Commission working document on the control of recognised organisations by the Commission and on the impact of the civil liability regime in accordance with Directive 94/57/EC
Date: 2006-10-11
Institutions: European Commission
Subjects: EU control, international standard, maritime safety, prevention of pollution, roadworthiness tests, supervisory body, vessel

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.10.2006 
COM(2006) 588 final 

COMMISSION WORKING DOCUMENT 

on the control of recognised organisations by the Commission and on the impact of the 
civil liability regime in accordance with Directive 94/57/EC 

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COMMISSION WORKING DOCUMENT 

on the control of recognised organisations by the Commission and on the impact of the 
civil liability regime in accordance with Directive 94/57/EC 

(Text with EEA relevance) 

1. 

INTRODUCTION 

The  reform,  within  the  « Erika  I »1  package,  of  the  Community  legal  framework  governing 
the  activity  of  recognised  organisations  brought  about  substantial  changes  to  address  the 
concern,  shared  by  the  European  Parliament,  the  Council  and  the  Commission,  that  the 
performance of recognised organisations does not always meet the necessary standards.  

Council  Directive 94/57/EC of 22  November 1994 on  common rules and standards for ship 
inspection  and  survey  organisations  and  for 
the  relevant  activities  of  maritime 
administrations2 (hereinafter “the Directive”) was thus beefed up to make for greater control 
of the activities of these private organisations which play a crucial role in maritime safety and 
pollution prevention. The new rules introduced in particular: 

–  Stringent  sanctions:  suspension  of  Community  approval  for  a  year,  which  can  lead  to 

complete withdrawal of approval if the deficiencies resulting in suspension persist;  

–  The  requirement  of  good  safety  and  pollution  prevention  control  performance  before 

Community approval is granted; 

–  Stricter  independence  and  quality  criteria,  as  well  as  greater  transparency  in  the 

communication of information on vessels in that class. 

–  Specific minimum levels of civil liability for recognised organisations. 

The present report is intended to: 

(1) 

(2) 

Give  an  account  of  the  control  of  recognized  organizations  by  the  Commission, 
including the encouraging results achieved in addressing situations of potential risk to 
maritime safety and the marine environment. 

Examine  the  economic  impact  of  the  new  liability  regime  in  accordance  with  article 
6(5). 

The  Commission  continues  to  verify  the  application  of  the  Directive  within  the  Member 
States  beyond  the  issues  examined  in  this  document  and  will  submit  a  separate  report  in 
accordance with article 16(4) at a later stage.  

1 
2 

COM(2000) 142 final 
OJ  L  319,12.12.1994,  p.  20.  Directive  as  last  amended  by  Directive  2002/84/CE  of  the  European 
Parliament and of the Council (OJ L 324, 29/11/2002 p. 53).  

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2. 

RECOGNIZED ORGANIZATIONS 

Among  the  approximately  sixty  classification  societies  recognized  by  the  Members  of  the 
International  Maritime  Organization  (IMO),  only  twelve  have  received  Community 
recognition in accordance with the Directive. They are the following:  

•  American Bureau of Shipping  

•  Bureau Veritas 

•  China Recognised organisation  

•  Det Norske Veritas  

•  Germanischer Lloyd 

•  Korean Register 

•  Lloyd’s Register of Shipping 

•  Nippon Kaiji Kyokai 

•  Registrecognised organisation Italiano Navale (RINA) 

•  Russia Maritime Register of Shipping 

•  Hellenic Register of Shipping 

•  Registro Internacional Naval (RINAVE) 

The  recognition  of  RINAVE,  originally  granted  by  the  Commission  in  20003  in  accordance 
with article 4(3) [now 4(2)], was extended on 18 April 2005 for a period of three years and 
with effects limited to Portugal4 once the Commission verified that the organization continues 
to meet the directive criteria as well as RINAVE’s satisfactory performance records.  

The recognition of the Hellenic Register of Shipping, originally granted by the Commission in 
20015 in accordance with article 4(3) [now 4(2)], was extended on 2 August 2005 for a period 
of three years with effects limited to Greece and Cyprus6 once a) the Commission verified that 
the  organization  continues  to  meet  the  directive  criteria  and  b)  the  Hellenic  Register  of 
Shipping committed itself to the objective of bringing its performance records into line with 
the average of the recognised organisations. The effects of this recognition were subsequently 
extended to Malta7 on 22 May 2006. 

The Polish authorities lodged in March 2004 a formal request for the limited recognition of 
the Polish Register of Shipping in accordance with article 4(2). Malta, Cyprus, Lithuania, the 
Czech  Republic  and  the  Slovak  Republic  later  joined  the  Polish  request.  After  nearly  two 
years of intensive corrective work following the Commission’s assessment, this organisation 
now  meets  all  directive  criteria  and  requirements.  At  the  time  of  drafting  this  report,  the 
relevant  draft  decision  granting  limited  Community  recognition  to  the  Polish  Register  of 
Shipping is in preparation.  

3 
4 
5 
6 
7 

Commission Decision 2000/481/EC, OJ L 193, 29.7.2000, p.91 
Commission Decision 2005/311/EC, OJ L 99, 19.4.2005, p. 15 
Commission Decision 2001/890/EC, OJ L 329, 14.12.2001, p.72 
Commission Decision 2005/623/EC, OJ L 219, 24.8.2005, p. 43 
Commission Decision 2006/382/EC, OJ L 151, 6.6.2006, p. 31 

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3. 

ASSESSMENT OF RECOGNIZED ORGANIZATIONS 

3.1. 

General overview 

According  to  article  4(5),  “the  organisations  which  on  22  January  2002  are  already 
recognised on the basis of this Directive shall continue to be recognised. Nevertheless, those 
organisations shall be required to comply with the new provisions laid down in this Directive 
and their compliance shall be assessed during the first assessments referred to in Article 11” 

According  to  article  11(3),  “all  the  recognised  organisations  shall  be  assessed  by  the 
Commission,  together  with  the  Member  State  which  submitted  the  relevant  request  for 
recognition,  on  a  regular  basis  and  at  least  every  two  years  to  verify  that  they  fulfil  the 
criteria of the Annex”.  

Since  the  entry  into  force  of  the  amended  directive8,  the  Commission  has  assessed  all 
recognized organizations at least once and the objective of two-yearly assessments has been 
achieved in 2005.  

Priority  has  been  given  to  verifying  compliance  with  the  amending  directive.  The 
Commission has carried out extensive assessments based on the analysis of both systems and 
specific casework. The assessments have included visits to both head office and one or several 
regional offices for each organization assessed. In a number of cases, the assessment has also 
included  visits  to  shipyards  and  ships  under  construction.  In  this  respect,  the  Commission 
conducted  in  February  2005  a  special  round  of  assessments  specifically  focused  on  new 
buildings, in order to examine the recognized organizations’ response to the exceptional strain 
that this market is currently undergoing.  

The  Member  States  concerned  have  regularly  taken  part  in  these  assessments,  which  has 
greatly added to the usefulness of the exercise. Most assessments have been jointly planned in 
preparatory  meetings  with  the  experts  appointed  by  the  participating  Member  State;  during 
the assessments, Member States have been able to follow-up on specific flag state issues and 
have contributed the flag state views to the exercise; finally, the assessors have discussed their 
findings with the attending Member State expert before reporting them to the Commission – 
who has kept the participating administration informed of its conclusions and follow-up. 

In  the  assessment  of  recognized  organizations,  the  Commission  has  been  assisted  by  the 
European Maritime Safety Agency (EMSA) since February 2004. 

•  The  expertise  provided  by  the  Agency  has  allowed  the  Commission  to  increase  the 
frequency of the assessments and enlarge their scope, which has proven key in meeting the 
above mentioned objectives.  

•  EMSA has formed a team of inspectors with the appropriate combination of skills in the 
different  aspects  covered  by 
the  directive,  and  developed  a  specific  fieldwork 
methodology. This has resulted in a more thorough preparation of the assessments and has 
greatly  increased  the  Commission’s  ability  to  spot  areas  of  weakness  in  the  recognized 
organizations’ systems and procedures where action is needed.  

8 

22 January 2002 

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3.2.  Main findings of the assessments  

3.2.1. 

In general 

The  assessments  carried  out  so  far  show  a  broad  degree  of  compliance  among 
recognized  organizations,  with  the  exception  of  the  findings  highlighted  in  the 
following subsections. The Commission nevertheless considers that the predominant 
trend is one of formal compliance, with well developed systems and procedures, but 
all too often to the detriment of pro-active control and effective management of risks. 

3.2.2.  Respect of class rules and statutory requirements 

The Commission has examined a considerable number of ship files, either by random 
sampling  and  visits  to  shipyards  or  following  casualties  and  port  state  control 
detentions.  

This examination has yielded a sometimes rather bleak picture, with instances where 
important errors had been made by the surveyors or certain inspections or tests had 
simply  been  omitted,  while  the  subsequent  internal  controls  sometimes  failed  to 
detect obvious occurrences or provide appropriate follow-up: 

•  There  seems  to  be  a  recurrent  pattern  whereby  the  most  significant  occurrences 
seem  to  affect  the  organizations  with  the  worst  relative  ratios  of  available 
resources9. 

•  Thus, the breach of class and statutory requirements by one organization could be 
traced  to  the  latitude  left  to  the  surveyors  by  the  organization’s  rules  and 
procedures10 in a context of heavy strain on its resources11. A further investigation 
carried out by the organization at the behest of the Commission identified several 
other locations where class and statutory requirements were not correctly applied.  

•  In  another  case,  upon  examination  of  the  file  of  a  ship  involved  in  a  casualty  it 
was  found  that  serious  mistakes  made  by  the  surveyor  in  applying  the 
organization’s rules, albeit clearly noticeable from the said file, passed undetected 
when his work was subsequently reviewed before submission to head office.  

•  This organization monitored its surveyors correctly and adopted measures in case 
of  low  performance,  including  de-certification.  However,  it  did  not  go  on  to 
examine  the  ships  these  surveyors  had  been  inspecting  in  order  to  identify  and 
address the potential risks. Unfortunately, a ship that had been inspected by one 
de-certified surveyor sustained heavy damage shortly afterwards, and examination 
of the ship file raises serious doubts as to the sufficiency of the survey work on 
the damaged areas.  

•  Instances have been found where specific inspections required by the international 
conventions (e.g. steering gear test with a fully laden ship) seem to be ignored by 
several recognized organizations.  

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10 
11 

Cf. section 3.2.4 
Cf. section 3.2.3 
Cf. section 3.2.4 

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3.2.3.  “Flexibility clauses” 

Assessment of the shipyards’ quality systems by the recognized organizations seems 
to play an increasingly important role in the certification process. 

The  Commission  fully  supports  such  assessment  as  a  fundamental  tool  to 
appropriately supplement the inspection work. However, this is not without pitfalls: 

•  As  mentioned  above,  it  was  found  that  one  recognized  organization’s  rules 
allowed surveyors to  omit  inspections based  on their assessment  of the shipyard 
quality system (the “flexibility clause”), without control by the management.  

•  Beyond the need for appropriate management control, statutory inspections should 
all  be  carried  out  without  exception.  In  the  referred  case,  the  organization’s 
procedures and checklists did not distinguish clearly between statutory and class 
inspections, with the result that both were omitted. 

•  Even  as  regards  class  inspections,  one  should  seriously  question  the  limits  of 
flexibility  clauses:  recognized  organizations  are  expected  to  certify  ships,  not 
shipyards, and must always retain sufficient direct knowledge to do so.  

•  Furthermore the Commission is wary of the possibility, voiced by the press, that 
recognized organizations might be “assisting” shipyards in setting up their quality 
systems  –  either  directly  or  by  means  of  subsidiaries  and  joint  ventures.  This, 
whether  or  not  in  conjunction  with  flexibility  clauses,  might  lead  to  conflicts  of 
interests.  

Beyond the measures taken in the individual cases, the Commission intends to make 
an in-depth assessment of the overall situation and proceed accordingly. 

3.2.4.  Resources  

In a number of cases, the Commission has identified a lack of sufficient resources to 
cope  with  the  actual  organization’s  workload,  in  particular  as  regards  the  current 
intensive peak of new building.  

•  The  Commission  has  basically  used  two  indicators  to  measure  the  overall 
appropriateness  of  resources,  namely:  the  ratio  of  ships  to  surveyor12,  which 
provides an overall measurement of the organization’s resources; and the ratio of 
new  constructions  to  surveyor13,  aimed  at  measuring  the  additional  strain  on  the 
organization’s  resources  due  to  the  more  demanding  inspection  and  certification 
activity  in  connection  with  ship  construction.  These  ratios  provide  very 
meaningful indications, which nevertheless need to be considered in light of other 
factors  such  as  the  composition  and  age  of  the  fleets.  The  Commission  has  also 
examined  whether  the  resources  are  sufficient  at  specific  places  of  work.  The 

12 

13 

Number  of  directive-relevant  ships  classed  by  a  recognized  organization  divided  by  the  number  of 
exclusive surveyors. 
Number of directive-relevant ships under construction to the class of a recognized organization divided 
by the number of exclusive surveyors. 

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results obtained have then been used as a tool to gauge the material findings of the 
assessments.  

•  In  assessing  the  work  carried  out  by  one  recognized  organization  at  a  major 
shipyard,  the  Commission  could  directly  identify  a  clear,  sustained  imbalance 
between the available work force (one exclusive surveyor, occasionally aided by a 
second surveyor) and the number of new constructions to be supervised (four at 
any  given  time  over  several  months).  This  resulted  in  several  breaches  to  both 
class and statutory requirements.  

•  In  another  case,  the  Commission  detected  an  abusive  recourse  to  external 
personnel  to  assist  a  recognized  organization’s  surveyors  at  major  new  building 
spots.  Such  external  personnel  was  found  to  carry  out  inspections  that  can  be 
considered a core activity during new building and should normally be carried out 
by the organisation’s exclusive surveyors. 

•  As  was  pointed  out  in  section  3.2.2,  a  correlation  seems  to  emerge  between  the 
most  significant  material  findings  and  the  highest  measurements  of  the  above 
mentioned indicators.  

The  causes  of  this  problem  are  not  entirely  clear,  though  it  might  stem  from  either 
sheer  competition,  lack  of  qualified  personnel  and/or  weakness  of  the  recognized 
organizations versus the shipyards - against the background of soaring demand and 
consequently  strained  production  conditions.  In  any  event,  the  Commission  is 
particularly  concerned  about  the  potential  impact  of  this  problem  on  ship  safety  in 
the  medium  and  long  term,  and  has  taken  the  necessary  measures  with  the  active 
cooperation of the organizations concerned.  

3.2.5.  Quality policy and system  

Recognized  organizations  have  in  general  put  in  place  quite  sophisticated  quality 
systems,  with  detailed  and  exhaustively  documented  procedures.  However,  the 
Commission  assessments  have  shown  a  nearly  systematic  failure  to  either  define 
significant key performance indicators, or, more commonly, pull them together in a 
meaningful  system  –  capable  of  helping  the  management  assess  the  organisation’s 
performance and take a pro-active, prevention-oriented stance.  

•  In general, the Commission’s impression is that this is a matter where some time 
of reflection and trial-and-error by the recognized organizations will inevitably be 
needed, but should normally be dealt with correctly by all of them in the medium 
term. 

3.2.6. 

Independence  

This is doubtless the criterion of most difficult assessment. This is largely due to the 
very  diverse  status  of  recognized  organisations:  some  of  them  are  foundations  or 
similar entities and one is fully owned by a foundation, while others are not-for profit 
corporations or similar entities, and the rest are joint stock companies.  

The Commission has sought to identify the organs and staff actually controlling the 
business  and  affairs  of  the  organisation,  and  to  achieve  a  clear  situation  where  the 

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categories of interests listed in the Annex (the “restricted categories”)14 would not be 
in a position to exercise a determining influence on them. For joint stock companies, 
the  ownership  of  the  shares  has  equally  been  taken  into  account  regardless  of  their 
corporate structure. 

•  The analysis has thus sometimes required examination of bodies which, albeit not 
concerned  with  the  company  administration,  had  a  say  on  decisions  concerning 
rules,  acceptance/suspension/withdrawal  of  class  and  delivery  of  statutory 
certificates – such as classification and technical committees.  

•  In  general,  recognized  organizations  have  made  significant  efforts  to  come  into 

line with the directive requirements. 

•  However, in one case, a recognized organization has been required to change the 
composition of its board of directors in order to ensure full compliance with the 
Directive requirements.  

Concerning surveyor’s  independence, the  situation is in general satisfactory and all 
assessed organisations have introduced appropriate protective clauses in their code of 
ethics, terms of employment, etc.  

•  Nevertheless, most of these clauses required adjustment to reflect the exact terms 
of  the  directive  relative  to  identity  with,  and  personal,  business  or  family  links 
with, restricted categories.  

•  In  general,  the  Commission  has  recommended  recognized  organizations  to 
implement  a  system  whereby  the  situation  of  their  surveyors  could  be  verified 
before assigning jobs.  

3.2.7.  Other directive requirements 

(1) 

(2) 

In  general,  the  exclusion  of  non-exclusive  surveyors  from  statutory  work 
seems  well  established  save  for  some  isolated  instances.  While  some 
recognized  organizations  have  ceased  to  employ  non-exclusive  surveyors, 
others  still  keep  them  in  rather  high  numbers.  The  Commission  pays 
particular  attention  to  verifying 
that  non-exclusive  surveyors  receive 
appropriate  training  and  monitoring;  but  in  any  case,  one  should  seriously 
question whether this anomalous situation, whereby surveyors excluded from 
statutory  tasks can however perform  class inspections, should  be allowed to 
continue. 

There  is  a  prevailing  trend  for  recognized  organizations  to  move  towards  a 
more de-centralised structure. However, certain shortcomings suggest that the 
recognized organizations taking this approach need to put in place additional 
checks and balances to cope with the new risks generated by de-centralisation 
(in particular, greater exposure to pressure from operational needs and clients’ 
requirements).  

14 

Shipowners  or  shipbuilders,  or  others  engaged  commercially  in  the  manufacture,  equipping,  repair  or 
operation of ships 

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(3) 

Thus,  in  the  most  representative  case,  de-centralisation  of  one  organization 
had resulted in regional managers acquiring de facto  extensive control as to 
the  assignment  of  jobs,  training  and  monitoring  of  surveyors.  This  was 
supported by a comprehensive database providing the regional managers with 
all the relevant information as to surveyor’s status, qualifications, etc., while 
the head office exercised its control basically by means of two-yearly audits. 
Nevertheless, there followed numerous occurrences of assignment of work to 
surveyors without the necessary status or qualifications. The case is currently 
under consideration.  

(4) 

On the whole, qualifications and training seem to be at present well dealt with 
by all recognized organizations. The Commission however remains attentive 
to the still rather frequent instances of overdue refresher training.  

3.3. 

Recognized organizations’ performance 

Measured in terms of yearly rate of class-related detentions in the Paris MoU, in the Tokyo 
MoU  and  by  the  US  Coast  Guard,  the  performance  of  the  twelve  Community  recognized 
organizations  has  improved  spectacularly  over  the  past  years  -  as  can  be  seen  from  the 
following tables: 

PARIS MOU PSC AREA
detentions  as a  % of inspections

10,00%

9,00%

8,00%

7,00%

6,00%

5,00%

4,00%

3,00%

2,00%

1,00%

0,00%

1999

2000

2001

2002

2003

2004

Source: PMOU annual reports.   Elaboration: EMSA

All detentions

Class related detentions (CRD) (all
CS)

Class related detentions(CRD) (12
EU RO)

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USCG PSC AREA
Class related detentions (CRD)
as a % of distinct vessel arrivals

0,60%

0,50%

0,40%

0,30%

0,20%

0,10%

0,00%

1999

2000

2001

2002

2003

2004

Source: USCG annual reports. Elaboration: EMSA 

TOKYO MOU PSC AREA
Class related detentions(CRD° as % of inspections

3,00%

2,50%

2,00%

1,50%

1,00%

0,50%

0,00%

12 EU RO average

All CS average

All CS

12 EU RO Average

2003
Source: TMOU annual reports.   Elaboration: EMSA

2004

The Commission warmly welcomes this improvement, which greatly mitigates the somewhat 
unsettling feeling given by the assessments carried out so far.  

A  more  sophisticated  system  to  measure  the  performance  of  recognized  organizations  is 
currently in preparation. The new system will include both yearly and multi-annual detention 
rates (measured in terms of statistical significance) and take into account other factors such as 
casualties and the flag composition of the respective fleets. 

3.4.  Measures taken by the Commission 

In  addressing  the  shortcomings  identified,  the  Commission  has  given  absolute  priority  to 
identifying and removing any potential threats to safety.  

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In general recognized organizations have cooperated readily and have taken action to amend 
their rules and procedures, as well as their quality systems, whenever they have been found 
not to conform to the directive requirements and/or not to have been applied correctly.  

Nevertheless,  in  a  number  of  grave  cases,  the  Commission  required  the  organizations 
concerned to go one step further and ensure that: 

(1) 

The potential consequences of any shortcomings are known as precisely as necessary: 

•  Comprehensive risk assessments in connection with the systemic failures detected 
have thus been required. In one case, this risk assessment encompassed the entire 
organization  and  up  to  1500  ships  whose  construction  had  been  supervised  over 
the recent years.  

(2) 

Ships identified as presenting a potential risk are adequately dealt with: 

•  Thus  several  ship  re-inspection  plans  have  been  required  to  verify  whether  the 
shortcomings identified in the assessments resulted in actual survey errors. At the 
time of drafting this report, seven ships have been re-inspected and two other are 
due for immediate re-inspection while more should follow as a result of the risk 
assessments in progress. 

(3) 

Rules  and  statutory  requirements,  whether  existing  or  newly  adopted,  are  correctly 
applied in future: 

•  Comprehensive training plans have been required, some encompassing the entire 

organization. 

(4) 

The organization has sufficient resources to carry out its tasks: 

•  Both one-off and multi-annual recruitment plans have thus been required. In one 
case this represents an increase of more than 10% in the organization’s surveyor 
workforce. 

(5) 

The independence of the organization is fully guaranteed: 

•  As  mentioned  above,  one  organization  has  been  required  to  change  the 
composition  of its board  of directors in  order to achieve a safe majority of  non-
restricted categories. 

Some of these actions are still in progress, but the Commission is convinced that they have 
brought about an entirely new, pro-active way of dealing with the weaknesses of recognized 
organizations. Some of them come at a very high cost for the organizations concerned, which 
proves both their commitment to safety and the added value of the Community action in the 
field – whose beneficial effects extend well beyond the European fleet. 

3.5. 

Conclusion 

The  European  Commission  considers  it  as  a  priority  for  the  Community-recognised 
organizations to ensure at any time the highest quality of their work. One must always bear in 
mind that every error counts and might one day have disastrous consequences. 

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From this point of view, the Commission’s findings show that much still needs to be done to 
achieve an acceptable level of risk. The Commission believes that the problem does not lie in 
either  the  systems  themselves  or  in  the  current  professional  standards  of  recognized 
organizations:  the  main  improvement  should  be  in  the  control  environment  of  these 
organizations  as  a  whole  –  which  is  not  yet  matching  the  actual  risks  involved  in  their 
activities.  

Over  the  recent  years,  unprecedented  levels  of  new  building  activity  have  placed  enormous 
strain on the industry, which is taken to the very limits of its capacity. It is important to ensure 
that recognized organizations can respond adequately so that no mortgage is placed on safety 
in the long term. 

The  Commission  will  not  hesitate  to  withdraw  the  recognition  of  one  or  several  recognized 
organizations  if  necessary,  but  not  without  first  attempting  every  means  to  ensure  that  the 
ships  they  certify  are  and  continue  to  be  safe.  This  is  what  the  Commission  has  done,  with 
encouraging  results  –  also  thanks  to  the  willing  cooperation  of  the  Member  States  and  the 
organizations concerned. The Commission will continue along this firm and pro-active line, 
with  the continued  technical assistance of EMSA, in  the conviction that the measures taken 
will effectively contribute to making our seas safer.  

The above findings have been fully taken into account in the Commission’s proposal for the 
recast  of  Directive  94/57/EC  within  the  framework  of  the  3rd  “Maritime  Safety”  package. 
Thus: 

•  A  strengthened,  more  transparent  and  independent  quality  system  certification  system  is 
fundamental for a preventive policy placing more emphasis on adequate risk management 
by recognised organisations. 

•  The  introduction  of  financial  sanctions  for  failure  to  comply  with  the  Directive  criteria 
(including  both  lump  sum  fines  and  periodic  penalty  payments)  not  only  adds  to  the 
proportionality of the system, but will greatly enhance the effectiveness of the Community 
action in the field and contribute to the objective of correcting shortcomings at the source.  

•  The lessons learnt from the assessments carried out so far have allowed the Commission to 
propose  a  number  of  adjustments  to  the  Directive  criteria  in  order  to  improve  both  their 
usefulness and legibility – e.g. as regards the sufficiency of resources.  

4. 

CIVIL LIABILITY 

The  Commission,  assisted  by  EMSA,  has  examined  the  economic  impact  of  the 
implementation  of  the  civil  liability  regime  contained  in  article  6.2(b)  of  the  Directive.  The 
results of the corresponding study are summarised in the annex.  

In  examining  this  topic  it  is  important  to  bear  in  mind  that  the  Directive  governs  only  the 
redress a Member State administration may claim from a recognised organisation in the event 
that the former is held liable as a result of the fault of the latter, judicially or in arbitration. 

4.1. 

Implementation by the Member States 

The above mentioned study has demonstrated that: 

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(1) 

The case of unlimited liability for gross negligence as regulated in Article 6.2(b)(i) is 
accepted and not disputed.  

(2)  With respect to negligence cases in Article 6.2(b)(ii) and (iii), what was intended to be 
minimum  liability  levels  (floors)  have  generally  become  maximum  liability  levels 
(ceilings) as a majority of Member States have set limits at, or slightly higher than, the 
amounts  mentioned  in  article  6.2(b)(ii)  and  (iii).  This  is  however  subject  to  the 
important  exception  that  five  Member  States  have  used  the  possibility  to  negotiate 
unlimited liability also for these cases. 

(3) 

No known case has so far triggered the application of the mechanism in article 6.2(b), 
and there is therefore no case law which could have provided guidance. 

4.2. 

Recognised organisations 

Nothing indicates that the financial stability of recognised organisations has been affected by 
the introduction of Art.6.2(b).  

When consulted, the recognised organisations have in general: 

(1) 

Insisted on the impossibility to “insure unlimited liability”. This is obvious- insurance 
cover  will  always  have  a  limit;  but  one  should  expect  this  coverage  to  be 
commensurate with the actual risks incurred. It is important to note that the study has 
shown that recognised organisations have not increased their insurance coverage as a 
result of the entry into force of the current civil liability regime under the directive – 
although this insurance is in general considered sufficient for the Directive thresholds. 
In  their  agreements  with  authorising  Member  States,  some  recognised  organisations 
have accepted unlimited liability also in case of negligence. It has been contended that 
this would work as a barrier to the market as those organisations who are not ready to 
accept  such  terms  would  not  be  able  to  operate  in  the  market  of  the  Member  States 
who so require. However, 

–  It is up to each party in a negotiation  to accept  the conditions of the agreement, 
including unlimited liability, which they are willing to work under. It would also 
appear that each party in such a negotiation would be of equal strength.  

–  The argument that this might be used in a discriminatory manner is not supported 
by  the  research  as  all  Member  States  have  agreements  with  several  recognised 
organisations depending on the size and nature of their flagged fleet. 

(2) 

Expressed their fear that the Directive may create new rights of recovery. The wording 
of  Article  6  and  in  particular  the  words:  “…if  liability  arising  out  of  any  incident  is 
finally  and  definitely  imposed  on  the  administration  by  a  court  of  law…the 
administration  shall  be  entitled  to  financial  compensation  from  the  recognised 
organisation…” is feared to raise an expectation that third parties now possess a new 
statutory  right  to  recover  financial  compensation  for  their  losses  from  the  relevant 
national  maritime  administration,  and,  indirectly,  from  the  relevant  recognised 
organisation via the indemnity provisions in Article 6.2 (b).  

–  However, this is clearly not the case: nothing in the directive modifies the liability 

regime of national administrations. 

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13 

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–  Recognised  organisations  have  nevertheless  reported  significant  growth  of 
insurance and litigation costs after the introduction of these provisions. This does 
not seem to have had a noticeable impact on the fees charged. 

–  In  order  to  clarify  the  situation  the  recognised  organisations  suggest  that  a 
provision  in  the  sense  that  Art.6.2(b)  does  not  create  new  rights  of  recovery  is 
inserted to alleviate any increasing litigation. It would appear that some Member 
States  in  their  agreements  with  recognised  organisations  have  accepted  such 
clauses (e.g. Denmark, Latvia, the Netherlands). These clauses will be verified in 
order  to  ensure  that  they  do  not  have  the  opposite  effect,  i.e.  to  hinder  the 
administrations’ capacity to obtain redress in accordance with the Directive. 

(3) 

Suggested that the limits of Art.6.2(b)(ii) and (iii) should be modified to be maximum 
limits of liability. Under this scenario the recognised organisations have indicated that 
they would be willing to accept higher limits of liability. 

4.3. 

Conclusion 

The  Commission  notes  that,  while  all  Member  States  have  communicated  the  relevant 
implementing measures, the research carried out by the University of Southampton15 suggests 
that some elements in the Directive may not have been correctly transposed into all national 
legal  systems.  The  necessary  verifications  will  be  made  as  part  of  the  Commission’s 
conformity assessment programme in this field16.  

The Commission sees no reason to modify the status quo given the absence of any evidence 
of disruption or impact on the financial stability (equilibrium) of the recognised organisations. 
In particular, the Commission does not consider it necessary to insert in the Directive a new 
provision  to  the  effect  that  Art.6.2(b)  does  not  create  new  rights  of  recovery,  as  recognised 
organisations demand17. 

Moreover, the current liability provisions have only been applicable since 22 July 2003, and it 
is perhaps too early to draw any firm conclusions on the need for their revision – notably in 
the  absence  of  any  relevant  court  rulings.  The  Commission  will  continue  to  monitor  the 
legislator.
application  of  article  6.2.b  and, 

if  necessary, 

report  back 

the 

to 

15 
16 

17 

Cf. table 1 in the Annex 
At the time of drafting this report, an infringement procedure is in progress against the Slovak Republic 
albeit not concerning the liability provisions in the Directive (breach of obligations under article 3) 
As  a  matter  of  course,  the  Commission  does  nevertheless  verify  in  its  assessment  of  each  recognised 
organisations that their insurance coverage is sufficient 

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ANNEX : PREPARATORY STUDY REGARDING THE LIABILITY REGIME 
PROVIDED FOR IN ARTICLE 6.2(b) OF DIRECTIVE 94/57/EC, AS AMENDED 

1. 

BACKGROUND 

Directive 94/57/EC as amended states in article 6.5 that ‘The Commission shall, not later than 22 
July  2006,  submit  a  report  to  the  European  Parliament  and  to  the  Council  evaluating  the 
economic impact of the Liability regime provided for in this Article [article 6.2(b)] on the parties 
concerned  and,  more  particularly,  its  consequences  for  the  financial  equilibrium  of  recognized 
organizations. 

The report shall be drawn up in cooperation with the competent authorities of the member States 
and  the  parties  concerned,  in  particular  recognized  organizations/classification  societies.  The 
Commission shall, if necessary in the light of this evaluation, submit a proposal amending this 
Directive with more specific reference to the principles of liability and the maximum liabilities.” 

The  Commission  requested  EMSA  in  September  2005  to  carry  out  a  preparatory  study  in  this 
respect  as  input  for  the  Commission  report.  Following  a  tendering  procedure,  EMSA  awarded 
the Institute of Maritime Law, University of Southampton a contract to carry out research. This 
resulted in a report drafted by an independent group of researchers of the Institute of Maritime 
Law of the University of Southampton in respect of a “Study on evaluating the economic impact 
of  the  liability  regime  on  parties  concerned  and  consequences  for  the  financial  equilibrium  of 
Recognised organisations – Directive 94/57 article 6.5” dated 15 February 2006. 

The overall objective of the study is to illustrate the effects of the implementation of the liability 
provisions  contained  in  article  6(2)(b)  of  Directive  94/57/EC  (as  amended  by  Directive 
2001/105/EC).  

The  research  is  specifically  focused  on  recognised  organisations  authorised  in  the  25  Member 
States of the European Union, Norway and Iceland, but some research on other extra-European 
shipping  countries  was  required  in  order  to  provide  a  background  against  which  commercial 
advantages or disadvantages of the implementation of the Directive may be evaluated. 

The study provides an overview of the monetary limits of liability that have been agreed between 
on  the  one  hand  the  25  EU  Member  States,  Norway  and  Iceland  and  on  the  other  hand 
recognised organisations, in accordance with art. 6(2)(b)(i), (ii) and (iii). Where the national law 
of a Country provides for unlimited liability, the possibility that the national law of the country 
concerned offers alternative forms of protection has been explored. 

The research and data in the Southampton study has been used as background and input to the 
present report.  

2. 

BACKGROUND TO THE LIABILITY PROVISIONS IN ARTICLE 6.2(B) 

The  proposal  for  changes  of  Directive  94/57/EC,  resulting  in  amendments  to  the  same  by 
Directive  2001/105/EC18,  where  one  of  the  central  proposals  following  the  ERIKA  accident  in 

18 

OJ L 324, 29.11.2002, p. 53 

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December 1999, and formed part of the so called ERIKA I package. One of the central issues for 
discussion in the Commissions proposal was the introduction of the liability provisions in Article 
6. The Commission proposal were based on the work of the so called Gothenburg group which 
comprised  some  of  the  EU  flag  administrations  and  some  of  the  international  recognised 
organisations discussing and drafting standard clauses in relation to liability and trying to agree 
on limitation of liability for negligence cases. 

The  Commission’s  proposal  (COM2000)142  final)  contained  a  text  which  included  unlimited 
liability for gross negligence or wilful acts and limitations of liability for negligent or reckless 
acts. The limits suggested were 5 million € for personal injury or death and 2.5 million € for loss 
or damage to property. 

In  the  co-decision  procedure,  leading  to  conciliation  between  the  Council  and  the  European 
Parliament,  the  proposal  was  changed  and  the  maximum  limits  (or  ceilings)  were  tuned  into 
minimums (or floors). The amounts were changed to 4 and 2 million € respectively. 

Article  6.2(b)  in  Directive  94/57/EC  requires  the  inclusion  of  the  following  provisions  in  the 
instrument governing the working relationship between national administrations and recognised 
organisations: 

– 

– 

– 

If liability arising out of any incident is finally and definitely imposed on 
the  administration  by  a  court  of  law  or  as  part  of  the  settlement  of  a 
dispute  through  arbitration  procedures,  together  with  a  requirement  to 
compensate the injured parties for loss or damage to property or personal 
injury or death, which is proved in that court of law to have been caused 
by  a  wilful  act  or  omission  or  gross  negligence  of  the  recognised 
organisation, its bodies, employees, agents or others who act on behalf of 
the  recognised  organisation,  the  administration  shall  be  entitled  to 
financial compensation from the recognised organisation to the extent that 
the said loss, damage, injury or death is, as decided by that court, caused 
by the recognised organisation;  

If liability arising out of any incident is finally and definitely imposed on 
the  administration  by  a  court  of  law  or  as  part  of  the  settlement  of  a 
dispute  through  arbitration  procedures,  together  with  a  requirement  to 
compensate  the  injured  parties  for  personal  injury  or  death,  which  is 
proved  in  that  court  of  law  to  have  been  caused  by  any  negligent  or 
reckless  act  or  omission  of  the  recognised  organisation,  its  employees, 
agents  or  others  who  act  on  behalf  of  the  recognised  organisation,  the 
administration  shall  be  entitled  to  financial  compensation  from  the 
recognised organisation to the extent that the said personal injury or death 
is,  as  decided  by  that  court,  caused  by  the  recognised  organisation;  the 
Member States may limit the maximum amount payable by the recognised 
organisation, which must, however, be at least equal to EUR 4 million;  

If liability arising out of any incident is finally and definitely imposed on 
the  administration  by  a  court  of  law  or  as  part  of  the  settlement  of  a 
dispute  through  arbitration  procedures,  together  with  a  requirement  to 
compensate  the  injured  parties  for  loss  or  damage  to  property,  which  is 
proved  in  that  court  of  law  to  have  been  caused  by  any  negligent  or 

EN 

16 

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reckless  act  or  omission  of  the  recognised  organisation,  its  employees, 
agents  or  others  who  act  on  behalf  of  the  recognised  organisation,  the 
administration  shall  be  entitled  to  financial  compensation  from  the 
recognised organisation, to the extent that the said loss or damage is, as 
decided by that court, caused by the recognised organisation; the Member 
States  may  limit  the  maximum  amount  payable  by  the  recognised 
organisation, which must, however, be at least equal to EUR 2 million. 

The following is important to distinguish: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

Statutory  work  (surveys)  is  performed  by  recognised  organisations  on  the  flag  fleet  in 
order to determine the compliance of registered vessels with the applicable requirements 
of  the  international  (IMO)  conventions,  codes,  EU  Directives  and  national  legislation. 
The situation between the flag administration and the recognised organisation should be 
set out in an agreement between the two parties. 

There  is  nothing  obliging  any  Flag  State  to  authorize  statutory  work  to  any  recognized 
organisation. It is perfectly legitimate to carry out that work them selves, in the same way 
as  it  is  perfectly  legitimate  to  authorize  statutory  work  to  an  RO.  In  practice  most 
Member  States  tend  to  authorise,  to  a  smaller  or  larger  degree,  statutory  work  to 
recognised organisations. 

The  situation  regulated  in  the  liability  provisions  is  the  one  between  the  Flag 
administration  and  the  Recognised  organisation  where  the  Flag  has  authorized  the 
recognised  organisation  to  carry  out  statutory  tasks  on  their  behalf.  If,  in  that  situation, 
liability arising out of any incident is finally and definitely imposed on the administration 
by a court of law, that administration can recover what they have been fined to pay, from 
the recognised organisation performing the work on their behalf. 

In the gross negligence case (art 6.2(b) (i)) there is then unlimited liability e.g. whatever 
the court decides the administration has to pay, they are entitled to recover in full from 
the RO. 

In the negligence cases (art 6.2(b) (ii)(iii)) they can recover up to a maximum as agreed 
between  the  Flag  administration  and  the  recognised  organisation  but  which  can  not  be 
lower than 4 and 2 million €respectively. Hence, in the case there is a limitation agreed 
between the parties to those amounts but a court would award a higher amount, the Flag 
administration  in  question  would  have  to  cover  anything  over  and  above  the  2  and  4 
million €themselves (or through insurance as the case may be). 

The  Directive  however  leaves  it  for  the  two  parties,  the  Flag  administration  and  the 
recognised organisation which they wish to authorize to do statutory work on their behalf, 
to negotiate and agree any amount higher then the 2 and 4 million, including unlimited 
liability.  The  Directive  does  however  not  impose  unlimited  liability  for  the  negligence 
cases (art 6.2(b) (ii)(iii)).  

If the parties cannot reach agreement then the administration cannot use or delegate any 
statutory work to that RO, and will have to perform those tasks as a Flag State, which it is 
in its full right to do. 

EN 

17 

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The  liability  provisions  in  article  6.2(b)  entered  into  force  22  July  2003  and  the  report  in 
accordance  with  article  6.5  aims  to  evaluate  the  effects  of  the  implementation  of  the  liability 
provisions.  It  is  interesting  to  evaluate  the  level  of  liability  Member  States  have  agreed  with 
recognised  organisations,  particularly  if  there  are  cases  where  Member  States  have  negotiated 
and  agreed  unlimited  liability  also  for  the  negligence  cases.  If  so,  the  question  if  there  is  any 
other protection for the recognised organisation in question has been explored. 

3. 

LIABILITY LEVELS – SUMMARY OVERVIEW 

3.1. 

State of Play Liability Levels EU/EEA Flag States 

The Directive stipulates that for gross negligence cases (Art 6.2(b)(i)) there should be unlimited 
liability and this is not contested, and appears to be that case for all EU MS having implemented 
the Directive. 

The  adopted  limits  of  liability  in  the  EU/EEA  States  vary  in  respect  of  negligence  cases 
(Art.6.2(b)(ii) /(iii)). 

•  Eight  Member  States  (Cyprus,  Hungary,  Latvia,  Lithuania,  Poland,  Slovenia,  Sweden,  UK) 

have limits of liability 4/2 million Euros for Art. 6.2(b)(ii)/(iii) respectively; 

•  Five  Member  States  and  Norway  have  limits  slightly  higher  than  the  Directive  amounts  at 
5/2.5 million Euros (Belgium, Denmark, Greece, Malta, Portugal, Norway) applicable to the 
situations envisaged in Art. 6.2(b)(ii)/(iii) respectively; 

•  Three Member States (Finland, Ireland and the Netherlands) have limits of liability of 5/2.5 

million US dollars19. 

•  Five  EU  States,  namely,  France,  Germany,  Italy,  Luxembourg  and  Spain  have  adopted 
unlimited liability under Art. 6.2(b)(ii) and (iii). (There is a possibility that the Polish model 
agreement may also establish unlimited liability). 

•  For the remaining four Member States20, there were no or little information available.  

In  conclusion,  17  Member  States  and  Norway  have  introduced  limited  liability  for  negligence 
cases. The amounts by and large correspond to the amounts in the Directive, turning the “floor” 
into  a  “ceiling”.  5  Member  States  have  used  the  possibility  provided  in  Article  6  and  agreed 
unlimited  liability  also  for  the  negligence  cases  with  the  recognised  organisations  they  are 
authorizing. For 3 Member States and Iceland the situation is unclear due to lack of information. 

Table 1 provides a summary overview of the situation as of February 2006, on the basis of a state 
by state analysis done by the University of Southampton using replies to questionnaires21. 

19 
20 
21 

Using conversion rate in February those amounts translates to 4.2/2.1 million EURO, respectively 
Austria, Czech Republic, Estonia and Slovenia 
Despite the best endeavours to collect all available data from governmental and other official sources, the 
accuracy and completeness of the information as provided cannot be guaranteed.  

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Table 1 The status of implementation of Art.6(2)(b) 

EU  Member 
State 

Implementation 
method 

New 
Agreements 

Implementation 
Problems 

(i)  Liability 
for  Gross 
Negligence 

(ii)Negligence 

(iii)Negligence 

Monetary 
Unit 

Recklessness 

Recklessness  

Loss  of  Life 
personal 
injury 

Property 
Damage 

(million €) 

(million €) 

recognised 
organisations 
authorized  by 
the  Member 
State 
irrespective  of 
the  degree  of 
authorisation 

Austria 

Not known 

Not known 

Not known 

Not Known 

Not Known 

Not Known 

Not Known  Not known 

Belgium 

LI + Agreement 

Under 
negotiation 

No 

Unlimited 

Cyprus 

LI + Agreement 

Yes 

Numbering 

Unlimited 

5 

4 

2.5 

2 

Euro 

Euro 

Czech 
Republic 

Not known 

No 

Not implemented 

STC 

STC 

STC 

Not Known 

Denmark 

LI + Agreement 

Yes 

No 

Unlimited 

5 

2.5 

Euro 

Estonia 

LI + Agreement 

Not known 

Not implemented 

Standard 
Terms 

Standard Terms  Standard Terms 

Finland 

LI + Agreement 

Under 
negotiation  

No 

Unlimited 

5 

2.5 

US$ 

ABS,  BV,  GL, 
LR, NKK, DNV 

BV, 
ABS, 
DNV, HRS, GL, 
KR,  LR,  NKK, 
RINA, RS 

ABS, 
BV, 
DNV,  GL,  LR, 
NKK, RINA 

ABS,  BV,  GL, 
LR, 
RINA, 
DNV, RS 

EN 

19 

EN 

 
  
 
 
 
EU  Member 
State 

Implementation 
method 

New 
Agreements 

Implementation 
Problems 

(i)  Liability 
for  Gross 
Negligence 

(ii)Negligence 

(iii)Negligence 

Monetary 
Unit 

Recklessness 

Recklessness  

Loss  of  Life 
personal 
injury 

Property 
Damage 

(million €) 

(million €) 

recognised 
organisations 
authorized  by 
the  Member 
State 
irrespective  of 
the  degree  of 
authorisation 

France 

LI + Agreement 

Yes 

Germany 

LI + Agreement 

Yes 

Greece 

LI + Agreement 

Yes 

No 

No 

No 

Unlimited 

Unlimited 

Unlimited  

ABS, BV, GL 

Unlimited 

Unlimited 

Unlimited  

Unlimited 

5 

2.5 

Euro 

Hungary 

LI + Agreement 

Not known 

Wording 

Unlimited 

Ireland 

LI + Agreement 

Yes 

Italy 

LI + Agreement 

Yes 

No 

No 

Latvia 

LI + Agreement 

Yes 

Wording 

Unlimited 

Lithuania 

LI + Agreement 

Under 
negotiation 

Luxemburg 

LI 

Yes 

No 

No 

4 

5 

2 

2.5 

Unlimited 

Unlimited 

Unlimited 

Unlimited  

4 

4 

2 

2 

Unlimited 

Euro 

US$ 

Euro 

Euro 

Unlimited 

Unlimited 

Unlimited  

ABS,  BV,  Gl, 
LR, DNV 

ABS, 
BV, 
DNV,  GL,  KR, 
LR, 
NKk, 
RINA, RS 

RINA 

BV,  GL,  LR, 
DNV 

RINA, 
BV, GL 

ABS, 

ABS,  BV,  GL, 
LR, DNV, RS 

BV,  LR,  DNV, 
RS 

ABS, 
BV, 
DNV,  GL,  LR, 
NKK, RINA 

EN 

20 

EN 

 
  
 
 
 
 
EU  Member 
State 

Implementation 
method 

New 
Agreements 

Implementation 
Problems 

(i)  Liability 
for  Gross 
Negligence 

(ii)Negligence 

(iii)Negligence 

Monetary 
Unit 

Recklessness 

Recklessness  

Loss  of  Life 
personal 
injury 

Property 
Damage 

(million €) 

(million €) 

Malta 

LI + Agreement 

Under 
negotiation 

Numbering 

Unlimited 

5 

Netherlands 

LI + Agreement 

Under 
negotiation 

No 

Unlimited 

5 

Poland 

LI + Agreement 

Under 
negotiation 

Wording 

Unlimited 

Portugal 

LI + Agreement 

Yes 

No 

Unlimited 

4 

5 

2.5 

2.5 

2 

2.5 

recognised 
organisations 
authorized  by 
the  Member 
State 
irrespective  of 
the  degree  of 
authorisation 

ABS, 
DNV, 
RINA and RS 

BV, 
GL, 

BV, 
ABS, 
DNV,  GL,  LR, 
NKK, RINA 

Euro/Local 
Currency 

US$ 

Euro 

No Info 

Euro 

LR,  BV,  DNV, 
ABS, 
RINA, 
GL,  RINAVE, 
NKK 

Slovakia 

LI + Agreement 

Not known 

Not known 

Not known 

Not known 

Not known 

ABS, GL?? 

Slovenia 

LI + Agreement 

Yes 

Spain 

LI 

Sweden 

Agreement 

Yes 

Yes 

U.K. 

LI + Agreement 

Yes 

No 

No 

No 

No 

Unlimited 

4 

2 

Euro 

BV, GL, RINA  

Unlimited 

Unlimited 

Unlimited  

BV, GL, RINA 

Unlimited 

Unlimited 

4 

4 

2 

2 

Euro 

Euro 

ABS,BV,  GL, 
LR, DNV 

BV, 
ABS, 
DNV,  GL,  LR, 

EN 

21 

EN 

 
  
 
 
EU  Member 
State 

Implementation 
method 

New 
Agreements 

Implementation 
Problems 

(i)  Liability 
for  Gross 
Negligence 

(ii)Negligence 

(iii)Negligence 

Monetary 
Unit 

Recklessness 

Recklessness  

Loss  of  Life 
personal 
injury 

Property 
Damage 

(million €) 

(million €) 

recognised 
organisations 
authorized  by 
the  Member 
State 
irrespective  of 
the  degree  of 
authorisation 

RINA, NKK 

EEA 
STATES 

Iceland 

LI + Agreement 

Not known 

Not known 

Not known 

Not known 

Not known 

STC/SDR 
200,000 

No Info 

Norway 

Agreement 

Yes 

No 

Unlimited 

5 

2.5 

Euro 

DNV,  LR,  BV, 
GL, ABS 

EN 

22 

EN 

 
  
 
 
 
 
 
 
 
 
3.2. 

The case of unlimited liability for negligence 

Directive  94/57/EC  permits  European  states  and  recognised  organisations  to  agree  higher 
limitations liability for negligence, without establishing a ceiling to such greater amount. The 
result  of  this  option  has  been  twofold:  on  one  hand  certain  countries  have  opted  for 
negotiating  higher  maxima  (mostly  €  2.5  and  €  5  million  respectively),  on  the  other  hand 
some  other  countries  have  insisted  on  and  negotiated  an  unlimited  right  of  recourse  against 
the recognised  organisations  authorised in their territory. These states  are  France, Germany, 
Italy, Luxembourg and Spain. As can be seen from Table 2 these Member States have signed 
agreements with EU recognised organisations.  

Table 2 

EU  Member 
State 

Art. 
6.2(b)(i) 

Art. 
6.2(b)(ii) 

Art. 
6.2(b)(iii) 

RO 

France 

Unlimited  Unlimited  Unlimited  ABS, BV, GL 

Germany 

Unlimited  Unlimited  Unlimited   ABS, BV, GL, LR, DNV 

Italy 

Unlimited  Unlimited  Unlimited  ABS, BV, GL, RINA 

Luxembourg  Unlimited  Unlimited  Unlimited  ABS,  BV,  GL,  DNV,  LR,  NKK, 

RINA 

Spain 

Unlimited  Unlimited  Unlimited  BV, GL, RINA 

Independent  legal  experts  in  these  countries  have  been  contacted  by  the  contractor  and  the 
matter  of  unlimited  liability  –  and  potential  defences  against  it  –  has  been  explored.  The 
overall results of such investigations may be summarised as follows. 

It  is  a  general  principle  of  most  legal  systems  that  the  sovereign  state  has  to  perform  its 
statutory duty with the diligence required for the task involved and that, in case of negligence 
on its part, it may be found liable to pay damages to all injured parties. The legal systems of 
France, Germany, Italy, Luxembourg and Spain are all strongly influenced by each other and 
do not in general provide the administration with protection against actions by their citizens. 
On  the  contrary,  constitutional  provisions  guarantee  citizens  the  possibility  of  a  fair  trial  in 
order to recover such damages22. In some countries there is a special court expressly created 
to deal with such claims23, while in others jurisdiction is left with the civil court.24  

This  being  the  position,  if  the  responsibility  for  issuing  statutory  certificates  lies  with  the 
administration25  and  the  administration  cannot  part  with  such  liability  by  mere  delegation26, 

22 
23 
24 
25 

For instance, in Germany § 34 GG, in Italy Art. 28 Cost 
As the French Tribunal Administratif 
As it is the case in Italy 
The obligation of issuing statutory certificates is generally imposed on the flag States by international 
conventions. This seems to be the case even as far as European legislation is concerned, at least from 
what  appears  in  two  of  the  recitals  of  the  Directive  where  reference  to  both  the  responsibility  of 
Member  States  for  the  issuing  of  international  certificates  for  safety  and  pollution  and  the  need  for 
closer involvement of the national administrations in the issue of such certificates are referred to 

EN 

23 

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the  question  arises  whether  any  statutory 
administration from recovering in full from a recognised organisation at fault.  

limitations  or  requirements  prevent 

the 

Based on the information gathered, the answer to this question appears to be in the negative27. 
The  only  European  country  for  which  conclusive  analysis  cannot  be  provided  is  Germany, 
where  it  has  been  argued  that  a  constitutional  provision  allowing  recourse  action  by  the 
Administration against its employees only in case of gross negligence would prevent recovery 
in all cases of simple negligence. It appears however that the German administration has been 
careful  not  to  qualify  recognised  organisations  as  public  employees  and  that  this  may 
invalidate this argument altogether. 

In  conclusion,  the  study  has  not  identified  any  relevant  national  legislation  allowing  the 
recognised  organisations  that  are  authorised  in  countries  where  unlimited  liability  for 
negligence is required to avoid or limit such unlimited exposure. The only state in which this 
may be possible is Germany, but no case appears to have been decided on this issue. 

The fact that some EU Flag States demand unlimited liability also for negligence cases may 
have  resulted  in  several  recognised  organisations  choosing  not  to  seek  authorization  from 
those states (See further below chapter 3.3). This may lead to the question if the possibility to 
negotiate unlimited liability also for negligence cases could work as a means to reduce access 
to that market?  

3.3. 

Directive 94/57/EC and competition 

Some  recognised  organisations  expressed  the  view  that  the  demand  of  unlimited  liability  in 
cases of negligence by some EU Member States and the associated uninsurable risks has acted 
as  a  protectionist  measure  to  distort  the  market  and  prevent  them  from  working  in  such 
countries.  In  their  view,  the  real  result  was  to  restrict  the  options  of  available  providers  to 
those  who  are  willing  to  risk  unlimited  liability  for  ordinary  negligence.  Some  recognised 
organisations suggest that the final text of the Directive supports an indirect continuation of 
the protectionism of national entities. 

This  view  appears  however  not  to  fully  consider  the  situation  that  some  recognised 
organisations, as can be seen from Table 2, have signed agreements for unlimited liability also 
for negligence cases. The suggestion that this can be used by a Member State to “protect” the 
“own”  recognised  organisation  is  not  supported  by  the  research,  as  all  Member  States  have 
agreements  with  several  recognised  organisations  (depending  on  the  size,  demand  from 
shipowners and nature of their flagged fleet). 

The Directive provides for the possibility to negotiate such unlimited liability but it is subject 
to  negotiation  and  agreement  from  both  parties,  the  EU  Member  State  and  the  Recognised 
organisation. It is not imposed by the Directive nor is it at the discretion of only one party. 

As  has  been  mentioned  earlier,  it  should  be  noted  that  if  a  EU  Member  State  demands 
unlimited liability for all negligence cases but there is no recognised organisation willing to 

26 

27 

Either because of a legal proviso in this sense or because the recognised organisations are qualified as 
agents of the administration itself 
In  Spain,  Decree  90/2003  clearly  imposes  such  liability  and  contains  no  exclusions,  exceptions  nor 
limitations 

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24 

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sign an agreement on those terms, that Member State will have to carry out the statutory work 
on their flagged fleet themselves.  

3.4. 

Liability Levels for some (non-EU) Flag States 

Outside  the  EU,  the  limits  of  liability  vary  significantly  within  the  range  currently  found 
within  the  EU.  The  research  investigated  some  of  the  major  Flag  States  in  the  world, 
Bahamas,  Panama,  Canada,  China,  Japan,  New  Zealand  and,  USA,  in  order  to  provide  a 
background against which commercial advantages or disadvantages of the implementation of 
the Directive may be evaluated. 

There are States in which the applicable limits of liability are based on the standard terms and 
conditions of each recognised organisation. Other States are compliant with the IMO model 
agreement, that is to say have unlimited liability for gross negligence and limits of liability for 
conduct  as  that  described  under  Art.6.2(b)(ii)  and  Art.6.2(b)(iii).  In  USA,  the  liability  of 
recognised organisations appears not limited contractually at all. 

However,  in  the  USA  (and  in  Germany),  legal  advice  available  to  recognised  organisations 
suggests that claims based on negligence against the relevant maritime authority are restricted. 
The  existence  of  unlimited  liability  between  the  maritime  Authority  and  the  recognised 
organisation is therefore not operational in practice. 

In conclusion, on the basis of the Southampton study there appears to be no suggestion that 
the  liability  provisions  in  the  Directive  have  influenced  non  EU  Flag  States  to  introduce 
unlimited liability for negligence situations. 

3.5. 

Relevant Court Cases 

The research carried out by Southampton revealed that to date28 there is no case either decided 
or  underway  under  which  the  recovery  of  the  Flag  State  against  a  recognised  organisation 
under Art.6.2(b) has been or may be activated.  

3.6. 

Insurance implications 

Recognised  organisations  have  professional  indemnity  cover  spanning  between  10  and  100 
million dollars for both statutory and general services. However, they state that the insurance 
arrangements are concluded on an aggregate basis with a total liability cap rather than a “per 
incident” cap.  

Based on information provided by recognised organisations, the insurance implication of the 
implementation of Directive 94/57/EC may be summarised as follows: 

•  The  implementation  of  Art.  6.2(b)  did  not  prompt  recognised  organisations  to  arrange 

increased or additional insurance cover;  

•  However,  insurance  premiums  increased  up  to  threefold  as  insurers  and  re-insurers  re-

evaluated the risks involved; 

28 

February 2006 

EN 

25 

   EN 

 
                                                 
•  Unlimited  liability  is  uninsurable.  Thus  recognised  organisations  operating  in  countries 
where  there  is  unlimited  liability  are  running  the  risk  of  not  being  able  to  meet  the 
liabilities in question in cases of catastrophic incidents, no matter how large the insurance 
cover they have purchased; 

•  Reinsurers have expressed their concern in respect of the unlimited liability potential under 

the Directive; 

•  Unfavourable contractual terms have been introduced in the insurance contracts; 

•  In contrast, the surveying fees do not appear to have risen significantly. 

In  conclusion,  it  appears  that  the  implementation  of  Art.  6.2(b)  did  not  prompt  recognised 
organisations  to  arrange  increased  or  additional  insurance  cover  however  the  insurance 
premiums  may  have  increased.  There  is  no  significant  difference  in  the  fees  charged  by 
recognised organisations that operate both under systems providing for unlimited and limited 
liability for negligent acts or omissions. 

3.7. 

Financial Stability (equilibrium) of recognised organisations  

On the basis of the information made available29 there appear to be no hard evidence that the 
financial stability of the recognised organisations has yet been affected by the introduction of 
Art.6.2 (b).  

A question of interest is whether the EU/EEA provide a competitive working environment, in 
comparison with the other major shipping countries worldwide.  

Based on the research carried out, it appears that the major distinction is not between EU and 
non-EU Countries but rather between countries with limited and unlimited liability in respect 
of claims for reckless or negligent acts.  

Limitation  of  liability  provides  a  more  secure  and  stable  financial  environment  for  the 
operation  of  recognised  organisations.  Unlimited  liability  in  respect  of  gross  negligence 
recognised  organisations  accept  as  commonplace  and  to  an  extent  reasonable  compromise. 
However,  accepting  unlimited  liability  for  simple  negligence  is  generally  considered  as 
risking commercial and financial suicide, for which reason some recognised organisations are 
not prepared to provide their services on such terms. 

In conclusion, the research has shown that, as far as commercial advantages/disadvantages of 
the  unlimited  liability  option  are  concerned,  there  is  no  hard  evidence  that  any  significant 
market  alteration  has  followed  the  implementation  of  the  Directive.  According  to  responses 
received from recognised organisations, survey fees have risen consistently according to the 
local markets concerned and do not appear to have been influenced by varying risk exposures.  

29 

The  recognised  organisations  that  responded  to  the  questionnaire  had  not  incurred  any  liability  to  a 
national  administration  as  a  result  of  statutory  marine  work  performed  by  them  for  that  national 
administration 

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4. 

CONSULTATIONS 

The  research  by  the  University  of  Southampton  was  conducted  by  use  of  questionnaires 
covering the issues identified. Given that the information required stemmed from a range of 
different sources with different interests and backgrounds, five different questionnaires were 
used and addressed to governments of European Union Member States, governments of non-
Member States, recognised organisations, legal experts from within the European Union and 
legal  experts  from  outside  the  European  Union  respectively.  In  almost  all  cases  the 
questionnaires were followed up by telephone interviews.  

With  some  important  exceptions,  written  responses  received  from  governments  were  short 
and  succinct  and  required  follow-up  of  further  investigation.  A  far  greater  amount  of  detail 
was  collected  through  follow-up  calls,  even  if  often  accompanied  by  explicit  requests  for 
confidentiality.  Responses  received  from  legal  experts  were  very  valuable  even  where  not 
comprehensive.  As  far  as  recognised  organisations  are  concerned,  all  members  of  the 
International Association of Classification Societies (IACS) were requested to take part in the 
study and seven responded. Two other Recognised organisations with limited EU recognition 
(the Hellenic Register of Shipping and RINAVE) where also contacted.  

The approach of the University of Southampton has been supported with a letter from EMSA 
explaining the work carried out as commissioned by EMSA.  

The requirement of Article 6.5 is that “The report shall be drawn up in cooperation with the 
competent  authorities  of  the  member  States  and  the  parties  concerned,  in  particular 
recognised organisations/ classification societies”. The approach followed largely meets this 
requirement.  

The  majority  of  IACS  members  have  been  providing  valuable  input  to  the  contractors  and 
their views have been included in the report (see chapter 4.1 below). Not all Member States 
have been active or responding to the study.  

4.1. 

Position of the recognized organisations 

The position of a group of recognised organisations in respect of the Directive is made public 
through the activities of the International Association of Classification Societies (IACS)30 In 
its paper Towards a Future Maritime Policy for the Union: A European vision for the ocean 
and  the  seas  Contribution  by  International  Association  of  Classification  Societies  (IACS)31, 
IACS  expressed  its  support  to  the  EU  initiatives  on  issues  of  marine  safety.  However,  with 
regard to the matter of liability of recognised organisations, IACS raised a number of issues 
which, in their view, represent weaknesses and deficiencies of the system created by Directive 
94/57/CE. Their position may be summarised as follows: 

“... The classification and related statutory services provided by the members of IACS in their 
capacity  as  either  a  classification  society  or  recognised  organisation  are  an  essential 
component  of  the  overall  maritime  safety  and  pollution  prevention  regimes.  These  services 

30 

31 

American  Bureau  of  Shipping,  Bureau  Veritas,  China  Classification  Society,  Det  Norske  Veritas, 
Germanischer  Lloyd,  Korean  Register  of  Shipping,  Lloyd's  Register,  Nippon  Kaiji  Kyokai,  Registro 
Italiano Navale, Russian Maritime Register of Shipping, Indian Register of Shipping (Associate) 
IACS, Towards a Future Maritime Policy for the Union: A European vision for the ocean and the seas 
Contribution by International Association of Classification Societies (IACS), 13th October 2005 

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make a significant contribution to the safety of life and property and to the protection of the 
marine environment. 

The continued provision of these essential services is threatened by the existing exposure of 
classification societies to potentially unlimited liability for errors or omissions on their part 
that do not amount to gross negligence. 

The  members  of  IACS  respectfully  request  that  the  Maritime  Policy  Task  Force  give  due 
consideration to extending appropriate legal protection to classification societies that operate 
within EU Member states and are recognised under the EU Council Directive 94/57/EC, as 
amended, on Common Rules and Standards for Ship Inspection and Survey Organisations and 
for the Relevant Activities of Maritime Administrations. Such protection would not extend to 
instances  of  gross  negligence.  Such  protection  would  be  in  recognition  of  the  essential 
contribution that classification societies make to overall economic growth, local employment 
opportunities,  maritime  safety  and  environmental  protection.  Such  protection  should  be 
objective, transparent and allow for an appeal. 

[…] 

As  international  organisations  addressing  the  most  international  of  industries,  marine 
classification societies rely on the principles of freedom of competition and trade to efficiently 
provide  service  to  the  shipping  and  offshore  industries.  Such  principles  are  based  on  the 
concept  of  reciprocity  between  sovereign  nations.  IACS  respectfully  requests  that  the 
Maritime  Policy  Task  Force  enshrine  these  principles  and  concepts  within  EU  maritime 
policy to encourage competitiveness within a free and fair market”32. 

From the above position, the following points emerge: 

•  IACS  does  not  call  for  an  amendment  of  Art.  6.2(b)(i)  which  applies  in  cases  of  gross 

negligence.  

•  IACS  members  are  concerned  that  the  provision  of  their  services  is  endangered  by  the 
possibility given to the EU Member States under Directive 94/57/EC to establish unlimited 
liability for damage arising in cases of negligence. 

•  They call for protection through an amendment of the liability provisions contained in Art. 
6.2(b)(ii)  and  6.2(b)(iii) of the Directive. These recognised organisations suggest that the 
limits  of  Art.6.2(b)(ii)  and  (iii)  are  modified  to  be  maxima  limits  of  liability  and  that  a 
provision in the sense that Art.6.2(b) does not create new rights of recovery is inserted to 
alleviate  the  increasing  litigation.  Under  the  above  scenario  the  recognised  organisations 
have indicated that they would be willing to accept higher limits of liability, provided they 
are capped. 

They also raise concerns33 in respect of the effect of the increased threat of criminal liability 
on their personnel and seafarers on recruiting suitable surveyors.  

32 
33 

Ibidem, para 6.1-6.7 
“…IACS  asks  that  the  Maritime  Policy  Task  Force  consider  the  strongly  negative  implications  on 
attracting  and  retaining  the  necessary  qualified  classification  personnel  that  would  be  occasioned  by 
further broadening laws that criminalise actions that may contribute to accidental pollution but which 
do not amount to gross negligence or a dereliction of duty on the part of an individual”. This point is not 

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From  the  responses  received,  it  appears  that  the  implementation  of  Art.  6.2(b)  of  Directive 
94/57/EC has influenced the issue of liability in particular: 

(1) 

(2) 

It appears to have affected the negotiation process with the various States; and 

It  provided  the  clients  of  recognised  organisations  with  an  impetus  to  discuss  higher 
liability amounts. 

Recognised organisations expect important changes in litigation following the implementation 
of the liability provisions of Article 6(2) of Directive 94/57/EC. In particular: 

•  The  wording  of  Article  6  in:  “…if  liability  arising  out  of  any  incident  is  finally  and 
definitely  imposed  on  the  administration  by  a  court  of  law…the  administration  shall  be 
entitled to financial compensation from the recognised organisation…” appears capable of 
raising an expectation that third parties now possess a statutory right to recover financial 
compensation  for  their  losses  from  the  relevant  national  maritime  administration,  and, 
indirectly,  from  the  relevant  recognised  organisation  via  the  indemnity  provisions  in 
Article 6.2 (b)(i), (ii) and (iii). 

•  Recognised  organisations  suggest  that  there  is  a  possibility  that  claimants  in  litigation 
against a recognised organisation may now add claims against the national Administration 
hoping to trigger claims by that Administration against the recognised organisation in order 
to support their private interests. 

•  Recognised  organisations  reported  an  increased  number  of  financial  claims  in  respect  of 
their surveys. In addition, they reported a considerable increase of the amounts claimed.34 
They  attribute  this  to  the  encouragement  received  by  claimants  under  the  wording  of 
Art.6(2)(b). 

•  Recognised organisations fear that the distinction between negligence and gross negligence 
may be blurred where there is significant loss of life or damage resulting from a shipping 
accident, thus “gross”  damages and publicity could  lead to gross negligence  being easily 
proven. 

•  Some recognised organisations reported that the increase in litigation is likely to affect the 
way  the  duties  of  marine  surveyors  are  discharged  because  of  the  impact  that  the 
possibility  of  high  profile  litigation  may  have  on  the  morale  and  the  attitude  of  both  the 
surveyors  of  recognised  organisations  and 
the  National 
Administrations  concerned.  There  was  also  the  suggestion  that  work  efficiency  may  be 
affected  by  the  threat  of  claims  by  shipowners  whose  vessels  have  or  are  to  be  detained 
following a survey. An increasing number of such threats and claims in very recent years 
have been suggested.  

the  civil  servants  of 

In addition the recognised organisations have suggested that due to the potential increase in 
litigation  it  has  become  much  more  difficult  to  obtain  adequate  cover  from  the  insurance 
market,  and  that  where  available  it  is  associated  with  higher  premium  rates  and  higher 
deductibles.  

directly relevant to the establishment and limitation of civil liability but is linked with the expectation of 
civil compensation in appropriate cases where criminal liability is established 
No statistics or details were provided 

34 

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