Merchant Shipping (Convention Relating to the Carriage of Passengers and their Luggage by Sea) Order 2014

Baroness Kramer Excerpts

Wednesday 7th May 2014 Grand Committee

Moved by

[Baroness Kramer]

That the Grand Committee do consider the draft Merchant Shipping (Convention Relating to the Carriage of Passengers and their Luggage by Sea) Order 2014.

Relevant document: 25th Report from the Joint Committee on Statutory Instruments.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, before I turn to the detail of the draft Privy Council order, I would just like to say that it is not often that I get the opportunity to debate a maritime matter, and I thank those noble Lords who are taking part.

The United Kingdom, which is surrounded by some of the world’s busiest shipping lanes, is particularly vulnerable to the consequences of maritime casualties. Thankfully, such instances are rare, particularly those involving passenger ships. However, we need only look at the terrible tragedies elsewhere in the world involving the cruise ship “Costa Concordia”, and more recently the South Korean ferry “Sewol”, to remind us that we can never be complacent.

Through this order, we are seeking to amend the Merchant Shipping Act 1995 to reflect the UK’s ratification of the International Maritime Organisation’s protocol of 2002 to the 1974 Athens convention relating to the carriage of passengers and their luggage by sea. This modernises and significantly strengthens the international framework for providing compensation in the event of death or personal injury to a passenger, or the loss of or damage to luggage, when travelling by sea.

The 2002 Athens protocol, which entered into force internationally on 23 April 2014, increases the limits of liability that currently exist for carriers of passengers under the 1974 Athens convention up to 400,000 special drawing rights, which is the virtual currency used by the International Monetary Fund. As of 24 April 2014, one special drawing right is equal to approximately 92p. The 2002 Athens protocol also requires carriers to maintain compulsory insurance of not less than 250,000 SDRs per passenger on a strict liability basis, and this insurance is to be evidenced by a certificate from a state party. It also provides claimants with the right of taking direct action against the insurer.

UK ratification will actually have very little practical effect on UK ship owners. This is because the key provisions of the 2002 Athens protocol have already been introduced into EU law. EU Regulation 392/2009, which entered into force on 31 December 2012, was implemented in the UK by means of the Merchant Shipping (Carriage of Passengers by Sea) Regulations 2012. Nevertheless, further government intervention is now necessary to ensure that UK-flagged passenger vessels can be issued with the correct state certification attesting that they have the necessary insurance in place at international level to meet their obligations under the 2002 Athens protocol when travelling on international, as opposed to EU, journeys.

In addition, the order will also enable the 2002 Athens protocol to be extended to the overseas territories and Crown dependencies, should they so wish it, which, if they chose to do so, would enhance the protection that is available to passengers travelling on board vessels that are flagged to those territories when travelling on international journeys.

In keeping with the responses received during public consultation, the order also preserves the existing arrangements for domestic journeys. This means that the original 1974 Athens convention, along with a limit of liability which has been progressively raised to 300,000 SDRs for those ship owners whose principal place of business is in the UK, will continue to apply to the carriage of passengers within the UK, the Channel Islands and the Isle of Man.

This order also presents us with an opportunity to revoke some related domestic legislation—Carriage of Passengers and their Luggage by Sea (Interim Provisions) Order 1980. This is an enabling power and applies only to contracts for domestic carriage made before 30 April 1987, so it no longer has any practical effect. It was identified as being completely redundant under the maritime theme of the Red Tape Challenge—an initiative that I sure many noble Lords will be familiar with.

Finally, some noble Lords may have already spotted that there is no review provision in this order. This is not an oversight; there is simply no power to incorporate such a provision here. Nevertheless, I can assure noble Lords that the Secretary of State for Transport will carry out a review, and will publish the conclusions of that review, every five years. The first such report will be published before 23 April 2019. I commend the order to the Committee and beg to move.

--- Later in debate ---

[Lord Rosser (Lab)]

My Lords, I am in the same position as the Minister. Debates on maritime matters are all too rare. I do not think the Minister was expressing the view that she is a particular expert in this field, and I would certainly not claim to be. That may become horribly evident in the contribution I have to make.

As the Minister said, this order amends the Merchant Shipping Act 1995 in the light of our ratification of the International Maritime Organisation’s 2002 protocol to the Athens Convention 1974 relating to the carriage of passengers and their luggage by sea. Ratifying the 2002 protocol ensures that UK-flagged passenger vessels can be issued with correct international certification and enables the protocol to be extended to the overseas territories and Crown dependencies, should they so wish. When the order was discussed in the other place a question was asked about what the Government’s accountability and jurisdiction would be if ships that are not UK-based, but are part of the Red Ensign group, chose to opt into these rules. It would be helpful if the Minister could clarify that point.

As the Minister said, the key provisions of the protocol have already been introduced into EU law—I think from the end of 2012—and implemented by the UK, but this order is needed to ratify the protocol, which came into force internationally on 23 April and incorporates the international elements. The 2002 protocol applies to international carriage only, but the order ensures the application of the Athens convention to domestic journeys within the UK, the Channel Islands and the Isle of Man. The 2002 protocol increases the liability limits for carriers that have been applicable in the event of accidents involving loss of life or personal injury and also requires carriers to maintain compulsory insurance on a strict liability basis, as well as providing claimants with the right to take direct action against the insurer. Under the order, the new limit of liability is, I think, the 400,000 special drawing rights. The Minister said that a special drawing right is currently equal to approximately 92 pence. It certainly fluctuates marginally since earlier in the year when it was being debated in the House of Commons the figure was given as approximately 93 pence.

The Government have also said that the further policy objective of the order is to revoke some redundant legislation. It would be helpful if the Minister could spell out which legislation is being revoked, bearing in mind that the Government’s objective appears to be that, for every new order introduced, two should be revoked. I am not clear what the two orders are that are being revoked.

The Explanatory Memorandum states in paragraph 10 that, although,

“external stakeholders were invited to contribute to the IA, the available evidence base continues to have a number of limitations”.

It then goes on to say:

“Given the significant uncertainties surrounding the impacts of this measure”,

relating to,

“the number of Overseas Territories and Crown Dependencies that … choose to ratify the … Protocol … and the limitations of the available evidence base, it has not been possible to monetise any of the costs and benefits in this IA”.

At least, that is my understanding of what it says. Yet when the order was discussed in the other place, the Minister described it as “short and highly technical”. I have always construed the reference to “highly technical” to mean “incomprehensible”. He said that not least because the,

“key provisions of the 2002 protocol have already been introduced into European Union law … and … implemented in the UK”.

The Minister in the other place said that the order therefore had,

“little practical effect on UK shipowners”.—[Official Report, Commons, Second Delegated Legislation Committee, 30/4/14; col. 3.]

I simply ask which is the correct version—that the order is short and highly technical with little practical effect on UK ship owners, as per the Minister in the House of Commons, or that, due to the significant uncertainties surrounding the impacts of the measure and the limitations of the available evidence base, as per the Explanatory Memorandum, monetising any of the costs and benefits of the order in the impact assessment is not possible and, by inference, would represent something of a voyage of discovery. Perhaps the Minister could indicate which horse of those alternatives she is backing, or, alternatively, say why what would appear to be two somewhat different views on the clarity and scope of this order are in fact saying precisely the same thing.

A further issue raised in the House of Commons was about the ships to which this order applies. In his response, the Government Minister said that,

“the classification of ships is determined by the area in which they operate and not necessarily the gross tonnage”.—[Official Report, Commons, Second Delegated Legislation Committee, 30/4/14; col. 8.]

However, because he was unable at that particular moment to give a definition of classification A and B vessels as referred to in the impact assessment, he undertook to write to the Committee. Can the Minister here provide that information and say whether the provisions of this order might be extended to other classes of ships?

A further question raised in the other place was about what steps the department was taking to ensure that information about the impact of the order was made available to ship owners and their passengers and customers. It would be helpful if the Minister could say what is happening on that issue. Of course, the answer to that may depend on whether she agrees with the Minister in the House of Commons that it is short and technical with little practical impact or with the Explanatory Memorandum, which appears to suggest otherwise. Finally, the Minister in the other place said that he was concerned to reduce the costs of the legislation around sulphur for UK shipping and, in particular, for the UK ferry industry. He went on to say that he had,

“asked the IMO to undertake an early review of the 2020 regulations”.—[Official Report, Commons, Second Delegated Legislation Committee, 30/4/14; col. 8.]

What exactly are the Government pressing for in that review?

We welcome the objectives of this order but would appreciate responses to the points to which I have referred.

[Baroness Kramer]

My Lords, I thank the noble Lord, Lord Greenway, for his reminder that we must not be complacent on this issue. As he says, the British shipping industry has an excellent safety record that is to be valued, but we must ensure that we continue to keep that record, as complacency would be dangerous. It is important to us to maintain that position in the global marketplace and our reputation for maritime excellence, as well as recognise our obligations to people who travel by sea.

I shall try to address the questions raised by the noble Lord, Lord Rosser, although I am not sure that I will satisfy him, given that the Minister in the other place did not. If there continue to be gaps, we will definitely follow up in writing but I will do my best to attempt to answer in an area which, as he is well aware, is certainly not one in which I would claim expertise. First, the noble Lord referred to the overseas territories and Crown dependencies and asked for a somewhat fuller answer, if I understood him correctly, on how we would enforce that protocol within that context if they opted to become signatories. He will know that the UK—as a signatory to international conventions on shipping-related matters—is bound to make sure that it gives effect to any changes under the conventions. It would therefore have a responsibility to ensure that any signatories among the overseas territories and Crown dependencies were followed through; failure to do so would constitute a breach of our international obligations under these conventions. I hope that adds significantly to the comments made by my honourable friend in the other place. We have obviously been encouraging these territories and Crown dependencies to sign up, so it is clearly good for travellers if they do so.

On revoking legislation, I believe I covered that in my opening speech. The Carriage of Passengers and their Luggage by Sea (Interim Provisions) Order 1980 seems to be almost unusual in that nobody thinks it has any practical effect any more. Therefore, removing it from the books strikes me as extremely appropriate. If I understood the question of the noble Lord, Lord Rosser, he was saying that there was a sort of “one in, two out” relationship. I have no idea what the “one” is or what the pairing “two out” was, but I think that he would support the idea that anything that was completely redundant was best off the books, rather than providing a complication.

[Lord Rosser]

I certainly share that view—there is no point keeping something on the books that is completely redundant—but I was looking at what the Minister said in the Commons:

“I am pleased to say that the Department for Transport, as its contribution to the red tape challenge, met its commitments on one in, one out. It is now meeting its commitments on one in, two out as well”.—[Official Report, Commons, Second Delegated Legislation Committee, 30/4/14; col. 8.]

It was in light of the Minister’s comment in the House of Commons that I was asking what the two were that were being removed now that this one was coming in.

[Baroness Kramer]

I am sure that the department would be delighted to write to him, as I will, with our successes in removing unnecessary and problematic regulation. We would be delighted to follow up on that issue but, standing at the Dispatch Box today, I cannot tell him that I know the answer.

The noble Lord then asked a question—he will help me if I am not fully understanding this—as to whether this was a piece of legislation that had no practical impact, or a piece of legislation that had important impact and looked at two areas of discussion. This is a piece of legislation that would have been significantly important had not the EU already enacted its provisions. Looking at the SI today, it is fair to say that it does not have a big practical impact because that was achieved back in 2012, when the EU protocol, which incorporates a directive including these provisions, came into force. It is important that the levels of compensation have been raised for passengers who may be in the appalling situation of being injured—potentially even killed—or having damage to their luggage. That is entirely appropriate. The protocol is necessary because there must be some containment of liability or else insurers will not be willing to step up to the plate. In that case, we would see a dramatic diminution in passenger sea transport. Raising that limit has been important, and the fact that it is an international protocol also matters, certainly to British passengers who do not necessarily travel only on UK-flagged vessels. It has been an important piece of legislation.

[Lord Rosser]

We did say at the end that we welcomed the objectives of the order, so we are not in any argument about what the order is seeking to achieve. Our point was just about what appeared to be the rather different view of the Minister in the Commons—who considered the order to be short, technical and with no impact on UK shipping—and paragraph 10 of the Explanatory Memorandum, which says that the,

“available evidence base continues to have a number of limitations…significant uncertainties surrounding the impacts of this measure…it has not been possible to monetise any of the costs and benefits in this IA”.

Clearly, as far as the author of this document is concerned, it is an issue of some significance. If it were not, why are those words in there?

[Baroness Kramer]

Frankly, in a sense, I am with the Minister, but if one is writing a technical document one does it against very technical standards. If you went out and described to a member of the public the increase from only 40,000 SDRs—I think that was the original figure—to the current 400,000, they would see that as a significant and important change. The technical language used by those who follow a very technical process of assessment may be somewhat different. As a very effective politician with a good history, the noble Lord will appreciate that issue. I do not have a problem with the difference. If his question was on whether we have consulted people to ensure that they consider the impact is appropriate, I should say that there was extensive consultation in 2012. Given that the practical effect of this SI is to extend the international scope rather than the EU scope, the noble Lord will understand that we did not need to repeat that consultation. He will know that this is a very widely supported measure.

The noble Lord asked about class A and class B domestic vessels. As he will know, domestic vessels are defined by the areas of the sea in which they operate. Class B ships are passenger ships engaged on domestic voyages where they are at no point more than 20 miles from the line of the coast. Ships falling within the description of class A are those on domestic voyages operating at greater distances from the coast. Under the EU protocol, I believe that class A will come under these same provisions in 2016 and class B in 2018, but through the mechanism of the EU.

[Lord Rosser]

Is there any intention to extend this to any other groups of vessel?

[Baroness Kramer]

The UK had already raised its limits to 300,000 SDRs for domestic sea travel. I think that the noble Lord, Lord Greenway, referred to this. When the relevant statutory instruments are brought in to deal with those changes for 2016 and 2018, it may well be appropriate to look more broadly at the entire domestic environment. However, at this moment in time, awards are not pushing up anywhere near to the limits provided under the current arrangements and it seemed tidier to deal with the domestic situation within a similar timeframe.

I am trying to ensure that I do not go over time but an issue was raised about communication. As the noble Lord will remember, extensive consultation took place in 2012. Those conversations continue on a regular basis with the Chamber of Shipping and all the various interested parties, so there is no concern that appropriate bodies will not be aware of the relevant provisions.

[Lord Rosser]

Do the interested parties cover passengers and customers?

[Baroness Kramer]

I was trying to look that up because I remember that a fairly substantial answer was given on it in the other place. However, I will come back to the noble Lord on precisely how we are informing consumers of their rights because I have to confess that it has slipped my mind at the moment.

Questions were asked about the ferry industry and the early review of the 2020 regulations. I will obtain more detail on that issue for the noble Lord, if it is available. However, a review tends to be reasonably broad ranging—that is why it is a review. Presumably, it will cover the appropriateness of the regulations and their practicality in a modern environment. I hope that I have covered those issues adequately. If there are any outstanding issues, I will be glad to follow them up in writing. I commend the order to the Committee.

Motion agreed.