SRI Annual Review 2013 - Personal injuries and deaths of seafarers

Seeking compensation – challenges

If injured or killed, then seafarers or their dependents may have to embark on often lengthy and complex litigation to seek compensation. There are unique aspects of the working lives of seafarers that place them at a great disadvantage in their ability to obtain proper compensation. An example of this is the perpetuity of movement from one jurisdiction to another. Any accident is likely to involve more than one jurisdiction – including the flag law, the law of the place of the accident, and/or the law governing the seafarer’s contract. The difficulties therefore of establishing where and when to sue, if necessary to do so, mean that access to justice can be denied by a series of legal doctrines and principles such as limited liability, periods of limitation, forum non conveniens and other forms of declining jurisdiction. In this complex setting, P&I insurers can actively participate (through the use of representatives and lawyers worldwide) at an early stage to prevent claims being pursued or they could attempt to settle claims at less than the legal entitlement of the claimant. If the seafarer is unable to afford a lawyer, or there is no longer any income because the seafarer is injured or deceased, such tactics might prevail.

Another challenge is that national schemes for compensating injuries and death vary widely. Some countries deal with the issue through social security schemes and/or workers’ compensation schemes; in other countries, this is covered by employment contracts or collective agreements negotiated by the unions; and in addition, national legislation in some countries provides for remedies in tort and for negligence. The value of a claim therefore can vary widely depending on the circumstance of the injury or death, and also depending on where a claim is pursued.

P&I coverage

In this context the question of insurance is critical. The vast majority of the world's merchant shipping is covered by P&I insurance. However historically, there was no obligation on a shipowner to insure himself against the risk of personal injury or death of a seafarer. Whilst injury and death are classified as insurable risks and all related expenses – including repatriation resulting from these events – are thus insurable, it was not uncommon to find P&I policies that specifically excluded cover for those risks. Such exclusion may be requested by the shipowner or may be based on a poor claims record by a member in previous years of coverage which would affect the underwriting information used in the setting of a member’s P&I calls. This exclusion will be unknown to the seafarer.

The guarantees provided under P&I cover were thus limited in three respects: the scope of the coverage itself; the privity between the insurer and the insured party (the insured is the shipowner, not the seafarer); and the ‘pay to be paid’ mutualist principle according to which the P&I Club reimburses claims which the shipowner has already settled. This last point clearly poses a problem as concerns the insolvent ship owner, who is unable to pay the claims in the first place, and for the seafarer – who has no recourse to the insurer other than through the shipowner.

If a shipowner operates without insurance or other form of financial security, then given the structure of the ownership of most vessels, the prospect of recovering proper compensation is very limited.

MLC 2006

Here MLC 2006 has stepped in and there now exists an obligation on Member States to ensure that ship owners 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.’ This is in the context of the overall purpose of the Regulation 4.2 ‘[t]o ensure that seafarers are protected from the financial consequences of sickness, injury or death occurring in connection with their employment.’

The subject of liability and compensation regarding claims for death and personal injury of seafarers is also on the agenda of the first meeting of the Special Tripartite Committee in April 2014. In particular, the meeting will discuss arrangements for financial security as proposed by the 9th session of the Joint IMO/ILO Ad Hoc Expert Working Group on Liability and Compensation regarding Claims for Death, Personal Injury and Abandonment of Seafarers. Those proposals include issues such as:

That contractual compensation shall be paid in full and without delay;

That there shall be no pressure to accept a payment less than the contractual amount;

That where the nature of the long-term disability of a seafarer makes it difficult to assess the full compensation to which the seafarer may be entitled, an interim payment or payments shall be made to the seafarer so as to avoid undue hardship;

That the seafarer shall receive payment without prejudice to other legal rights, but such payment may be offset by the ship owner against any damages resulting from any other claim made by the seafarer against the ship owner and arising from the same incident;

That the claim for contractual compensation may be brought directly by the seafarer concerned, or their next of kin, or a representative of the seafarer or designated beneficiary;

That seafarers shall receive prior notification if a ship owner’s financial security is to be cancelled and be notified immediately if it is not to be renewed;

That documentary evidence of financial security, in English or accompanied by an English translation, should be posted in a prominent position in the seafarers’ accommodation.

These proposals, if agreed, should shore up the precarious position the seafarer and his dependents are currently in. However they deal with contractual compensation only, and if the seafarer is in an unequal bargaining position with the ship owner in the first instance, and perhaps does not have the benefit of a collective agreement negotiated by a trade union, then the contract may not contain adequate provisions to support him or his family in the event of an accident. Thus many of the challenges for seafarers around this area remain and work needs to continue until all seafarers can have some reassurances if they lose their livelihood in a work related injury, or their lives in a work related death.

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Source: Seafarers Right

07 July 2014
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