Making waves

Disasters at sea such as those involving the Tricolor and the Prestige can create a tide of work for city lawyers.

Chris Baker explores the ins and outs of maritime litigation and looks at moves to set up an EU safety agency

Acynic could argue that Christmas came early for the UK's maritime law firms last year.

Specialists from the City firms that dominate the shipping scene were scrambled last month when Liberian-registered tanker the Prestige broke up off the coast of Spain.

Shortly afterwards, Norwegian car carrier the Tricolor sank in the English Channel after colliding with another vessel.

Two days later, another container ship hit the Tricolor, with yet another one following suit in the new year.

It all means litigation for loss of cargo, insurance and pollution claims and possible criminal cases in the country where the disaster occurred.

'From an outsider's point of view, the City admiralty firms have had a real bonanza Christmas,' says Russell Kelly, a partner at south-coast firm Lester Aldridge.

'Everything was pretty quiet last year then there was a rush of incidents and everyone has been picking up work.

The Tricolor is a bit of a gravy train because people keep running into it and creating new cases.'

And another partner - who prefers to be unnamed - at a City firm with a large maritime department says of the Prestige, which still threatens to spill 70,000 tonnes of oil: 'Ecologically, it's a disaster but accidents like these do tend to generate a lot of disputes.'

The Prestige sank in Spanish waters and the Norwegian Tricolor went down in Belgian-controlled waters and is being guarded by the French authorities - so it is easy to ask why lawyers from City firms are playing such a huge role in litigation arising from the disasters.

But Britannia's shipping lawyers still rule the waves.

Maritime laws developed during the days of Empire still hold sway, and the firms that make up the City of London Admiralty Solicitors Group have been involved in most, if not all, of the cases that followed the shipping mishaps of the past 25 years.

Richard Shaw, a senior research fellow at Southampton University's institute of maritime law, explains: 'It's a relatively small circle of firms - about 25, with a hard core of 12, that specialise in maritime law.

They all know each other, which helps in the settlement of cases.'

The International Maritime Organisation (IMO) is the only United Nations body to be based in the UK and the majority of the protection and indemnity (P&I) associations - mutual insurance clubs where shipowners share risks - are also based in the capital.

The UK P&I Club, the world's largest, last week launched a 'value for money' exercise designed to ensure that members benchmark the legal services they receive (see [2003] Gazette, 9 January, 6).

Most of the firms have 24-hour emergency instruction helplines, so when disaster strikes they can be on the scene within hours.

The City firm partner says: 'A maritime lawyer is appointed, who flies out and takes statements.

These statements form evidence which is used to decide what the position is and what the case should be.

Firms like ours have on their staff people who are ex-maritime and they travel to scenes of maritime casualties to find out the facts.'

This was the case with the Prestige.

The ship's owners and its liability insurers have instructed City firm Ince & Co.

Partner Colin de la Rue says: 'Our role is more as international lawyers than as English solicitors.

We liaise with local lawyers and aim to assist with experience of similar cases elsewhere.'

A mixture of national laws, depending on the flag the ship is flying, the nationality of its crew and where the incident took place determine the rules that apply in maritime incidents.

All states in which ships are registered come under the regulatory auspices of the IMO, which then agrees on international agreements on shipping laws, or conventions.

Compensation is administered by a two-tier system.

The first slice, up to 10 million, comes from the shipowner and its P&I club.

The second, of up to 140 million, is administered by the International Oil Pollution Compensation Fund, raised from levies on the oil companies.

A diplomatic conference on proposals to increase compensation levels by 50% is scheduled to be held in the summer.

Unfortunately, this will be too late for victims of the Prestige spill.

'We don't know whether the claims [arising from the Prestige] will be sustainable,' says a source close to the fund.

'There are very strong suspicions that there will not be enough to pay all the claims in full.'

The fund pays out on claims regardless of who is actually responsible for the pollution to save victims getting embroiled in complex litigation.

But once the money is paid, the fund and P&I club will try and discover who was ultimately responsible for the catastrophe, and attempt to recover some of the losses.

This will involve instructing lawyers such as City firm Clifford Chance, which acts for the fund from time to time in relation to UK-based issues.

The Sea Empress, for example, spilled 72,000 tonnes of oil around Milford Haven in west Wales in 1996.

'Nearly seven years after that incident, there is still ongoing litigation to establish who was ultimately responsible - and that is likely to be the case with the Prestige,' the source says.

It can take up to a decade - the Braer shed 85,000 tonnes of oil into the sea off the Shetland Isles in 1993 and there are still some cases pending.

According to Mr Shaw, who sits on the IMO's legal committee, the latest cases of the Prestige and Tricolor raise a number of interesting issues for shipping law.

The salvage of the Tricolor's 30 million cargo of luxury cars has been arranged under a Lloyd's contract first used in 1908, where the salvager undertakes the work and its remuneration is later assessed by an arbitration panel.

'But the fact that two other ships have hit it makes salvage more difficult and it might be that the salvagers make claims against those two ships,' he explains.

And the vessel lies in waters beyond English and French boundaries - although the French authorities are protecting it - raising issues of jurisdiction, he adds.

Sabre-rattling by France and Spain after the Prestige disaster - this week both countries said they were going to monitor all ships and banish ones with bad records - may not be allowed under UN conventions, Mr Shaw warns.

It also raised the question of whether Spain was right to order the ship out to sea instead of giving it a safe haven where the damage could have been limited.

But Mr Kelly strikes a note of caution: 'It would take a brave harbour master or port authority to welcome a ship potentially on the verge of breaking up into his port voluntarily,' he says, suggesting that some sort of international co-operation or legal regime may be required to ensure that harbours cannot turn vessels away in such circumstances.

The Prestige incident is also likely to speed up moves by the European Union to set up a European maritime safety agency to monitor its waters.

The EU has traditionally seen shipping as an international matter, but has come under increasing pressure to get involved, Mr Shaw says.

Other recent developments include a draft IMO convention on wreck disposal, and a new protocol that increases the amount of money passengers can recover as a result of death or injury at sea.

The cases of the Tricolor and Prestige have already led to calls for changes to maritime law, and these will continue in the coming months, but the conventions cannot be amended or rewritten in a hurry, Mr Shaw warns.

Each country has to ratify the IMO convention and that means ensuring it chimes with each of the 162 member states' legal systems.

'Maritime law is about having a set of principles that a ship's captain can understand and apply wherever they are in the world,' he says.

'Some might say that's ambitious, but people like me and my friends in the City are working towards that end.'

Chris Baker is a freelance journalist