the Celebrity Solstice homeport in Australia in 2020, the two ships will inject an estimated $58m to the Australian economy. The boom in the Australian cruise economy continues with average increases in passenger numbers of 19.4% annually throughout the period from
2007 to 2016.
The breadth of the cruise experience
Travellers are familiar with accepting terms and conditions when they travel, whether they be those of an airline carrier, a tour provider or when clicking “agree” on an Airbnb booking. Often one holiday can include many contracts formed in a number of different jurisdictions.
For cruise passengers, however, the entire travel experience is usually embodied in one contract. Not only is the passenger signing up to the terms which apply to the mode of travel – that is the vessel – they are signing up to the terms of the accommodation, the provision of services and meals and all incidental activities. When something goes wrong in the course of a cruise, this can raise contractual conundrums for a passenger as to where and when and against which entity to bring a claim.
Period of liability
Compared with the period of liability that an airline operator has with its passengers – essentially from airport to airport – a cruise operator has a much broader period of responsibility to its customers and accordingly a greater exposure to risk.
In Australia, airline operators are able to limit liability to passengers in the event they suffer an injury or lose luggage pursuant to the Convention for the Unification of Certain Rules for International Carriage by Air, commonly known as the Montreal Convention. Claims also must be brought against an airline within two years of an incident, which creates some certainty for insurers. This is currently not the case for cruise operators facing claims from their Australian customers. There is a very real inconsistency between the rights of Australian passengers travelling by sea and those travelling by air, and reciprocally the rights of airline and cruise operators.
The Australian government is aware that the current legal framework in Australia for the international carriage of passengers on ships is complex and can be uncertain for both passengers and carriers. The Department of Infrastructure and Regional Development has conducted a consultation process to consider whether Australia should ratify the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea 1974, as amended by the 2002 Protocol (Athens Convention).
Submissions have been made by various Australian academics and legal associations with expertise in the field, as well as the two largest cruise operators in Australia (Royal Caribbean Cruises and Carnival Australia). Three of the five submissions advocate for adopting the Athens Convention, while one submission is against the adoption and another is neutral. Submissions were due by 31 January 2018 and the department is now considering its position.
At present, claims by Australian passengers based in negligence or breach of contract can be brought pursuant to state and federal civil liability laws and also federal Australian consumer laws but not without some complexity as to how these interact with one another. The Athens Convention provides a framework for such claims. Some key features are listed below.
- The convention has a two-tier system for claims involving injury or death that arises out of a shipping incident. Firstly, a carrier will be strictly liable up to 250,000 special drawing rights (SDRs) – equating to about $450,000 – per passenger unless the carrier can prove the loss was caused by war or natural phenomena. Secondly, individual claims may be subject to a higher per passenger limit of 400,000 SDRs per passenger (about $746,000) unless the carrier can prove the incident occurred without its negligence.
- For injury or death that is caused by a shipping incident, the carrier will potentially be liable up to an overall limit of 400,000 SDRs ($730,000) per passenger.
- Claims for loss of luggage or vehicles are limited to roughly $4000 for cabin luggage, $23,000 for vehicles and $6000 for “other luggage” per passenger.
- Non-shipping related incidents (including trips and falls) are not covered under the convention; a claimant would still have to prove that the carrier was at fault in such an incident.
- Unlike aviation passenger claims, there is no prohibition on recovery for damages in the event a passenger suffers psychological or mental injury.
- Generally, the time limit to make a claim is two years (except where the specific law of a forum allows for the suspension of a time bar). Currently time limits for bringing claim depend on state and federal limitation periods which can be up to six years from the date of the incident.
- Carriers must have financial security to cover death or personal injury for 250,000 SDRs (roughly $450,000) per passenger. This is important for passengers when it is uncertain how operators would respond in the event of a major casualty involving death or injury to thousands of passengers. The Ovation of the Seas, for example, has a capacity of 4180 passengers. It is also of importance to the insurance community, in particular P&I clubs as it allows a cap on liability which is significant given the potential for a large number of claimants on board passenger vessels.
- A claim can be brought directly against a ship’s financial securer. This form of financial security has been adopted in other maritime conventions and is backed by the major P&I clubs, which insure the majority of the world’s seagoing passenger ships.
- Claimants can bring a claim in another jurisdiction that is party to the convention (provided there is a sufficient connection with the jurisdiction chosen). This deals with difficulties in cruise contracts where the cruise operator may require claims to be brought in an overseas jurisdiction completely unrelated to the claimant’s place of residence or where a claim arose.
- Limitations in contracts which are contrary to the convention would be void.
The reach of the Athens Convention
Currently, 28 member states, including most major flag states (including Panama and the Marshall Islands) and the UK have adopted the Athens Convention and the 2002 Protocol. The EU has not only adopted the convention but has extended it from international to domestic travel.
Australia is no stranger to international liability conventions. It participates in the Convention on Limitation of Liability for Maritime Claims 1976 and the Bunker Pollution Convention 2001. Ratification would, therefore, be consistent with existing treaties to which Australia is a party, including the Convention for the Montreal Convention. As one of the leading academics in this area, Professor Nick Gaskell stated in his submission is to the department’s consultation process: “The Athens Convention 2002 is not perfect. It does not solve all passenger problems, but must be viewed as a reasonable compromise. It is the best solution available internationally for passengers as ‘consumers’ … Australia would be joining an internationally acceptable regime similar to, and in some ways better than, the Montreal Convention on international air travel.”
In the event Australia ratifies the Athens Convention, passengers will certainly benefit from the certainty it brings to claims and vessel insurers from the capped limits and clarity of jurisdiction.
* Alexis Cahalan is principal lawyer at Thomas Miller Law
This article appeared in the January 2019 edition of DCN Magazine