Eleanor Ayres

What can we learn from the Costa Concordia? by Eleanor Ayres, Associate, Holman, Fenwick and Willan

Almost exactly 100 years after the sinking of the Titanic, the Costa Concordia disaster has been cited as one of the worst maritime insurance losses ever. The fallout from the Costa Concordia is likely to have a worldwide impact, not only on cruise operators, but also on insurers and all vessel owners and operators. According to analysts, the total insured loss could be nearly US$1 billion, including the salvage and hull costs, and it was initially estimated that the claims from passenger deaths, injuries and loss of property will exceed US$8 million, before even considering any environmental damage or wider loss of business to the whole cruise market. Claims filed to date are understood to seek more than US$1.4 billion in compensation. The size of the claim means that it will resonate throughout the insurance world and into the wider shipping industry.

Claims are still emerging in the aftermath of the Costa Concordia incident, with claims for loss of life, personal injuries from passengers and crew alike. Four of the musicians and dancers employed on the vessel have recently launched claims for US$200 million, alleging that they can no longer work due to physical and emotional injury, and the family of the Hungarian violinist who died while helping other passengers has launched a claim for US$400 million. In such a case as this, claimants are flocking to the US, where punitive damages are awarded and the Athens Convention (which limits liability for passenger claims) does not apply.

Claimant personal injury solicitors called upon all regulators, including the IMO, to improve safety through the design and management of vessels in order to avoid death and serious injury, and to do so pro-actively, rather than just learning “after the event”, a call which was backed by the EU Transport Commissioner, Slim Kallas. Modern cruise ships are very different from their predecessors and changing all the time, primarily to maximise the number of passenger cabins, and it is therefore essential that regulators keep up with the changes to both ships themselves and the nature of their use.

It is apparently undisputed that the Costa Concordia incident occurred for a number of reasons. Chief among these is the fact that the vessel deviated from the planned route in order to “salute” the island of Giglio and struck rocks, causing the vessel to capsize and lie heavily on her side. The catastrophe was compounded by the high number of passengers and crew on board, the lack of safety drill and the fact that the vessel’s list meant that almost half the lifeboats were ineffective. It has subsequently been suggested that the high centre of gravity found on a modern cruise ship means that capsizing is inherently much more likely.

This incident emphasises several key risk factors including:

• Design of the vessel.
• Crew error.
• Emergency procedures – under SOLAS ships are required to be able to evacuate within 30 minutes, rather than the six hours it took on the Costa Concordia.
• Practical issues – location of lifeboats and life jackets and importance of safety briefings.
• Environmental risk (after the event), such as oil spills and damage to reefs.

These risk factors need to be managed as far as possible in order to prevent a disaster of such magnitude occurring again. There is also the added factor, more significant perhaps with passenger vessels than cargo ships, of risk to reputation.

Cruising is now a significant part of the tourism industry, and cruise ships carry huge numbers of passengers each voyage, with large crews comprising not only seamen, but also entertainment, catering and housekeeping staff. The considerations to be taken into account are therefore very different from 100 years ago. Modern cruise ships are considerably taller than the old-style liners such as the Titanic and are designed with a large number of decks above the waterline, with a large superstructure accommodating more passenger cabins and balconies, and a flattened hull to allow them to enter more harbours and carry more passengers. As a result, they have a relatively shallow draft and a very high air draft, which leads to the higher centre of gravity (increased by the fact that the swimming pools are generally at the top of the vessel) which has been partly blamed for the Costa Concordia incident. As a result, the wind heeling moment is also high, which has to be compensated for with heeling tanks transferring ballast from side to side to maintain stability and promote passenger comfort.

This had been taken further in recently revised class actions in the US, which allege that the Costa Concordia had a flawed design and maximised passenger-carrying capacity at the expense of seaworthiness. The suit suggests that safety was compromised in order to maximise passenger numbers and stated that the shallow draught “made it unstable, and susceptible to tilting during the allision with the rock, rendering many of its lifeboats useless”. It also alleges that the internal architecture made evacuation difficult, turning the vessel into “a deadly maze and labyrinth”. This internal architecture can also lead to an increased instability, with a high shear force and bending moment, due to the nature of the structure, with lots of small internal walls (in cabins) and spaces. Conversely, there are also large open spaces on cruise ships, such as the centrepiece grand atrium and theatres. These open spaces (which have a structural effect more like cargo holds than the rest of a cruise ship) cause different stresses and strains, and present different risks in the event of fire in those spaces, as they need to be able to be easily evacuated.

However, experts have commented that the broad beam of these “floating hotels” promotes stability, despite the higher centre of gravity. Furthermore, modern vessels are designed to stay afloat, even in the event of a significant hull breach, due to large numbers of watertight compartments. Fire on board is perhaps a more likely event than collision or grounding, and fire on a balcony can spread very quickly down the side of a vessel due to wind. It is therefore important that fires can be isolated and smoke cleared promptly. Fundamentally, the ship itself is designed to limp back to port (under tow if necessary) if disaster strikes. Consequently, cruise ships are significantly safer than many other modes of transport.

The sheer size of modern cruise ships (which have been likened to a small town at sea – the Costa Concordia was carrying more than 4, 000 passengers and crew) mean that any incident is likely to affect a large number of people, and present major challenges for evacuation, rescue and salvage. It is therefore crucial that all emergency requirements are complied with, and evacuation procedures are properly implemented.

During the evacuation of the Costa Concordia, the lifeboats appear to have caused particular problems as many of them were unavailable due to the angle at which the vessel came to rest (about 70°). This angle will also have affected access to emergency corridors. The International Convention for Safety of Life At Sea (SOLAS) (which was developed following the sinking of the Titanic and added to following other major incidents such as the sinking of the Estonia, in 1994) sets out the requirements for life jackets and lifeboats/rafts (a major issue for the Titanic which notoriously did not have enough), as well as their locations and distribution around the ship, and states that lifeboats should be able to be launched at lists of up to 20° for new vessels. Marine evacuation systems (i.e. chutes for speedy evacuation) and freefall lifeboats (launched at the stern) may deal with some of these problems, but there are concerns over their suitability for the very young and very old. SOLAS also requires that emergency drills for passengers are to take place within 24 hours of the ship leaving the embarkation port, and requires that a sufficient number of crew are trained to handle life boats and deal with passengers. Unfortunately, the Costa Concordia incident took place only two hours after leaving the embarkation port, and an emergency drill had not taken place.

The shipping industry is already highly regulated and safety-aware (with conventions such as SOLAS and the Convention on Standards of Training, Certification and Watchkeeping), but in the immediate aftermath of the Costa Concordia incident, the Cruise Lines International Association (CLIA) called for a comprehensive evaluation of safety regulations by the IMO, although a fuller investigation would have to wait until the Italian police investigation was complete. The CLIA (which has a North American focus) and the European Cruise Council (ECC) carried out a review of operational safety following the accident, and has now launched new policies as a result. Significantly, the new muster policy is that all passengers must receive their muster drill before the ship sails. They have also prescribed that extra life jackets must be carried (in excess of the SOLAS requirements), voyage planning procedures are tightened and passenger nationality information must be logged, to be kept ashore, in order that this information can be easily available in the event of an emergency. Bridge access is also to be limited to those with operational functions unless senior management approves otherwise. Another notable addition is to add certain additional requirements to the muster policy to be provided to passengers as required by SOLAS.

Even where excellent procedures have been set down by the owners/operators at management level, human error frequently plays a significant role in accidents in any industry, and is likely to have been a significant factor in the Costa Concordia incident. As part of several safety measures introduced by the vessel’s operators since the Costa Concordia incident (including those recommended by the CLIA), they have announced that they have launched a safety monitoring system which is overseen in real time by land-based staff, thus enabling unexpected changes of direction to be readily identified. Voyage planning will also be discussed before departure.

In addition to this kind of monitoring, regular review of planned maintenance systems, class surveys and claims records can perhaps provide an indication of when something is not quite right, and it is then up to the owners/operators to ensure that all safety procedures are properly implemented, and, if necessary, reviewed and updated. For all vessels, whether cargo, passenger or other types of vessel, there have been suggestions that minimum requirements, whether set by the flag state, classification society or the IMO, are not enough. Minimum crew requirements, for example, do not take account of the vast amounts of paperwork now required to be completed, or the number of port calls that a cargo ship might make in a short period of time, leading to crew exhaustion and with no time for maintenance to be completed. Crew exhaustion, in particular, has been blamed for major accidents such as the Exxon Valdez oil spill. It is not possible to avoid all accidents, but perhaps closer monitoring can reduce their likelihood. Further regulation may also lead to increased costs, but may lead to increased safety and a reduced potential for loss of life.

With accidents such as that of the Costa Concordia or other cruise ship incidents such as fires or serious food-poisoning outbreaks, it will be the owners or operators who face many of the subsequent legal claims, whether as a tour operator under the Package Travel Regulations (for EU customers), as an employer (for crew claims) or simply as the provider of the cruise. Given the size of the claims, there is no merit in these claimants seeking recourse from the Captain himself, even if it can be said that it was his negligence that caused the accident. The latest actions launched by passengers in Florida cite inadequate training of crew (as well as the failure to carry out muster drills) as being the root of the negligence leading to the incident. Cruise and tour operators must also consider the reputational aspects of dealing with passenger claims in a reasonable and appropriate manner. However, there may be scope, under English law at least, for defending or passing on claims where a crew member has acted outside his employment or the accident was actually the responsibility of a third party (perhaps port operatives or stevedores). It is difficult to see how this might be proven, particularly where passage-planning is concerned, as a Master of a ship has considerable freedom to determine this (as he should), and it may be difficult to draw a line as to where he has acted outside his employment. In cases where the Package Travel Regulations apply, the customer can always make the claim against the tour operator in the first instance and it is then up to the tour operator to make an indemnity claim if appropriate.

Fundamentally, ship owners and operators must put in place (and actually apply) all appropriate measures and safety management systems, particularly for passenger ships, where there will be many passengers with no experience of life aboard ship. Crew must be selected and trained appropriately, and following major incidents there need to be systems in place to deal with the injured passengers and their families, and the inevitable claims that follow.

For more information, please contact Eleanor Ayres, Associate, on EMAIL: eleanor.ayres@hfw.com