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26 April 2006
As important as they are at times controversial, classification societies occupy a unique place in the field of maritime law and commerce.
Classification societies enforce statutory requirements on behalf of flag and port states, yet they are not government agencies themselves. Classification societies have the power to impose penalties, yet they also compete for the business of those that come under their scrutiny. Classification societies make and enforce the rules, but also offer consulting services on how best to comply. Classification societies require the shipowners they supervise to have systems of accountability, yet the societies themselves remain largely alien to the concept of legal liability for their own negligence. Classification societies derive nearly all of their maritime revenue - directly or indirectly - from shipowners, yet they resist liability when a shipowner is wronged through class negligence. Increasingly, this mix of roles and attitudes has struck many observers as problematic in light of the discussion over whether classification societies should be legally liable for negligence.
The three most frequently heard arguments against liability are as follows:
In today's world, classification societies are hardly unique among professionals who charge relatively small amounts for their services, yet still risk considerable economic liability for losses caused by their negligence. Other professionals customarily minimize risks through different forms of insurance arrangements; classification societies increasingly do the same. With earnings sheets that are more comparable to those of successful businesses than those of service institutions, today's classification societies have a more reasonable ratio of fees to exposure than many organizations and industries.
While shipowners always remain responsible for their vessels' seaworthiness, they should be able to rely on the class certificate. However, if a classification society is unwilling to accept legal responsibility for its judgments, how much faith can a shipowner or insurer reasonably be expected to place in the certificate? In the case of newbuildings, the class representative (customarily paid by the yard) has not just performed one survey, but rather has been a regular presence on site throughout the vessel's construction. Under such circumstances, is it appropriate for a new owner to bear the risk of loss caused by the classification society's negligence if the vessel has been designed, built and tested in accordance with the classification society's own rules, and this control has led to the granting of a classification certificate and the delivery of the vessel?
In Norway, the authorities have delegated certain control functions through the agreement of July 1 1987 with annexes between the Ministry of Trade and Det norske Veritas. This delegation has raised questions regarding the role of Det norske Veritas. The tasks that Det norske Veritas performs on behalf of the authorities are considered to be more of a service than business nature. Activities of a service nature are traditionally protected in Norwegian tort law; one may wonder whether this protection has influenced the discussion on the liability of classification societies for those tasks that are not performed on behalf of the authorities.
The claim that classification societies are public-spirited service institutions deserving special treatment with regard to liability dates back many years. Today, the liability of classification societies must be examined in light of the fact that hospitals, health professionals, accounting firms and even government agencies may now all be held legally liable for negligence. While it is certainly true that classification societies perform important and valuable research on improving safety at sea, commentators have questioned whether it is still appropriate for this research to be carried out by each society individually. If classification societies deserve special treatment with regards to liability because of their public mission, many believe that this mission would be more efficiently and effectively pursued by combining resources through one set of standards, rather than by the societies competing among themselves.
The long-simmering debate over the liability of classification societies was raised a notch in 2003 when the Spanish government sued the classification society responsible for classing the Prestige. Moreover, there are no signs of the debate cooling off in the near future. As shipowners are increasingly held accountable by classification societies for their performance and actions, they are expecting nothing less than the same from the societies. On the legal front, the trend in Norway is in favour of increased liability for government bodies dealing with tasks of a typically 'service nature'. It seems unlikely that classification societies will escape the same fate in the long run.
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