The recent decision by the Court of Appeal in the case of Begum v Maran (UK) Limited has shown that there are developing areas of liability for ship owners when selling a vessel for scrapping or recycling and, in particular, when harm has been caused by a third party after the vessel has been sold. The decision in this case separately reiterates important issues relating to foreign time bars, which prevent the bringing of an entire claim.
An English company acting as a managing agent to the operators of a tanker arranged for the tanker to be sold to a buyer for demolition. The demolition was to take place in a ship yard in Bangladesh, which was allegedly notorious for its low regard for the safety of its workers. The agent had the option to sell the tanker for a lower price where the tanker would have been sent to a reputable ship yard, but the agent elected for the higher purchase price and the vessel, as a result, was sent to Bangladesh. Whilst demolishing the tanker, a worker fell from a height and died from his injuries. The deceased’s widow is attempting to bring a claim against the agent for her husband’s death under English law, alleging that the agent owes a duty of care to the workers.
The agent applied for summary judgment or for the claim to be ‘struck out’ on the basis that the claim was fanciful and had no real prospects of success. The agent argued that it had no control over the tanker, the shipyard or its workers after the tanker was sold and it, therefore, could not be responsible for the death. The application in the first instance was denied but this decision was recently reconsidered in the Court of Appeal.
The Court of Appeal also refused the application for the claim to be ‘struck out’ because it found that there is a prospect of success, however miniscule, in the widow’s argument that the agent was responsible for a dangerous situation arising by allowing the tanker to be sold to a buyer at a higher price; in other words, the claim by the widow was not completely fanciful. However, the court did acknowledge that this claim would face ‘formidable hurdles’.
This decision is of concern to ship owners because it means that owners could be potentially held liable in a situation where harm is caused by a third party over which the owner has no control and that harm takes place after the ship has been sold. The general rule in negligence is that a person/entity is not liable for loss or harm caused by a third party. In this case, however, the judge stated in the ruling that a claim cannot be struck out where the law is on the edge of development and that this is ‘one of the most fast-developing areas of the law of negligence at present’. The judgment shows this area of law is evolving and that ship owners should, therefore, now be cautious and aware of these potential liabilities.
In this case, the Court of Appeal also considered whether the Bangladeshi one year limitation period should be dis-applied as contrary to public policy. This is a limitation period which prevents the widow from bringing the claim as one year has lapsed since the incident. The court determined that the time bar should not be dis-applied in this instance because, even though the limitation period of one year may be less generous than the English limitation period, it does not mean that it is contrary to a ‘fundamental principle of justice’ – this is the test for public policy and a high threshold to overcome. However, the widow is alleging that the one year limitation period will result in ‘undue hardship’ for her. The matter has, accordingly, now been referred for trial in the Queen’s Bench Division to consider if ‘undue hardship’ will result from the application of the Bangladeshi limitation period: another difficult hurdle for the claim to overcome.
This decision demonstrates and re-iterates that where there is a foreign law element within a claim, that element - including any foreign limitation period - cannot simply be disregarded; there is a high threshold to dis-apply a short foreign law limitation period, especially when seeking to rely on it as contrary to public policy.
This article has been co-written with Remie Grice, a trainee solicitor in the shipping team.