Warner v Scapa Flow Charters – The Athens Convention – “Suspension”, “Postponement” and “Extension”

Date: Wednesday, November 14th, 2018 by Michaela Hickson.

A recent Supreme Court decision on the grounds for the suspension of the limitation period under the Athens Convention benefits minor Scottish pursuers, but in discussing the Court of Appeal decision in Higham v Stena Line, the Supreme Court has left something of a grey area for England and Wales.

Background

The Pursuer was the infant son of a diver who died at sea on 14 August 2012. A claim was brought on their behalf, and was issued on 14 May 2015, 2 years and 9 months following the incident. Scapa Flow Charters applied for the matter to be struck out due to the limitation period in the Athens Convention and the issue was appealed to the Supreme Court.

Issues

The key issue concerned article 16 of the Athens Convention, which would have required suit to be brought within two years of the date of the deceased’s disembarkation, no later than 18 August 2012 in this case. The Convention provides, however, that the law of the Court seized of the case can govern “suspension or interruption” to this period, provided proceedings are issued within three years of disembarkation.

The Prescription and Limitation (Scotland) Act 1973 was the relevant Scottish legislation for the issue. To paraphrase, this provides that if the pursuing relatives of the deceased are not of legal age, the period until they reach legal majority (16 in Scotland) is disregarded in the computation of the Limitation Period.

Scapa Flow Charters argued that this was not a suspension or interruption within the meaning of article 16. A suspension could only occur if it arose after the limitation period had begun, which was not the case in the current matter. The arguments put forward in support of the position were:

1. The meaning of “suspension” must mean a provision which gives rise to a break in a course of events already in train, as discussed in Higham; and
2. That the words “suspension or interruption” should have a technical meaning adopted from certain civil law systems for the sake of certainty. They pointed to international definitions whereby a suspension operates to pause a limitation period which has started to run, and resumes such period running after the issue suspending limitation, such as mental incapacity, ceases.

Thus, they argued that the Scottish Act could not suspend the limitation period, as it opted to postpone it by disregarding the period in which the Pursuer was a minor.

The Court’s Decision

 The Court has clarified the approach in Scotland, in that the wording in the Prescription and Limitation (Scotland) Act 1973 does suspend the limitation period in the Athens Convention in the case of minors, addressing SFC’s arguments as follows:

1. A technical approach to interpretation of the words “suspension and interruption” should not be adopted for the following reasons:
   1. Conventions are supposed to be international, and thus the Court felt it was not appropriate to look at the domestic law of certain systems for a technical meaning of words which are applied in many common law systems. Thus, a broad approach should be adopted, and in any event the Court found that the word “suspension” can readily cover postponement as in the Scottish Act.
   2. The Court found that there was no international consensus regarding the meaning of “suspension” when the Athens Convention was adopted. As such, there was no support for SFC’s argument for the case of certainty, particularly as it is undisputed that the 3 year long-stop period in the convention operates ‘across the board’ in any event.
   3. Adopting such an approach would lead to ‘serious anomalies’ in its application, such as covering only mental incapacity that post-dated an incident and disregarding mental incapacity that pre-dated an incident.
2. The Higham definition of “suspension” referred to in the judgment included postponement as one of its definitions, and as such the postponement in Scottish law was a “suspension” under the Convention. In any event, as previously discussed, the Court had determined that “suspension” has a broader, rather than technical, meaning in different legal systems.

Discussion

 The Court’s decision on the matter strayed beyond the Scottish issues above, into a discussion regarding the provisions of the English Limitation Act 1980 and the Athens Convention.

The judgment provides clarity in Scotland. It appears that in Scotland minor pursuers now have three years in which to issue proceedings for incidents at sea causing injury, or when pursuing a claim arising out of the death of a relative. The provisions for personal injury claims under the Prescription and Limitation (Scotland) Act 1973 concerning injury claims for minors and those without capacity mirror those discussed in this case and will doubtlessly apply in all injury claims for minors.

The Court also reaffirmed that judicial discretion cannot be used to disapply the two year time limit in the Athens Convention, in Scotland, England or otherwise.

England and Wales

 In Higham the Court of Appeal opined, obiter, that as certain provisions in the Limitation Act were said to apply to periods “prescribed by this Act”, they may be disqualified from having any application to the provisions in the Athens Convention. The Supreme Court has disagreed with this argument and clarified that provisions in the Limitation Act are not disqualified from applying to the Athens Convention. In particular, they have stated that section 32 of the Limitation Act 1980 which postpones limitation in certain cases of fraud, concealment or mistake will suspend limitation under Article 16.

And so we come to the ‘elephant in the room’, what about minor claims in England and Wales? The Supreme Court has, rather interestingly, focused on s. 32 of the Limitation Act, and not referred at all to s.28, which extends the limitation period for minors and those without capacity. So the question is, is an “extension” under the Limitation Act a “suspension” under the Athens Convention? The answer appears to be that it is. The approach of the Court in this case was to adopt a broad approach in favour of the minor pursuer, which indicates the likely approach in future. Further, the following comment made in the judgment is almost certain to be used by Claimants in arguing this point if the issue is raised in England:

“…In my view, where article 16(3) speaks of the law of the court seized governing “the grounds of suspension… of limitation periods” (in the plural) it was applying the grounds – such as minority or incapacity – which the lex fori would apply to domestic claims for personal injury, or death or loss or damage to property…”

The mention of minority or incapacity is likely to be highly influential when a Court comes to assess whether the extension under the Limitation Act is a suspension under the Athens Convention.

This will be a disappointing decision for carriers and insurers alike as it raises uncertainty concerning the rules, particularly in England and Wales, and could result in complex and costly arguments regarding limitation.

Gemma Pearce, Marine Special Interest Group Team Leader& Partner BLM, UK

Tel: +44 (0)117 933 7721

Email: [email protected]

View from Switzerland

Relevance of the Athens Convention for Switzerland

 You may wonder why the Athens Convention is of any relevance in Switzerland, a country that does not have any direct access to the sea. The passenger’s ticket may provide for Swiss law to apply. Such choice of law is, in principle, binding among the carrier and the passenger. However, the passenger may ask the court to apply the law of the state in which he or she has his/her ordinary residence if, for instance, he or she received the offer for the journey in this state (art. 120 of the Swiss Private International Law Act).

Under Swiss law, the 1974 Athens Convention as well as the 1976 Protocol apply. The 1990 Protocol has not been adopted by Switzerland.

In accordance with art. 17 of the Athens Convention a Swiss court may be competent to deal with passenger claims.

The wording of art. 16 of the Athens Convention

 According to art. 16 para. 1 of the Athens Convention “any action for damages arising out of the death of or personal injury to a passenger or for the loss of or damage to luggage shall be time-barred after a period of two years.

Para. 3 provides that “the law of the court seized of the case shall govern the grounds of suspension and interruption of limitation periods, but in no case shall an action under this Convention be brought after the expiration of a period of three years from date of disembarkation of the passenger or from the date when disembarkation should have taken place, whichever is later”.

Para. 4 provides that “the period of limitation may be extended by a declaration of the carrier or by agreement of the parties after the cause of action has arisen. The declaration or agreement shall be in writing”.

The UK Supreme Court case

 The Scots law of limitation enacted in section 18 of the Prescription and Limitation Act 1973 did not contain “grounds of suspension and interruption” as to extend the limitation period. It only postponed the start of the limitation period, in the case at hand, for minors. The Supreme Court concluded that a “suspension” in its natural meaning could also cover the postponement of the start of a limitation period. Therefore, the claim of the minor that has been brought after two years but before the three years deadline was not time-barred.

Suspension and interruption in Switzerland

 Swiss law applies “suspension” and “interruption” to all civil claims. Suspension refers to the situation in which a limitation period does not commence and, if it has begun, is paused by a situation, such as the duration of an employment, and then resumes its running when the situation ceases (art. 134 Swiss Code of Obligations). Interruption refers to an event in which the limitation period, having been halted by an event such as debt enforcement, commences afresh for the full duration (art. 135 Swiss Code of Obligations).

In Switzerland there is no  postponement of the start of a limitation period for a minor’s claim against a carrier (unless the carrier is the minor’s father or mother; see art. 134 para. 1 no. 1 Swiss Code of Obligations). If the claim was presented under Swiss Law, then the minor’s claim would have been time-barred.

This being said, art. 16 para. 3 of the Athens Convention does not really fit into Swiss law by any other means. Suspension and interruption, in principle, are possible for eternity. In other words, a passenger would be able to interrupt and/or suspend the limitation period as often as he or she likes. The claim would then not be time-barred at all. If a carrier wishes to challenge and clarify the uncertainty it would have to file a negative action for a declaratory judgement (i.e. a judgement that confirms that the carrier owes to the passenger either nothing or a certain amount). The provision on limitation periods now suggests the following “but in no case shall an action under this Convention be brought after the expiration of a period of three years”, which would be unusual. At first sight, many lawyers would say the three year period is not a limitation period but rather a preclusion period where the passenger loses his or her right for damages completely after three years. Such deadline applies, for instance, under the Montreal Convention (Convention for the Unification of certain Rules for International Carriage by Air), art. 35 of which reads under the title of “limitation of actions” as follows:

“The right to damages shall be extinguished if an action is not brought within a period of two years, …”

The Athens Convention however does not use the word “extinguished”, it only provides that the right to damages may no longer be brought as an action before court. The other original version, the French one that is also official language in Switzerland reads the follows:

« Délai de recours

L’action en responsabilité doit être intentée, sous peine de déchéance, dans le délai de deux ans… »

In comparison to the Montreal Convention, the French wording of the Athens Convention does not speak of “déchéance” (i.e. forfeiture) but only of “prescription” and “délais de prescription” (i.e. limitation and limitation period). Also the German translation uses the terms “Verjährung” and “Verjährungsfrist” (i.e. limitation and limitation period) for art. 16 of the Athens Convention whereas for art. 35 of the Montreal Convention the word “Ausschlussfrist” (i.e. preclusion period) is being used.

The above seems to afford clarity, unless you read the Italian translation, another official language in Switzerland. Both, art. 16 of the Athens Convention and art. 35 of the Montreal Convention use the term “prescrizione” which means limitation period. The translation of art. 35 of the Montreal Convention should rather have used the term “perenzione” that is used in Swiss law for the forfeiture of rights, i.e. for a preclusion period.

Switzerland faced the same language problems when they included the provisions of The Hague-Visby Rules into the Swiss law, in particular regarding the preclusion period as per art. III, section 6, of the Hague-Visby Rules that reads the follows:

“… the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period, may however, be extended if the parties so agree after the cause of action has arisen.”

The wording of the above clearly provides for the forfeiture of the rights to damage after one year. But the provisions of The Hague-Visby Rules are not directly applicable in Switzerland. When incorporating the rules into the Federal Act of 23 September 1953 on Navigation under Swiss Law, the preclusion period became a limitation period (art. 87 of the Navigation Act). Interruption and Suspension, therefore, is possible for eternity as described above.

Not only the strict limitation of the interruption and suspension tends, from a Swiss law perspective, to the forfeiture of rights but also para. 4 of art. 16 of the Athens Conventions according to which the limitation period can be extend by agreement or declaration of the carrier could cause confusion. Under Swiss law, it is clear and completely undisputed that such extension of the limitation period by agreement or declaration is possible. This holds true for many jurisdictions, I think. Why would one explicitly include such obvious possibility as a separate paragraph? From a Swiss point of view, such inclusion would make much more sense if the passenger’s right would extinguish after the three years. In case of forfeiture of rights, it is not entirely clear whether the parties are able to prevent such forfeiture by mutual agreement or declaration of the defendant. It would, therefore, make much more sense to clearly stipulate in the convention that such extension is possible. This is exactly what happened in the Hague-Visby Rules (see above).

To sum up, art. 16 para. 3 of the Athens Convention provides for a limitation period of (maximum) three years that one cannot extend, unless the carrier agrees to such extension in accordance with para. 4 of art. 16. As lex specialis, such deadline prevails over the Swiss code of obligations according to which limitation periods may be extended by suspension and interruption eternally. Art. 16 para. 3 of the Athens Convention does not provide for the rights to be extinguished. The rights still exist after the lapse of the three years periods but cannot be brought as an action to court. But the passenger may still set off such claim against any possible claim that the carrier may have against him or her.

Nando Stauffer von May, Partner gbf Attorneys-at-Law, Switzerland

Tel: +41 43 500 48 50

Email: [email protected]

View from Italy

Italy applies Annex I to the REGULATION (EC) No 392/2009 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents. Annex I effectively embeds the Athens Convention 1974 as amended by the 2002 Protocol into the EU instrument.

In particular Art. 16 (Time bar of actions) of the Annex I of said EU Regulation – Para. 1,2 and 3 – provides for a two year time bar limitation period and refers to the law of the Court seized to govern suspension and interruption of limitation periods. In no case, however, shall an action under the Convention be brought after the expiration of any one of the following periods of time:

• a period of five years beginning with the date of disembarkation of the passenger or from the date when disembarkation should have taken place, whichever is later; or, if earlier;

• a period of three years beginning with the date when the claimant knew or ought reasonably to have known of the injury, loss or damage caused by the incident.

The Rule goes on to provide that,  notwithstanding paragraphs 1, 2 and 3 of the Article, the period of limitation may be extended by a declaration of the carrier or by agreement of the parties after the cause of action has arisen.

This discipline is in fact identical to the one dictated by Athens Convention, so time extensions (or Parties agreements) are allowed in Italy in case the Parties should mutually decide to extend the limitation periods beyond the three or five years.

Under Italian law there are two types of limitation periods. The first is an ‘extendable’ time bar, subject to being interrupted by a simple registered Letter of Claim. The second type is the ’rigid’ time bar, which can be interrupted only by way of Court action. Usually only the extendable time bar could be derogated by a time extension or agreement between the parties, while the rigid time bar does not allow interruptions beyond the Court lawsuit remedy. The Athens Convention 1974 and the corresponding EU regulation No. 392/2009 who incorporates the Convention as EU legislation does in fact provides, from an Italian law perspective, a hybrid institute, which is the “relatively rigid” time bar, where the three or five years’ time bar could exceptionally extended only by time extension or parties written agreement. This is a unique institute under Italian law which applies strictly to cases subject to the EU Reg. 392/2009 and 1974/2002 Athens Convention but will not be applicable beyond the scope of such harmonized legislation. There are no recent relevant court decisions on the subject matter in Italy.

Alberto Batini, Senior Partner BTG Legal, Italy

Tel (UK): +44 (0)203 693 7220

Tel (Milan): +39 02 30322560

Email: [email protected]