Limiting ship owners' liability for compulsory pilotage services

06 March 2019
The peculiar nature of the shipping business makes the prudent management of time, risk and liability a sacred imperative to staying afloat. Unfortunately, loss does occur despite a ship owner's best efforts; the perils of the sea constituting only a fraction of their worries. It is not uncommon for shipowners to incur liability for acts or omissions for which neither they nor their employees are directly responsible. This is particularly common in the compulsory pilotage field. However, even in cases where liability cannot be disputed, shipowners may be entitled to limit their liability and, in some cases, escape it entirely.

The Nigerian Ports Authority (NPA) Act allows the minister of transport to designate certain areas of the nation's ports and territorial waters as compulsory pilotage districts.(1) In general, the navigation of ships within these areas must be performed by a pilot employed or licensed by the NPA. Where there is a loss or injury to a third party directly resulting from the negligence of such a pilot, the shipowner under pilotage cannot reject liability for such loss even though the pilotage was compulsory. Section 54 of the act codifies this well-settled principle:

The master or owner of a ship navigating in circumstances in which pilotage is compulsory shall be answerable for any loss or damage caused by the ship or by any fault of the navigation of the ship in the same manner as he would if pilotage were not compulsory.(2)

The rationale for this legal position is that a pilot rendering pilotage services becomes a servant of the vessel under pilotage, such that their actions or omissions bind the vessel and its owners. Although Section 55 of the act recognizes the pilot's personal liability – as well as the owner's right to claim indemnity from the pilot – the prospects of a full recovery by the owner from the pilot are slim, if not non-existent.

Thankfully for owners the Merchant Shipping Act 2007 entitles shipowners to limit their liability in respect of loss, injury or damage arising from the operation of a vessel.(3) Previously, shipowners could not limit their liability unless they could prove that the act or omission causing loss or damage occurred without their "actual fault or privity". However, having acceded to the Convention on Limitation of Liability for Maritime Claims 1976, together with the introduction of the Merchant Shipping Act 2007, the actual fault or privity rule has been abolished in Nigeria. Thus, shipowners can limit their liability unless the claimant can show that the loss resulted from a personal act or omission by the shipowner (or the shipowner's agents acting within the scope of their employment), which was committed with intent to cause such loss or committed recklessly and with the knowledge that such loss would probably occur.(4)

The burden of proof now rests with the claimant rather than the owner. Owners are entitled to exercise their right to limit their liability, unless the claimant can present contrary evidence which nullifies that right in line with the Merchant Shipping Act.