“MARCO POLO” – Liability for Norovirus outbreak under the Athens Convention and the Package Travel Regulations

Cruise and Maritime Services International Limited v Navigators Underwriting Limited – [2017] EWHC 843 (Comm)

James Severn and John Strange of Thomas Cooper LLP acted for the successful Defendant in this claim heard by Knowles J in the Commercial Court.

In early July 2009 the cruise ship “MARCO POLO” (the “Vessel”) was 2 days into a cruise in the Scottish Islands when there was an outbreak of Norovirus on board. As a result of the outbreak, the cruise was curtailed and all the passengers on board were significantly affected.

At the time of the outbreak the Head Charterers of the Vessel were Marco Polo Chartering Ltd. There was a sub-time charter to Transocean Tours Touristik GmbH, a company domiciled in Germany, and Transocean entered into a General Sales Agency Agreement (“GSAA”) with the Claimant, Cruise and Maritime Services International Ltd (“CMSI”). CMSI then appointed a number of Tour Operators who marketed and sold cruises to the general public.

The Head Charterers held a policy of insurance in which CMSI were a named Co-Assured (the “Policy”). The lead underwriter was Navigators Underwriting Agency. The Policy was a Charterer’s Liability Policy written on a line slip and based on the rules of the UK Club.

Following the curtailment of the cruise, CMSI made a number of payments. It was CMSI’s claim that these payments were made to passengers as a result of injury and “ruined holidays” and that they should be entitled to an indemnity from Underwriters.

The key issues to be determined were;

i) Whether CMSI had any liability to the passengers as a result of the operation of the Athens Convention or the Package Travel Regulation; and

ii) If they did have such a liability, were CMSI covered by the Policy?

The Athens Convention

The Athens Convention sets out that there can be both a “Carrier” and a “Performing Carrier” in a contract of carriage. The “Carrier” is the person who concludes a contract of carriage with the passenger and the “Performing Carrier” is the person who actually performs the carriage.

CMSI claimed it was the “Carrier” for the purposes of the Athens Convention as it had contracted with the passengers and that it had a liability to the passengers as a result of the outbreak of Norovirus.

The Court held that CMSI was not the Carrier for the purposes of the Athens Convention and that it had no liability to passengers as a result of the operation of the Athens Convention. It was held that the Carrier(s) were the Tour Operators appointed by CMSI who had sold the cruise packages to the passengers. The Performing Carrier was the Head Charterer.

It was suggested in the course of the trial that it could be possible for there to be two Contracting Carriers for one voyage.  In this case that would have been both the Tour Operator that contracted with the passenger and CMSI. On the facts, the Court found nothing to support this construction and it is suggested that there is unlikely to be a situation where there are two or more “Carriers”.

The Package Travel Regulations

CMSI claimed it was liable to the passengers as it was the “organiser” of packages sold to them for the purposes of the Package Travel Regulations 1992 (the “PTR”).  Pursuant to Regulation 15 of the PTR, the organiser of a “package” under these regulations is responsible for the proper performance of the contract whether or not it is responsible for the failings.

This element of CMSI’s claim was abandoned in the Claimant’s closing submissions and did not receive judicial consideration. It is clear however that CMSI was not the Organiser of the cruise for the purposes of the PTR as they had no direct relationship with the passengers. It was conceded in cross-examination that CMSI did not even know the names of the passengers and could not, in any event, have been the organiser of the packages as they did not have the necessary insurance or ABTA Bond.

The Policy

Having decided that CMSI had no liability to the passengers and that the Policy was a liability policy, there was no need to consider the terms of the Policy in detail. The Court did, however, go on to find that CMSI was not a “Charterer” and, even if it did have a liability to passengers, the liability could not properly be described as having been “incurred as Charterers”. This would, in any event, have brought any liability that CMSI had to the passengers outside the scope of the Charterers Liability policy held by Head Charterers.

Both parties made submissions as to the significance of CMSI being named as co-assured in the Policy as opposed to an additional named assured. Underwriters considered that the cover provided to CMSI was “mis-directed arrow” cover but CMSI argued that it should have the benefit of cover equivalent to that of the named assured. Given the findings of the Court in respect of CMSI’s liability to the passengers, this did not need to be addressed.

Comment

This case is a useful reminder that an assured must establish that it has a liability to make payments in order to bring a claim under an indemnity policy. Claims against cruise operators are routinely brought under both the Athens Convention and the PTR and the Court’s judgment in this case addressed liability under both regimes. The judgment also serves as a reminder that the fact of an outbreak of norovirus on a cruise ship is not, in itself, evidence of fault on the part of the carrier.

For further information, please contact James Severn or John Strange.

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About the contributors

  • James Severn Partner

    James is a sport and litigation solicitor and a partner in our Marine Commercial Litigation group. James has a broad commercial litigation and dispute resolution practice with a particular focus on shipping and insurance disputes...

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  • John Strange Partner

    John is a partner in our London office and a member of our casualty response team. He specialises in personal injury and shipping cases with particular emphasis on the cruise and ferry industry.

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