Civil Liability arising from Vessel Collisions: Notable Practical Issues when Litigating in Indonesia

Introduction

Marine transport plays a vital role in global trade. Each year around 90% of global trade, approximately 11 billion tons of cargo, is transported by sea. ^[1]A Press Release by World Bank, “Digitalizing the Maritime Sector Set to Boost the Competitiveness and Resilience of Global Trade,” The World Bank (worldbank.org), Jan. 21, 2021. However, the high level of global trade comes with risks of maritime accidents, ranging from fire, sinking, and collision.^[2]Andrew Wiguna Mantong, et.al., “Maritime Safety in Indonesia: Mapping the Challenges and Opportunities,” Center for Strategic and International Studies,” 2021, p. 31

Over the past decade, improved designs, technology, regulations, and risk management have led to a 70% drop in reported shipping losses. ^[3]Carine Dominguez‑Péry, et.al., “Reducing Maritime Accidents in Ships by Tackling Human Error: a Bibliometric Review and Research Agenda.” Journal of Shipping and Trade, 2021, p.2. The number of reported maritime accidents have also declined by a slight 4% in 2020.^[4]Allianz Global Corporate & Specialty (ACGS), “Safety and Shipping Review 2021: An Annual Review of Trends and Development in Shipping Losses and Safety,” Allianz (www.agcs.allianz.com), 2021, … Continue readingDespite the declining trend, any maritime accidents, such as collisions, may still result in catastrophic consequences, from environmental pollution, loss of property, and worst of all, loss of life.

Along with the South China, Indochina and the Philippines seas, Indonesian waters have gained a reputation for being one of the hotspots for shipping losses, accounting for a third of all shipping losses in 2020. ^[5]Ibid., p. 4. Congested ports, busy shipping lanes and extreme weather conditions are contributing factors to maritime accidents in Southeast Asian waters, including Indonesia.^[6]Ibid., p. 4. From 2010 to 2017 alone, 46 cases of vessel collisions had been recorded in Indonesia.^[7]Shanty Yahya, “Organization as the Cause of Ship Collision in Indonesian Waters,” Advances in Social Science, Education and Humanities Research, Volume 647. International Conference on Applied … Continue reading

Risk of vessel collisions hinges on the application of maritime safety measures. Maritime safety has long been regulated in legal framework that includes international conventions and standard practices. Indonesia has ratified various international conventions on maritime safety, including the International Convention for the Safety of Life at Sea (SOLAS) and Convention on the International Regulations for Preventing Collisions at Sea, 1972 (COLREGs)

However, apart from the international law aspect of maritime safety, a vessel collision also entails the private law aspect pertaining to the liability involved in the incident. This article will discuss several key points relating to civil liability in a vessel collision from an Indonesian law perspective.

Legislative Framework

In Indonesia, shipping is regulated under two major legislations. The first is Law No. 17 of 2008 on shipping as amended (“Shipping Law”) that comes with several implementing regulations. Secondly, the law that dates back to the Dutch colonial era, the Commercial Code (Kitab Undang-undang Hukum Dagang or KUHD), particularly Book II of the Commercial Code. Shipping Law mostly deals with the administrative and public aspects of shipping, covering governance of ports, marine environment protection, etc. Meanwhile, the Commercial Code for the most part governs the private aspects that cover the legal relationships between all actors in shipping activities, regulating issues such as vessel chartering, contract of carriage, and collision.

Indonesia is not a party to the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels (“Brussel Collision Convention”) which was signed on September 23, 1910, in Brussels. However, as the Netherlands had ratified the convention, it was incorporated into the country’s Commercial Code which, by way of concordance principle, was subsequently applied in Indonesia following its declaration of independence. In other words, while Indonesia is not a party to the Brussel Collision Convention, the provisions on collision under the Commercial Code have nevertheless been in line with those of the Convention.^[8]HMN Purwosutjipto, S.H., “Pengertian Pokok Hukum Dagang Indonesia: Hukum Pelayaran Laut dan Perairan Darat”, Penerbit Djambatan, 3^rd Edition, 1989, p. 276.

Definition of Collision and Maritime Accident Investigation

Article 245 of Shipping Law defines a vessel accident as an event endangering the safety of ships and/or human life in the form of sinking, fire, collisions, and grounding. Further, Article 534 defines a collision as a contact between one vessel and the other. The following situations are also deemed as ‘collision’ within the ambit of the Commercial Code:

a. If as a result of navigational method or non-compliance with any laws or regulations, a vessel causes damage to other vessel(s), goods, or the people on board of the other vessel(s), such event shall still be considered as a collision (Article 544).

b. If a vessel collides with or is in contact with an immovable object or objects secured to one (e.g., a jetty) (Article 544 a).

Port authorities are tasked with conducting preliminary investigations on maritime accidents such as collisions. Upon their own discretion, port authorities may forward the findings of the investigations to Maritime Court, also known as Mahkamah Pelayaran, which will further examine the incident. While the institution is referred to as a court, the Maritime Court is technically not a judiciary body and instead functions as an administrative body that examines indications or allegations of errors or negligence in the implementation of professional standard of seamanship by masters or officers of vessels in the event of maritime accidents such as collisions.

Civil Liability

Under Article 1365 of Indonesian Civil Code (“ICC”), in general, the operator of the vessel that is found to be at fault in a collision is liable to redress the other party.

With respect to liability in the event of a collision, the Commercial Code stipulates the following:
a. If it cannot be ascertained as to who is at fault in a collision, either because the collision is caused by force majeure or if there are doubts as to the cause of the collision, the damages shall be borne by those who have suffered it (Article 535).
b. If the collision results from the fault of one of the colliding vessels, the operator of the vessel that committed the fault shall be liable to pay damages to the other vessel (Article 536).
c. If both vessels are to blame for the collision, the liability of each vessel operators will be in proportion to the degree of their respective fault (Article 537 para. 1). The proportion shall be established by a judge without any demonstration from the party that claims indemnity. In the event such matter cannot be established, each vessel operator shall be be liable in equal proportion. (Article 537 para. 2).
d. In the event of death or personal injury resulting from a collision, each vessel operator shall be liable to third parties for the damage suffered from death or personal injury. The operator who has paid damages to the third parties to the proportion of liability as determined in the manner set out in point c above is then entitled to claim the excess from the other vessel (Article 537 para. 3)
e. If a towed vessel comes into collision with third vessel through the fault of the towing vessel, the operator of the towed vessel and the towing vessel shall be jointly and severally liable (Article 538).

Protecting your Claim

a. Time Bar
Article 742 of the Indonesian Commercial Code provides that all claims relating to vessel collisions are subject to two years expiry date from the date of the collision or the day damage is incurred as a result of the collision.

Article 1979 of ICC stipulates that a time bar can be precluded by a reminder, summons, and any legal claim submitted in the required format by authorized officials (i.e., court bailiffs) on behalf of the rightful party to the individual who shall be precluded from invoking the time bar. In practice, this is problematic as nowadays court bailiffs no longer perform the duty of serving a reminder or summons. Hence, there are opposing views on whether any reminders or demand letters which are privately served on a party (as opposed to those officially served by court bailiffs as prescribed by Article 1979 of ICC) would suffice to preclude the time bar.

Nevertheless, it is common practice for plaintiffs to serve demand letters on the other parties privately to preclude time bar. However, such privately served demand letters may be challenged by the opposing party and the court’s view on whether privately served demand letters will suffice to preclude a time bar remains to be seen.

In practice, however, parties may also extend the time bar with an agreement.

b. Tort Claim
ICC entitles those who suffered loss to be redressed by way of filing a tort claim based on faults. Article 1365 of ICC requires any person whose unlawful act has caused damages to other party to give redress. Pursuant to this provision, for an act to qualify as tort, the following elements must be established:
i. Unlawful act;
ii. Fault;
iii. Damage;
iv. Causal relationship between the unlawful act and the damage incurred;

Legal claim for losses or damage arising from a vessel collision is presented as a claim based on tort. While a plaintiff suing for damages arising from a vessel collision will be required to establish the four elements of tort claims, two of these elements generally evoke the most debates, namely damage and fault.

As the Maritime Court examines indications or allegations of errors or negligence in the implementation of professional standard of seamanship by masters or officers in the event of a maritime accident including collision, its findings may be used by a plaintiff to establish fault of the other vessel in a collision case.

On the other hand, since port authorities exercise their own discretion as to whether to refer their preliminary findings to the Maritime Court, it is possible that the relevant port authority may determine that no follow-up examination by the Maritime Court is necessary for a particular collision. Therefore, no Maritime Court decision will be issued for such collision.

In the absence of Maritime Court decision, it may be problematic for a plaintiff to prove the other vessel’s fault in a collision case. In such a case, navigational or maritime safety expert called by a plaintiff plays an even more crucial role in proving the element of fault on the part of the other vessel. Given that judges in general have little to no navigational or seamanship background, these experts’ opinion may provide significant insight in determining the cause of the collision.

Nevertheless, it should be noted that the Indonesian law does not acknowledge the legal principle where precedents hold a binding power (stare decisis). Judges have broad discretionary power to interpret facts, weigh evidence, and apply applicable laws.

In general, losses in tort litigation may be classified into material and non-material damage. Material damage includes the loss of expected profit. Non-material damage may take the forms of any psychological distress, fear, illness, and the loss of amenity. A plaintiff bears the burden of proving that the loss suffered is actual and comes as a result of the tort concerned. In collision cases, a typical plaintiff will claim for repair costs, survey costs and loss of hire against the other vessel.

Forums and Jurisdiction

Unlike in common law jurisdictions, to date Indonesia does not have admiralty court to deal with shipping disputes. As stated earlier, the so-called Maritime Court (Mahkamah Pelayaran) is in fact an administrative body that examines indications or allegations of errors or negligence in the conduct of masters or officers of vessels in the event of maritime accidents such as collisions.

In the absence of admiralty court, shipping disputes such as cargo claims and claims arising from collisions are litigated in district courts as courts of first instance.

Due to the nature of collision, parties involved in such an incident are not bound by prior contractual relationship and their legal relationships arise from tort actions. In the absence of prior contractual relationship, they are not bound by arbitration agreement. This explains why most collision disputes are litigated in courts. However, since theoretically, parties may agree to make acta compromise, i.e., to enter into an agreement to arbitrate after a dispute arises, parties involved in collisions may refer their collision disputes to arbitration through mutual agreement, by virtue of their acta compromise.

Arrest of Vessels

Article 222 of Shipping Law provides that any vessels involved in criminal and civil cases may be arrested. Further, Article 223 of the Law stipulates that a party may request arrest of a vessel without filing a lawsuit, on the basis of a maritime claim (i.e., for damage caused by vessel operation). However, these provisions have been largely ineffective due to the fact that no implementing regulations concerning this practice have been issued. As a result, most courts are still reluctant to issue orders for arrest of vessels.

Due to ineffective vessel arrest regime, in practice, a plaintiff wishing to effect pre-judgment security against a defendant may file a conservatory attachment against the defendant’s assets, including its vessels.

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For further information, please contact Desi Rutvikasari at:
Harvardy, Marieta & Mauren
Menara Global – 7th Floor
Jl. Gatot Subroto Kav. 27 Jakarta Selatan 12950, Indonesia
Phone: +62 21 5292 0918 / 0919
E-mail: rutvikasari@hmmattorneys.id, info@hmmattorneys.id
Website: http://hmmattorneys.id

Disclaimer:
This article is intended for general information only. It is not intended to be, nor should it be construed as, legal advice applicable to your particular situation. You should seek the advice of legal counsel of your choice before acting upon any of the information in this article.