In July 2020, a High Court judgment in Begum v Maran was handed down where, for the first time, an English court has grappled with the controversial issue of “shipbreaking”.

As the recent tragedy in Beirut highlights, the catastrophes that can result from ships abandoned by their owners are potentially huge. This judgment is a timely reminder of the law relating to shipping companies’ liability for vessels, even after they have divested ownership of them.

Shipbreaking

Shipbreaking is the process by which end-of-life ships are dismantled for scrap. For the purposes of this case, a distinction is drawn between ‘shipbreaking’ and ‘ship recycling’.

Ship recycling involves a ship being first contained in an enclosed landing space and then taken apart using mechanised equipment. Hazardous waste is properly disposed of in approved landfills, and health and safety measures are enforced for the workers.

Shipbreaking, on the other hand, is the technique utilised across South Asia; most notoriously in Chittagong (Bangladesh), Alang (India) and Gadani (Pakistan). The scale of the industry is apparent from simple Google satellite images of Chittagong.

End-of-life vessels are driven at full speed towards the shore and deliberately run aground (the “beaching method”). Toxins and hazardous materials leak from the vessels and flow directly into the sand, soil or sea, where they are flushed away by tidal movements.

Workers then crowd the ship, with the “gravity method” adopted for much of their work. This involves large parts of the ship being cut away manually and allowed to crash over the side of the ship and onto the beach. Workers (including children) then cut the smashed metal using handheld blowtorches or other rudimentary equipment. Health and safety policies and equipment are conspicuous by their absence.

Over the last decade more than 70 per cent of end-of-life vessels have been broken up using the beaching methods.

Shipbreaking is far cheaper than ship recycling. The Norwegian Council on Ethics estimates that the difference between ship recycling and ship breaking is as much as US$3-7 million profit per ship for the ship owner.

However, the human and environmental cost of shipbreaking is considerable. The Shipbreaking Platform has documented at least 400 fatalities at shipbreaking yards since 2009 and serious accidents are common.

Most ships contain asbestos, and this is often broken apart by hand. A European Commission study found that shipbreaking workers had an increased risk of developing asbestos-related diseases and cancer, and at a younger age. The International Labour Organisation has named shipbreaking as among the most dangerous jobs in the world. The environmental damage caused by and arising from shipbreaking is extraordinary as thousands of tonnes of hazardous waste are released.

It can be said that the environmental damage, human rights violations and atrocious health and safety records of shipbreaking yards are inextricably linked to the attraction of these yards to shipowners: namely, price. To develop a reasonably safe working environment or greener practices would have the inevitable effect of shipbreaking yards lowering purchase prices and offering less profit for shipowners.

The Claim

The Claimant, Hamida Begum, is the widow of a shipbreaking worker who suffered a fatal accident while dismantling a defunct oil tanker in Chittagong, Bangladesh. The claim was not brought against the Bangladeshi shipyard or her late husband’s employer, but against the English shipping company which was allegedly responsible for the vessel ending its life in Chittagong.

Mrs Begum’s husband, Khalil Mollah, fell to his death while working on the EKTA (ex-Maran Centaurus) (the “Vessel”) in March 2018. Mr Mollah had worked in shipbreaking for about 10 years. He worked between 12-16 hours a day and rarely took holidays or days off. He was paid about 25,000 BDT per month (around £220).

The Vessel had been previously owned by companies within the Angelicoussis Shipping Group, a multi-billion dollar enterprise headquartered in Greece. One company within this group is Maran (UK) Limited, based in London. In a sale brokered in London in August 2017 she was sold for demolition in a deal worth $16m. The buyer, Hsejar Limited, was a brass-plate company registered in Nevis. The deal was guaranteed by a “cash buyer”, Wirana Shipping Limited.

Cash buyers exist to take the financial risk of selling a ship for scrap away from the shipowners. However the Shipbreaking Platform notes that cash buyers also provide distance between the shipowner and the beaching yard: “Indeed, one of the most used excuses when a ship owner is confronted with having sold a ship to a beaching yard is: ‘But, I only sold my ship to another owner – that owner alone chose to scrap the ship at a beaching yard’.” 

The Claimant’s case centred around the following evidential allegations:

Critically, the Angelicoussis Shipping Group decided to dispose of the Vessel. It is complicated, but possible, to do this safely. The Claimant alleged that the Defendant, even though they were not the legal owner of the Vessel, had control and autonomy over the Vessel’s sale; that they could have chosen to ensure that the Vessel was disposed of safely, but would have had to accept a lower purchase price.

Instead, the sale was conducted in a way where the only possible scrapping destination was Chittagong (inferred from the purchase price and quantity of fuel left on board).

Finally, the Defendant knew – or, should have known – that shipbreaking in Chittagong involves a foreseeable risk of death or serious injury to those tasked with dismantling the beached ships.

The Decision

The Defendant applied to strike out the claim on the basis that the Claimant had no real prospect of success. They argued that Maran (UK) Limited was too far removed (in time and space) from Mr Mollah’s death to owe him a duty of care. His death, they argued, was caused by unsafe working practices over which they had no control.  

The judge, Mr Justice Jay (Jay J), rejected these arguments. Taking a broader and purposive approach, Jay J held that the accident resulted from a chain of events which led to the vessel being grounded at Chittagong.  

In English law, the distinction between acts and omissions can be a key feature in determining whether a duty of care was owed in negligence claims. Jay J agreed with the Claimant that the Defendant “acted” to send the Vessel to Chittagong, rather than simply “omitting” to ensure that she was scrapped safely. 

The judge then identified that there is an inherent danger in an end-of-life vessel destined for scrapping, unless appropriate safety measures are taken with regard to her dismantling. It is therefore arguable that the Defendant acted in such a way that exposed Mr Mollah to a foreseeable risk of death or injury by a danger which was created by the Defendant. This, the judge held, is sufficient basis to argue at trial that the Defendant owed the Deceased a duty of care.

Jay J held that the Claimant had a real prospect of establishing at trial that English law is applicable to the claim pursuant to Article 7 of Rome II (injury arising from, or the result of, environmental damage). Jay J stated that the proximate cause of death (a fall from height) had to be set within the context of the Vessel’s beaching, which damaged the beach and tidal waters. 

The Defendant’s application to strike out was therefore dismissed.

Analysis

As this was a strike out hearing rather than a full trial, the judge also had to consider the Claimant’s case at its highest and accept allegations of fact as true, unless ‘plainly fanciful’. Any weight placed on the judge’s findings (which, are also subject to appeal) must be viewed in context.

Nonetheless, the judgment is an important marker that Courts are taking note of the risks and dangers inherent in shipbreaking and are prepared to subject established practices within the shipping industry to close scrutiny.

Two further elements of the judgment could have repercussions for the industry.

Firstly, Jay J rejected the proposition that the Defendant could not ever be liable for doing what the majority of the industry does in sending ships to South Asia for dismantling in conditions which have scant regard for human safety. Jay J found that “if standard practice was inherently dangerous, it cannot be condoned as sound and rational even though almost everybody does the same.”

Secondly, it would not be sufficient to save a Defendant who knew that a vessel was being sold to a cash buyer who was certain to convey it to be dismantled on a beach, that the sale contract included a clause that the buyer would use an ethical shipyard. If the Defendant had the relevant knowledge, it could not “turn a blind eye”.

The judgment follows the trend seen in criminal cases in other jurisdictions (such as Netherlands, Norway and Bangladesh itself) where courts have made it clear they are willing to enforce international statutes to prevent the trans-boundary movements of hazardous waste.

Shipping companies may already be taking note: a TradeWinds in July noted some companies are willing to take a ‘financial hit’ in order to comply with EU laws by selecting ship recycling for their vessels.

This is undoubtedly a positive step. The judgment illustrates the prospect of being able to establish continuing liability of shipowners (and companies within shipping groups) even after their ships have changed hands.

The case continues.

Alex Wessely is a solicitor in Leigh Day’s International and Group claims department. He specialises in corporate accountability cases against English multinational companies and claims against the British government. Alex is part of the Leigh Day team acting on behalf of shipbreaking workers and their families, alongside Leigh Day partners Martyn Day and Oliver Holland.