Recent Development in Thai Maritime Law

[align=left]Thailand has never been regarded as a maritime nation, and maritime law is considered a relatively new branch of law in Thai jurisprudence, unfamiliar to most Thai lawyers and judges.

At present Thailand’s “real” maritime law consists of three acts of Parliament passed only during this decade: the Carriage of Goods by Sea Act 1991, the Arrest of Ships Act 1991, and the Ship Mortgages and Maritime Liens Act 1994. There are other, much older acts whose scope of application encompasses maritime activities, but their prime intention is t generally govern the practice of water transport. These include the Navigation in Thai Waters Act 1913, the Thai Vessel Act 1938, the Mercantile Marine Promotion Act 1978, and the Prevention of Vessel Collision Act to 1979.

With the establishment of the Intellectual Property and International Trade (IPIT) Court in December 1997, some maritime disputes now fall under the exclusive jurisdiction of this Court. Civil cases involving international transport, marine insurance, and arrest of ships are also to be brought before the IPIT Court. The cases are heard and determined by a quorum of two professional judges and one associate judge knowledgeable and experienced in maritime matters. Although the IPIT Court can exercise its expertise and specialization to adjudicate some maritime disputes, the enforcement of other maritime claims disputes, the enforcement of other maritime claims, including maritime lien, has to be carried out in the Civil Court.

Three maritime laws, designed to bring Thai maritime law into line with internationally accepted norms and relevant international conventions, are now being drafted. They are the Civil Liability for Ship Collision Act, the Salvage Act, and the General Average Act, which are expected to be enacted some time this year. Initially, the draftsmen of the acts intended to combine the three topics in one piece of legislation but ultimately decided to separate the three topics to simplify and speed up the legislative process.

In addition the draftsmen decided to place the new maritime legislation under the jurisdiction of the IPIT Court to ensure that issues governed by the new maritime laws would be adjudicated by a specialized court already experienced in certain areas of maritime law .

The objective of this article is to introduce the principles of the three new laws. It should be borne in mine, however, that the contents of the acts might be altered during the legislative process.

I. Civil Liability for Ship Collision:
This draft Act is divided into two parts: allocation of liability for collision damage and compensation for collision damage, the Act will apply to collisions involving at least one seagoing vessel in whatever waters the collisions take place. The meaning of collision is extended to include situations where although no collision actually takes place, damage is caused by a seagoing vessel to another vessel or to its goods or persons on board. For example, damage caused by excessive wash from a seagoing vessel would fall within the meaning of collision.

The Act defines “seagoing vessel” as a vessel of a description for use on the sea. In other words, the characteristics of the vessel, not actual use by its owner, are to be considered. For example, a long-tailed boat used for carrying tourists around the islands in southern Thailand will not be regarded as a seagoing vessel under the Act because according to its nature and condition, it does not have the characteristics for use on the sea.

Collision liability is based on fault. In this regard, the Act has fully embraced the concepts of the 1910 Brussels Collision Convention. If a collision is caused by force major or fault cannot be established, damages are borne by those who have suffered them. If the collision is caused through the fault of one of the vessels, liability is attached to the owner of the vessel at fault. On the other hand, if two or more vessels are at fault, the liabilities of the vessel owners are proportional to the degree of fault of each party. If, however, having regard to the circumstances, it is not possible to establish the degree of fault or if it appears that the faults are equal, liability is apportioned equally.

In case where death, personal injury, or damages to health are involved, the vessels at fault are jointly as well as severally liable for compensation. However, among the vessels at fault, their liabilities will be in proportion to the faults respectively committed.

Compensation for collision damage is classified into three types : damage to vessel, damage to property on board, and damage to life, personal injury, or health. Whatever the case, compensation is paid by financial means.

In the event of total loss of a vessel, damages will be equal to the value of the vessel at the date of collision, taking into account the type, age condition, earning capacity, nature of operation, value of insurable interest, cost of purchasing a similar vessel, and any other relevant factors. Recoverable damages also include reimbursement of salvage, general average, expenses for mitigating the damage, and other expenses reasonably incurred as a result of the collision. The sums for which the claimant has become liable as a result of the collision, the value of bunkers and ship’s gear lost, and the net freight lost can also be reimbursed.

If a vessel is damaged but not totally lost, damages will be the cost of reasonable temporary repairs affected to enable the vessel to proceed safely to the destination and cost of reasonable permanent repairs. Reimbursement for out-of-pocket expenses, as in total loss, is also recoverable. However, if the claimant chooses not to repair the damage, he is entitled to recover the sum which would have been paid had the repair been effected.

Where property on board is lost to damage as a consequence of the collision, damages to be recovered will depend on the type of property.

Property consisting of cargo carried under a contract of carriage of goods or charter party with a commercial value:

• If lost, damages will be the market value of the property at the port of destination at the time when it should have arrived, less any expenses saved. If the market value cannot be determined damages will be the shipped value of the property plus freight and the cost of insurance if incurred, plus a margin of 10% of the value of the property as calculated above.
• If damaged, damages recoverable will be equal to the difference between the value of the property in sound condition at the destination and its value in damaged condition.

Property on board other than those carried under a contract of carriage of goods or charter party:
• If the property is lost or irreparable, damages will be the value of the property or reasonable replacement costs.
• If the property is damaged and can be repaired, damages will be reasonable repair costs but not exceeding the value of the property or reasonable costs to replace it.

If the collision leads to death, personal injury, or damage to health, the Civil and Commercial Code (Sections 443-446) will apply mutatis mutandis.

The draft Act also stipulates that a person who has a collision claim in connection with any vessel (excluding claims related to loss of or damage to cargo and property of passengers carried on board a vessel under a contract of carriage), will have a maritime lien under the Ship Mortgages and Maritime Liens Act over such vessel. There are also provisions dealing with the right to interest on recoverable damages in addition to the principal sum, and the time the interest will run. However, the draft Act does not specify the rate of interest, thus, the rate in the Civil and Commercial Code of 7.5% per annum will apply.

II. Salvage
This draft Act defines “salvage” as any operation undertaken to assist a vessel or any other property in danger in whatever waters, regardless of whether the operation is under a salvage agreement. For this purpose, “vessel” means any description of vessel capable of navigation and “property” means any property not permanently and intentionally attached to the shoreline and includes freight at risk.

Although salvage can be undertaken against any description of vessel capable of navigation, the draft Act will not apply to warships or other government vessels used for non-commercial purposes or to fixed or floating platforms or mobile offshore drilling units when such platforms or units are engaged in the exploration or production of sea-bed mineral resources on location. Similarly, the Act will not apply to salvage operations in inland waters where all the vessels involved are not sea-going vessels, or to salvage operations in inland waters where no vessels are involved.

The draft Act follows closely the principles of the IMO International Convention on Salvage 1989. Apart from adopting the traditional concept of “no cure no pay”, the draft Act deals with “special compensation”. The salver is entitled to remuneration for an operation, regardless of its results, if the danger is substantial physical damage to the environment including human health, marine life, or resources along the coastline or inland waters or areas adjacent thereto caused by pollution, contamination, fire, explosion, or similar major incidents.

The first part of the draft Act deals with salvage operations. Although there is no provision imposing the duty to assist a vessel or property, the master has the duty to render assistance to any person in danger of being lost at sea. If a salvage contract is concluded, it is deemed that the master has the authority to bind the owner of the vessel, and the master or the owner of the vessel has the authority to bind the owner of the property on board the vessel. However, in enforcing the salvage contract, if the court is of the view that the contract was entered into under undue influence, such as fraudulent or fictitious acts, misrepresentation or non-disclosure, or under the influence of danger, and its terms are inequitable or the payment under the contract is far too large or too small taking into account the services actually rendered, the court may annul the whole or any part of the con-tract and apply the provisions of the Act instead, modify any terms thereof, or increase or decrease the remuneration to an amount commensurate with the actual services rendered.

Part 1 of the draft Act also deals with the duty of the salver to the owner and the master of the vessel or the owner of other property in danger, and vice verse, These duties are intended not only for the performance of salvage operations but also for the prevention and minimization of damage to the environment.

Part 2 deals with salvage remuneration, which is divided into two types: salvage reward and special compensation. The salver is entitled to a reward when salvage operations prove useful to the safety of the ship or other property. Under this Act, unless otherwise agreed in the salvage contract, the IPIT Court has the authority to fix rewards aimed at encouraging salvage operations, taking into account Artic 13 of the 1989 Salvage Convention. However, in any case, the reward to be fixed shall not be more than the salved value of the ship and other property. The act also specifies how the reward can be apportioned among different salvers and between the owners and crewmembers of each vessel involved in the operation.

Special compensation is payable by the owner of the ship in danger where the salver has carried salvage operations in respect of a vessel which by itself or its cargo threatened damage to the environment and (a) has failed to earn a reward, or (b) the reward is less than reasonable expenses incurred in the operations. In the former case, the salver is entitled to reimbursement for reasonable expenses incurred in the operations. In the former case, the salver is entitled to reimbursement for reasonable expenses incurred in the operations.

In the latter case, the compensation will be the differential. The Act has also adopted the concept of “enhanced award” If damage to the environment has been prevented or minimized by the salvage operations, special compensation may be increased up to a maximum of 30% of the expenses incurred by the salver. However, if the court, taking into account the criteria for fixing the reward, believes that the salver deserves more than the 30% increment, it may increase the special compensation further, but the total amount shall not exceed 100% of the expenses.

The Act makes it clear that only a claim for salvage reward, not special compensating, gives rise to maritime lien. Moreover, the special compensation is not regarded as general average loss, which gives rise to general average contribution under the law on general average.

Although the Act does not give the salver the right to retain the salved ship or other property, it sets out the such vessel or property will not be removed from the port or place at which they first arrived after the completion of the operations unless (a) permission has been given by the salver, (b) removal is by order of the court or competent authorities, or (c) the person responsible for salvage remuneration has put up satisfactory security for the remuneration, including interest and costs. If there are reasonable grounds to believe that the vessel or such other property will be removed, or the salver can show that the security put up or to be put up will be inadequate or inappropriate, the court may give an interim attachment order.

Any action relating to salvage remuneration or damages from failure to perform any duty specified in the Act is time-barred if proceedings are not instituted within two years commencing on the day the salvage operations were terminated.

III. General Average
This draft Act introduces into Thai law the traditional concept of “general average” which is recognized as and forms an integral part of maritime law in every nation. Al interests at risk in a maritime adventure are proportionally liable to make good any loss voluntarily incurred at the time of peril.

The Act defines “general average loss” as loss, damage, or expenses which are the direct consequence of any extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for preserving a ship and the property on board from peril affecting the common safety of such ship and property. Unless the property on board consists of personal effects of the crewmembers or passengers or postal mail, the owners of the ship and property saved from the peril and reaching the final destination safely as a result of the general average act are liable for contribution.

The Act follows many concepts of the York-Antwerp Rules. Rights to contribution will not be prejudiced even though the peril affecting the common safety of the ship and here property may have been due to the fault of one of the parties of the adventure, but this will not have any impact on any remedies or defenses which may be open against or to that part in respect of such fault.

If the ship-owners wish to declare general average contributions, they need to appoint an average adjuster to assess the extent of loss and adjust the amount of contributions to be made pro rata by the owners of the ship and the owner of the saved property. The ship-owners also have to inform the owners or other parties with interests in the property on board, so far as practicable from the information in the shipping documents or other documents in their possession, of the nature of the general average loss as well as the name and address of the adjuster. The act then imposes a duty on the party that suffered from the general average loss to send notice in writing to the average adjuster appointed by the ship-owners giving details of the loss, damage, or expenses no later than 12 months from the day the common adventure came to end. Failure to such duty will lead to estoppels against that party. Proof otherwise will be allowed only if it becomes apparent that the assessment made by the adjuster in incorrect.

The Act also deals with cases where the party who suffered from the general average loss seeks for contribution directly from the owners of the property in safety. It should be borne in mind that the Act makes it plain that the rules and methods for contribution specified in the Act are applicable only where there is no prior agreement. If an agreement exists as to the rules and methods for general average contribution, the rules agreed on will be the governing principles.

Unless otherwise agreed, the amount to be made good for the loss or damage will be based upon the value at the port of destination or the port where the adventure ends. Where the general average act is expenditure, the actual expenses reasonably incurred are the basis for consideration. In assessing the contributory value of the property for the purpose of adjusting the contribution, the value at the time and place when the where the adventure ends will be used.

The Act sets out a different time bar for actions for general average contribution. If the ship-owners are the party claiming for contribution, the action must be brought within one year from the date the notification of the amount of contribution is given. On the other hand, if the party who suffered from the general average is claiming for contribution, the time-bar is two years from the date when the general average loss took place[/align]