Inquiry Into Cruise Ship Personal Injury Liability (conflict of laws perspectives only)

Based on a request from the Attorneys General of the Commonwealth, the States and the Territories, an inquiry has been initiated to explore the conflict of laws implications for personal injury claims against cruise ship operators.

Background

For general background, see Nygh, Conflict of Laws in Australia 20.71 - 20.77.

Cruise ship travel has emerged in the 21^st Century as one of the most popular forms of tourism. Australians have particularly embraced cruising and, while disrupted by COVID, cruising is making a strong comeback.

As the size of the ships grows and the number of passengers increases, the likelihood and occurrence of unfortunate shipboard injuries is also a growth industry. This has been magnified by COVID-19 mass infections. Remember the Ruby Princess!

On 2 September 2022, the Full Court issued its decision in Carnival plc v Karpik (The Ruby Princess)[2022] FCAFC 149 ('Carnival'), reversing the federal Court decision that can be found in [2021] FCA 1082.

The issue in the Carnival decision focused on 2 terms in the cruise ship ticket agreement. The contract language in question contained (1) a waiver of right to join in a class action and (2) an exclusive jurisdiction clause specifying the Federal court in Los Angeles. The plaintiff, Mr Ho, is Canadian and the cruise line is an American Company. Mr Ho wants to participate in an Australian class action against Carnival/Princess.

Mr Ho argued and the Federal Court agreed that the contractual language was invalid under the Australian Consumer law and that he was free to join the Australian class action. The Full Court concluded that the ACL had no such anchoring effect because the contract language was not unfair as that term is defined by the ACL. If the ACL applied at all, the Full Court held that the Federal Court in Los Angeles was quite capable of enforcing it as the ACL was settled law in this area. The law governing the dispute was not decided and has been left to the LA Court if Mr Ho pursues his claim there.

The Carnivaldecision is lengthy and was not unanimous. While much of the decision deals with offer/acceptance and the laws of agency, a substantial amount deals with the ACL and choice of law as well as the validity of exclusive forum laws. The Court concluded that the clause had been incorporated into the contract and had not been rejected by the plaintiff - leaving the issues of validity and effect of the jurisdiction clause.

The court concluded that a class action waiver was procedural as opposed to substantive as it does not affect the legal rights and duties between the parties but rather deals with specific procedure that may be employed to recover damages under the appropriate substantive law.

Your attention is drawn to the following paragraphs of the decision: 240 - 260, 324 - 347, 367 - 393. As a result of this language, a number of recent Australian decisions are now drawn into doubt.

There is no doubt that cruise ship injury claims will increase along with the popularity of cruises.

The challenges created by cruise ship passage language has also been a matter of concern in the USA where it has been dealt with by Federal legislation. In light of the Carnivaldecision, you are to consider the US legislation in the following context.

This inquiry focuses on the situation where a passenger desires to make a claim against a cruise ship operator in connection with a personal injury (not loss or damage to property) suffered by the passenger. Injuries commonly encountered by passengers include: (1) claims for negligent design or maintenance occasioning or resulting in injury to the passenger - including sanitation and public health lapses; (2) claims for assaults by other passengers or members of the crew; (3) assaults by third-parties who are negligently allowed on the ship.

This Inquiry is not concerned with the nature or quality of substantive Australian tort laws for personal injury. The Inquiry is limited to conflict of laws issues.

In light of the proliferation of personal injury claims, cruise ship operators routinely insert choice of forum and choice of law [not an issue in Carnival] clauses in the contract (terms of carriage) with the passenger and this Inquiry is focused on such clauses. For purposes of this Inquiry, you will base your responses on the following clause which is used by a large Italy-based cruise operator:

Any claim, controversy, dispute, suit, or matter of any kind whatsoever arising out of, concerned with, or incident to any Cruise or in connection with this contract shall be instituted only in the courts of Genoa, Italy, to the exclusion of any other country, state, or nation. Italian law shall apply to any such proceedings, without effect to Italian choice-of-law principles.['Clause']

Virtually all cruise ship passenger contracts contain a forum/choice of law referring to a country that is a party to the Athens Convention [Convention]. Italy is a signatory to the Convention. Italy is also a member of the European Union.

The Athens Convention places limits on the financial liability of a cruise ship operator for personal injury liability. While many countries have acceded to the Athens Convention, Australia has not and neither has the USA. At this point in time, Australia has no interest in acceding to the Convention and adopting the Convention's liability limitations into Australian municipal (domestic) law of torts.

As a non-member state to the Athens Convention and in response to the Convention, the United States has enacted domestic legislation that provides:

46 USC 30509(a)

1. In general. - The owner, master, manager, or agent of a vessel transporting passengers between ports in the USA, or between a port in the USA and a port in a foreign country, may not include in a regulation or contract a provision limiting -
2. The liability of the owner, master, or agent for personal injury or death caused by the negligence or fault of the owner or the owner's employees or agents; or
3. The right of a claimant for personal injury or death to a trial by a court of competent jurisdiction.
4. Voidness. - A provision described in paragraph (1) is void.

The Attorneys General of Australia are considering recommending to Parliament legislation similar to 45 USC 30509(a), with appropriate changes. The central focus of this Inquiry is the appropriateness of a modified Statute as considered through the perspective of conflict of laws and in light of Carnival. The proposed Australian version ['Statute'] would state:

(1)In general. - The owner, master, manager, or agent of a vessel transporting passengers between ports in Australia, or between a port in Australia and a port in a foreign country, may not include in a regulation or contract a provision limiting -

1. The liability of the owner, master, or agent for personal injury or death caused by the negligence or fault of the owner or the owner's employees or agents; or
2. The right of a claimant for personal injury or death to a trial by a court of competent jurisdiction.
3. Voidness. - A provision described in paragraph (1) is void.['Statute']

As the Nygh text makes clear, the Australian choice of law rules for personal injuries on ships is far from settled. However, the focus of this Inquiry is the choice of forum/choice of law clause cited above - the Clause.

The conflict of laws perspective includes all the topics addressed in LAWS5057 including jurisdiction, enforcement of judgments, cross-vesting, forum non conveniens and choice of law.

Terms of Reference

The following questions are to be answered on the basis that the Statute has not been enacted in Australia:

1. Without the Statute, from a conflict of laws perspective, if an Australian commences a lawsuit in an Australian Court against a cruise ship operator (domestic or foreign) where the terms of carriage include a choice of forum/choice of law pointing to a Convention country, such as Italy, what are the likely conflict of laws procedures that may be called into play by the parties? [Just list]
2. From a conflict of laws perspective, how would an Australian court deal with the issues identified in Question1?
3. Would the plaintiff's causes of action have an effect on how the Clause is interpreted by an Australian Court? Supply an example.

The following questions are to be answered on the basis that the Statute has been enacted in Australia:

1. What would be the effect on your response to Question2 if the Statute was enacted here?
2. If legislation like the Statute was enacted in Australia, discuss enforcement of judgment issues that may arise.
3. Would you suggest any substantive changes to the Statute and explain the benefit of the changes? You may consider the Carnival decision and the American experience with the Statute in your response.