The Seafarers Rights Under P+I Club PDF

FACULTY OF LAW
Lund University
Jose Manuel Correro Martin
The seafarer´s rights and P&I

coverage on the crew in the UK
Master thesis
30 credits
Lars-Göran Malmberg
Master´s Programme in Maritime Law
Spring 2011
Contents
SUMMARY 1
ABBREVIATIONS 2
1 INTRODUCTION 3
1.1 Background 3
1.2 Purpose 4
1.3 Method and material 4
1.4 Delimitation 5
2 ABOUT THE P&I CLUBS 6

2.1 Origins 6
2.2 What is a P&I club and how it work? 8
2.2.1 Structure 9
2.2.1.1 The directors 9
2.2.1.2 Managers 9
2.2.2 The Scope of the cover 10
2.2.3 P&I club reinsurance and the International Group of P&I clubs 11
2.2.3.1 The International Group Pooling Arrangement 12
2.2.3.2 The representative function of the International Group of P&I clubs13
3 LAW AND P&I COVER REGARDING THE CREW IN UK 15

3.1 Common law liability and negligence 16
3.2 Contractual liability 17
3.3 P&I cover regarding crew members 19
3.3.1 Illness, injury and death 20
3.3.2 Shipwreck unemployment indemnity 22
3.3.3 Loss of effects 22
3.3.4 Substitutes 23
3.3.5 Distressed Seamen, Desserters and Strikers 23
3.3.6 Diversion 24
3.3.7 Repatriation 25
3.3.8 Collective and special agreements 26
3.4 Limitation of the liability regarding the crew 27
4 CREW CLAIMS AND DIRECT ACTIONS AGAINST P&I

CLUBS 28
4.1 The Third Parties (Rights Against Insurers) Act 1930 28
4.2 Pay to be paid rule 29
4.3 The Third Parties (Rights Against Insurers) Act 2010 30
5 THE MARITIME LABOUR CONVENTION 2006 32

5.1 The aim of the convention 32
5.2 Adoption of the convention and entering in to force 33
5.3 The convention 34
5.3.1 The Articles 34
5.3.2 The Regulations and the Code 36
5.3.2.1 Tittle 1: Minimum requirements for seafarers to work on a ship 36
5.3.2.2 Title 2 Conditions of Employment 37
5.3.2.3 Title 3 Accommodation, recreational facilities, food and catering 39
5.3.2.4 Title 4 Health protection, medical care, welfare and social security
protection 40
5.3.2.5 Title 5 Compliance and enforcement 44
5.4 Implementation in the UK 46
5.4.1 MLC Tripartite Working Group 48
5.4.2 Legislation amendements 48
5.4.3 Inspection and certification regime 48
5.5 How will affect the MLC 2006 to the P&I cover? 49
6 PIRACY, CREW AND P&I CLUBS 51

6.1 What is piracy? 51
6.2 Seafarers rights and P&I coverage in the case of a pirate attack 52
6.3 Ransom 54
6.3.1 UK legislation and Ransom Payments 54
6.3.2 Who pays for the ransom? 55
6.3.3 Guards and security personnel: effect on the P&I coverage 58
7 CRIMINALISATION OF SEAFARERS 59
8 ANALYSIS AND CONCLUSION 63
SUPPLEMENT A 70
SUPPLEMENT B 71
BIBLIOGRAPHY 76
TABLE OF CASES 80
Summary
In this thesis different topics will be explained, with the common
denominator that all of them are related to the seafarers rights and the
extend of the cover on the crew of the P&I Clubs in every case.
In order to have a comprehensive view of the relation between the seafarer’s

rights and the P&I Clubs cover on the crew, the following topics will be
addressed:
• The origins of the P&I Clubs, how they work and the scope of their
cover and the International Group of the P&I Clubs
• The Common Law liability and negligence in the UK; the

contractual law and P&I Cover on the crew. Since The ILO
Maritime Labour Convention 2006 will be implemented in the UK,
and most of the UK law comply already with this convention, the
convention will be explained and the UK statutory law regarding the
seafarer’s rights will be addressed by a cross reference at the end of
this thesis.
• Direct action against the P&I Clubs in the UK in case of crew

claims; the Pay to be paid rule, and the Direct Action (Rights
Against Insurers) Act 1930 and 2010 will be explained.
• Piracy and P&I cover on the crew, what is it and to what extend the
claims of the crew are covered by the P&I clubs (injury, illness,
repatriation, substitution, the payment of ransom…)
• Criminalization of the seafarers; the reasons of this trend and the

extend of the coverage of the P&I Clubs on the crew are analysed.
The focus will be on English Seafarers on board English registered ships.
1
Abbreviations
BIMCO The Baltic and International Maritime Council
CBA Collective Bargaining Agreement
DFT Department for Transport
ECSA European Community Shipowners Association
ETF European Transport Federation
EU European Union
FOC Flag of Convenience
GA General Average
IG P&I International Group of P&I Clubs
ILO International Labour Convention
IMO International Maritime Organization
IRTC Internationally Recognised Transit Corridor
ISM International Safety Management Code
MARPOL International Convention for the Prevention of Pollution
from Ships
MCA Maritime Coastguard Agency
MLC Maritime Labour Certificate
MLC 2006 Maritime Labour Convention 2006
MSA Merchant Shipping Act
MSCHO Maritime Security Centre Horn of Africa
OCIMF Oil Companies International Marine Forum
OECD Organisation for Economic Cooperation and Development
P&I Clubs Protection and Indemnity Clubs
SOLAS Save of Life at Sea
STCW Standard Training Certification and Wacthkeeping
TWG Tripartite Working Group
UK United Kingdom
UKMTO United Kingdom Maritime Trade Operations
UNCLOS United Nation Convention on the Law of the Sea
UNCITRAL United Nation Commission on International Trade Law
USD United States Dollars
WGLCCS Working Group on Liability and Compensation regarding
Claims for death, personal injury and abandonment of
seafarers
2
1 Introduction
1.1 Background
The P&I clubs born to cover the third party liability; it was the answer of the
British shipowners when in the 19th century injured crew members began to
seek compensation from their employers. Nowadays, there are thirteen
principal underwriting member clubs of the International Group of P&I
Clubs (“the Group”) between them provide liability cover (protection and
indemnity) for approximately ninety percent of the world’s ocean going
tonnage.
Regarding to what is a P&I club and what kind of liabilities are covered, the
IGP&I website explains it in brief with these words:
Each Group club is an independent, non-profit making mutual insurance

association, providing cover for its shipowner and charterer members
against third party liabilities relating to the use and operation of ships. Each
club is controlled by its members through a board of directors or committee
elected from the membership.
Clubs cover a wide range of liabilities including personal injury to crew,

passengers and others on board, cargo loss and damage, oil pollution, wreck
removal and dock damage. Clubs also provide a wide range of services to
their members on claims, legal issues and loss prevention, and often play a
leading role in the management of casualties. 1
The idea for the topic chosen for this thesis came from the importance of the
claims for injuries, illness and death of the crew, which -as was stated
before-,was in the very beginning of the P&I clubs, and today have an
important role in the claims against the shipowners and their insurers. The
relation between the P&I cover on the crew and the Seafarers Rights lead to
some actual topics, as how the Maritime Labour Convention 2006 is going
to affect the covers, the piracy, and the criminalization of the seafarers.
The claims for personal illness, injury and death are more than 30% of the
claims statistic of the P&I clubs. 2 An example of the amount of money that
this claims move will be illustrative:
During the period 1995-2001, Clubs had handled or were handling 84,300
claims (rounded down to the nearest hundred) relating to seafarer illness,
personal injury and death amounting in value to USD 1,146,000,000.00
(rounded down to the nearest USD 100,000.00). The latter figure was
1
IG P&I website, online at: www.igpandi.org/ (last visit 14/04/2011).
2
Statistic from The UK P&I Club, online at www.ukpandi.com/loss-prevention/people-
claims/ (last visit 13/05/2011).
3
calculated on sums paid where claims had been finalized and estimates
where they had not.3
1.2 Purpose
The aim of this thesis is to analyse the relation between seafarer’s rights in
UK and the P&I cover on the crew, in a comprehensive way. Therefore, the
UK domestic law and the cover of the P&I clubs on the crew will be
examinated, also the possibility of a direct action against the P&I clubs in
case of a seafarer claim will be studied.
The Maritime Labour Convention 2006, which is not yet in force but
hopefully it will be in force in 2012, will be explained, due to its
importance, and also because the UK government, shipowners and P&I
Clubs are getting ready for its implementation in the UK. The question of
how it will affect the cover of the P&I clubs will be addressed.
Other topic of interest treated is the Piracy (crew injuries, death, ransom…),
in relation with P&I cover on the crew, and the liabilities that arise in case
of a piratical attack.
Finally yet importantly, the criminalization of the seafarers will be

addressed, especially regarding the crew rights and if arise any shipowner
liability that could trigger the P&I coverage.
1.3 Method and material
The methodologies used in this paper to fulfil its purpose are: the dogmatic
method, to illustrate the legal concepts, and the analytic method to highlight
the relation between the seafarer’s rights and the cover on the crew of the
P&I Clubs.
The sources for the investigation are: the last version of the rule book of
Britannia P&I club, different books (as the Gard Handbook on P&I
insurance, the Seafarers Right, P&I Law and Practice…), articles, the
websites of the IGP&I and the clubs has been used in the research of
information and statistics, governmental sites like the MCA website, and the
ILO and ITF websites for information related with the ILO MLC 2006.
3
IGP&I, Examination of the issue of financial security for crew seafarers with regard to
compensation in cases of personal injury, death and abandonment, IMO/ILO/WGLCCS
7/2/7, 7th session 25 january 2008.
4
1.4 Delimitation
The seafarers rights addressed in this thesis are focus on the English
seafarers on English registered vessels.
Having said that, the first chapter is the introduction to the thesis, where it is
explained what and how is going to be done. The second chapter is an
overview of the P&I insurance, its origin, what is it, the scope of the cover,
and the IGP&I.
The third chapter is about the law and P&I cover of the crew in the UK. It
start explaining the common law liability and the negligence, to continue
with the contractual liability, and ends with the P&I cover of the crew,
where the rules of one of the member of the IG P&I (Britannia) will be
commented.
The fourth chapter deals with the possibility of direct action against the P&I
Club in case a claim for injury, illness or death. The UK law applicable
(third parties (rights against insurers) act 1930 and the new one of 2010, pay
to be paid rule) will be explained.
The fifth chapter goes through the ILO Maritime Labour Convention 2006,
and its implementation in the UK, to finish by explaining how the
improvement of some rights will affect the shipowners liability with respect
to the crew.
In the sixth chapter, a hot topic is addressed: piracy, crew and P&I Clubs,
with focus on the P&I cover regarding the crew and ransom payments.
The seventh chapter is about the criminalisation of the seafarers, and it will
be explained what is criminalisation, how it affect to the seafarers, and if it
is covered somehow by the P&I clubs.
The eighth chapter are the analysis and conclusion.
5
2 About the P&I clubs
2.1 Origins
The P&I Clubs were created in United Kingdom around the mid- 1850, and
comes from the Hull clubs. In 1720 the Royal Exchange Assurance co. and
the London Assurance co. were granted with a statutory monopoly by the
“bubble Act”, and the hull insurance provided at that time by these
companies was unacceptable to the shipowner due to:4
• In a situation of monopoly, the insurers have a strong position that

lead to an increase in the price –higher premium.
• The hull insurance does not cover the whole liability of the
shipowners in case of collision, only three fourth´s.
Therefore, in order to cover the one fourth not covered and the shipowners
liability for personal injury (the protection Insurance), the shipowners broke
the law (the bubble act mentioned) and create mutual associations – Mutual
Hull Clubs. 5
This system was not perfect, because the bad operators took advantage of
the system making most of the claims against their club, and the good
operators compensating them. 6
When in 1810 the monopoly was removed, the operators began to be

polarized in two sections: 7
• the insurance market allowed to the good operators to have better

premiums rates, and they change from the clubs to the commercial
markets.
• The bad operators, who could not get good rates in the commercial
markets, stay in the Hull clubs.
This trend was changed when in 1836, with the case of collision de Vaux v
Salvador 8 which held that a damage done to another vessel in collision
(third party collision liability) does not fall under the perils of the sea of an
ordinary policy. The shipowners negotiated with the insurers to cover the
collision liability cover, but the agreement reached only the cover of three
4
Anderson, Phil, P&I Clubs and Mutual Insurance, Module 3 of the Postgraduate Diploma
in Marine Insurance 2007-2008 (LM1901), World Maritime University and Lloyds
Maritime Academy, pp 11-12.
5
Ibid, p 12.
6
Ibid, p 13.
7
Ibid, p 13.
8
De Vaux v Salvador (1836) 5 LJ (KB) 134.
6
fourth´s of the claims (the Running Down Clause), and the shipowners, to
cover the one fourth left, turned to the Hull clubs. 9
The changes at the time in the British legislation made the shipowners face
more and more liabilities toward third parties. Two acts will be
illustrative: 10
• Lord Campbell's Act (Fatal Accident Act) of 1846, the injured crew
members and the dependents of crew members who were killed,
were entitled to seek compensation from their employers.
• the Harbour, Docks and Piers Clauses Act of 1947 allowed harbour
authorities to recover the damage done to port property by a ship
from the shipowners under strict liability.
Another major event before the birth of the P&I Clubs was the Merchant
Shipping Act 1854, in which it was stated the right of the shipowners to
limit their financial liability to include injury and death, which define the
boundaries of the insurance risk. 11
After this, Mr. Peter Tindall, manager of one of the leading hull insurance
clubs, set up the first 'Protection Club', the Shipowners' Mutual Protection
Society12 in 1855. The risks covered by the 'Protection Club' were those of
the MSA 1854: loss of life, personal injury, property damage and the risk of
running down other vessels which were not covered by the ordinary hull
policies (the one fourth in case of collision). 13
At this time, the shipowners were not concerned with cargo claims, because
the carriers took advantage of the almost total freedom of contract to include
in to the Bills of Lading terms to the effect that: 14
“…the carrier is not responsible for any loss or damage to

cargo how-so-ever caused…”
However, this situation was changed by The Westenhope 15 case in 1870. In

this case, the vessel was carrying a cargo bound for Cape Town, but
proceeded instead first to Port Elizabeth, where she loaded further cargo,
and then sailed back to Cape Town. Unfortunately, she sank in on the way
to Cape Town with the total loss of the ship and the cargo.16
The cargo owners held that the exceptions in the contract of carriage did not
apply because of the deviation, which was a breach that made the contract
9
Anderson, Supra note 4, p 13.
10
Ibid, p 14.
11
Ibid.
12
Known as Britannia P&I Club nowadays.
13
14
Ibid, p 15.
15
The westenhope (1870) (unreported).
16
7
invalid. The judge agreed with this argument, finding the shipowner liable
to compensate the cargo owner for the loss of the cargo. The shipowner
went to his Protection Club seeking an indemnity, but the cargo liabilities
were not cover under the rules. 17
After this judgment, Mr. Mitcalf (who was an underwriter with an insurance
company in Newcastle) wrote an article about the wide range of potential
liabilities that shipowners might have towards cargo owners and
underwriters. As consequence of the article, a group of shipowners ask him
to form a new club in 1874, to provide insurance to these potential cargo
liabilities, called 'Indemnity Club'. 18
After some years of being separated, the first Protection and Indemnity Club
was formed in 1886: The North of England Protection and Indemnity
Association. 19
In 1893, the need for cargo insurance was remarked by the US Harper Act,
which restricted the rights of the shipowners to rely on the exclusion clauses
in the bills of lading and required them to do the due diligences to make the
ship seaworthy, and the Hague Rules (1924) which spread worldwide these
principles. This is the moment when the P&I clubs began to offer defence
cover, to provided insurance for legal cost, and claims handling service for
P&I and many non P&I matters. 20
2.2 What is a P&I club and how it work?

The Characteristics that define a P&I club are:
• It is an association of shipowners and charterers and other associated

parties.
• The members of the club are insured and insurers, contributing to
claims through the “calls”;
• They are mutual, non profit making insurance associations;
• The protection and indemnity insurance of the P&I clubs
indemnifies the shipowners on the discharge of the incurred legal
liabilities that he can face in running his ship. 21
17
18
Ibid, p 16.
19
Ibid.
20
Gold, Edgar, Gard Handook on P&I insurance, 5th ed., , Assuranceforeningen Gard-
gjensidig, Arendal, Norway, 2002, pg 68.
21
Hazelwood, Steven J., Semark, David, P&I Clubs: Law and Practice, 4th ed., Lloyd´s
List, London, 2010, pg 1.
8
2.2.1 Structure
The clubs originally were established as unincorporated associations –this
is, the members (shipowners and charterers) were personally involved as
insurer and assured. Nowadays, most of the clubs ”had become
incorporated such that they were then a separate legal entity from their
members. This incorporation was typically done in the UK under the
Companies Act and invariably as a company limited by guarantee.” 22
The structure and the relationship between the company and the members
are stipulated in a Memorandum and Articles of association. 23 A typical
organization of the clubs is composed by directors and managers.
2.2.1.1 The directors
The clubs have as member’s shipowners and charterers. Originally, the
members appointed their representatives (one per member) to be the board
of directors and made the important decisions about how their club should
be run. Because the large number of members in the P&I clubs and its
internationalisation, nowadays this has change, and the representation of the
members in the Board of Directors is made by shipowners who reflect a
cross-section of the Membership of the individual Club. The configuration
of a Board of director is normally a Chairman, one or two Vice-chairman,
and 20+ normal members. 24 The chairman and vice chairman are elected by
the other members of the board. The Board´s competences are: 25
• The formulation of the underwriting policy of the club,

• Its high level financial planning,
• The extent of the cover provided. They also decide regarding
amendments to the cover set out in the Rules.
• If a new risk not covered by the club happens, the board can admit or
reject discretionally depending on the circumstances.
2.2.1.2 Managers
The day-to-day running of the club is delegated to management teams.
These managers can be:
• Independent professional managers who charge a fee for their

management services (for example, Tindall, Riley who manage the
Britannia Club).
22
23
Ibid.
24
Ibid, p 18.
25
Steamship Mutual website, online at: www.simsl.com/About-Steamship-Mutual/the-
current-pi-market.html (last Visit 15/05/2011).
9
• “in-house” management team (for example, Skuld, who employ
their management and staff directly). 26
The managers and their representatives employ a staff of underwriters,

analysts, lawyers and claim’s adjusters who provide the very wide breadth
of expertise required to deal with P&I claims on the member’s behalf. The
chief executive of manager is normally part of the Board of Directors. 27
2.2.2 The Scope of the cover

The insurance in respect of liabilities to third parties are divided in:
• Liability insurance: in this form the insurer has the obligation to pay
to the assured the damages produced as consequence of an event
covered in the policy. 28
• Indemnity insurance: the insurer has the obligation to indemnify or
reimburse to the assured only to the extent that the assured has
incurred and discharged his liability. The assured must pay first to
the third party to trigger the insurer duty to indemnify. 29
The P&I clubs insurance cover has been traditionally indemnity insurance,
but this principle has been changed in some important respects by
international instruments such as 30:
• The Civil Liability Convention (1969 and 1992)

• The Bunker Convention 2001
• The International Convention on Liability and Compensation for
Damage in Connection with the Carriage of Hazardous and Noxious
Substance 1996
• The Nairobi International Convention on the Removal of Wrecks
2007
These convention allows the direct action against the Clubs, even in the case
that the assured is in breach of his duty to pay first. 31
The P&I cover provided by the Clubs provides insurance for a Member
against loss, damage, liability or expense incurred by him, which arises:
(A) In respect of the Member’s interest in an Entered Ship; and

(B) Out of events occurring during the period of entry of the Ship in
26
Anderson, Supra note 4, pg 18.
27
Steamship Mutual website, online at: www.simsl.com/About-Steamship-Mutual/the-
current-pi-market.html (last Visit 15/05/2011).
28
Hazelwood et al, Supra note 21, pg 123.
29
Ibid.
30
Ibid.
31
Ibid.
10
the Association; and
(C) In connection with the operation of the Ship. 32
The members can negotiate with the P&I club which risk they want to
cover, and if they want to bear deductibles in any of them. Regarding what a
typical club covers in his book-rule, in words of HAZELWOOD,
”A typical P&I Club provide indemnity insurance in respect of a member’s

liabilities triggered by these events:
1. Collisions and non contact damage

2. Damage to fixed and floating objects
3. Cargo claims
4. Property on board
5. Loss of life, personal injury and illness
6. Passengers
7. Crew liabilities
8. Supernumeraries and others on board
9. Fines
10. Inquiries and criminal proceedings
11. Quarantine expenses
12. Stowaways, etc.
13. Diversion expenses
14. Life salvage
15. Unrecoverable general average
16. Ship’s proportion of general average
17. Liabilities relating to the wreck of the entered vessel
18. Pollution
19. Towage contracts
20. Expenses incurred pursuant to directions of the club
21. The “omnibus rules” 33
2.2.3 P&I club reinsurance and the International

Group of P&I clubs
The P&I clubs are a good solution for the shipowners to get insurance at a
low price, because its mutual and non profit basis; but due to the contribute
by way of unlimited calls in case of claims against the Club, if this claims
are frequent and astronomical, the members can find unexpected large
emergency or supplementary calls. The clubs, to avoid or minimize this,
developed a reinsurance system. 34
This system is a reinsurance pooling agreement. This means that the clubs
agree to pool claims in excess of a specified figure (an Excess Loss Pool). In
other words, the members of a P&I club (primary insurer) will pay up to the
32
Rule 3.1 of Britannia Rules of Class 3, 2011.
33
Hazelwood et al, Supra note 21, p 124.
34
Ibid, p 365.
11
specified figure, and reached that point, the reinsurance enter in action, and
from that level all the members of all the clubs in the pool agreement will
share the risk and contribute up to a fixed amount.35
The 10 of April of 1899 was concluded the first club pooling agreement
between six British Clubs, and they were known as the London Group. This
Group change the name when other non British Clubs enter in the
agreement, and nowadays is known as the International Group.36
2.2.3.1 The International Group Pooling Arrangement
The key components are:
The Constitution: which sets out the rights and obligations of the clubs
members of the International Group, and settle the administration system. 37
The International Pool Agreement: 38
• Regulates how clubs accept entries from owners who wish to move
their fleet from one club to another
• Sets out how clubs are to quote rates on renewal and what
information the clubs are allowed and obliged to share with each
other
• Imposes sanction in case of a member do not follow the rules
stipulated in the IGA
• Requires to the clubs to disclose the ratio of their operating cost to
their premium and investment income. 39
The Pooling Agreement and the International Group’s reinsurance

programme
The Pool provides a mechanism for sharing all claims in excess of USD8
million up to, currently, approximately USD6.9 billion. There is no
premium paid between the clubs under the agreement, and claims are simply
shared in agreed proportions according to an agreed formula. 40
Because the clubs of the International Group share claims through the
pooling system, they have a common interest in loss prevention and control,
and in the maintenance of quality standards throughout the membership. 41
35
36
Ibid, p 365.
37
Ibid, p 367.
38
The most recent version of the agreement is from 20 of February 2008, and can be
download at: www.igpandi.org/Group+Agreements/The+International+Group+Agreement
(last visit 16/04/2011).
39
40
IG P&I Clubs website, online at:
www.igpandi.org/Group+Agreements/The+Pooling+Agreement (last visit 16/04/2011).
41
Ibid.
12
The Pooling Agreement defines which claims can be pooled, the types of
claim which can be pooled, the types of claim which are excluded from
pooling, the method by which claims are calculated for pooling purposes,
the contribution formula and the provision for new applications to the
pool. 42
The Pooling arrangement works as a reinsurance in layers; the first three are
part of the pooling agreement, and the rest are part of the IG reinsurance
programme. This comes from 1951, when the clubs decided to effect excess
reinsurance cover with the proprietary market to protect the pool from any
claim above 250,000 pounds to 1,500,000 pounds. 43
A chart of the reinsurance structure is shown at the Supplement A (see

below).
2.2.3.2 The representative function of the International

Group of P&I clubs
The principal function of the IG P&I clubs is to provide the insurance pool
and arranges market reinsurance, but representing the ninety percent of the
world´s ocean tonnage, the members of the IG P&I use their weight to
defend their interest in international conventions and legislation that can
affect shipowners liabilities.
It carries out this function in relation to, and liaises with: 44
• inter-governmental bodies such as IMO, UNCITRAL and OECD

• national governments and the EU
• other industry organisation such as Intertanko, BIMCO, OCIMF etc.
There are thirteen separate and independent principal clubs in the

International Group:
• American Steamship Owners Mutual Protection and Indemnity

Association, Inc
• Assuranceforeningen Skuld
• Gard P&I (Bermuda) Ltd.
• The Britannia Steam Ship Insurance Association Limited
• The Japan Ship Owners' Mutual Protection & Indemnity Association
• The London Steam-Ship Owners' Mutual Insurance Association
Limited
• The North of England Protecting & Indemnity Association Limited
42
IG P&I Clubs website, online at:
www.igpandi.org/Group+Agreements/The+Pooling+Agreement (last visit 16/04/2011).
43
Hazelwood et al, Supra note 21, pg 368
44
IG P&I Clubs website, online at: www.igpandi.org/About (last visit 16/04/2011).
13
• The Shipowners' Mutual Protection & Indemnity Association
(Luxembourg)
• The Standard Steamship Owners’ Protection & Indemnity
Association (Bermuda) Limited
• The Steamship Mutual Underwriting Association (Bermuda)
Limited
• The Swedish Club
• United Kingdom Mutual Steam Ship Assurance Association
(Bermuda) Limited
• The West of England Ship Owners Mutual Insurance Association
(Luxembourg)
14
3 Law and P&I Cover
regarding the crew in UK
The UK is one of the main actors in the shipping industry, and a legal and
commercial reference in shipping nowadays. However, the weight of the
UK as flag state is decreasing due to the open registries (the shipowners
prefer to flag out to FOCs); this situation and the cheapest and available
seafarers from developing countries diminish the importance of the UK as a
crew supplier. 45
The importance of the UK in the shipping industry, in its different branches

(finance, operation, insurance…), leads to its importance as a centre for
dispute resolution. 46 The historic maritime tradition of the UK leave as
result the admiralty jurisdiction, and the ability of the courts to deal with
maritime disputes regardless of the nationality of the crew or the flag of the
ship, with a well developed jurisprudence. 47
The seafarers rights in the UK are established in the Merchant Shipping Act
1995 (MSA 1995), and in the general employment legislation, making
distinction of seafarers of UK registered vessels and seafarers on foreign
flag vessels. 48 The focus will be maintained on the seafarers in the UK
registered vessels.
The P&I clubs liability in respect of the injury, illness or death of crew
members can arise from:
• Contracts, CBAs and articles

• Statute
• Common law
Next will be explained the common law liability and negligence, to continue
with the contractual liability. Regarding the statutory obligations and the
law of the flag state (for this thesis, the UK law), due to the forthcoming
enter in force of the Maritime Labour Convention 2006, (the seafarers “bill
of rights”), and the compliance of the UK legislation with the standard
establishes in the MLC 2006, and the amendments that are being carried out
when do not comply with it, the focus will be on the MLC 2006 and its
implementation in the UK, which will be analyzed in the fifth chapter.
45
Fitzpatrick and Anderson, Seafarer´s Rights, Oxford University Press 2005,p 486
46
Ibid.
47
Ibid.
48
Ibid, p 487
15
3.1 Common law liability and negligence
The common law is “a system of laws that have been developed from
customs and from decisions made by judges, not created by Parliament”. 49
In the UK, with the statutory obligations, also operates a common law. For
instances, for negligence, common law liability can override the
shipowner´s obligations to the crew member under the individual contract or
CBAs. This means that a shipowner may be liable to pay a common law
compensation even when he paid a contractual compensation to a crew
member. 50
One first point that must be kept in mind is that any claim from a seafarer
could come via contractual, and depending on the jurisdiction, it is possible
to make the claim in tort. The differences of these two procedures are:51
• If the seafarer uses the contract, normally is enough to demonstrate

the injury, and then highlight the clause of the contract where the
employer liability is settled.
• If the seafarer use the tortuous way, it will be more difficult, because
he will need to proof that the injury was caused by the negligence of
the shipowner.
It is obviously easier the contractual remedy, but the way chosen will
depend on whether the seafarer think that he will obtain a higher level of
compensation. 52
Negligence is the omission to do something which a reasonable man, guided

upon those considerations which ordinarily regulate the conduct of human
affairs, would do, or doing something which a prudent and reasonable man
would not do.53 The case of Donoghue v. Stevenson [1932]54 is one of the
most famous cases in British legal history. The decision of the House of
Lords founded the modern tort of negligence (delict in Scotland), both in
Scots law and across the world in common law jurisdictions. The case
originated in Paisley, Scotland but the House of Lords declared that the
principles of their judgment also applied in English law. It is often referred
to as the “Paisley snail” or the “snail in the bottle” case. 55
The case is perhaps best known for the speech of Lord Atkin and his
“neighbour” or “neighbourhood” principle, where he applied biblical Luke
49
Oxford Advanced learner´s Dictionary, Oxford University Press, 2011.
50
Gold, Supra note 20 p 241.
51
52
Ibid.
53
Blyth v Birmingham Water works Co. (1856) 11 Ex.781.
54
Donoghue v Stevenson [1932] AC 562 (HL).
55
Wordpress. Donoghue v Stevenson. Online at www.donoghuev.info/ (last visit on
12/05/2011).
16
10 to law, that is, where an established duty of care does not already exist, a
person will owe a duty of care not to injure those whom it can be reasonably
foreseen would be affected by their acts or omissions. 56
The duty of care is the first of the three elements of negligence:
1. A duty of care, and the breach of that duty

2. Breach causing harm in fact
3. The harm must be not too remote a consequence of the breach (the
foreseeability play’s a leading role) 57
After the case of Donoghue v Stevenson, negligence law became much more
complicated because the neighbour principle could be applied in many
facets of the life. 58 The House of Lords reinforce the neighbour principle in
the case of Anns V Merton 59, which establish a presumptive duty. 60 If this
principle is applied to ships, the liability grows exponentially.
English law reject this principle now, and the foreseeability play a minor
role. 61
3.2 Contractual liability

The relation between the shipowner and the seafarers arise from individual
contracts, collective agreements, and the articles (also called “shipping
articles”) posted onboard vessels. A crew member can make an individual
contract with the shipowner, his manager or operator, with terms agreed by
the parties; this terms must not be against the statutory law. 62
Collective Bargaining Agreements are negotiated between a shipowner and

a Seafarer´s Union about the pay and working conditions of the union
members. The Seafarers union can be affiliated to the Transport Workers
Federation (ITF), which has its own CBAs. 63
In the UK, the statutory provisions regarding Seafarers and Masters on UK

registered vessels are established in the Part III of the MSA 1995. 64 The
56
Wordpress. Donoghue v Stevenson. Online at www.donoghuev.info/ (last visit
12/05/2011).
57
Richard Smellie, Understanding the negligence issues, paper given to the IBC
Conference, March 2002, online at:
www.fenwickelliott.co.uk/files/docs/articles/html/understand_neg.htm (last visit
13/05/2011).
58
Gold, Supra note 20, p 231.
59
[1978]AC 728.
60
61
Ibid, p 232.
62
Ibid, p 238.
63
ITF web page, online at: www.itfseafarers.org/itf_agreements.cfm (last visit
12/05/2011).
64
17
Maritime Coastguard Agency (MCA) supplements the MSA provisions with
Marine Notices, which are divided in: 65
• Merchant Shipping Notice (MSN): mandatory information that must

be complied with under UK legislation
• Marine Guidance Note (MGN): give significant advice and guidance
relating to the improvement of the safety of shipping and of life at
sea
• Marine Information Note (MIN): intended for information which
will only be of use for a short period of time
In art. 25 MSA 1995 (crew agreements), it is stated that the agreement must
be made in writing, and signed, by the seafarer and the employer, and all the
agreements made by the persons employed on a ship ”shall be contained in
one document”, which is referred as crew agreement. This Crew Agreement
must be approved by the Secretary of State (art.25.3 MSA 1995), but in
practice this is done by the Maritime and Coastguard Agency (MCA) on
behalf of the Secretary of State. The crew agreement must be carried
onboard.66
There is a standard Crew Agreement produced by the MCA, which fulfils

the requirements of the STCW convention and the ILO C22 67. Any other
agreement need the approbation of the MCA, which will check if the
agreement proposed complies with UK standards. A record of the crew
joining and leaving must be kept in the Official Log Book on the vessel. 68
The crew agreement must include: 69
• a description of the ship and its owners

• the ship's master
• the port the voyage will start from
• the destination and the port where the voyage will end
• meal supplies for the crew
• rules or laws to be observed
• particulars of each member of the crew – for instances: name, age,
place of birth, previous ship, place and date of signing, capacity,
certificates of competency, pay for the journey, and crew's addresses
• particulars of discharge
65
MCA website: online at www.dft.gov.uk/mca/mcga07-home.htm (last visit 12/05/2011).
66
Fitzpatrick et al, Supra note 45, p 493.
67
ILO Seamen´s Articles of Agreement Convention 1926.
68
Fitzpatrick et al Supra note 45, p 493.
69
Business Link, UK government's online resource, at:
www.businesslink.gov.uk/bdotg/action/detail?itemId=1087136625&r.l1=1081597476&r.l2
=1086795191&r.l3=1087115858&r.l4=1087136317&r.s=sc&type=RESOURCES (last
visit 12/05/2011).
18
The Crew Agreement is a fixed term contract between the employer, crew
member, and the vessel. It automatically terminates at the end of a stated
period - which cannot be longer than 12 months - or specific voyage. 70
It must contain a list of all crew members, and the following information on
each crew member: 71
• minimum terms of employment

• job descriptions
• period of notice
• how the master or employer must give notice
• circumstances when the agreement can be terminated
• stated salary
The MCA produced a draft proposal of Seafarers Employment Agreement,

preparing for the implementation of the MLC 2006 in the UK. This draft is
published online to assist owners of UK ships in their preparations for the
MLC. 72
The minimum terms and conditions (working hours, repatriation, etc...) are
according most times with the Maritime Labour Convention 2006, and when
not, the UK government is making amendments to comply with the
convention. These terms will be explained in the fith chapter.
To conclude, the contractual liability may be quite complex: a seafarer may

have an Individual contract that must comply with the minimum standard
establish by the Articles (Crew Agreement), and incorporate by reference a
CBA in his contract.73
3.3 P&I cover regarding crew members

“Seaman” is defined in the rules-book of Britannia as:
• A person (including the Master) engaged under articles of

agreement or otherwise contractually obliged to serve on board an
Entered Ship (except persons engaged only for nominal pay)
70
www.businesslink.gov.uk/bdotg/action/detail?itemId=1087136625&r.l1=1081597476&r.l2
=1086795191&r.l3=1087115858&r.l4=1087136317&r.s=sc&type=RESOURCES (last
visit 12/05/2011).
71
Ibid.
72
MCA website, at: www.dft.gov.uk/mca/mcga07-home/workingatsea/mcga-
healthandsafety/maritime_labour_convention_2006/mcga-ds-ssh-mlc-sea.htm (last visit
12/05/2011).
73
19
including a substitute for such person and also including such
persons while proceeding to or from such Ship.74
First, the P&I clubs do not provide injury or illness insurance to the
seafarers themselves, but to their members (shipowners) in respect of the
liabilities that arise in the relation between the shipowner and the seafarers
as employer and employee, from the contract, the statutory law, the
collective agreements and the international conventions applicable.
The clubs normally expand this definition in relation to the families of the
crew who visit on board or travel with the crew, because the member can
incur in liabilities to them in respect of loss of life, illness, personal injury,
loss of effects, etc. The normal practice is that the crew and their families
should have the written permission of the member and this arrangement
should be approved by the Club. 75
In this chapter will be presented the liabilities cover in respect of the crew,
and for this purpose the Rule 19 of Britannia Rules book 2011 is going to be
analyzed as general example of the scope of the cover typically provided by
the IG P&I clubs.
3.3.1 Illness, injury and death

Rule 19.1 Illness, injury and death (A)
Medical, hospital, funeral and other expenses necessarily incurred and wages,
maintenance, compensation and damages payable by reason of the illness or
death of, or injury to, a Seaman. Notwithstanding the proviso to Rule 5(1),
where a Member has failed to discharge or pay a liability for wages,
maintenance, compensation or damages for the illness or death of, or injury
to, a Seaman, the Association shall discharge or pay such liability on the
Member’s behalf directly to such Seaman or dependent thereof.
Provided always that
(i) the Seaman or dependent has no enforceable right of recovery from any
other party and otherwise would be uncompensated;
(ii) subject to (iii) below, the Association shall in no circumstances be liable
for any sum in excess of the amount which the Member would have been
able to recover from the Association under these Rules and the Member’s
terms and conditions of entry;
(iii) where the Association is under no liability in respect of the claim by
virtue of Rules 33(1) and 35(1), the Association shall nevertheless discharge
or pay the claim to the extent that it arises from an event occurring prior to
the cesser of the insurance, but only as agent of the Member and the Member
shall reimburse the Association in full.
Comments:
74
Definition from Britannia Class 3 Rule book 2011.
75
20
Normally the compensation regarding illness, injury and death are stated in
terms of the contract, by an amount of money or a certain number of days
pay; but the liability for this compensation can arise not only from the
contract but also from statutory and common law. The compensation which
arises from statutory and/or common law is covered by the club, but the
liability that arise’s from the contractual terms should be approved by the
Club. 76
Other added liability of the shipowner could be the expenses derived from
hospital, medical expenses and, if the seafarer pass away, funeral and linked
expenses. 77
The long-term compensation and the cost of hospitalisation and medical

treatment of a serious illness to a seaman can vary -it can include
expenditures for acute treatment, diagnostic measure, surgery, post-surgery
treatment, nursing care and medicines, be given in a public or private
hospital, in which country is given…- 78. Most of the clubs recommend to
carry out a medical examination of the seafarers before their employment. 79
The Clubs may pay the cost of sending a close relative (for instance, the
spouse) to visit a crew member when he is hospitalized far away from
home, but it is necessary a certificate from the doctor or the person in charge
of the medical advisory, stating that this visit probably help to a sooner
recovery. 80
Also, a proviso to this rule stipulated that ”where the liability arises or the
costs or expenses are incurred under the provisions of a crew agreement or
other contract of service or employment and would not have arisen but for
those terms, that liability or those costs or expenses are only covered by the
club if and to the extent that those terms shall have been previously
approved by the managers in writing” 81.Approval is usually not given
where the contract provided an open-ended commitment in respect of
medical care. 82 This approval is required in order to protect the mutuality, in
other words, to protect all the members of the club from the risks and
liabilities beyond the normal standard assumed by one of his member.
In the case of occupational diseases such as mesothelioma caused by the

exposure to asbestos, the problem arises because the symptoms take a long
time to develop (up to 40 years). It is obvious the difficulties face by the
claim to proof when the expositions that cause the disease occurred. Some
jurisdiction allow to the claimant of this disease to sue all his former´s
76
Hazelwood et al, Supra note 21, pg 165, and Gold, Supra note 28, p 256.
77
78
79
80
Gold Supra note 20, p 257.
81
82
21
employers jointly, due to the risk of contract mesothelioma increase with the
exposure. 83
The practise in the case of asbestos claims is divide pro rata between the
former´s employers according to the sea services days that the seafarer had
which each one. 84
3.3.2 Shipwreck unemployment indemnity

19.1 Shipwreck unemployment indemnity (B)
Wages payable to a Seaman during unemployment in consequence of the

wreck or loss of an Entered Ship and other payments made to Seamen in
consequence of such wreck or loss under statutory obligation.
Provided always that any such wages and other payments which exceed two
months basic wages shall not be recoverable from the Association.
Comments:
The seafarers face different perils. The vessels can ground, sink, fire, etc. in
their journey. The members will be indemnified in their liability respect a
seaman who is proceeding to, or from that vessel, or on board, for the loss
of his employment because the ship wreck or is loss. 85
The liability of the shipowner normally arise from the contract of

employment, which provides a compensation of one month´s basic wages
usually, but depending on the country, statutory or common law may be
applicable. 86
3.3.3 Loss of effects

19.1 Loss of effects (C)
Compensation payable under statutory obligation in respect of loss of or

damage to the Personal Effects of a Seaman.
Comments:
The shipowner can find himself liable to compensate a seafarer for loss of or
damage to their personal property, as consequences of theft by stevedores,
fire on board, etc. This cover exclude valuables, cash, negotiable
instruments and objects of a rare or precious nature. 87
83
Hazelwood, Supra note 21, p 165.
84
Ibid.
85
Ibid, p 166.
86
87
22
3.3.4 Substitutes
19.1. Substitutes (D)
Expenses necessarily incurred in providing a substitute for a Seaman who is

unfit for duty, or has been left behind for any reason where liability for such
expenses could not reasonably have been avoided.
Provided always that wages shall only be recoverable as part of the said
expenses when the Member is legally obliged to pay wages to two Seamen
simultaneously for the same job and is unable to recover such double wages
from any other source.
Comments:
If a seaman died or is injured or ill, and as consequence a substitute is

necessary for the safe operation of the ship, or for any other reason is ”unfit
for duty” –for example, a national government, for security reasons, refused
to allow a vessel to enter to port with a particular seaman on board- the only
choice of the shipowner will be to substitute that man, in order to maintain
the ship properly manned and sea worthy. In this cases, the club cover the
cost of the substitution. 88
The same treatment receives the situations regarding when a seaman is left
behind. This can be due to different reasons, as desertion, or because the
seaman was negligent and he did not return on time on board and the vessel
departed without him. In any case, as far as the substitute is necessary to run
the ship properly –complying with the standards regulations, seaworthy, etc.
Then the costs of the substitution are a valid claim against the club. 89
3.3.5 Distressed Seamen, Desserters and Strikers
19.1 Distressed Seamen, Deserters and Strikers (E)
Expenses incurred by or chargeable to a Member under statutory obligation

in respect of a distressed Seaman or Seamen who desert or go on strike,
where such expenses are not recoverable under any other paragraph of this
Rule and where such expenses cannot be recovered from the Seaman himself.
Comments:
Strikers: Seamen employed in UK ships which go to sea will be committing

an offence under section 59 of the Merchant Shipping Act 1995 if they go on
strike at a time when their ship is at sea, which means (for the purposes of
section 59) at any time when it is not securely moored in a safe berth. The
Act does not appear to prohibit such action at berths in places outside the
88
Anderson, Supra note 4, p 111
89
Gold, Supra note 20, p 265
23
UK. 90 If the Strike is in port (ship moored), the Seafarers are subject to
ordinary laws governing industrial action. This will give rise to potential
civil liability that can be only avoided if the facts fall within one of the
statutory immunities. 91
Deserters: Desertion “is the wilful abandonment of an employment or of

duty” 92. A seaman becomes a deserter when he is signed on a crew
agreement but wilfully fails to rejoin the ship in breach of the agreement. 93
In this case, the employer may make a civil action for the mentioned breach.
A seafarer who desert is no committing a criminal offence, but depending of
the country, the seaman may be illegal according to the State´s immigration
laws, which will lead to criminal prosecution and fine or imprisonment, and
deportation. 94 This can generate cost -as repatriation of the seafarer- to the
shipowner, who is covered by the P&I club.
Distressed seaman: Under SOLAS Convention there is an obligation to save

lives. The costs derivated from this obligation (it can lead to deviation, for
example) will be bear by the shipowner, and if can not be recovered from
the H&M underwriters, then it will be covered by the P&I club. 95
3.3.6 Diversion
19.1 Diversion (F)
Diversion expenses associated with liabilities covered under this Rule which
are payable in accordance with Rule 19(6).
19-6 Diversion expenses: The cost to a Member of putting in to, or remaining

in, port in circumstances which could entitle the Member to recover under
Rule 19(1), Rule 19(2), Rule 19(3), Rule 19(4) or Rule 19(5), but confined to
the net loss to the Member (over and above the expenses that would have
been incurred but for the diversion or delay) in respect of port charges,
bunkers, insurance, Seamen’s wages, stores and provisions necessarily
incurred as a result of the diversion, while securing medical attention for sick
or injured persons on board the ship, or while awaiting a substitute.
Comments: The vessels are always engaged in a commercial operation,

trading under a time or voyage charter etc, subject to deadlines and subject
to specific amounts of money to make the trip. However, there are some
events that will make necessary to divert the route, for example to help
another ship in distress, or to land an injured seaman, etc.96
90
Malcolm Maclachlan, The shipmaster´s bussines companion, 4th ed. The Nautical
Institut, London 2004, p 469.
91
Fitzpatrick et al, Supra note 45, p.489.
92
Oxford Dictionary, Supra note 31.
93
Maclachlan, Supra note 90 p.757.
94
Ibid.
95
96
24
If the vessel is under a time charter party, probably the charterer will put the
vessel off hire for the time of the diversion. There will be cost related to the
diversion in any case to the ship operator, like bunkers, the wages of the
seamen, stores and provisions... 97
This cost will end only when the vessel is back to his original voyage. These
losses, even when they are not ”third party losses” (they are losses of the
ship operator), are partially covered by the P&I clubs, ”confined to the net
loss” 98 (the loss of hire is not included). 99
3.3.7 Repatriation
19.1 Repatriation (G)
Repatriation expenses associated with liabilities covered under this Rule

which are payable in accordance with Rule 19(7).
19.7 The cost to a Member of maintaining, repatriating or deporting persons

in circumstances which would entitle the Member to recover under Rule
19(1), Rule 19(2), Rule 19(3), Rule 19(4) or Rule 19(5).
Comments: When a seaman must be repatriated, for:
Illness, injury: In some part of the world, the appropriate equipment may
not be available, or the seaman may not be in physical condition to sail with
the vessel, so he will need to be repatriated to his country to recover enough
to travel. The member can claim the expenses on repatriation to the club,
provided that the repatriation was necessary –sometimes the repatriation is
possible without alteration of the original route; in this cases the cost are
considered “operational costs” and are not covered by the Club. 100
Must be mentioned that a visitor (normally a relative) may be used as escort

during the repatriation, paying the club the costs –provided that this is the
cheapest solution. Anyway, the clubs recommend their members to consult
for advice and approval in this situation. 101
Death: The cost of a normal funeral and burial are covered, as well as the
expenses in return the body, ashes and the personal effects of the seaman
who pass away. Extra costs as flowers are not covered. 102
Shipwreck: This situation may take place far away from the homeland of the
seafarers. Nowadays, the crew have the legal right to be repatriated by the
97
98
Net loss: A decrease in owner’s equity from the result of unprofitable operations. In other
words, total expenses exceed total revenues (definition from www.invertordictionary.com).
99
100
101
Ibid.
102
Ibid, p 258.
25
employer, and the ship operator can recover such expenses from the P&I
club. 103
In addition, in the case of the example commented above of the government

who do not allow a vessel to get into the port for one particular seaman, that
seaman has the right to repatriation. 104
P&I clubs do not cover normal repatriation at the end of a seaman´s

employment: 105
• upon the sale of the vessel

• when a seaman is dismissed for misconduct
3.3.8 Collective and special agreements

19.1 Collective and special agreements (H)
The liabilities, costs and expenses covered under this Rule may be extended
to include those for which a Member may be liable under collective or special
agreements which have received the prior approval of the Managers.
However, there shall be no recovery under this Rule arising out of a

Member’s liability under a contract of indemnity or guarantee between the
Member and a third party (see Rule 19(15)).
PROVIDED ALWAYS THAT:
There shall be no recovery under this Rule 19(1) in respect of liabilities, costs
or expenses:
(i) which arise as a result of the termination of an agreement of service in

accordance with the terms thereof, or by mutual consent, or from any other
discretionary act of the Member,or from the sale of an Entered Ship; or
(ii) in respect of Seamen employed as catering staff on board the Entered

Ship when moored (otherwise than on a temporary basis) and open to the
public as a hotel, restaurant, bar or other place of entertainment.
Comments: The liability of the shipowner arise also from the applicable
CBA for the ship, and the clubs cover this liabilities, if they have been
approved by the managers; this is, as was mentioned above, to protect the
membership of the Club from the risks and liabilities beyond the normal
standard assumed by one of his member. 106
103
104
Ibid.
105
106
Anderson, Supra note 4, p 109, and Gold, supra note 20, pp 239-240.
26
3.4 Limitation of the liability regarding the
crew
The cover is limited to a maximum of USD 3.000.000.000, “unless
otherwise limited to a lesser sum”. 107
107
Rule 27.2.B.(ii) Britannia Rules of Class 3, 2011.
27
4 Crew claims and direct
actions against P&I clubs
The P&I clubs cover the liability of the shipowners regarding third parties,
as it has been shown. It is not an insurance over the crew, and the aim of the
P&I clubs is to protect the members and indemnify them for the losses that
they suffer. Having said that, what happens in the event that a shipowner –
member of the club fall in bankruptcy? Can a seafarer subrogate on the
position of the member and make a direct action against the P&I club?
In England, this situation was deal with The Third Parties (Rights Against
Insurers) Act 1930, and a new act that replace it, The Third Parties (Rights
Against Insurers) Act 2010. The P&I clubs positions respect the direct
actions are the same, except for the third party claims about injury and death
of the crew.108
4.1 The Third Parties (Rights Against

Insurers) Act 1930
Before the The Third Parties (Rights Against Insurers) Act 1930, the
insurance protected only to the one who pay’s for it, and who was a part of
the insurance contract. However, this Act changes it; The purpose of the
Act is:
to confer on third parties rights against insurers of third-party risks in the

event of the insured becoming insolvent, and in certain other events. 109
Respect of its applicability, the Act covers the entire insurance contract
“Where under any contract of insurance a person (...) is insured against

liabilities to third parties which he may incur in the event of the insured
becoming bankrupt (...)” 110
The third party then has the same rights as the insured against the insurers,
and the insurers have the same defences as if the third party were the
insured, but subject to some conditions (section 1 (4) of the Act):
• if the liability of the insurer to the insured exceeds the liability of the insured to the
third party, nothing in this Act shall affect the rights of the insured against the
insurer in respect of the excess; and
• if the liability of the insurer to the insured is less than the liability of the insured to
the third party, nothing in this Act shall affect the rights of the third party against
the insured in respect of the balance.
108
109
Third Parties (Rights Against Insurers) Act 1930.
110
Ibid, section 1.
28
The subrogation can only take place if there is a legal liability between the
insurer and the assured, and the third party and the assured. Also, the section
1 (3) of the Act stipulate that any clause to make the contract void in case of
bankruptcy or insolvency of the insured, in order to protect the insurer from
the application of the Act, is void. 111
Once the third party is in the position of the assured, the assured has the
duty to give the necessary information to the third party (section 2 of the
Act). 112
The P&I clubs response to The Third Parties (Rights Against Insurers) Act
1930 was that they were not under the scope of the Act, since it only applied
to “contracts of insurance”, and the relation between the members and the
club is different than in the commercial insurance. After some years, it was
clear that the P&I clubs fall under the scope of the Act. However, as stated
in the section 1(4) of the Act, the insurers have the same defences as if the
third party were the insured. The defences of the insurance contract (in this
case the club rules). 113
This means that the third party will receive the same treatment by the club
as if he were a member; for instance, if the claim´s origin is an act of wilful
misconduct of the member, the club will not be liable.
4.2 Pay to be paid rule

Another defence is the “pay to be paid rule”; this rule means that, because
the clubs are indemnity insurance, the member must pay and settle the claim
before asking for the indemnification to the club. This rule is stipulated in
the Britannia rulebook in these words:
“If a Member shall become liable as hereinafter set out in Rule 19, in
damages or otherwise, or shall incur any costs or expenses in respect of a
Ship which was entered in the Association at the time of the casualty or event
giving rise to such liability, costs or expenses, such Member shall be entitled
to recover out of the funds of this Class of the Association the amount of such
liability, costs or expenses to the extent and upon the terms, conditions and
exceptions provided by these Rules and by the Certificate of Entry. (…)
Provided always that, unless the Committee in its discretion otherwise
determines, it shall be a condition precedent of a Member’s right to recover
from the funds of the Association in respect of any liability, costs or
expenses that the Member shall first have discharged or paid them.”114
The ”pay to be paid” defence was used in the cases of The ”Fanti” and The
”Padre Island”. The defence relied on the obligation of the member (the
insured) to pay to the third party in order to get the right to recover the
money from the P&I club; but if the member is in bankruptcy this will be
111
112
Ibid, p 293.
113
Ibid, pp 293-294.
114
Britannia Class 3 Rule Book, rule 5.1.
29
impossible. Therefore, the third party who subrogate in the position of the
member under the 1930 Act, should pay himself to fulfil the requirement of
the rule to get the right to recover from the funds of the insurer. 115
In “The Fanti” 116 the court held that this requirement is impossible to
fulfil. 117 It also held that, therefore, the clause falls in the scope of the
section 1.3 of the Act 1930, and was void.
In the ”Padre Island” 118, a similar case to ”The Fanti”, the court held that the
club was allowed to use the same defence against the third party as if the
third party were the member, and that this was not in the scope of the
mentioned section.
Despite the requirement was impossible, the House of Lords held that: 119
• an insured with a good defence against the assured has the same
defence in the case of the 1930 Act subrogation
• a contract provision that cannot be performed does not mean that it
should be nullify
• the pay to be paid rule was not in the scope of the Section 1.3 of the
Act 1930, and therefore, was not void
Lord Justice Goff warned the Clubs to not use this defence for cases of loss
of life or personal injury.
4.3 The Third Parties (Rights Against

Insurers) Act 2010
On 25 March 2010, the Third Parties (Rights Against Insurers) Act 2010
(“the Act”) received royal assent and became law in England and Wales.
The aim of the Act is to modernize the previous Act from 1930. As in the
Act 1930, it transfers the rights of an insolvent assured against his insurers
regarding the indemnity that arise from the insurance contract to a third
party claimant, but the 2010 Act introduces four key changes; in words of
Christina Fitzgerald:
115
Hazelwood et al, Supra note 21, pp 300-301.
116
Firma C-Trade SA v. Newcastle Protection and Indemnity Association (The Fanti)
[1987] 2 Lloyd's Rep. 299 .
117
118
Socony Mobil Oil Co Inc v. West of England Ship Owners Mutual Insurance Association
(London) Ltd (The Padre Island) (No.1) [1984] 2 Lloyd's Rep. 408.
119
Firma C-Trade SA v. Newcastle Protection and Indemnity Association (The Fanti) and
Socony Mobil Oil Co. Inc. and Others v. West of England Ship Owners Mutual Insurance
Association Ltd (The "Padre Island") (No.2) [1991] 2 A.C. 1.
30
“1.A third party claimant is no longer required to first establish liability
against an insured before bringing proceedings against their insurers. A new
Court procedure is available to third parties. The third party has a right to
seek declarations as to the insured’s liability to them and as to the insurer’s
potential liability under a contract of insurance in one set of proceedings. If
the Court or Tribunal makes such declarations it will be able to make an
appropriate judgment which is likely to be a money judgment. A third party
will no longer be obliged to join the insured in proceedings against the
insurer.
2.The definition of insolvency has been widened to include companies subject
to a Company Voluntary Arrangement or a Scheme of Arrangement.
3.The regime governing a third party’s ability to seek information is
clarified. The list of disclosable material is set out in the Act. A third party
will now have greater rights of access to information to establish the terms of
any relevant insurance policy which will assist in deciding whether to
embark on litigation. If it can be established that there is a contract of
insurance that covers, or might reasonably be expected to cover the supposed
liability, information can be obtained on the identity of the insurer, the terms
of the insurance, and whether there are or have been proceedings between
the insurer and the insured in respect of the supposed liability.
4.A third party claimant need not take steps to restore a dissolved insured
company to the Companies House Register.”120
Regarding the personal injuries claims, The “Pay to be paid” defence to

avoid the third parties claims in case of loss of life or personal injury when
the member/assured has become insolvent is now useless under the English
law (but it can be used for other kind of claims). The third party personal
claims which arise after the enter in force of the Third Parties (Rights
against Insurers) Act 2010, can be actioned directly against the clubs. 121
This change is part of the preparation for the MLC 2006, which is expected
to enter in to force soon. Some clubs, in their preparations, have changed
their rules to waive:
• any pay to be paid provision, and

• retrospective termination of cover in respect of claims for crew
injury or death. 122
120
Christina Fitzgerald, Third Parties (Rights Against Insurers) Act 2010, 7 June 2010,
online at www.mablaw.com/2010/06/3778/ (last visit 13/05/2011).
121
122
Ibid.
31
5 The Maritime Labour
Convention 2006
The MLC has its roots in the in Article 94 UNCLOS:
Article 94 - Duties of the flag State
1. Every State shall effectively exercise its jurisdiction and control in

administrative, technical and social matters over ships flying its flag.
Particularly, the states shall:
(b) assume jurisdiction under its internal law over each ship flying its flag
and its master, officers and crew in respect of administrative, technical and
social matters concerning the ship…
3. Every State shall take such measures for ships flying its flag as are
necessary to ensure safety at sea with regard, inter alia, to:…
(a) the manning of ships, labour conditions and the training of crews, taking
into account the applicable international instruments; …
5. In taking the measures called for in paragraphs 3 and 4 each State is
required to conform to generally accepted international regulations,
procedures and practices and to take any steps which may be necessary to
secure their observance.
In the words of Chao and Turner: “The MLC is a single, consolidated

convention that provides comprehensive rights and protection at work for
more than 1,200,000 seafarers worldwide. It consolidates and updates more
than sixty five international labour standards relating to seafarers adopted
over the last eighty years and, importantly, for the first time, it creates a
system of certification and inspection to enforce those standards”. 123
5.1 The aim of the convention

The MLC is designed to sit alongside other regulations such as the IMO
standards on ship safety, security and quality ship management (such as
SOLAS, STCW and MARPOL). Where those instruments deal more with
the vessel and its operation, the MLC deals with the rights of the
seafarers. 124
Therefore, the Convention´s aim is the standardisation of the seafarers right

internationally, setting their rights to decent working conditions, and
providing the tools to certificate and enforce this standards, regardless of the
123
John Turner and Chao Wu, Legal Briefing: MLC (November 2010) Comprehensive
rights and protection at work, UK P&I Club, 02-12-2010.
124
ITF Seafarers webpage, online at: www.itfseafarers.org/ILOMLC.cfm (last visit
14/05/2011).
32
flag of the vessel and the seaman race, religion, sex, colour, social origin,
etc. 125
5.2 Adoption of the convention and

entering in to force
The MLC was adopted in February 2006. It will come into force exactly 12
months after a minimum of 30 countries representing at least 33% of the
world fleet in gross tonnage have ratified the convention. 126 The
requirement of the 33% has been met already, and the countries that ratified
the convention are:
Convention No. MLC

(Source: ILOLEX - 18. 4. 2011)
Ratification
Country Status
date
Bahamas 11:02:2008 ratified
Bosnia and Herzegovina 18:01:2010 ratified
Bulgaria 12:04:2010 ratified
Canada 15:06:2010 ratified
Croatia 12:02:2010 ratified
Liberia 07:06:2006 ratified
Marshall Islands 25:09:2007 ratified
Norway 10:02:2009 ratified
Panama 06:02:2009 ratified
Saint Vincent and the Grenadines 09:11:2010 ratified
Spain 04:02:2010 ratified
Switzerland 21:02:2011 ratified
Ratified: 12 Conditional ratification: 0 Declared applicable: 0 Denounced: 0
A large number of other countries in all regions have already taken steps
toward ratification. In June 2007, the EU Council adopted a decision
authorizing all EU Member States to ratify the MLC, 2006 in the interest of
the European Community before 31 December 2010. In December 2008, the
Council of the European Union reached a political agreement on a proposal
for a Directive implementing the agreement concluded by the European
Community Shipowners’ Associations (ECSA) and the European Transport
125
Turner et al, Supra note 123.
126
Art. VIII.3 of the MLC 2006
33
Workers’ Federation (ETF) on the MLC, 2006. 127 In words of Moira
McConnell:
Although December 2010 has now passed, the goal of five years may still be
possible, as there has been significant progress in other countries,
particularly in the Asia, Southeast Asia and Pacific region. Many countries
in the Caribbean are moving forward now, as well as several countries in
Africa. But, not surprisingly, the global economic destabilization and other
political events and major natural disasters have had an impact on national
legislative agendas. 128
5.3 The convention

The Member States (Member hereinafter) are the ones to decide how the
convention will be implemented in their domestic law. Regarding the
structure, the Convention is divided in three parts: The Articles, the
Regulations and the Code. The Articles and Regulation establish the core
rights and the basic obligations of the Members of the Convention. In the
Code are contained the details about how to implement the Regulations. 129
5.3.1 The Articles

It began with the preamble and sixteen articles were state the general
obligations, definitions and scope of application, the fundamental rights and
principles, the seafares´employment and social rights, the implementation
and enforcement responsibilities, the entry into force, how to made the
amendments…
Article III state that the fundamental rights in the convention are:
(a) freedom of association and the effective recognition of the

right to collective bargaining;
(b) the elimination of all forms of forced or compulsory labour;
(c) the effective abolition of child labour; and
(d) the elimination of discrimination in respect of employment
and occupation.
The Article IV, about the seafarer’s employment and social rights, state in
its point 5 that:
127
ILO, Article: Achieving the seafarers’ international bill of rights: more than half way
there! Geneva (ILO Online) 23/02/2009, online at: www.ilo.org (last visit 14/05/2011).
128
Moira L. McConnell, The ILO’s Maritime Labour Convention, 2006: Filling a Gap in
the Law of the Sea, Thursday, 07 April 2011, MEPIELAN Electronic Bulletin, online at:
www.mepielan-
ebulletin.gr/default.aspx?pid=18&CategoryId=2&ArticleId=55&Article=The-ILO (last
visit 14/05/2011).
129
34
Each Member shall ensure, within the limits of its jurisdiction,
that the seafarers’ employment and social rights set out in the
preceding paragraphs of this Article are fully implemented in
accordance with the requirements of this Convention. Unless
specified otherwise in the Convention, such implementation may
be achieved through national laws or regulations, through
applicable collective bargaining agreements or through other
measures or in practice.
In Article V (implementation and enforcement responsibilities), the

convention state that the members shall implement and enforce laws or
regulations or other measures that it has adopted to fulfil its commitments
under this Convention with respect to ships and seafarers under its
jurisdiction. 130 Each Member shall effectively exercise its jurisdiction and
control over ships that fly its flag by establishing a system for ensuring
compliance with the requirements of this Convention, including regular
inspections, reporting, monitoring and legal proceedings under the
applicable laws. 131 One point to highlight is Article V.7, which stipulate that
Each Member shall implement its responsibilities under this Convention in
such a way as to ensure that the ships that fly the flag of any State that has
not ratified this Convention do not receive more favourable treatment than
the ships that fly the flag of any State that has ratified it. 132 In other words,
after the MLC is in force, it will be the standard and no advantage should be
gained when registering a vessel in a non-ratifying state.
Article VI explain the regulations and the code. This will be explained
below (5.3.2 The regulations and the code). Article VII states that any
derogation, exemption or other flexible application of this Convention
requires consultation with shipowners’ and seafarers’ organizations.
Article VIII is about the entry into force, already explained (see above point
5.2 Adoption of the convention and entering into force). Article IX explain
how a Member State may denounce the convention. It stipulate a period of
ten years to denounce it. If there is no denounce, the Member State will be
bound for another period of ten years.
Article X establishes the effect of entry into force. All the conventions that
are revised by the MLC 2006 are listed. Article XI and XII are about the
depositary functions. Article XIII explains the function of the special
tripartite committee (composed by representatives of the Goverments,
seafarers and shipowners of each Member State). The function is to” keep
the working of this Convention under continuous review through a
committee established by it with special competence in the area of maritime
labour standards.”
130
MLC 2006, Article V.1.
131
MLC 2006, Article V.2.
132
35
Article XIV explains the procedure to make amendments in the convention,
and the Article XV explains the procedure to make amendments in the code.
The Article XVI stipulates that the authoritative languages of the convention
are English and French.
5.3.2 The Regulations and the Code

Regarding the Regulations, the convention is structured in five titles:
• Title 1: Minimum requirements for seafarers to work on a ship;

• Title 2: Conditions of employment;
• Title 3: Accommodation, recreational facilities, food and catering;
• Title 4: Health protection, medical care, welfare and social security
protection and;
• Title 5: Compliance and enforcement.
All the titles are divided in three parts:
• The First part (Regulations) stipulate the purpose and general

principles and mandatory obligations.
• A second one (Part A) set the mandatory standards that the member
states must implement.
• The third Part (Part B) establishes the guidelines about how the Part
A should be interpreted. This part is not mandatory133
5.3.2.1 Tittle 1: Minimum requirements for seafarers to

work on a ship
Tittle 1 is about the regulations, standards and guidelines of:
The minimum age (Regulation 1.1), to ensure that no under-age persons

work on a ship (the minimum age 16, the night work under the age of 18 is
prohibited 134, the employment, engagement or work of seafarers under the
age of 18 shall be prohibited where the work is likely to jeopardize their
health or safety135).
Medical certificate (Regulation 1.2), to ensure that all seafarers are

medically fit to perform their duties at sea. The medical certificate shall be
issued by a duly qualified medical practitioner. 136
Training and qualifications (Regulation 1.3), To ensure that seafarers are

trained or qualified to carry out their duties on board the ship; training and
133
Article VI.
134
Std A1.1.2.
135
Std A1.1.4.
136
Std A1.2.4.
36
certification in accordance with the mandatory instruments adopted by the
International Maritime Organization shall be considered as meeting the
requirements for this purpose.137
Recruitment and placement (Regulation 1.4), To ensure that seafarers

have access to an efficient and well-regulated seafarer recruitment and
placement system, without charge to the seafarer. If the recruitment and
placement service operate in the territory of a Member State, it must comply
with the standards set out in the code. 138 In respect of seafarers who work on
ships that fly its flag, that shipowners who use seafarer recruitment and
placement services that are based in countries or territories in which this
Convention does not apply, the Members shall ensure that those services
conform to the requirements set out in the Code.139
5.3.2.2 Title 2 Conditions of Employment
Title 2 is about the seafarers’ employment agreements, wages, hours of

work and hours of rest, entitlements to leave, repatriation, compensation for
the ship’s loss or foundering, manning levels and career and skill
development and opportunities for seafarers’ employment.
The Convention has the definitions of Seafarer and ship in its Article II:
1. For the purpose of this Convention and unless provided otherwise in

particular provisions, the term:
Seafarer means any person who is employed or engaged or works in any

capacity on board a ship to which this Convention applies;
Ship means a ship other than one which navigates exclusively in inland
waters or waters within, or closely adjacent to, sheltered waters or areas
where port regulations apply;
4. Except as expressly provided otherwise, this Convention applies to all

ships, whether publicly or privately owned, ordinarily engaged in
commercial activities, other than ships engaged in fishing or in similar
pursuits and ships of traditional build such as dhows and junks. This
Convention does not apply to warships or naval auxiliaries.
Seafarer’s employment agreements (Regulation 2.1): To ensure that

seafarers have a fair employment agreement, the terms and conditions “shall
be set out in a clear written legally enforceable agreement and shall be
consistent with the standards set out in the Code.” 140 Also the seafarers must
have ”the opportunity to review and seek advice on the terms and conditions
in the agreement” 141 before signing.
137
Reg 1.3.4.
138
Reg 1.4.2.
139
Reg 1.4.3.
140
Reg 2.1.1.
141
Reg 2.1.2.
37
Where a collective bargaining agreement forms all or part of a seafarers’
employment agreement, a copy in English of that agreement shall be
available on board. 142
Wages (regulation 2.2): All seafarers shall be paid for their work regularly
and in full in accordance with their employment agreements. 143 The
payments interval should not be greater than a month. 144 Also, ” Seafarers
shall be given a monthly account of the payments due and the amounts paid,
including wages, additional payments and the rate of exchange used where
payment has been made in a currency or at a rate different from the one
agreed to.”145
Shipowners shall take measures to provide seafarers with means to transmit
all or part of their earnings to their families or dependants or legal
beneficiaries. 146
Hours of work and hours of rest (Regulation 2.3): Each Member shall
ensure that the hours of work or hours of rest for seafarers are regulated. 147
The normal working hours’ standard for seafarers shall be based on an
eight-hour day with one day of rest per week and rest on public holidays. 148
In determining the national standards, each Member shall take account of

the danger posed by the fatigue of seafarers, especially those whose duties
involve navigational safety and the safe and secure operation of the ship. 149
The limits on hours of work or rest shall be as follows: 150

• maximum hours of work shall not exceed: 14 hours in any 24-hour
period; and 72 hours in any seven-day period;
• minimum hours of rest shall not be less than ten hours in any 24-
hour period; and 77 hours in any seven-day period.
Hours of rest may be divided into no more than two periods, one of which
shall be at least six hours in length, and the interval between consecutive
periods of rest shall not exceed 14 hours.151
142
Std A2.1.2.
143
Reg 2.2.1.
144
Std A2.2.1.
145
Std A2.2.2.
146
Std A2.2.3.
147
Reg 2.3.1.
148
Std A2.3.3.
149
Std A2.3.4.
150
Std A2.3.5.
151
Std A2.3.6.
38
The Master of a ship has the right to require a seafarer to perform any hours
of work necessary for the immediate safety of the ship, persons on board or
cargo, or for the purpose of giving assistance to other ships or persons in
distress at sea. 152
Entitlement to leave (Regulation 2.4) : Each Member shall require that

seafarers employed on ships that fly its flag are given paid annual leave; 153
this paid annual leave shall be calculated on the basis of a minimum of 2.5
calendar days per month of employment. 154
Seafarers shall be granted shore leave to benefit their health and well-being
and with the operational requirements of their positions. 155
Repatriation (Regulation 2.5): Seafarers have a right to be repatriated at

no cost to themselves in the circumstances and under the conditions
specified in the Code. 156
Each Member shall require ships that fly its flag to provide financial
security to ensure that seafarers are duly repatriated in accordance with the
Code. 157
Seafarer compensation for the ship’s loss or foundering (Regulation

2.6): The seamen have the right to a compensation in the case of injury, loss
or unemployment arising from the ship´s loss or foundering. 158 In the
guideline is explained how the calculation of indemnity should be made: at
the same rate, and with a maximum of the total indemnity payable of two
months wages. 159
Manning levels and career and skill development and opportunities for
seafarers employment (Regulations 2.7 and 2.8): The MLC stipulates
standards that must be implemented in the domestic law of the States
Members. The purposes are to “ensure that seafarers work on board ships
with sufficient personnel for the safe, efficient and secure operation of the
ship” and “To promote career and skill development and employment
opportunities for seafarers”.
5.3.2.3 Title 3 Accommodation, recreational facilities, food

and catering
This title is divided in two, one part regarding the regulations, standards and
guidelines of accommodation and recreational facilities, and the second part
about the food and catering.
152
Std A2.3.14.
153
Reg 2.4.1.
154
Std 2.4.2.
155
Reg 2.4.2.
156
Reg 2.5.1.
157
Reg 2.5.2.
158
Reg 2.6.1.
159
Guideline B2.6.1.
39
In respect of the Accommodation and recreational facilities (Regulation
3.1), it is stipulated that each Member shall ensure that ships that fly its flag
provide and maintain decent accommodations and recreational facilities for
seafarers working or living on board, or both, consistent with promoting the
seafarers’ health and well-being. 160 It also states that the implementation of
the regulation established in the Code related to ship construction and
equipment apply only to ships constructed on or after the date of the
convention will enter in force for the Member concerned. 161
About Food and catering (Regulation 3.2), the Code provides that “each
Member shall ensure that ships that fly its flag carry on board and serve
food and drinking water of appropriate quality, nutritional value and
quantity that adequately covers the requirements of the ship and takes into
account the differing cultural and religious backgrounds. 162 The food during
the period of engagement of the seafarers on the ship must be free of
charge. 163 The code, in the standard A3.2 (8) also set a prohibition: the
ship´s cook work must be carried out by employees with age of 18 or more.
5.3.2.4 Title 4 Health protection, medical care, welfare and

social security protection
This title is divided in regulations, standards and guidelines about:
• Medical care on board ships and ashore

• Shipowners liability
• Health and safety protection and accident prevention
• Access to shore-based welfare facilities
• Social security
Medical care on board ship and ashore (Regulation A4.1): Each Member
shall ensure that all seafarers on ships that fly its flag are covered by
adequate measures for the protection of their health and that they have
access to prompt and adequate medical care whilst working on board. 164
This protection and care shall, in principle, be provided at no cost to the
seafarers. 165
The Member shall ensure that seafarers on board ships in its territory who
are in need of immediate medical care are given access to the Member’s
medical facilities on shore. The standards of the health and protection for
the seafarers on board settled by the code are aimed to provide medical care
160
Reg 3.1.1.
161
Reg 3.1.2.
162
Reg 3.2.1.
163
Reg 3.2.2.
164
Reg 4.1.1.
165
Reg 4.1.2.
40
as comparable as possible to that which is generally available to workers
ashore.
The health protection and medical care includes (Standard A4.1):

• dental care
• the right to visit a qualified medical doctor or dentist without delay
in ports of call, where practicable
The Members shall implement national laws and regulation where set the
requirements stipulated in the Standard A4.1(4) as a minimum. The main
requirements are:
• ships carrying 100 or more persons and ordinarily engaged on

international voyages of more than three days’ duration shall carry a
qualified medical doctor who is responsible for providing medical
care. 166
• ships which do not carry a medical doctor shall be required to have
either at least one seafarer on board who is in charge of medical care
and administering medicine as part of their regular duties or at least
one seafarer on board competent to provide medical first aid. This
seafarer in charge of the medical care must have the STCW training
in medical care. 167
• The competent authority shall arrange a system of medical advice at
any time (24/7), by radio or satellite. The communication shall be
free of charge irrespective of the flag that they fly. 168
Shipowners’ liability (Regulation 4.2): The purpose states that is to ensure

that seafarers are protected from the financial consequences of sickness,
injury or death occurring in connection with their employment. In order to
fulfil this purpose, the Standard A4.2 set some mandatory minimum
standards, such as:
• Shipowners shall be liable to bear the costs:

 for seafarers working on their ships in respect of sickness and
injury of the seafarers occurring between the date of
commencing duty and the date upon which they are deemed
duly repatriated, or arising from their employment between
those dates; 169
 of burial expenses in the case of death occurring on board or
ashore during the period of engagement. 170
166
Std A4.1.4(b).
167
Std A4.1.4(c).
168
Std A4.1.4.(d).
169
Std A4.1.4.(a).
170
Std A4.2.1(d).
41
• shipowners shall provide financial security to assure compensation
in the event of the death or long-term disability of seafarers due to an
occupational injury, illness or hazard, as set out in national law, the
seafarers’ employment agreement or collective agreement; 171
• Shipowners shall defray the expense of medical care, including
medical treatment and the supply of the necessary medicines and
therapeutic appliances, and board and lodging away from home until
the sick or injured seafarer has recovered, or until the sickness or
incapacity has been declared of a permanent character;172
• When the illness or injury results in incapacity to work for the
seafarer, the shipowner is liable to pay wages: 173
 As long as the seafarer remains on board, or until he has been

repatriated.
 In whole or in part as settled in the national legislation or in
the CBAs from the time when the seafarers are repatriated or
landed until their recovery or, if earlier, until they are entitled
to cash benefits under the legislation of the Member.
• Limitation of the liability of the shipowners: in the case of the

liability to defray the expense of medical care and board and
lodging, and the liability to pay wages in whole or in part in respect
of a seafarer no longer on board, national legislation of the Members
may limit such liabilities to a period which shall not be less than 16
weeks from the day of the injury or the commencement of the
sickness. 174
• Exclusion of the shipowner´s liability: National legislation may
exclude it in respect of the injury incurred otherwise than in service
of the ship; also, if the illness or injury is due to the wilful
misconduct of the seafarer, or in case that the sickness is concealed
intentionally when the engagement is entered into.175
• Exemption of the shipowner´s liability The shipowner may be
exempted from liability to defray the expenses of medical care and
board and lodging and burial expenses by the national legislation to
the extent that this is covered by the public authorities. 176
Health and safety protection and accident prevention (Reg. 4.3): With
this regulation, the MLC aim is that the work environment on board ships
171
Std A4.2.1(b).
172
Std 4.2.1(c).
173
Std 4.2.3.
174
Std 4.2.4.
175
Std 4.2.5.
176
Std 4.2.6.
42
promotes occupational safety and health for the seafarers. In order to do this,
the code stipulates that the Members shall:
• develop and promulgate national guidelines for the management of

occupational safety and health on board ships that fly its flag, after
consultation with representative shipowners’ and seafarers’
organizations and taking into account applicable codes, guidelines
and standards recommended by international organizations, national
administrations and maritime industry organizations. 177
• adopt laws and regulations addressing the matters specified in the
Code, taking into account relevant international instruments, and set
standards for occupational safety and health protection and accident
prevention on ships that fly its flag; 178 this regulation is developed in
the Standard A4.3, which said that laws and regulations shall
include:
 The adoption, implementation and promotion of policies and
programmes about safety and health, including risk
evaluation and training of seafarers. 179
 Programmes for the prevention of occupational accidents,
injuries and diseases on-board, including measures to reduces
and prevent the risk of exposure to harmful levels of ambient
factors and chemicals as well as the risk of injury or disease
that may arise from the use of equipment and machinery on
board ships; 180
 Control measures, to inspect, investigate, report and correct
unsafe conditions and occupational accidents. 181
• The competent authority shall ensure that the occupational accidents,
illness and injuries are properly reported in accordance with the ILO
guidance, that statistic about such events are analyzed to find the
causes in order to minimize it, and that investigations will be carried
out when the result of the accident, injuries or sickness is the loss of
life or serious personal injury. 182
Access to shore-based welfare facilities (Regulation 4.4): The Members

are responsible for that Seafarers working on board a ship have access to
shore-based facilities and services to secure their health and well-being; 183
177
Reg. 4.3.2.
178
Reg. 4.3.3.
179
Std. A4.3.1(a).
180
Std. A4.3.1(c).
181
Std. A4.3.1(d).
182
Std. A4.3.5.
183
Reg.4.4.1.
43
Social security (Regulation 4.5): to ensure that measures are taken with a
view to providing seafarers with access to social security protection, the
Members shall ensure that:
• all seafarers and their dependants (as far as in the national legislation
are protected) have access to social security protection in accordance
with the Code, and are entitled to benefit from social security
protection no less favourable than that enjoyed by shoreworkers. 184
• steps are taken to achieve progressively comprehensive social
security protection for seafarers; this includes medical care, sickness
benefit, unemployment benefit, old-age benefit, employment injury
benefit, family benefit, maternity benefit, invalidity benefit and
survivors’ benefit. 185
• the procedures for settlement of disputes shall be established by the
Member State. 186
5.3.2.5 Title 5 Compliance and enforcement
Flag State responsibilities (Regulation 5.1): The aim of the regulations in

this title is to ensure that each Member implements its responsibilities under
this convention with respect to ships that fly its flag. In order to do that, the
Members shall establish a system of inspection and certification of maritime
labour conditions to ensure that the standards of the convention are
meted. 187 This system may be done by competent and independent public
institutions or other organisations (including those of another Member, if
latter agrees), which carries out inspections or issue certificates or both.
Nevertheless, the Member will be responsible for the results of the system
regarding the working and living conditions of the seafarers concerned on
ships that fly its flag. 188
To proof that the ship has been duly inspected by the Member and it comply
with the Convention requirements relating to working and living conditions
of the seafarers, a Maritime Labour Certificate complemented by a
Declaration of Maritime Labour Compliance will be needed. 189
Maritime Labour Certificate and Declaration Of Maritime Labour

Compliance (Regulation 5.1.3): The Maritime Labour Certificate, once
issued, will be valid for a period of five years, 190 and it will be subject to an
184
Reg. 4.5.1.
185
Reg. 4.5.2 and Std A4.5.1.
186
Std. A4.5.9.
187
Reg. 5.1.1.2.
188
Reg. 5.1.1.3.
189
Reg. 5.1.1.4.
190
Std. A5.1.3.1.
44
intermediate inspection to ensure the continuing compliance with the
requirements of the Convention. 191
The renewal inspection can be done: 192
• Within three months before the expiry of the existing Maritime

Labour Certificate: then the new MLC will be valid for five years,
starting from the date of expiry of the existing MLC.
• More than three months before the expiry date of the existing MLC:
in this case the new MLC will be valid for five years starting from
the completion of the renewal inspection
Provisional Maritime Labour Certificate may be issued: 193
• To new ships on delivery

• when a ship changes flag
• when a shipowner assumes responsibility for the operation of a ship
that is new to that shipowner.
On-board complaints procedures (Regulation 5.1.5): In this Regulation it

is established the obligation of the Members to ensure on-board procedures
for the fair, effective and expeditious handling of seafarer complaints
regarding the non-compliance of the standards and rights settled in the
convention. 194 Also, the Members shall prohibit and penalize any kind of
victimization of a seafarer for filing a complaint. 195
The procedure mentioned above shall seek to resolve complaints at the

lowest level possible. Nevertheless, the seafarers have the right in any case
to complain directly to the master (and to external authorities where
necessary). 196 A copy of this complaints procedure must be provided to all
the seafarers on board. 197
Port State responsibilities (Regulation 5.2): The Members can inspect the
foreign ships calling at their ports to check if they comply with the
requirements of the Convention relating to working and living conditions of
the seafarers on the ship. 198 The maritime labour certificate and the
declaration of maritime labour compliance shall be accepted as prima facie
evidence of the compliance with the mentioned requirements. 199 This
191
Std. A5.1.3.2.
192
Std. A5.1.3.3 and Std A5.1.3.4.
193
Std. A5.1.3.5.
194
Reg. 5.1.5.1.
195
Reg. 5.1.5.2.
196
Std. A5.1.5.2.
197
Std. A5.1.5.4.
198
Reg. 5.2.1.1.
199
Reg. 5.2.1.2.
45
inspection shall be carried out by authorised officers, and based on a
monitoring system to ensure that the working and living conditions meet the
requirements of the Convention, including seafarers´ rights. 200
When the authorised officer finds that the requirements of the Convention
are not met, a second inspection, more detailed, shall be carried out with
focus on the points where the breaches were found. 201 If after this inspection
the ship is found not to conform with the requirements of the convention,
with conditions on board hazardous to the safety and health of the seafarers
or a serious breach of the requirements of the convention, the authorised
officer shall take steps to ensure that the ship shall not proceed to sea until
this situation has been rectified, or a plan to fix this situation is presented to
and approved by the authorised officer. In this event, the authorized officer
shall notify to: 202
• the relevant shipowners organization

• the appropriate seafarers organisation in the port where the
inspection was carried out
5.4 Implementation in the UK

The MLC 2006 is expected to enter into force internationally around mid-
2012. The MLC will bring in, and set the new internationally agreed
minimum living and working conditions for seafarers working at sea on
board UK registered ships. The MLC inspections will be carried out by the
Maritime and Coastguard Agency, and shipowners will need to show their
compliance with the new requirements. 203
The UK Government has the intention to ratify the MLC 2006:
At its 94th (Maritime) Session in February 2006 the International Labour

Conference adopted the Maritime Labour Convention 2006 (MLC). The new
Convention consolidates and updates over 60 maritime labour instruments
adopted by the International Labour Organization since 1920. The UK
Government firmly supported the development of the new Convention and is
committed to ratifying it at the earliest practical date.
The nature of the MLC is such that it cannot be ratified piecemeal, but must
be ratified as a whole. A review of all the provisions of the Convention
indicates that in some cases, the UK is already fully compliant. In other
cases, while existing UK legislation is not exactly in line, there are powers in
the Merchant Shipping Act 1995 which provide the necessary vires to make
the necessary amending legislation. Finally, in relation to a third category of
provisions, existing legislation does not implement the Convention
200
Reg. 5.2.1.4.
201
Std. A5.2.1.1.
202
Std. A5.2..1.6.
203
MCA webpage, online at www.dft.gov.uk/mca/mcga07-home/workingatsea/mcga-
healthandsafety/maritime_labour_convention_2006/ds-ssh-mlc-shipowner-training.htm
(last visit 15/05/2011).
46
requirements and the Merchant Shipping Act 1995 does not include the vires
to introduce the necessary legislation. 204
In this chapter the focus will be on how the convention is being

implemented, and what the UK shipowners will need to do to comply with
the UK legislation which is being revised to meet the requirements of the
MLC 2006.
First, the Convention provides that there should be no reduction in existing

standards; therefore, if the national legislation is above the minimum
requirements of the MLC 2006, it will remain as it is. 205
The MLC applies to all seafarers; regarding the ships, in the Convention it is
stipulated that applies to all ships engaged in commercial operations (ships
engaged in fishing, ships of traditional build such as dhows or junks and
warships are excluded). In the convention, ship is defined as:
Ship means a ship other than one which navigates exclusively in inland
waters or waters within, or closely adjacent to, sheltered waters or areas
where port regulations apply
The convention gives some flexibility about the application “in case of
doubt” about if the convention applies or not. Regarding the definition of
sea-going ship, in the UK there is no change of policy, but the MCA use a
definition from the Medical Certification Regs for a greater clarity:
"sea-going" in relation to a United Kingdom ship means -

(a) a ship in respect of which a certificate is required to be in force in
accordance with-
(i) the Merchant Shipping (Load Line) Regulations 1998 (1),
(ii) the Merchant Shipping (Vessels in Commercial Use for Sport or
pleasure) Regulations 1998 (2), or
(iii) the Merchant Shipping (Small Workboats and Pilot Boats) Regulations
1998 (3),
(b) a passenger ship of class I,II,II(A), III, VI or VI(A) in respect of which a
certificate is required to be in force in accordance with the Merchant
Shipping (Survey and Certification) Regulations 1995 (4), or
(c) a high speed craft in respect of which a permit to operate outside waters
of Categories A,B,C or D is required to be in force in accordance with the
Merchant Shipping (High Speed Craft) Regulations 2004(5). 206
The UK therefore will apply the provisions of the Convention to:
• all UK seagoing ships which operate either on international voyages,

or from a foreign port; and
204
Department for Transport, UK, Explanatory memorandum to the european communities
(definition of treaties) (maritime labour convention ) order 2009 no. 1757.
205
MCA: MIN 383 (M) about the implementation of the MLC in the UK.
206
Extract of the Medical Certifications Regs, as quoted in MCA, Aplication of the MLC
2006, United Kingdom Policy, online at: www.dft.gov.uk/mca/mcga07-
home/workingatsea/mcga-healthandsafety/maritime_labour_convention_2006/mcga.ds-ssh-
mlc-definitions (last visit 13/05/2011).
47
• all UK ships operating on UK domestic voyages, which operate
more than 60 miles from a safe haven in the UK;
• all UK ships operating on UK domestic voyages outside of
categorized waters which are 500 gross tonnage or over. 207
Anyway, standards such as medical certification and hours of work will not
be limited to certain sea-going ships, but applied to all.
The UK is changing its legislation where needed to be prepared for the

MLC 2006; it will be ratified once the preparations will be finished. The
Maritime and Coastguard Agency has focus for the implementation of the
convention on three basis:
• The Tripartite Working Group

• Legislative amendments
• And Inspection and certification regime
5.4.1 MLC Tripartite Working Group

The Tripartite Working Group comprises representation from government,
industry and Trade Unions. The aim of this Group is to discuss policy and
advise the Maritime and Coastguard Agency (MCA) on the implementation
of the Convention in the UK. The Group consists of representatives of UK
shipowners, Maritime Unions, the Red Ensign Group administrations, the
Department for Transport (DfT) and the MCA.
The TWG has had twelve meetings and four sub-group meetings that has
produced fifty eight reference papers.
5.4.2 Legislation amendements

The MLC 2006 affects 30 sets of UK regulation, and 14 sets of new
regulations are required. 208 A cross-references between the Maritime Labour
Convention and the UK legislation is available in the Supplement B (at the
end of this thesis).
5.4.3 Inspection and certification regime

The inspection and certification regime of the MLC 2006 was explained
above, but to explain the implementation in the UK a it will be good to
remember that the ships subject to the convention will require a Maritime
207
MCA, Aplication of the MLC 2006, United Kingdom Policy, online at:
www.dft.gov.uk/mca/mcga07-home/workingatsea/mcga-
healthandsafety/maritime_labour_convention_2006/mcga.ds-ssh-mlc-definitions (last visit
13/05/2011).
208
MCA, Maritime Labour Convention Seminar, 2009, online at:
healthandsafety/maritime_labour_convention_2006/maritime_labour_convention_seminar_
-_2009-3.htm (last visit 12/05/2011).
48
Labour Certificate issued by the flag state, and will need to have on board
and maintain a Declaration of Maritime Labour Compliance. This
declaration will be implemented in two parts:
• Part I, completed by the MCA, which will refer to the national

requirements, equivalences and exemptions.
• Part II, completed by the shipowners, must have the measures that
they will put in place to ensure compliance and continuous
improvement.
The inspections will be carried out at the same time for those required under
the ISM Code for the Safety Management Certificate, because the time
between the inspection is the same for both; this is not a coincidence, the
MLC 2006 was drafted in a way to minimize the time and burocracy cost of
its implementation. 209
The MCA plan to carry out MLC inspections instead of the actual ILO 178
Convention 210 inspection in the twelve months before the convention enter
in force, once it has been ratified. In that year, a Maritime Labour Certificate
will be issued with the same expiry date as the Safety Management
Certificate. 211
5.5 How will affect the MLC 2006 to the

P&I cover?
The P&I clubs cover the Convention in the majority of its extension, for
example: 212
(a) repatriation - including repatriation in cases of a shipowner’s

insolvency (effectively abandonment); and
(b) compensation for illness, injury and death of a crew member
However the shipowners will not have other defence under the Convention
than the wilful misconduct of the seafarer, even in cases of war, terrorism,
insolvency or bio-chemical attack for which Club cover is either limited or
not available. 213
Regarding the financial security for the abandonment of seafarers, that will
be applied and amendment once the Convention enter in force the
background is as follow:
209
MCA, MIN 383 (M).
210
ILO Convention (No. 178) concerning the Inspection of Seafarers' Working and Living
Conditions.
211
Turner et al, Supra Note 123.
212
Ibid.
213
Chris Spencer and Davis Tilsley, The Maritime Labour Convention 2006 special edition,
Standard Safety, The Standard Club, March 2011.
49
The Maritime Labour Convention 2006 (MLC) places responsibility on
shipowners to provide financial security in respect of liability for the
repatriation of seafarers, including maintenance pending repatriation
(Regulation 2.5) and compensation for death sickness or injury of seafarers
in connection with their employment (Regulation 4.2). Further to IMO
Resolution A.930(22) and A.931(22) of 17 December 2001, the 9th meeting of
the Joint IMO/ILO Ad Hoc Expert Working Group on Liability and
Compensation regarding Claims for Death, Personal Injury and
Abandonment of Seafarers, held between 2-6 March 2009 in Geneva,
formulated proposed mandatory principles in the form of text regarding the
provision of financial security in the case of abandonment of seafarers. The
principles are designed to amplify MLC Regulation 2.5 and Regulation 4.2 of
214
the MLC.
The Expert Working Group proposed some standards and guidelines, which
are still not in force, but now is sure that the financial security will be
required to the shipowners. The principles will be, in words of Turner and
Wu:
The ‘principles’ relating to abandonment, state that the financial security

system should provide for:
(1) a right of direct action against the financial security provider
(2) the cost of repatriation and reasonable expenses incurred by the seafarer
from the time of abandonment until the time of repatriation
(3) outstanding wages and other contractual entitlements, limited to a period
215
of four months.
The P&I clubs do not cover with requirements at the moment. The question
is what evidence of financial responsibility will be acceptable by the
Members, which is unclear at the moment, but meanwhile the
recommendation of the P&I clubs for the members is to use a copy of the
ship´s certificate of entry in the P&I club as evidence of partial
compliance. 216
214
MCA, MIN 389 (M).
215
216
Ibid.
50
6 Piracy, crew and P&I clubs
Piracy is nowadays a hot topic in the maritime industry due to the legal
problems which arise from this activity, the doubts about how to fight it and
the question about “who pays what” in case of a piratical attack.
The most notorious geographical location where piracy attacks occurs lately
has been the Gulf of Aden, where the piracy attacks are linked with the
inland situation of Somalia, defined as a failed stated. But there are other
regions where piracy attacks occur, as the South China Sea, the waters
around Indonesia and South America. The causes of piracy are diverse, for
example Carolin Liss, of Murdoch University in Australia, argues that five
factors “are of particular importance in shaping piracy in Southeast Asia:
over-fishing, lax maritime regulations, the existence of organised crime
syndicates, the presence of radical politically motivated groups in the
region, and widespread poverty.” 217
The shipping industry is suffering extra costs because the piracy, however
the real victims are the seafarers, who are exposed to the pirates violence
and robbery of his belongings; and when the pirates hijack the vessel, the
crew is normally held as hostages, with the deprivations derived from this
situation. 218
In this chapter it will be discussed what is piracy, how it affects the seafarers
right, and if it is covered by the P&I Clubs.
6.1 What is piracy?

The classic definition of a pirate is in Republic of Bolivia v Indemnity
Mutual Mar Ass Co Ltd (1909)( 11 Asp MLC 117) , which is ‘a man who is
plundering indiscriminately for his own ends and not a man who is simply
operating against the property of a particular state for a public end, the end
of establishing a government, although that act may be illegal and even
criminal, and although he may not be acting on behalf of a society which is
politically organised’ 219
Piracy has existed since the maritime trade began; it is an international

crime in the international law, that can be punished by any State, since it is a
crime against the human kind, provided always that the pirates were in the
217
As quoted in ”Piracy in South East Asia, A Growing Threat”, 17 july 2009, Idarat
Maritime, online at: www.idaratmaritime.com/wordpress/?p=137 (last visit 10/05/2011).
218
Dr. Sam Bateman, The thinker: Asia vs. the pirates, Article published in the Jakarta
Globe, February 12, 2011, online at: www.thejakartaglobe.com/opinion/the-thinker-asia-vs-
the-pirates/421871 (last visit 12/05/2011).
219
Jonathan Bruce, Who pays the bill for piracy? 23-03-2009, Maritime Risk
Internationational, Vol 23 No 2, online at: www.i-law.com (last visit 13/05/2011).
51
high seas, or in the territorial sea of the State concerned and it is a crime
punishable under its domestic law. 220
The definition of Piracy in UNCLOS is in Article 101:
“Piracy consists of any of the following acts:

(a) any illegal acts of violence or detention, or any act of depredation,
committed for private ends by the crew or the passengers of a private ship or
a private aircraft, and directed:
(i) on the high seas, against another ship or aircraft, or against persons or
property on board such ship or aircraft;
(ii) against a ship, aircraft, persons or property in a place outside the
jurisdiction of any State;
(b) any act of voluntary participation in the operation of a ship or of an
aircraft with knowledge of facts making it a pirate ship or aircraft;
(c) any act of inciting or of intentionally facilitating an act described in
subparagraph (a) or (b).”
The rights of a warship regarding to board a ship suspicious of piracy are in

the Article 110 UNCLOS, which says:
“1.Except where acts of interference derive from powers conferred by treaty,

a warship which encounters on the high seas a foreign ship, other than a
ship entitled to complete immunity in accordance with articles 95 and 96, is
not justified in boarding it unless there is reasonable ground for suspecting
that:
(a) the ship is engaged in piracy;(…)”
Due to the special situation in Somalia, the United Nations Security Council
approve the Resolution 1816 (2008) which enable the fight of the piracy in
Somalian waters; in article 7 states that:
“7. Decides that for a period of six months from the date of this resolution,
States cooperating with the TFG in the fight against piracy and armed
robbery at sea off the coast of Somalia, for which advance notification has
been provided by the TFG to the Secretary General, may:
(a) Enter the territorial waters of Somalia for the purpose of repressing acts
of piracy and armed robbery at sea, in a manner consistent with such action
permitted on the high seas with respect to piracy under relevant international
law; and
(b) Use, within the territorial waters of Somalia, in a manner consistent
with action permitted on the high seas with respect to piracy under relevant
international law, all necessary means to repress acts of piracy and armed
robbery;”
6.2 Seafarers rights and P&I coverage in

the case of a pirate attack
For insurance purposes, piracy acts are not limited to the high seas, the ones
in the somalian waters are also considered pirate attacks. Must be kept in
220
Gotthard Gauci, Piracy and its legal problems: with specific reference to the english law
of marine insurance, Journal of Maritime Law and Commerce, October, 2010.
52
mind that the P&I clubs do not insure the seafarers, therefore to trigger the
cover of the P&I clubs the pirate attack must have as consequence a liability
of the shipowner, and one liability that is covered by the club.
P&I clubs cover the liabilities stipulated in the “risk covered” rule 221. Piracy
is not one of the named risks covered by the P&I clubs, but neither is it
named in the exclusions for the liabilities covered by the club. In fact, in the
exclusion of war risk, in the Britannia rulebook, rule 25.1(b), the piracy is
excepted:
General Exclusion 25(1)
Unless otherwise agreed in writing there shall be no recovery from the

Association against any liabilities, costs or expenses incurred as a result of:
B) Capture, seizure, arrest, restraint or detainment (barratry and piracy
excepted) and the consequences thereof or any attempt thereat;
Nevertheless, under these general exclusions, it is include the “act of

terrorism” and “weapons of war”:
A) An incident caused by war, civil war, revolution, rebellion, insurrection or

civil strife arising therefrom, or any hostile act by or against a belligerent
power, or any act of terrorism;
C)An incident caused by mines, torpedoes,bombs, rockets, shells, explosives
or other similar weapons of war (save for those liabilities, costs or expenses
which arise solely by reason of the transport of any such weapons whether on
board the Entered Ship or not).
Pirate attacks can result in injury, illness or death of crew or passenger, or

loss of their effects; damage to or loss of ship, pollution, wreck removal,
damage to or loss of cargo, delay, wasted time and expenses. To maintain
the focus on the topic, only the results related with the crew will be
discussed (injury, illness or death of crew, crew repatriation and
substitution, or loss of their effects). To be covered, the first thing to do is
analyse if the War Risk Exclusion are applicable.
Piracy is a marine peril which falls under the scope of the clubs cover. It
must be differentiated from terrorism, which is a war risk that falls outside
of the cover. The difference between piracy and terrorism is that piracy, as
was mentioned above in the UNCLOS definition, is an illegal act of
violence or detention committed on the high seas for private gain,
meanwhile terrorism acts are attacks politically or ideologically
motivated. 222
Regarding the explosives (mines, torpedoes, bombs, etc…), it is an

enumeration as example, it means all kind of explosives; this enumeration is
to be used in contrast of “normal weapons” such guns, rifles and so on. If
221
See, for instance, Britannia rule book class 3, rule 3 – nature of the cover.
222
IG P&I, Piracy, Frequently asked questions, 02/06/2009, online at:
www.igpandi.org/downloadables/news/news/Piracy_FAQs_final.pdf (last visit
12/05/2011).
53
weapons of war are used, the liabilities which arise from a pirate attack may
be excluded. Also, some primary P&I War Risk underwriters include piracy
as a specific named peril in which case P&I liabilities arising are covered by
them and not by the clubs. 223
6.3 Ransom
Having said that, and now that it is clear that the consequence of a pirate
attack regarding the crew is covered (injury, loos of effects, etc), another
question that arises is: In the case that the pirates kidnap the crew and ask
for ransom, Who pays it? Is it covered by the P&I clubs?
For the shipowners and cargo owners, the issue is that if they want the
vessel, the cargo and the crew in good conditions, they will need to pay the
ransom that the pirates are demanding. 224 Can it be legally paid?
6.3.1 UK legislation and Ransom Payments

The payment of a ransom is legal, but depending on whom the money is
paid and the circumstances, the payer may be committing an offence of
money laundering or terrorist financing. 225
Terrorist legislation: the terrorist act 2000 established in its section 15 (3)
that “a person commits offence if (a) he provides money or other property,
and (b) knows or has reasonable cause to suspect that it will or may be used
for the purposes of terrorism. In addition, the section 17 of the same act sets:
Funding arrangements.
A person commits an offence if—
(a)he enters into or becomes concerned in an arrangement as a result of
which money or other property is made available or is to be made available
to another, and
(b)he knows or has reasonable cause to suspect that it will or may be used
for the purposes of terrorism.
If the ransom payment took place overseas, the person who made it could be
found guilty in a UK court under the section 63 of the act, which establishes
extraterritorial jurisdiction. The definition of terrorism in this Act (for this
offence) is in section 1 of the 2000 Act as amended in the Counter-terrorism
Act 2008 as being the use or threat of action which is designed to influence
223
IG P&I, Supra note 222.
224
Harry Hirst, Ince & Co Partner, Piracy, the legal issues available at The Nautical
Institute, Hong Kong Branch , online at:
www.nautinsthk.com/archive/documents/PiracyHKG09/PRESENTATIONS/ince.htm (last
visit 12/05/2011).
225
European Union Committee - Money Laundering And The Financing Of Terrorism;
Annex A The Law In The Uk On Ransom Payments, online at
www.publications.parliament.uk/pa/ld200809/ldselect/ldeucom/132/9031112.htm (last visit
12/05/2011).
54
the government or an international governmental organisation or to
intimidate the public or a section of the public, and is made for the purpose
of advancing a political, religious, racial or ideological cause. To the
present, the attacks and hijacking of vessels in the horn of Africa are
considered piratical and not terrorist acts. 226
Money Laundering legislation: Once the ransom monies are in the hands of
the pirates, they become the “proceeds of a crime”, 227 and therefore fall
under the scope of the proceed of crime Act 2002, which establishes the
obligations to report money laundering. In fact, Section 19 of the Terrorism
Act 2000 stipulates a general duty to report suspicions of terrorist finance
offences to the police or SOCA (Serious Organised Crime Agency), and it is
an offence the breach of this duty. 228
To conclude, the payment of ransom is legal if the payers comply with the
terrorist and money laundering legislation; now in Somalia there are
terrorist groups, but it is not believed that there is a systematic connection
with the Somali pirates. If in the future new information to prove these
connections appears, then the pay of ransom will fall on the scope of the
terrorist legislation and money laundry legislation. 229
6.3.2 Who pays for the ransom?

The amount of money for the ransom can be quite high. Furthermore, the
amount is not only about the ransom itself, it also include expense and risk
involved in negotiating the deal, getting the cash safely to its drop-off point
and extracting the vessel itself. 230
Can it be recovered from the insurers?
The payment of the ransom leads to the release of the ship, the cargo and the
crew. Therefore, the payment of the money under English law is recoverable
under the hull policy as sue and labour expenditure; and when there is cargo
on board, as general average (“GA”) expenditure. 231
What happens with the P&I clubs?
Sue and labour:
Extraordinary costs and expenses (…) reasonably incurred on or after the

occurrence of any casualty, event or matter liable to give rise to a claim (…)
but only to the extent that those costs and expenses have been incurred with
226
EU Committee, Supra note 225.
227
Hirst, Supra note 224.
228
EU Committee, Supra note 225.
229
Ibid.
230
Bruce, Supra note 219.
231
55
the agreement of the Managers or to the extent that the Directors in their
discretion decide that the Owner should recover from the Association. 232
Should not help in the payment due to its interest in the safety of the crew?
In the opinion of Jonathan Bruce, Sue and labour expenses could well be
covered in the relevant P&I rules/cover in any event. 233 However, the
reimburse to the members for Sue and Labour costs only occur where
approved in advance or under the omnibus rule (at the discretion of the P&I
club Board of Directors;234 and provided that is not recoverable under any
other insurance and cannot be recovered from any other source.235
General Average:
There is a general average act when, and only when, any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for the common safety for the
purpose of preserving from peril the property involved in a common maritime adventure.
General average sacrifices and expenditures shall be borne by the different contributing
interests as the basis hereinafter provided”236
If the shipowner declares GA, “it has been traditionally accepted adjusting
practice and upheld by the English courts that a ransom payment made to
obtain the release of a hijacked vessel/cargo is a general average expense for
which shipowners are entitled to recover contributions.” 237 The P&I club
does not contribute in to GA primary because the clubs are not involved
with property, but if the contribution to GA of the cargo cannot be recovered
due to the shipowners’ breach of the contract of carriage (for instance, the
ship is unseaworthy), then P&I clubs will be liable for that contribution. 238
Nowadays, there is a trend between the insurers to cover piracy under war
risk policy. In the words of Nick Riddle, Senior Vice President at Marsh
Limited:
Many insurers now require that the peril of piracy is moved from the marine
hull policy to the war risks policy as part of renewal discussions, regardless
of the original policy conditions. The payment in war risks policies of an
additional premium when ships are considered to be at high risk is one of the
reasons for this decision. 239
Therefore, the P&I War Risk cover may be triggered in the payment of
ransom if the incident fall under its scope (for example, the pirates used
“weapons of wars”); The P&I War Risk is an excess cover only, so the
members of the P&I clubs must maintain their primarily war risk insurance;
in a circular extended to all P&I clubs of the IG, the IG established that the
232
Section 25 (A) Sue an Labour and Legal Cost, UK P&I Club Rule Book 2011.
233
Bruce, Supra note 219.
234
235
236
York Antwerp Rules 1994; Rule A.
237
238
239
Nick Riddle, Piracy Published on February 10, 2011 by Mark Lowe, Maritime Security
Review, online at: www.marsecreview.com/2011/02/piracy/ (last visit 16/05/2011).
56
limit of cover remains at USD 500 million in excess of the market value of
the vessel or USD100 million. 240
To avoid the gap between P&I, Hull and War Risk insurance, the K&R
(Marine Kidnap and Ransom Insurance) is being used. With this insurance,
the ransom payments, the cost related with negotiation and the delivery of
the cash to the drop point, etc, are covered. 241
Regarding the claims that the crew may present against the shipowner after
a piracy attack, they are entitled to present claims for:
• Injury and death

• Loss of effects
• Mental anguish (not only the crew, also their families).
In words of Harry Hirst:
As a matter of English law, if you have failed to properly prepare the crew
for entering an area with high piracy risk, and for facing the threat of attack
and hijacking, then where things go wrong and the ship is hijacked, the Crew
will be entitled to claim for any personal injuries they may sustain, as well
damages for mental anguish, that is, post traumatic stress. Again therefore,
you may have to show that you exercised proper care. 242
From the mentioned quotation is evident that the only legal defence against
the mental anguish is that the shipowner exercise a proper care; this duty of
care consist in made the preparations and take the precautions to minimize
the risk of a pirate attack and a subsequent hijack of the vessel and the
crew. 243 In the case of the GoA and the horn of Africa, the shipowners
should follow the recommendations made in the Industry Best Management
Practices 3 (BMP3) guide. The purpose of this guide is:
The purpose (…) is to assist ships to avoid, deter or delay piracy attacks off
the coast of Somalia, including the Gulf of Aden (GoA) and the Arabian Sea
area. Experience, supported by data collected by Naval forces, shows that
the application of the recommendations (…) can and will make a significant
difference in preventing a ship becoming a victim of piracy. 244
Also, the vessel should transit inside the Internationally Recognised Transit
Corridor (IRTC), established by the IMO and where naval forces patrol and
protect the area. The vessels can use the convoy system for ships using the
IRTC; to use it the shipowners just need to join the Group Transit
Scheme. 245
240
IG P&I Circular: War Risks P&I Excess Cover And Bio-Chem Cover 2011/2012,
January 2011.
241
242
Ibid.
243
Ibid.
244
Section 1 of the BMP3 june 2010, Witherby Seamanship International Ltd.
245
57
Another recommendation is to register with the MSCHOA (Maritime
Security Centre Horn of Africa) website. In order to coordinate support and
protection to mariners effectively, MSCHOA needs to know about merchant
vessels approaching, transiting or operating in the region. 246
Other organisations which are providing invaluable assistance and

information specific to the Somalia/Gulf of Aden the UK Maritime Trade
Operations centre in Dubai (UKMTO), the EU Naval Task Force
(EUNAVFOR) and the International Maritime Bureau. 247
6.3.3 Guards and security personnel: effect on the

P&I coverage
Some shipowners employ private armed guards to protect their ship, crew
and cargo. These measure have as advantage that reduce the risk of the ship
to be hijacked, but increase the risk of the damage to the ship and injury to
the crew in case of confrontation. 248 However, the view of the industry,
most states and the IG P&I is that the crew and/or security personnel should
not be armed, to avoid the mentioned increase of the risk and the predecible
escalate of violence and use of more potent weapons by the pirates. In the
UK, the prohibiting and licensing provisions of the Firearm Legislation are
extended to UK flag vessels. 249 But the allowance or the prohibition will
depend on the flag state and port state legislation.
Regarding the cover of the P&I Clubs, it must be differentiated when the
guards are armed or not:
• Guards unarmed: the cover is not prejudiced

• Armed guards: if they are used in breach of the applicable
legislation, it could result in prejudice the cover
The liabilities acquired by the shipowners in the moment when they contract
a security company “may not be fully covered by their clubs and may be
excluded if they would not have arisen but for the terms agreed where these
are not permissible in accordance with the governing principles in the
Pooling Agreement relating to contracts and indemnities.” 250 This terms
embody the principle of that any contract from which arise special liabilities
to the member must be approved by the club.
246
UK P&I Club, Maritime security and piracy; essencial precautions and preparations.
UK P&I web page, at: www.ukpandi.com (last visit 15/05/2011).
247
248
249
250
Ibid.
58
7 Criminalisation of
seafarers
What is it? In words of François Laffoucrière the criminalisation is:
Criminalization(...)It is a process consisting in transferring the qualification

of damage from a different category to a criminal one. For the Pilot, it means
that in the past another person was prosecuted – either the Captain or the
Ship-owner – or no prosecution was carried out – minor offence or less
pressure - or else the qualification upheld was civil – what mattered was
repair. From civil liability requiring damage directly linked to a cause,
criminalisation establishes penal liability for which a material fact, the actus
reus – a law infringement even without any damage – must be accompanied
in principle by a psychological element, the mens rea – intention or
recklessness. Even in a criminal offence of “strict liability”, which is
normally minor, some elements of the crime require mens rea 251
Prof. Proshanto Mukherjee states that:
Criminalisation in reference to a person means turning someone into a

criminal by making his activity illegal. Thus, a person is criminalised if his
conduct or act is criminal. It is the imposition of penal sanction that
essentially defines a crime and distinguishes it from a civil wrong
characterized by a tort or delict. 252
The criminalisation should be motivated when there is evidence of criminal

negligence committed by the seafarer. Many times the courts use a
scapegoat to expedite the process or simply to not get into a trouble as in the
case of political campaigns, in which politicians seek to gain the sympathy
of the people assuming that they protect the environment, and they
criminalise to foreign seafarers. 253
This trend is unfair for the seafarers, bad for the industry (since it is
decreasing the number of young people who decide to be seamen) 254, and
also for the society, which is not concient about the importance of the
maritime trade, that carry out 90% of the world trade. 255
251
F. Laffoucrière. Criminalisation of the Maritime Pilot, 24/11/2009, available online at
the International Maritime Pilot Association website www.impahq.org/news_archive.cfm
(last visit 13/05/2011).
252
P. K. Mukherjee. Criminalisation and unfair treatment: the seafarer’s perspective.
Journal of International Maritime Law, 2006, VOL 12; ISSU 5, pages 325-336; See also
Judy Pearsall (ed), The New Oxford Dictionary of English, Oxford University Press,
Oxford, 1998 at 2001, p 2.
253
Ibid, p 6.
254
Efthimios Mitropoulos, Criminalisation in the maritime context, online at:
www.epandi.com/ukpandi/resource.nsf/Files/mitropoulos/$FILE/mitropoulos.pdf (last visit
13/05/2011).
255
ILO web page, online at: www.ilo.org/global/standards/maritime-labour-
convention/lang--en/index.htm (last visit 13/05/2011).
59
There are three layers that must be analysed to have a global picture of the
criminalisation of the seafarers in case accidental discharge of oil:
international conventions, communitary level and domestic law. 256
The international context, the rules 4.2 of Annex I and 3.2 of Annex II of
the International Convention for the Prevention of Pollution From Ships,
1973 as modified by the Protocol of 1978 (MARPOL 73/78 Convention)
refer to the Captain or the Ship-owner (not the crew), and solely for
pollution damage they wilfully caused, or due to “recklessness knowing
that such damage will probably occur”. 257 Also the UNCLOS, in its
art.230.2 (Monetary penalties and the observance of recognized rights of the
accused) stipulates that:
2. Monetary penalties only may be imposed with respect to violations of

national laws and regulations or applicable international rules and
standards for the prevention, reduction and control of pollution of the marine
environment, committed by foreign vessels in the territorial sea, except in the
case of a wilful and serious act of pollution in the territorial sea.
In Europe two cases were key factor in the change of the european
legislation and the creation of the “criminalisation Directive”: The case of
the Erika in France (1999) and the Prestige in Spain (2000):
In the case of The Erika, on 12 December 1999 the 37,238-dwt

tanker Erika broke in two in heavy seas off the coast of Brittany, France,
while carrying approximately 30,000 tonnes of heavy fuel oil. Although the
crew were saved, some 14,000 tonnes of oil were spilled and more than 100
miles of Atlantic coastline were polluted. 258 “By 27th of December, about
15,000 dead or oiled birds had been washed ashore along 400-500
kilometres of the French coast between Finistere and Charente-Maritime.
Not less than 10,000 tonnes of fuel was said to have come ashore between
Christmas Eve and the end of March 2000. An official report of the
European Commission blamed the poor condition of the ship, which was
then 25 years old and single-hulled, for the spill”. 259
As a result of the Erika disaster, proposals were submitted to the MEPC to

accelerate the phase-out of single-hull tankers contained in the 1992
MARPOL amendments. 260
Regarding The Prestige, the captain, due to the condition of the ship and the
weather, ask for help to the Spanish authorities, with the intention of arrive
to the nearest Spanish port and save the vessel and the cargo. Unfortunately,
256
Laffoucrière, Supra note 251.
257
258
IMO web page, online at: www5.imo.org/SharePoint/mainframe.asp?topic_id=231#9
(last visit 13/05/2011).
259
Anthony, Olagunju G, Criminalization of seafarers for accidental discharge of oil: is
there justification in international law for criminal sanction for negligent or accidental
pollution of the sea, 37 Journal of Maritime Law and Commerce, 219 (Apr 2006).
260
IMO, Supra note 258.
60
in Spain the authorities, pushed by politicians (at that time there were
elections in Spain), refused the petition and order the captain to lead to high
seas. The engines of the prestige did not work , and the vessel was at the
mercy of the sea; Tugs were sent, but finally the ship collapsed. “An
estimated 5,000 tons of fuel oil were reportedly initially spilled in the
incident. However, in the subsequent months, more than eighty percent of
the tanker's 77,000 tons was reported to have leaked into the Spanish waters
from the wreck, costing several millions of dollars to clean up”. 261
In both case the captains were treated as scapegoats: Captain Mathur, master
of the Erika was initially imprisoned, and detained for three months in
France.
In the case of Captain Magouras of the Prestige, he was jailed for 83 days,
and the Spanish authorities only let him go after a 3 million Euros bail was
paid; even after the bail was paid, he could not leave Spain for two years
after the Prestige accident.
The political answer in Europe after the prestige was the protection of the
environment through a directive (“criminalisation directive” of Maritime
safety, prevention of ship-source pollution: penalties for infringements
(amend. Directive 2005/35/EC)) through criminal liability. The directive
establishes the punishment of the pollutant in case of “gross negligence or
wilful misconduct”. The question is what is gross negligence, which is not
defined in the directive, or in other words, the line between the civil
negligence and the criminal act.
Finally, in the UK MARPOL is strictly implemented, and it seems that only

the Captain or the Shipowner can be criminally prosecuted for pollution,
and only if it is intentional. 262
In England, an Industry coalition led by Intertanko went to Court since they

believe that the Directive is against the MARPOL Convention. The case
went to the European Court of Justice. 263 The final decision of the ECJ was
delivered on 3 June 2008 and in brief, the ECJ ruled that the Directive:
1. Cannot be assessed by reference to MARPOL as the Community itself

(unlike its Member States) is not a party to MARPOL.
2. Cannot be assessed by reference to UNCLOS as, although the
Community is a party to UNCLOS, that Convention does not give
individuals rights or freedoms on which they can rely against States.
The Court held that the use of the term ‘serious negligence’ does not
infringe the requirement of certainty in Community legislation. Therefore,
the directive must be implemented. The case must be referred back to the
261
Olagunju G, Supra note 259.
262
263
Intertanko webpage online at www.intercargo.org/criminalisation.html (last visit
14/05/2011).
61
English High Court for conclusion, either on a contested, or an agreed basis.
In addition, there is the option to refer the matter to the International
Tribunal for the Law of the Sea in Hamburg. 264
Regarding the question of “who pays?” and the relation between the P&I
clubs and the seafarers rights, Laffoucrière states that
P&I Clubs usually pay the fines inflicted on Captains when there is an
absence of will in the offence, but there is little chance to see this happening
for pilots. This could lead to over cautiousness with a damaging effect on the
fluidity of the traffic which in turn would have negative economic
consequences. 265
P&I Club covers do not extend to criminal liabilities. The club´s ‘omnibus’
rule may cover it but on a ‘case by case’ basis and certainly requiring Board
approval. Therefore the question is that a substantial legal bill perhaps
exceeding millions of USD will have to be settled at some stage and this
may only be recoverable at a later date, if at all. 266 Thus, the clubs can:
• Arrange for legal representation of the crew members and possible

bail, if the Board approves it;
• Cover fines related to the scope of the cover of the P&I clubs rules,
• Pressure through publicizing the crew situation together with other
industry bodies. 267
To conclude, so far there is no solution, except for the recourse of a legal

protection insurance, which is an option in the event that a seafarer faces a
case of criminalisation since it is sure that he will need a lawyer to defend
himself, and as has been pointed out, it can be very expensive process. 268
264
Intertanko, Supra note 253.
265
Laffoucrière. Supra note 251.
266
267
Collins William, P&I cover for crew followin and accident, presentation of the
Steamship Insurance Management Limited, in the Conference for the “year of the Seafarer”
for the World Maritime Day held in Vancouver in 2010, online at:
www.worldmaritimedayna.org/ (last visit 13/05/2011).
268
Laffoucrière. Supra note 251.
62
8 Analysis and Conclusion
The relation between the P&I clubs and the seafarer´s rights is indirect: the
P&I clubs cover the liability of the shipowners in (inter alia) their relation
with the crew; in fact this was in the very beginning of the P&I clubs: the
crew cover was the answer of the shipowners to the claims of the seafarers.
The relation between the seafarers rights and the P&I cover on the crew, as
has been explained in previous chapters, is complex, due to the liability
comes from different sources, as contract, CBAs, articles, statutory law and
common law.
A seafarer´s claim may come contractually; in that case, when the injury is
stipulated in one clause of the contract, will be enough for the claimant
prove the injury. However, in England, if the seaman chooses to claim in
tort, he will need to prove that the negligence of the shipowner caused the
injury; in other words, the shipowner had a duty of care, he breached his
duty, and that breach was the cause of injury. A much more difficult way
compared to the contractual.
The reason why a seafarer may choose to claim in tort could be, for
instances, in case of an accident that end in permanent disability. The
permanent disability compensations are contractually fixed, but the seafarer
may get more claiming in tort.
Regarding the contractual liability, which arises from the individual

contracts, collective agreements, articles and statutory law, the liability of
the shipowners is increasing in the same proportion that the rights of the
seafarers. This is something certainly good for the seafarers, and even when
is increasing the cost of the industry, in the author opinion it will have a
positive impact in the long term. The biggest advance in this area has been
done with the ILO Maritime Labour Convention of 2006.
This convention replaces 68 existing international maritime labour

instruments. It is divided into three different parts: Articles, Regulations and
the Code.
The code is two part (Part A mandatory standards and the Part B
recommendations). The UK will not make The provisions of the Part B
compulsory in its legislation.
The ILO Maritime Labour Convention of 2006, which is being implemented

in the UK in preparation for the time when it enter in force, is certainly a big
step, and will fill the gap not covered by the SOLAS, STCW and MARPOL,
complementing those conventions.
63
The convention establishes standards for the minimum requirements for
seafarers to work on a ship, conditions of employment, accommodation,
reational facilities, food and catering, health protection, medical care,
welfare, social security protection, and one of the best points of the
convention: compliance and enforcement. These are the “teeth” of the
convention: the flag states inspection system and the port state inspection
system.
The system of inspections and certification are in its chapter 5. It contains

provisions for complaint procedures available to seafarers; also, the flag
state shall issue a Maritime Labour Certificate, and will have to maintain
and to keep on board a Declaration of Maritime Labour Compliance –as
evidence of compliance with the requirements of the convention. The port
inspections will review the certificate and the declaration.
In other words, the flag state inspections and certification are to ensure that
the ships flying the flag of the State Member comply with the ILO MLC
2006, and the Port State inspections are part of international collaboration to
check if the foreign vessels calling at the port comply with the convention,
being the evidence of the DMLC and the Maritime Labour Certificate.
The inspections, for an easier implementation, are designed to be carried out

at the same time as the Safety Management Certificate. Furthermore, the
guidelines will make the system of inspection and certification of the
Convention are carried out in the different Member States in an harmonized
and standard way.
It is expected to enter in force in 2012, and the ratifying countries will have
protection against the non ratifying countries which may use substandard
ships to win advantage, thanks to the “no more favourable treatment
clause”. The ratifying countries will also benefit from certification system,
which will make it easier to carry out the inspections in foreign ports, and
consequently less time for the inspections will be needed.
Regarding the impact of the convention on the coverage of the P&I Clubs
regarding the crew, there are two issues to highlight:
• First, the shipowners will not have any other defence under the
convention than the wilful misconduct of the seafarer.
• Second, the financial security for the abandonment of seafarers that

will be required to shipowners, which the P&I Clubs do not cover at
the moment:
 right of direct action against the financial security provider

 the cost of repatriation and reasonable expenses incurred by
the seafarer from the time of abandonment until the time of
repatriation,
64
 outstanding wages and other contractual entitlements, limited
to a period of four months
Which documents will be acceptable by the Member States as financial

security? If finally the P&I clubs change their cover comply with all these
requirements, a copy of the ship´s certificate of entry may be an evidence;
but meanwhile, it is only a partial evidence.
As was stated above, the P&I coverage of the crew has been developed to
respond to the liabilities of the shipowner, on the basis of legal liability
derived of the approved contracts of employment or CBAs. having said that,
for a Seafarer, the knowledge that medical treatment on board is granted,
and if necessary that the seaman will be sent ashore (because a more serious
illness or injury), and that the cost are covered, gives confidence and peace
of mind.
The P&I club cover, regarding the crew:
• Damages or compensation for death, injury or illness

• Medical or funeral expenses
• Repatriation
• Crew substitutes
• Shipwreck unemployment indemnity
• Deviation expenses
• Loss of baggage and personal effects
Also, at discretion of the directors board, the P&I clubs can cover any
incident not named in the club rules (omnibus rule).
Normally the P&I club cover insurer the shipowner, but it may cover also a
crew member if he is targeted and the shipowner is vicariously liable for his
actions, or if benefit to the legal position of the shipowner.
So, the aim of the P&I clubs is to protect their members and indemnify them
for the losses that they suffer; in other words, the member must pay first to
be indemnified for his loss by the P&I club (pay to be paid rule). This
means that in the case of insolvency of the shipowner, the seafarers which
claims falls in the scope of the cover of the P&I club, will be left without
compensation, because they have action against the member, not against the
P&I club.
In England the situation was in that way until the Third Parties (Rights
Against Insurers) Act 1930; the purpose of this act was to protect the third
parties in case that they have action against the insured, and this one
becomes bankrupt. The way to make it was by subrogation: the third party
has the same rights as the insured against the insurer, and the insurer has the
same defences, with limitation on the excess of liability.
65
This Act stipulates as a condition that there must be a legal liability between
the parties (insurer  assured  third party); and it prohibit clauses that
make the contract void in case of insolvency of the assured.
The application of the 1930 Act regarding the P&I clubs was tested with
two cases: “The Fanti” and “the Padre Island”; the House of Lord finally
held that the clubs can rely in the “Pay to be paid” rule, inter alia, because
“an insured with a good defence against the assured has the same defence in
the case of the 1930 Act subrogation”.
The Third Parties (Rights Against Insurers) Act 2010 changed this, in the
claims related to loss of life or personal injury, and nowadays in English law
the “pay to be paid” rule is useless as a defence (in other cases not related to
loss of life or personal injury it is still a valid defence). This change in the
direct action against the clubs is part of the preparation for the
implementation of the MLC 2006, which as was mentioned above, will
leave the defences of the shipowner reduced to the wilful misconduct of the
seafarer.
Another issue that has been discussed, and that will be influenced by the
MLC 2006, is piracy, due to the potential danger to the seafarers physical
integrity, and the scope of the cover of the P&I clubs regarding the crew in
case of a pirate attack.
A priori, pirate attacks can produce quite a lot of the named risks covered by
the P&I clubs, as injury, illness or death of the seafarers, loss or damage to
their effects, substitution and repatriation.
However, the attack will fall out of the scope of the cover if the War Risk
Exclusion is applicable (terrorism, war weapons). Regarding the terrorism,
the question is if the attack has a political background.
The “weapons of war” are, basically, explosives like torpedoes and mines.
Here an interesting question is what will happen once the MLC 2006 enters
in to force. In principle it will affect the defences of the shipowners,
reducing their defence to the wilful misconduct of the seafarer, even in cases
of war and terrorism. Therefore the exclusion and the differentiation
between the terrorist and piracy, at least for the crew claims related with
injury, death, illness and repatriation, will be irrelevant.
Piracy attacks can lead to the hijacking of the vessel and the crew by the
pirates, in order to demand a ransom. The first issue to solve is if it is legal
or not to pay the ransom. In English law ransom pay is legal, as long as the
money is not used for terrorist purposes or the ransom payment complies
with the Money Laundering Legislation.
Normally the ransom is paid by the Hull insurance as Sue and Labour
expenditure, and when there is cargo on board, as General Average
expenditure. The Sue and Labour expenditure may be paid by the Club
66
under the omnibus rule, provided that it cannot be recovered under any other
source.
General Average is normally not covered by the club unless the contribution
of the cargo cannot be recovered.
The P&I clubs may contribute to the payment of the ransom if the insurers
cover piracy under the war risk policy; in this case, if the pirates use
“weapons of war”, the P&I war risk (which is a excess cover) will
contribute, up to USD 500 million in excess of the market value of the
vessel.
Anyway, the market insurance has an option for this problem: the Marine
Kidnap and Ransom Insurance (K&R), which covers the ransom payments
and the costs related.
Regarding the claims, a particular one can arise in the case of a pirate attack:
the post traumatic stress of the crew even when they are physically well
(that can also affect to the family of the seafarers), in case of entering the
area with high risk like the GoA, in facing the threat of pirate attack, and if
the ship is hijacked.
Harry Hirst stated that in English law the only defence for claims related
with the mental anguish that may arise from pirate attacks, is to exercise the
proper care in prepare the crew for the possibility of a pirate attack; this is,
follow the latest Best Management Practice and the recommendation, like
transit within the International Recognised Corridor, or register the ship in
the Maritime Security Centre of the Horn of Africa.
Certainly these kinds of measures decrease the risk of pirate attacks, but the
defence against a mental anguish claim will depend on the circumstances.
The post traumatic stress claims from the seafarers may be unavoidable
even to the most careful shipowner in case that nonetheless all the measures
taken, a pirate attack happens.
The possibility of the attack is why some shipowners contract security

personnel. This has advantages as it reduces the risk of the ship being
hijacked, but it increases the risk of injury to the crew and the damage to the
ship, and the foreseeable escalate of violence and weapons.
The UK legislation prohibits armed guards, and with unarmed guards the
P&I club cover is not prejudice.
The author agrees with the view of the IG P&I and of most states that the
fight against piracy with armed guards will lead to a worser situation, and
not only that; is a measure that do not solve the problem. The roots of the
piracy, in the case of the Somalia coast, come from inland, and it have
something in common with other piratical spots like the south of China or
south America: the problem of piracy is the lack of a strong authority able to
67
enforce the law. Therefore, the measures like armed guards are futile, with
counterproductive effects as have been mention.
Last but not least, from pirates attacks to seafarers to the criminalisation of
the seafarers. The criminalisation in case of pollution is another problem
that affects the seafarers. This trend has been develop after various accidents
like the Erika in France and the Prestige in Spain. The process developed
basically because after these accidents, the public opinion was asking for
responsibilities, and the politicians targeted the seafarers as scapegoats,
turning the criminal liability as it is states in the MARPOL (to be criminal,
the liability must derivate from a wilful act, and must produce a serious act
of pollution). This was changed with a Directive (known as “Criminalisation
Directive”); with its application, the requisite for the criminal liability was
“gross negligence”, a concept vague and not defined within its text.
Therefore the boundaries between civil negligence and criminal acts turn
blurred.
In the UK, where MARPOL applies strictly, a legal battled is being carried
out by (inter alia) Intertanko in the tribunals regarding the legality of the
Directive in its relation with MARPOL. The first battle was lost in the ECJ,
but there is the opinion to refer the same matter to the International Tribunal
of the Law Of the Sea.
Is this criminalisation of seafarers covered somehow by P&I clubs? Well,

P&I Clubs do not cover criminal liabilities, but they have the omnibus rule,
with which they could cover it, if the Board of Directors approves it.
Particularly for the Captains, the P&I clubs usually pay the fines when there
was no will in the offence.
A final thought related to the piracy and the criminalization: The shipping is
moving 90% of the world trade, so it is key piece of the international
commerce, and the seafarers are critical to the shipping industry. The
criminalization and the piracy are making the sea-going profession less
attractive, to not say dangerous, for the needed new generations.
This can be changed by the governments, starting with the review of the
criminalisation of the seafarers, and changing such measures for other more
positive from the perspective of effectiveness; in other words, the
criminalisation maybe calm the public opinion, and be useful for the
politicians to look like they are fighting the problem, but is not useful in the
prevention of the accidents resulting in pollution.
The argument in favour of the criminalization is well known: since that

seafarers (crew, captain..) can be punished with deprivation of liberty, they
will act as watchdogs of the compliance of the ships with the international
standards. his is completely unfair for the seafarers, who are bearing
criminal liability in cases that should lead only to civil liability, with the add
that this difference have as consequence the fall out of the scope of the
cover of the P&I Clubs.
68
The application of the four pillars of the shipping regulations, SOLAS,
MARPOL, STCW and the new ILO MLC 2006, will do much more in the
prevention of the accidents that the punishment of the seafarers in case of
accident as if they were criminals.
The piracy issue is more complex and difficult, because the problem came
from the lack of authorities to enforce the law, or in other cases, to the lack
of resources of the existing authorities to combat piracy.
The solutions will come from the creation of the government and authorities
in the places needed –like in Somalia-, and the assistance from the EU, USA
and the Industry to the local authorities with finance, logistic and training to
combat the piracy.
69
Supplement A
Fig.1
Source: International Group P&I Clubs Web Page
70
Supplement B
Cross-references Between Maritime Labour
Convention and UK legislation269
Regulation 1.1 Minimum age

Statutory Instruments
• 1991 No. 2144: The Merchant Shipping (Crew Agreements, Lists of Crew
and Discharge of Seamen) Regulations 1991
• 1995 No. 972: The Merchant Shipping (Employment of Young Persons)
Regulations 1995
• 2002- No. 2055: The Merchant Shipping (Medical Examination)
Regulations 2002
• 2004 No. 1469: The Merchant Shipping (Hours of Work) (Amendment)
Reg. 2004
• 2005 No. 1919: The Merchant Shipping (Medical Examination)
(Amendment) Regulations 2005
Merchant Shipping Act 1995 (c.21)
• 55: Young Persons
Regulation 1.2 Medical certificate
• 2002- No. 2055: The Merchant Shipping (Medical Examination)
Regulations 2002
• 2005 No. 1919: The Merchant Shipping (Medical Examination)
Regulation 1.3 Training and qualifications
Merchant Shipping Act 1995 (c. 21)

• 50: Production of certificates and other documents of qualification.
• 51: Crew’s knowledge of English.
• 127: Training in safety matters.
Regulation 1.4 Recruitment and placement

• 82: Maintenance of Merchant Navy Reserve
• 83: Supplementary provisions
Regulation 2.1 Seafarers’ employment agreements
269
American Bureau Of Shipping, Guidances Notes on the ILO Maritime Labour
Convention, 2006, May 2009 (updated October 2010)
71
• 1991 No. 2144: The Merchant Shipping (Crew Agreements, Lists of Crew
and Discharge of Seamen) Regulations 1991
• 1995 No. 972: The Merchant Shipping (Employment of Young Persons)
Regulations 1995
• 2006 No. 630: The Race Relations Code of Practice Relating to
Employment (Appointed Day) Order 2006
Regulation 2.2 Wages

• 30: Payment of seamen’s wages
• 31: Account of seaman’s wages
• 32: Regulations relating to wages and accounts
• 33: Power of superintendent or proper officer to decide disputes about
wages
• 34: Restriction on assignment of and charge upon wages
• 35: Power of court to award interest on wages due otherwise than under
crew agreement
• 36: Allotment notes
• 37: Right of person named in allotment to sue in own name
• 38: Right, or loss of right, to wages in certain circumstances
• 39: Protection of certain rights and remedies
• 40: Claims against seaman’s wages for maintenance, etc. of dependants
• 41: Remedies of master for remuneration, disbursements and liabilities
• 58: Conduct endangering ships, structures or individuals
• 59: Concerted disobedience and neglect of duty
• 61: Inquiry into fitness or conduct of officer
• 62: Disqualification of holder of certificate other than officer's
• 63: Inquiry into fitness or conduct of seaman other than officer
• 64: Re-hearing of and appeal from inquiries.
• 65: Rules as to inquiries and appeals
• 66: Failure to deliver cancelled or suspended certificate.
• 67: Power to restore certificate
• 68: Power to summon witness to inquiry into fitness or conduct of officer
or other seaman
• 69: Procedure where inquiry into fitness or conduct of officer or other
seaman is held by sheriff
• 70: Civil liability for absence without leave
• 71: Civil liability for smuggling
• 72: Civil liability for fines imposed under immigration laws
• 110: Payments of seamen’s wages
• 111: Regulations relating to wages: deductions
• 112: Accounts of wages and catch
• 113: Restriction on assignment of and charge upon wages
• 114: Right, or loss of right, to wages in certain circumstances
Regulation 2.3 Hours of work and hours of rest
72
• 2004 No. 1469: The Merchant Shipping (Hours of Work) (Amendment)
Regulations 2004
• 115, Hours of work
Regulation 2.4 Entitlement to leave

None identified at time of publication
Regulation 2.5 Repatriation

• Merchant Shipping Act 1995 (c. 21)
o 28, Seamen left behind abroad otherwise than on discharge
• Discharge of seamen when ship ceases to be registered in United Kingdom
o 73, Relief and return of seamen, etc., left behind and shipwrecked
o 74, Limit of employer’s liability under section 73
o 75, Recovery of expenses incurred for relief and return, etc.
o 76, Financial assistance in respect of crew relief costs
Regulation 2.7 Manning levels

• 47: Manning
• 48: Power to exempt from manning requirements
• 49: Prohibition of going to sea undermanned
Regulation 3.1 Accommodation and recreational facilities
• 1989 No. 102: The Merchant Shipping (Provisions and Water) Regulations
1989
• 2005 No. 1643: The Control of Noise at Work Regulations 2005
• 2006 No. 2739: The Control of Asbestos Regulations 2006
• 43: Crew accommodation
• 44: Complaints about provisions or water
• 85: Safety and health on ships
• 94: Meaning of “dangerously unsafe ship”
• 95: Power to detain dangerously unsafe ship
• 96: References of detention notices to arbitration
• 97: Compensation in connection with invalid detention of ship
• 98: Owner and master liable in respect of dangerously unsafe ship
Regulation 3.2 Food and catering
73
1989
Regulation 4.1 Medical care on board ship and ashore

• 1995 No. 1802: The Merchant Shipping and Fishing Vessels (Medical
Stores) Regulations 1995
• The Merchant Shipping (Maritime Labour Convention) (Medical
Certification) Regulations 2010
• 28: Seamen left behind abroad otherwise than on discharge
• 29: Discharge of seamen when ship ceases to be registered in United
Kingdom
• 45: Expenses of medical and other treatment during voyage
• 53: Medical treatment on board ship
Regulation 4.2 Shipowner’s liability

• Merchant Shipping Act 1995 (c. 21)
• 45, Expenses of medical and other treatment during voyage
• 53, Medical treatment on board ship
• 55, Young persons
Regulation 4.3 Health and safety protection and accident

prevention
• 1988 No. 1638: The Merchant Shipping (Entry into Dangerous Spaces)
Regulations 1988
• 1988 No. 2274: The Merchant Shipping (Safety at Work Regulations)
(Non-UK Ships) Regulations 1988
• 2001 No. 54: The Merchant Shipping and Fishing Vessels (Health and
Safety at Work) (Amendment) Regulations 2001
• 2005 No. 1643: The Control of Noise at Work Regulations 2005
• 2006 No. 2183: The Merchant Shipping and Fishing Vessels (Provision
and Use of Work Equipment) Regulations 2006
• 2006 No. 2184: The Merchant Shipping and Fishing Vessels (Lifting
Operations and Lifting Equipment) Regulations 2006
• 2006 No. 2739: The Control of Asbestos Regulations 2006
• 42: Obligation of shipowners as to seaworthiness
• 85: Safety and health on ships
• 86: Provisions supplementary to section 85: general
• 87: Provisions supplementary to section 85: dangerous goods
• 88: Safety of submersible and supporting apparatus
74
• 127: Training in safety matters
• 267: Investigation of marine accidents
• 268: Formal investigation into marine accidents
• 269: Re-hearing of and appeal from investigations
• 270: Rules as to investigations and appeals
• 271: Inquiries into deaths of crew members and others
• 272: Reports of and inquiries into injuries
• 273: Transmission of particulars of certain deaths on ships
Regulation 4.5 Social security

• Old Age, Disability, and Survivors
• Consolidated Legislation, 1992
• Pension, 1995
• Welfare Reform and Pensions, 1999
• Child support, pension, and social security, 2000
• Sickness and Maternity
• National Health Service, 1977
• Incapacity Benefit, 1994
• Welfare Reform and Pensions, 1999
• Work Injury, Consolidated Legislation, 1992
• Unemployment, Jobseekers, 1995
• Family Allowances
• Tax Credits, 2002
Regulation 5.1.1 General principles
• 2003, No. 1636, The Merchant Shipping (Port State Control)
• Part X, Enforcement Officers and Powers
Regulation 5.1.5 Flag State responsibilities – On-board

complaint Procedures
1989
• 2003 No. 1636: The Merchant Shipping (Port State Control) (Amendment)
Regulations 2003
• 37: Right of person named in allotment to sue in own name
75
Bibliography
BOOKS
Anderson, Phil, P&I Clubs and Mutual Insurance, Module 3 of the

Postgraduate Diploma in Marine Insurance 2007-2008 (LM1901), World
Maritime University and Lloyds Maritime Academy, Informa UK
Limited., London, 2007.
BMP3 June 2010, Witherby Seamanship International Ltd
Britannia Rule Book class 3, 2011
Deirdre Fitzpatrick and Michael Anderson, Seafarer´s Rights, Oxford

University Press, USA, April 7, 2005.
Gold, Edgar, Gard Handook on P&I insurance, 5th ed.,

Assuranceforeningen Gard-gjensidig, Arendal, Norway, 2002
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Malcolm Maclachlan, The shipmaster´s bussines companion, 4th ed. The

Nautical Institut, London 2004
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ARTICLES
Chris Spencer and Davis Tilsley, The Maritime Labour Convention 2006
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June 2010, online at www.mablaw.com/2010/06/3778/ (last visit
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available online at the International Maritime Pilot Association website
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with regard to compensation in cases of personal injury, death and
abandonment, IMO/ILO/WGLCCS 7/2/7, 7th session 25 january 2008
76
ILO, Article: Achieving the seafarers’ international bill of rights: more than
half way there! Geneva (ILO Online) 23/02/2009, online at: www.ilo.org
(last visit 14/05/2011).
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Comprehensive rights and protection at work, UK P&I Club
Jonathan Bruce, Who pays the bill for piracy? 23-03-2009, Maritime Risk
Internationational, Vol 23 No 2, online at: www.i-law.com (last visit
13/05/2011)
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Filling a Gap in the Law of the Sea, Thursday, 07 April 2011, MEPIELAN
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55&Article=The-ILO (last visit 14/05/2011).
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Maritime Security Review, online at:
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perspective. Journal of International Maritime Law, 2006, VOL 12; ISSU 5,
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IBC Conference, March 2002, online at :
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(last visit 13/05/2011).
SEMINARS AND PRESENTATIONS
Collins William, P&I cover for crew followins and accident, presentation of
the Steamship Insurance Management Limited, in the Conference for the
“year of the Seafarer” for the World Maritime Day held in Vancouver in
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healthandsafety/maritime_labour_convention_2006/maritime_labour_conve
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seafarers: looking for the crew, available at The Nautical Institute, Hong
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communities (definition of treaties) (maritime labour convention ) order
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80

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FACULTY OF LAW

Jose Manuel Correro Martin

The seafarer´s rights and P&I

Master´s Programme in Maritime Law

2 ABOUT THE P&I CLUBS 6

3 LAW AND P&I COVER REGARDING THE CREW IN UK 15

4 CREW CLAIMS AND DIRECT ACTIONS AGAINST P&I

5 THE MARITIME LABOUR CONVENTION 2006 32

6 PIRACY, CREW AND P&I CLUBS 51

8 ANALYSIS AND CONCLUSION 63

In order to have a comprehensive view of the relation between the seafarer’s

• The Common Law liability and negligence in the UK; the

• Direct action against the P&I Clubs in the UK in case of crew

• Criminalization of the seafarers; the reasons of this trend and the

The focus will be on English Seafarers on board English registered ships.

Each Group club is an independent, non-profit making mutual insurance

Clubs cover a wide range of liabilities including personal injury to crew,

Finally yet importantly, the criminalization of the seafarers will be

1.3 Method and material

The eighth chapter are the analysis and conclusion.

• In a situation of monopoly, the insurers have a strong position that

When in 1810 the monopoly was removed, the operators began to be

• the insurance market allowed to the good operators to have better

“…the carrier is not responsible for any loss or damage to

However, this situation was changed by The Westenhope 15 case in 1870. In

2.2 What is a P&I club and how it work?

• It is an association of shipowners and charterers and other associated

• The formulation of the underwriting policy of the club,

• Independent professional managers who charge a fee for their

The managers and their representatives employ a staff of underwriters,

2.2.2 The Scope of the cover

• The Civil Liability Convention (1969 and 1992)

(A) In respect of the Member’s interest in an Entered Ship; and

”A typical P&I Club provide indemnity insurance in respect of a member’s

1. Collisions and non contact damage

2.2.3 P&I club reinsurance and the International

The International Pool Agreement: 38

The Pooling Agreement and the International Group’s reinsurance

A chart of the reinsurance structure is shown at the Supplement A (see

2.2.3.2 The representative function of the International

It carries out this function in relation to, and liaises with: 44

• inter-governmental bodies such as IMO, UNCITRAL and OECD

There are thirteen separate and independent principal clubs in the

• American Steamship Owners Mutual Protection and Indemnity

The importance of the UK in the shipping industry, in its different branches

• Contracts, CBAs and articles

• If the seafarer uses the contract, normally is enough to demonstrate

Negligence is the omission to do something which a reasonable man, guided

The duty of care is the first of the three elements of negligence:

1. A duty of care, and the breach of that duty

3.2 Contractual liability

Collective Bargaining Agreements are negotiated between a shipowner and

In the UK, the statutory provisions regarding Seafarers and Masters on UK

• Merchant Shipping Notice (MSN): mandatory information that must

There is a standard Crew Agreement produced by the MCA, which fulfils

The crew agreement must include: 69

• a description of the ship and its owners

• minimum terms of employment

The MCA produced a draft proposal of Seafarers Employment Agreement,