PAL Convention (Maritime Law)

Introduction A Conference, convened in Athens in 1974, adopted the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974. The Convention is designed to consolidate and harmonize two earlier Brussels conventions dealing with passengers and luggage and adopted in 1961 and 1967 respectively.

The Convention establishes a regime of liability for damage suffered by passengers carried on a seagoing vessel. It declares a carrier liable for damage or loss suffered by a passenger if the incident causing the damage occurred in the course of the carriage and was due to the fault or neglect of the carrier.

However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledge that such damage would probably result, he can limit his liability. For the death of, or personal injury to, a passenger, this limit of liability is set at 46,666 Special Drawing Rights (SDR) (about US$61,000) per carriage. The 2002 Protocol, when it enters into force, will substantially raise those limits.

As far as loss of or damage to luggage is concerned, the carrier's limit of liability varies, depending on whether the loss or damage occurred in respect of cabin luggage, of a vehicle and/or luggage carried in or on it, or in respect of other luggage.

The 2002 Protocol

Adoption: 1 November 2002

Entry into force: 24th April 2014

The Protocol introduces compulsory insurance to cover passengers on ships and raises the limits of liability. It also introduces other mechanisms to assist passengers in obtaining compensation, based on well-accepted principles applied in existing liability and compensation regimes dealing with environmental pollution. These include replacing the fault-based liability system with a strict liability system for shipping related incidents, backed by the requirement that the carrier take out compulsory insurance to cover these potential claims.

The limits contained in the Protocol set a maximum limit, empowering - but not obliging - national courts to compensate for death, injury or damage up to these limits.

The Protocol also includes an "opt-out" clause, enabling State Parties to retain or introduce higher limits of liability (or unlimited liability) in the case of carriers who are subject to the jurisdiction of their courts.

Compulsory insurance

A new Article 4b of the Convention requires carriers to maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution, to cover the limits for strict liability under the Convention in respect of the death of and personal injury to passengers.

The limit of the compulsory insurance or other financial security shall not be less than 250,000 Special Drawing Rights (SDR) (about US$325,000) per passenger on each distinct occasion. Ships are to be issued with a certificate attesting that insurance or other financial security is in force and a model certificate is attached to the Protocol in an Annex.

Limits of liability

The limits of liability have been raised significantly under the Protocol, to reflect present day conditions and the mechanism for raising limits in the future has been made easier.

The liability of the carrier for the death of or personal injury to a passenger is limited to 250,000 SDR (about US$325,000) per passenger on each distinct occasion.

The carrier is liable, unless the carrier proves that the incident resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character; or was wholly caused by an act or omission done with the intent to cause the incident by a third party.

If the loss exceeds the limit, the carrier is further liable - up to a limit of 400,000 SDR (about US$524,000) per passenger on each distinct occasion - unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier.

Loss of or damage to luggage and vehicles - The liability of the carrier for the loss of or damage to cabin luggage is limited to 2,250 SDR (about US$2,925) per passenger, per carriage.

- Liability of the carrier for the loss of or damage to vehicles including all luggages carried in or on the vehicle is limited to12, 700 SDR (about US$16,250) per vehicle, per carriage.

- Liability of the carrier for the loss of or damage to other luggage is limited to 3,375 SDR (about US$4,390) per passenger, per carriage.

- The carrier and the passenger may agree that the liability of the carrier shall be subject to a deductible not exceeding 330 SDR in the case of damage to a vehicle and not exceeding 149 (about US$220) SDR per passenger in the case of loss of or damage to other luggage, such sum to be deducted from the loss or damage.