COMMUNICATION FROM THE COMMISSION on the enhanced safety of passenger ships in the Community

1. general introduction

In this Communication, the Commission proposes a set of measures aiming at improving the existing Community legislation on the safety of passenger ships, in line with policy objectives outlined in the Commission's White Paper on Transport Policy. [1] The measures proposed in the present communication include a proposal on specific stability requirements for ro-ro passenger ferries and a revision of Directive 98/18/EC on safety rules and standards for passenger ships. It also presents the Commission's line of thinking in relation to the liability regime for carriers of passengers by sea and the on-going revision of the IMO Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974.

[1] White Paper European transport policy for 2010: time to decide COM(2001)370 of 12/09/2001. The priorities outlined in this document include the constant improvements of shipping safety, improvements to the transport of citizens and their rights as passengers in the different transport modes.

In the 1993 Communication on a common policy on safe seas, [2] the Commission highlighted the need for a number of measures to improve and to harmonise the safety regime which applies to passenger vessels. A series of tragic accidents involving passenger ships in EU waters further emphasised the need to take measures in this area. [3] Within a time span of only a few years the Community undertook a major reinforcement of its legislation on safety of passenger vessels. In particular, four new Community instruments were introduced in order to ensure equal safety standards on all passenger ships in the Community [4], particular requirements on ro-ro ferry services [5], better information about passengers travelling on board passenger ships [6] and an early implementation of the ISM Code on passenger ships. [7]

[2] Commission Communication for a common policy on maritime safety COM(93)66 of 24.2.1993.

[3] See e.g. Council Resolution of 22 December 1994 on the safety of ro-ro passenger ferries, OJ C 379 of 31.12.1994.

[4] Council Directive 98/18/EC, of 17 March 1998, on safety rules and standards for passenger ships, OJ L 144 of 15.5.1998, p.1.

[5] Council Directive 1999/35/EC of 29 April 1999 on a system of mandatory surveys for the safe operation of regular ro-ro ferry and high speed passenger craft services, OJ L 138 of 1.6.1999, p.1.

[6] Council Directive 98/41/EC, of 18 June 1998 on the registration of persons on board passenger ships OJ L 188 of 2.7.1998, p. 35.

[7] Council Regulation No. 3051/95/EC, of 8 December 1995 on the safety management of roll-on/roll-off passenger ferries (ro-ro ferries) OJ L 320 of 30.12.1995, p.14, amended by Commission Regulation (EC) No. 179/98 of 23 January 1998 OJ L 19 of 24.1.1998, p.35.

The process of implementing these measures and evaluating their effectiveness showed certain shortcomings and confirmed that the aim of achieving harmonised rules for all passenger ships entering or leaving an EU port has not yet been fully achieved. A process of evaluating the passenger safety regime with a view to proposing improvements had already started, when the latest European tragedy involving a passengers ferry, the Express Samina accident in Greece, underlined the need for Member States and the Commission to increase their efforts in order to avoid such accidents from happening again.

Furthermore, the developments in the construction of passenger vessels, more particularly their increasing size (up to 150.000 gross tons) and passengers capacity (up to 5.000 passengers and crew), is being closely followed by the Commission. In fact a number of questions have been raised regarding the adequacy of the presently applicable construction and operational safety standards for very large passenger vessels. IMO is now analysing this subject at technical level and in the light of this work and subsequent analysis at Community level, the Commission will propose further initiatives in the area of safety and security of passenger vessels during the second half of 2002.

2. Specific Stability Requirements for Ro-Ro Passenger Vessels Operating to or from EU Ports

2.1. Background

The stability of passenger vessels following a collision is of key importance for the safety of ro-ro passenger ships. The longer a ship remains afloat in case of serious damage, the more efficient will the evacuation of passengers and crew and search and rescue operations be. This consideration becomes even more important in view of the escalating size of ro-ro ships serving Community ports and the increasing number of passengers and crew they carry. Indubitably, one of the major dangers for a ro-ro ship with an enclosed ro-ro deck is the effect of a build-up of significant amount of water on that deck.

At international level, the principal standard regulating the stability of ro-ro passenger vessels is the so-called SOLAS 90 standards, which implicitly address the effect of water entering the ro-ro deck in a moderate sea state with significant wave height in the order of 1.5 metres. [8] These standards are also applied to domestic EU trades, by means of Directive 98/18/EC.

[8] Furthermore, Directive 1999/35/CE on a system of mandatory surveys for the safe operation of regular ro-ro ferry and high speed passenger crafts provides in its article 4.1.e that ro-ro ferries shall fulfil the specific stability requirements adopted at regional level, when operating in the region covered by such regional rules.

In February 1996, in the aftermath of the Estonia disaster in the Baltic Sea, eight European States (Denmark, Finland, Germany, Ireland, Netherlands, Norway, Sweden and the United Kingdom) agreed, through a special agreement, the "Stockholm Agreement", [9] to introduce specific stability requirements for ro-ro passenger ships. The key idea of the Stockholm Agreement is that a ship should be designed to resist capsize even when a certain quantity of water has made its way to the ro-ro deck. The technical requirements of the Agreement go beyond those that had been established in the SOLAS 90 standards as they increase the survivability of the vessels in more severe sea states, by upgrading the SOLAS requirements to take into account also the effect of water which could accumulate on the ro-ro deck following damage.

[9] Agreement concerning specific stability requirements for ro-ro passenger ships undertaking regular scheduled international voyages between or to or from designated ports in North West Europe and the Batic Sea, Annexed to IMO circular letter N° 1891 of 29 April 1996.

The stability requirements are applicable to all ro-ro passenger ships, irrespective of flag, operating on regular scheduled international voyages carrying passengers between designated ports to or from designated ports in the area covered by it. In addition, all Parties to the Stockholm Agreement have currently extended its application to equivalent domestic trades.

2.2. The Commission's position

At the conclusion of the Diplomatic Conference at which the Stockholm Agreement was adopted, the Commission issued a statement, taking note of the Agreement concluded and expressing the opinion that the same level of safety should be ensured for all ro-ro passenger ships operating in similar conditions. Noting that the Agreement is not applicable in other parts of the Community, the Commission announced its intention to examine the prevailing local conditions, under which ro-ro passenger ferries sail in all European waters and examine the effects of the application of the Stockholm Agreement in the region covered by it. The statement concluded that in the light of this examination the Commission would take a decision with regard to the need for further initiatives in this area.

Following its commitment, the Commission has examined the extent and effect of the application of the Stockholm Agreement concerning specific stability requirements for ro-ro passenger ships and the suitability of extending its scope of application to European waters not covered by it. This analysis was finalised in 2001 and the main findings, which are based on inputs from various sources including a specific study contracted by the Commission, may be summarised as follows:

* Wave heights in the Mediterranean are comparable to those of the Baltic Sea, while wave heights in the Eastern Atlantic (the Atlantic coast of France, Spain and Portugal) are comparable to those of the North Sea and Channel area. Factors relating to visibility and water temperature are generally more favourable in the Mediterranean than in the area covered by the Stockholm Agreement, but on the other hand waves tend to be steeper in the Mediterranean. In conclusion, the wave heights in the South European waters are comparable to those in the North.

* The implementation of the Stockholm Agreement did not cause major problems for the industry or the contracting governments involved. A significant number of the ships concerned did not need any upgrade at all. 69% of the totality of 140 vessels concerned were upgraded for less than EUR 1 million. The estimated total cost of upgrade was around EUR 85 million, but the main part of those costs related to the accelerated compliance with SOLAS 90 standards, rather than just to compliance with the Stockholm Agreement as such.

* The modification cost of the Southern European fleet for compliance with the provisions of the Stockholm Agreement would be approximately the same as those associated with compliance with the SOLAS 90 requirements. Since full compliance with SOLAS Regulations in any event is due to take place in the coming years, on the basis of the IMO timetable (international trades) and Directive 98/18/CE (domestic EU trades), the industry should already have foreseen investments in upgrading the vessels concerned.

* The introduction of the additional requirements of the Stockholm Agreement for the South European vessels will offer uniformity of stability requirements throughout the EU and thus increased safety level in the Community.

In light of the above, the Commission considers that the division of north/south as regards stability requirements for ro-ro vessels in damaged condition (Stockholm Agreement standards in the North and SOLAS 90 standards in the South) is unjustified, as regards both safety parameters and techno-economic reasons. For these reasons the Commission proposes a Directive implementing the specific stability requirements of the Stockholm Agreement to all ro-ro passenger ships operating on international trades in the EU. This initiative has the advantage of providing increased safety of passenger ships in the Community and creating uniformity in the regulation of passenger vessels in international trades. The proposal is attached in Annex I to this Communication.

Taking into account that operating conditions for ro-ro passenger ships in domestic voyages in the Member States are often similar to those in international voyages, the Commission also proposes to revise Council Directive 98/18/EC in order to introduce the same or equivalent stability standards for ro-ro ships operating in domestic voyages.

3. revision of Council Directive 98/18/EC of 17 March 1998 on safety rules and standards for passenger ships

3.1. Introduction

Although Council Directive 98/18/EC on Safety Rules and Standards for Passenger ships [10] is a relatively recent Directive, a number of problems have already emerged in relation to its implementation. The Commission therefore considers it appropriate to propose certain amendments to it. The proposed revision would mainly concentrate on a strengthening of certain key parts of the Directive and simplification of some of its provisions. The proposal is attached in Annex 2 to this Communication and includes the following amendments.

[10] OJ L144, 15.5.1998, p. 1.

3.2. Publication of the lists of sea areas (Article 4.2)

Article 4 of Directive 98/18/EC provides for the definition of sea areas in different categories for the purpose of limiting the scope of traffic for different categories of vessels. Paragraph 2 of the article lays down a procedure for notification by Member States of such sea areas to the Commission. Once the sea areas have been approved by the Commission, assisted by the Committee, they shall be published in the Official Journal of the European Communities.

Experience with the implementation of this article has pointed at a number of problems. Part of these problems have been of a legal nature, in that Member States have interpreted the meaning of the article in very different ways. In addition, there have been serious delays in the notification of sea areas. At a more technical level, the format chosen by some Member States for presenting the list of sea areas has been unsuitable for the purpose of publication in the Official Journal. Given that that the classification of sea areas is a crucial aspect of the effective implementation of the Directive as a whole, these shortcomings need to be overcome.

The Commission therefore proposes a new Internet-based procedure for the notification and publication of sea areas, which would make the procedure more clear and simple while at the same time bringing more transparency into the system, as the information would be more easily available to the parties concerned.

3.3. Derogation for Greece

Article 6.3.g includes a derogation for existing Class A or Class B vessels operating in Greece. The derogation gives these vessels an opportunity to operate without complying with the safety requirements of the Directive until they reach the age of 35 years, whilst the age of compliance with this Directive from 2007 would be considerably lower for other vessels.

For the purpose of this extension, Greece was required to notify the Commission of the details of each such ship, and those details were to be published in the Official Journal. This list was published with a Commission decision of 24.6.1999 [11] and revealed that only a very limited number of ships were concerned by the derogation. In addition to the limited practical relevance of the derogation, its political significance has been greatly reduced. For these reasons, the Commission proposes to delete the derogation clause for passenger vessels operating in Greek waters as from 1.1.2005.

[11] OJ L180, 24.6.1999, p. 5.

3.4. High Speed Craft Code 2000

Directive 98/18/EC currently applies the High Speed Craft (HSC) Code [12] in full to all high speed craft operating on domestic services. Since the Directive was adopted, however, an additional High Speed Code has been elaborated for new ships. This new HSC 2000 code was adopted on 5 December 2000 and applies to all new vessels whose keels are laid or which are at a similar stage of construction on or after 1 July 2002. [13] The HSC 2000 does not replace the previous code older high speed vessels, but applies to new vessels only.

[12] "International Code for Safety of High Speed Craft", IMO Resolution MSC 36(63) of 20 May 1994.

[13] "International Code for Safety of High Speed Craft, 2000 (2000 HSC Code)", IMO Resolution MSC 97(73) of 5 December 2000.

In order to keep up with these developments at international level, the Commission proposes amend Directive 98/18/EC, to enable the HSC Code 2000 to be made applicable through amendments to the Directive developed through the Comitology procedure. This requires an amendment of article 8.a of the Directive. This would ensure the same flexible method for amendments of the Directive in relation to developments international legislation for both passenger ships and high speed craft code, which is currently not the case.

3.5. Stability requirements and phasing out for Ro-Ro Passenger Vessels

The first legislative proposal of this communication on passenger ship safety introduces specific stability requirements on ro-ro passenger ships operating on international routes to/from EU portsby 1 October 2010 at the latest. To ensure consistent levels of safety between international and domestic trade, the amendments to Directive 98/18/EC also include a proposal for applying these or equivalent stability requirements to ro-ro ships operating domestically.

To encourage compliance with the stability requirements for ro-ro passenger ships operating in different types of sea areas under the same sea conditions, the Commission proposes that the specific stability requirements shall apply to all new ro-ro passenger ships of classes A, B and C as from 1 October 2004. For new ro-ro passenger ships of class D, the application of the specific stability requirements is not justified, due to the restricted operational conditions applying to these ships. However, taking into account the difficulties that can be encountered in upgrading existing vessels of classes A and B, the Commission proposes to introduce as an alternative the possibility of phasing out such vessels at the age of 30 years if the specific stability requirements cannot be complied with. The same phasing out possibility shall apply to existing ro-ro passenger ships of classes C and D, unless they fully comply with the stability requirements set out in paragraph II-1/B/8 of Annex I of the Directive. This means full compliance of these vessels with the SOLAS 90 stability requirements, an obligation from which they are presently exempted.

The requirements/options for ro-ro vessels trading in the 4 types of domestic sea areas (classes A, B, C and D) are presented in a summarised way in the following table:

>TABLE POSITION>

3.6. Safety requirements for passengers with reduced mobility

Demographic change of the population of the European Union is contributing to an ageing population. A larger proportion of society, and hence a larger potential transport service consumer group, will in the future have some form of reduced mobility, due to old age or a disability. Making passenger vessels operating on domestic services safe and accessible for people with reduced mobility (PRM [14]) is therefore increasingly relevant, as the number of persons directly benefiting from increased accessibility can be up to 30% of the population. Designing passengers ships for all passengers, including those with reduced mobility, furthermore means making the ship safer and more user-friendly for all passengers.

[14] Definition of a person with reduced mobility in Directive 2002/xx/EC relating to "special provisions for vehicles used for the carriage of passengers comprising more than eight seats in addition to the driver's seat, amending Directives 70/156/EEC and 97/27/EC" reads: "Passenger with reduced mobility" means all people who have a difficulty when using public transport, such as disabled people (including people with sensory and intellectual impairments, and wheelchair users), people with limb impairments, people of small stature, people with heavy luggage, elderly people, pregnant women, people with shopping trolleys, and people with children (including children seated in push chairs).

The European Commission's White Paper titled "European Transport Policy for 2010: time to decide" states that : "Successful intermodality depends also on easy access to all transport modes. In this context, it is important that account be taken of the difficulties encountered by people with reduced mobility who use public transport, for whom changing to one mode to another can sometimes be a real obstacle" [15]. Article 13 of the EC Treaty furthermore calls for measures to combat discrimination on among other grounds, disability and age, and other recent Community legislation and Commission proposals [16] include access for people with reduced mobility as a requirement for operation.

[15] White Paper "European transport policy for 2010 : time to decide", COM(2001)370 final of 12.9.2001.

[16] See e.g. Directive 2001/XX/EC quoted in footnote 12 and Proposal for a Regulation of the European Parliament and the Council on action by Member States concerning public service requirements and the award of public service contracts in passenger transport by rail, road and inland waterway(COM(2000)7 final of 26.7.2000).

Examples of barriers on passenger ships facing people with reduced mobility are: physical access when boarding, moving to and from car deck, access to on board facilities, lack of access to information about safety (escape routes, emergency announcements) and access to accommodation areas.

The Commission proposes the insertion of a new article in the Directive regarding safety requirements for passengers with reduced mobility, and an additional annex including guidelines for this purpose. These safety requirements cover all classes of vessels, both new and existing, although the solutions will vary depending on the size and type of the ship. The development of specific technical requirements should be left to the Member States, in accordance with the principle of subsidiarity. Consultation by Member States of organisations representing people with reduced mobility is crucial. Although it is considered that taking into account these safety guidelines at the design stage is thought to include no significant additional costs, it is recognised in the proposed new article that adaptations of existing vessels may be costly, and a safeguard against adaptations that impose an unreasonable economic burden on the shipowner is therefore built into the Directive. In this context, the Commission also proposes that it should be possible to amend Annex II and III with the assistance of the Committee.

4. Liability of carriers of passengers by sea

4.1. Introduction

The liability for damage caused to passengers carried by sea is not subject to fully harmonised rules, neither at international nor European level. There is no Community legislation in this field and the protection of passengers varies between Member States, depending on what international conventions, and which amendments to them, have been ratified by the State in which the claim is settled. Consequently, maximum compensation amounts for death or personal injury to a passenger show great variations within EU Member States. In addition, none of the applicable conventions or protocols stipulates a strict liability for the carrier or an obligation for carriers to take out insurance to meet claims from passengers.

Given the importance of adequate and uniform protection of passengers carried by sea, the Commission considers that the present state of affairs is untenable. The need for a passenger liability regime in shipping is accentuated by the fact that the size and passenger carrying capacity of ferries and cruise liners continues to increase and that there are ever-more operators in this market, which continues to grow as people increasingly have more time and money to spend on travel and holidays. A uniform and adequate passenger liability regime should therefore form an integral part of the Community legal framework for passenger ships. This is all the more so as the Community, through Regulation 2027/97/EC on air carrier liability in case of accidents, has already established a comprehensive EU-wide passenger liability regime for air carriers.

This section puts forward the Commission's views on the key elements of a workable maritime passenger liability regime. Such a regime shall, in the view of the Commission be put in place within the EU within a near future. The introduction of a regime at EU-level, coincides with the revision on the international rules on the liability for carriers of passengers by sea at international level. It is considered that if the international regime satisfies, or at least does not prevent the application of all the key elements outlined below, it is preferable to implement the EU-regime within the context of the international rules. Should, however, the international regime fail to meet those expectations or be significantly delayed, the Commission is of the opinion that the importance of the matter requires specific Community-wide initiatives and will put forward a proposal to that effect before the end of this year.

4.2. Background

4.2.1. Shipping

The principal international convention governing the liability of carriers of passengers by sea is the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 (hereinafter the Athens Convention), which establishes a regime of liability for damage suffered by passengers on seagoing vessels. The Athens Convention establishes a fault-based liability regime, in which the carrier can limit his liability unless he acted "with intent to cause such damage, or recklessly and with knowledge that such damage would probably result". This limit of liability is set at 46,666 Special Drawing Rights (SDR) (about EUR 67,000) per passenger in case of death or personal injury. As far as loss of or damage to luggage is concerned, the carrier's limit of liability varies, depending on the nature and the location of the luggage. The Athens Convention entered into force in 1987 and is now ratified, or acceded to, by 26 States, including six EU Member States, [17] representing one third of the world's seagoing tonnage. The main reason for the relatively low number of ratification among EU Member States is that the convention limits are considered to be too low. Efforts to raise the limits were made in the late 1980's, but the resulting 1990 Protocol is not widely ratified and has not entered into force.

[17] The EU Member States which have ratified the Athens Convention are: Belgium, Greece, Ireland, Luxembourg, Spain and the United Kingdom. In addition, the Nordic States apply the substance of the convention, but with the limits of its 1990 Protocol.

In view of the generally unsatisfactory situation as regards the compensation of passengers on seagoing vessels, the Legal Committee of the International Maritime Organization (IMO) decided to carry out a review of the Athens Convention. One of the underlying purposes of the revision was to ensure at least a similar level of protection for passengers as that provided by the revised air passenger liability regime, while taking into account the specific operational and insurance conditions of the shipping industry. The Commission participates in this work of the IMO, the outcome of which is more fully presented in Section 4.4 below.

There is currently no Community legislation on the liability of carriers of passengers by sea. When considering such a regime, the corresponding legislation in the aviation sector therefore serves as a useful reference point.

4.2.2. Aviation

At Community level Regulation 2027/97/EC establishes a liability regime for air carriers in the event of accidents. It only applies to carriers established in the Community and provides for unlimited liability of the carrier in case of death or injury of passengers, which is divided into two tiers. For claims totalling under 100.000 Special Drawing Rights (around EUR 143.000) per passenger, the carrier is prevented from using the legal defence that he took all possible measures to avoid the accident. Regulation 2027/97 further specifies that carriers shall be insured up to the limits of the strict liability and beyond that up to a 'reasonable level'. The Regulation does not cover damage to luggage.

At international level a uniform set of rules has been agreed through the adoption of the 1999 Montreal Convention for the Unification of Certain Rules for International Carriage by Air (the Montreal Convention). This convention, which is not yet in force, is similar to the existing Community regime as regards claims for death and injury for passengers, but is broader in scope as it includes, among other things, provisions on liability for damage to luggage and cargo. The Montreal Convention also includes an obligation for States Parties to require carriers to maintain "adequate insurance covering their liability under this Convention".

Efforts are currently underway to align the Community regime to the Montreal Convention, by including claims for loss of or damage to luggage and delay into its scope and to pave the way for the Community and the Member States jointly to become parties to the Montreal Convention. According to the conclusions reached by the Council, the simultaneous ratification of the Convention by the Community and the Member States shall take place before the end of 2002.

4.3. The Commission's view

4.3.1. Introduction

The Commission is of the firm opinion that the liability regime which applies for passengers carried by sea needs to be updated and strengthened in favour of passengers. Many features of the Athens Convention as it stands are outdated and fail to meet the expectations of citizens travelling on passenger ships in Community waters and beyond. The adequate protection of passengers is particularly important as regards compensation for damage relating to death or personal injury, which is also the focus of Regulation 2027/97/EC on air carriers' liability.

It has to be acknowledged, however, that there are a number of relevant differences between the two modes of transport, which imply different solutions for the respective liability regimes. Those differences include the way in which passengers spend their time during the carriage, the way in which carriers are organised and arrange their insurance and the way the two industries themselves view matters related to liability. Because of these and other divergences, it would not necessarily be practicable or even desirable to implement an identical passenger liability system for the two modes of transport. For example, the large and ever-increasing number of passenger ship carriers, not all of whom are well-known, calls for very specific insurance requirements in the maritime sector. Similarly, coverage of all carriers, irrespective of the flag of the vessel, is crucial if the maritime passenger liability regime is to be effective.

In order to ensure adequate protection of passengers, certain key principles have to be incorporated in a Community maritime passenger liability regime. At least the six features outlined below should, in the view of the Commission, form part of an EU-wide maritime passenger liability regime.

4.3.2. Strict liability

Strict liability is aimed at improving the position of claimants, as the liability is not dependent on an act of fault or negligence by the carrier. In contrast to the liability regime that applies in the aviation sector, none of the applicable maritime passenger liability conventions provides for a liability of the carrier for death or personal injury which is totally independent of fault on his part. [18] Frequently, this difference between the modes of transport has been justified by reference to the contrasts between the roles of a passenger on board a passenger ship or a cruise ship and an air passenger. While the latter normally is expected to remain seated for the main part of the voyage, the passenger on board a ship, in particular a cruise ship, is considerably more mobile and active and has more time and opportunities to engage in acts of contributory negligence. A cruise ship passenger may often be more comparable to a customer in a restaurant, discotheque, hairdresser or spa. Since none of those service providers is normally subject to strict liability, it has been considered unfair to place such a burden on the carrier of passengers by sea. In support of this view, it has been stated that some 90 per cent of the passenger claims in the marine sector are claims by one or a few passengers, while claims in the aviation sector, when they arise, tend to involve all or most passengers on board the aircraft.

[18] Article 3.3 of the Athens Convention, however, does provide for a presumption of fault of the carrier if the damage arose from shipwreck, collision, stranding, explosion or fire, or defect in the ship.

Nevertheless, that line of reasoning fails to take into account passenger vessel accidents that origin in causes which are beyond the control of the passengers on board. Such incidents, including shipwreck, grounding, collision, fire etc. are fully comparable to typical accidents in the aviation sector and should be regulated accordingly. For this reason, the Commission, like the present draft text of the new Protocol to the Athens Convention, considers that a distinction should be made between two categories of claims. Damage which is caused by the operation of the ship and where the possibility of passengers to control the events typically is very limited ('shipping incidents') should be subject to a strict liability regime while a negligence-based liability system may suffice for other types of personal injury damage incurred on board.

4.3.3. Sufficient limits of liability

The Commission accepts that the strict liability of the carrier could be subject to maximum limits, in particular as the regime in order to be effective needs to be coupled with rigorous insurance requirements. Such limits, however, need to be set at a limit which is deemed sufficiently high, in particular as regards death and personal injury claims.

The determination of an adequate limit is complicated by the generally limited availability of statistical information on the costs of passenger ship accidents. Generally speaking, despite a series of tragic ferry accidents in European waters, there are few known cases, out of those already settled, indicating manifest shortcomings in the compensation regime for seaborne passengers. This, however, may be taken as an indication of flexible insurance practices rather than evidence in favour of the adequacy of the current maximum limits. In the view of the Commission, fair compensation of passengers should minimise the reliance on such flexibility, even in expensive claims, and should therefore be based on limits which correspond to, or exceed, those of comparable compensation regimes.

The strict liability of the air carrier is limited to around EUR 143.000 at EU-level. This figure is likely to become applicable at international level, through the entry into force of the Montreal Convention, within a near future. In the maritime context, the 1990 Protocol to the Athens Convention, increased the limit substantially up to 175.000 SDR (EUR 250.000), which corresponds to the overall limit laid down for passenger ships in the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC). Despite having been implemented in the legislation of some Member States, neither of these Protocols have entered into force internationally.

In the view of the Commission, the limit of the 1990 Protocol to the Athens Convention, as deflated into present day value, [19] constitutes the minimum acceptable figure for a strict liability regime for death and personal injury claims. That figure has already been agreed by the international community in the context of negotiations of previous instruments. However, such a figure presupposes that the overall per passenger liability, including liability in case of fault or neglect by the carrier, will be substantially higher.

[19] In 1990, SDR 175.000 corresponded to an average of ECU 186.752.7 (Eurostat/New Cronos). By deflating this figure with the consumer price index between 1990 and 2003 (estimated time for adoption of the proposed limit), which according to the Commission's estimates is 142.27 for the 15 EU Member States, one arrives at a figure of EUR 265.000. In other words, due to the difference in value between SDR and ECU/EUR since 1990, the deflated limitation figure is only marginally different from the one adopted in 1990.

4.3.4. Extended liability in case of fault or neglect

It is generally accepted that the right of carriers to limit their liability should be waived in cases of gross misconduct. Currently the limitation right, both in the Athens Convention and in the LLMC regime, is lost only where the carrier has acted "with intent to cause such damage, or recklessly and with knowledge that such damage would probably result". Clearly, there can be very few incidents involving passenger ships that would satisfy those criteria and for practical purposes the limitation right may therefore be considered to be unbreakable at present. In the view of the Commission, this is a major default of the existing regime, as an unbreakable limitation right amounts to a right for carriers and their insurers to deny passengers compensation above a certain limit, no matter how justified the claims may be and irrespective of the cause of the accident. In addition, unbreakable limitation rights in general provide little incentive for the carrier to take the appropriate precautions to avoid accidents in the first place.

The Commission considers that the liability for death and personal injury to passengers, whether caused by a shipping incident or not, shall be subject to a significantly higher limitation figure than that proposed for the part covered by strict liability described in the previous section. If there shall be a limit for the liability for death and personal injury at all, it should be high enough to fully cover foreseeable losses. This would correspond better to normal principles of tort law and would be more consistent with the regime applying in the aviation sector as well as being coherent with the Commission's views regarding the liability regime for oil pollution damage. [20] In order to ensure further consistency with the regime applicable in the aviation sector, a distinction should be made between shipping incidents and other incidents as regards the basis of liability. For shipping incidents it is reasonable to presume fault or neglect on behalf of the carrier. In other words, like in the Montreal Convention, the carrier should be held liable for loss suffered as a result of death of or personal injury to a passenger, unless the carrier can prove that the incident occurred without fault or neglect on his part.

[20] The Commission's views on the international oil pollution liability and compensation regime are laid down in COM(2000)802 final of 6 December 2000.

4.3.5. Compulsory insurance

None of the applicable international conventions on passenger liability, includes a requirement for carriers to be adequately insured. The absence of insurance requirement on passenger carriers is out of any proportion with the risks involved in the carriage of hundreds or thousands of passengers on board a ship. While it is true that most passenger ships nevertheless are financially protected, usually through entry in one of the mutual Protection & Indemnity (P&I) Clubs, the absence of formal requirements on insurance standards lacks justification. Compulsory insurance requirements must therefore form an integral part of any passenger liability regime. For the purpose of ensuring equality between carriers, the insurance requirements shall apply to all carriers, irrespective of flag of the ship, providing a service to or from an EU port. As to the amount, the insurance needs to cover the maximum strict liability limits per passenger and a reasonable amount beyond that limit, multiplied by the maximum number of persons on board.

4.3.6. Direct action

The possibility for claimants to make their claims directly against the insurer is of key importance in shipping, as the carrier may at times be difficult to trace and/or unable to fully meet its financial obligations. Therefore, the existence of a right of 'direct action' against the insurer is instrumental in any maritime liability regime if it is to serve its purpose effectively. It is clear therefore, that such a requirement must be included in a future passenger liability regime for carriers of passengers by sea. As to the economic extent of this right, it should equal the full per capita limitation amount which is subject to compulsory insurance.

4.3.7. National carriage

The liability regime should cover all transports in the Community, including carriage within a single Member State. The Athens Convention regime only applies to international voyages. A number of Member States, however, have decided to extend its application to national carriage as well. In line with the Community's philosophy underlying its existing legislation for passenger ships, that the level of protection of passengers shall not depend on whether the service is between two Member States or purely domestic in nature, the liability regime shall therefore extend to all types of carriage.

4.4. The way ahead

A Community liability regime for passengers carried by sea that meets all the criteria outlined above would satisfy the present day needs of passengers on board ferries and cruise ships and would create a uniform liability regime within the Member States. In sum, such a regime would include many of the key features of the liability regime which applies in the aviation sector, but would provide some additional benefits for passengers in that the limits of the strict liability would be higher and the insurance requirements would be considerably more elaborated. Importantly, the insurance requirements would cover all carriers, irrespective of the flag or registration of the vessel entering or leaving Community ports. The Commission considers that such a liability regime for carriers of passengers by sea should be put in place within the Community as soon as possible.

The preparation of a proposal for an EU-wide maritime passenger liability regime coincides with the elaboration of a new Protocol to the Athens Convention, which is scheduled for adoption in late 2002. A draft Protocol was approved by the IMO Legal Committee at its 83rd session on 8-12 October 2001 and will be transmitted for adoption by a Diplomatic Conference scheduled for October-November 2002. The draft Protocol introduces, among other things, compulsory insurance requirements for passenger carriers and a regime of strict liability coupled with rights of direct action. It is also intended to considerably raise the liability limits for death or personal injury to passengers caused by shipping incidents. A possibility for States Parties to apply higher limits of liability for claims of loss of life or personal injury to passengers in case of negligence by the carrier (where shipping incidents would be subject to a reverse burden of proof for the benefit of claimants) is also introduced. As to the application of the provisions of the Protocol to national carriage, which is not directly addressed in the text, it appears that the international regime would not prohibit such complementary measures by its contracting parties.

In sum, it seems likely that the new Protocol would largely satisfy the concerns expressed above, provided that the limits of liability are sufficiently high. Importantly, even if the overall liability limit for claims relating to death or personal injury would not be sufficiently high, the Protocol as presently drafted would still allow for the possibility for its contracting parties to apply higher limits or no limits at all. In the interest of promoting widespread adherence to the passenger liability regime, the Commission therefore considers that the Member States and the Community as a whole should make efforts to have the new Protocol to the Athens Conventions adopted and brought into force on a wide scale as soon as possible. [21]

[21] The entry into force of the new Athens Protocol is conditional upon a certain number of States expressing their consent to be bound by it. The number of States required to bring the Protocol into force is yet to be established, but the number serving this purpose in the Athens Convention was ten.

The new Protocol to the Athens Convention looks set to provide for the possibility for the Community as such to become a contracting party to it. Community adherence to the new Protocol alongside with its Member States is necessary in light of the exclusive Community competence over certain matters regulated in the Protocol, [22] which followed the adoption of Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. [23]

[22] Article 10 and 11 of the draft Protocol, replacing or amending Articles 17 and 17a of the Athens Convention, relate to the jurisdiction, the recognition and enforcement of judgments given in accordance with the Protocol. Those provisions affect the provisions of Regulation 44/2001.

[23] OJ L 12, 16.1.2001, p. 1.

The form of the Commission's proposal to achieve a maritime passenger liability regime that meets the elements outlined above is not yet certain. This will depend on the outcome of the Diplomatic Conference on the Athens Protocol. Ideally, the Community regime could be applied within the global regime and thus form part of a wider internationally harmonised regulatory framework. An international solution would have a number of advantages, not least from the practical and procedural perspective, given that passenger claims by their nature are susceptible to govern disputes involving potentially many different parties and many different States' legal systems. At the same time, however, the Commission in this case considers that a satisfactory regional solution is to be preferred to an unsatisfactory international one. Should the outcome of the Diplomatic Conference adopting the Athens Protocol represent fundamental shortcomings with respect to the key elements outlined in this section, or other impediments to their implementation, the Commission will therefore propose a Community-wide regime containing the necessary elements. Considering the importance of the matter under regulation, the adequate compensation of death and personal injury of passengers, the Commission believes that a Community-wide regime in this area is a well-justified and necessary measure, should the international agreement fail to provide the necessary guarantees.