Guardian Offshore AU Pty Ltd v Saab Seaeye Leopard 1702 Remotely Operated Vehicle Lately On Board The Ship ‘Offshore Guardian’  FCA 273
The Federal Court of Australia has handed down a judgment that gives an interesting insight into the meaning of ‘ship’ under the Australian Admiralty Act 1988.
The applicant sought to arrest an ROV as security for its claim against a diving services company in relation to a contract relating to the use of the ROV. A third party, related to the diving services company and said to be the owner of the ROV, subsequently applied to set aside the arrest. Its application was based on several grounds including that the ROV was not a ship that was capable of being arrested.
To determine the issue, the court had to focus on section 3 of the Australian Admiralty Act 1988 whereby a ‘ship’:
… means a vessel of any kind used or constructed for use in navigation by water, however it is propelled or moved and includes:
(a) a barge, lighter or other floating vessel
(b) a hovercraft
(c) an off-shore industry mobile unit, and
(d) a vessel that has sunk or is stranded and the remains of such a vessel
but does not include:
(e) a seaplane;
(f) an inland waterways vessel; or
(g) a vessel under construction that has not been launched.
The ROV in question was capable of being launched into the water from an offshore support vessel within a cage-like frame. It could be operated remotely by a pilot on board the offshore vessel and was equipped with lights and cameras to allow the pilot to observe the surroundings in real time. The ROV drew electric power from an umbilical cord attached to the offshore vessel and was otherwise self-propelled and capable of being precisely manoeuvred to undertake complex underwater tasks at depths of up to 2,000 metres.
The Court carried out an extensive review of case law going back to the late 19th century. The Court held that the ROV was not a ship because it (i) lacked the usual characteristics of a ship; (ii) did not obtain buoyancy by displacing water; (iii) had a limited ability to be navigate through water; (iv) was self-propelled only in a limited sense; (v) did not have the capacity to withstand the ordinary perils of the sea; (vi) was unable to leave the jurisdiction on its own (unlike a conventional ship); (vii) was small; and (viii) was not registered as a ship.
Accordingly, the proceedings were dismissed.
The decision confirmed that an ROV is not considered a ‘ship’ pursuant to the Australian Admiralty Act 1988 and therefore cannot be arrested (unless there is another basis, for example, as ‘other property’ under section 17). However, this was a first instance decision of a single judge and is open to be challenge because while it may be persuasive, other judges are not bound to follow this decision.
English law perspective
English law cases have tended to consider ships as those capable of navigation and transporting goods and people. See for example Steedman v Schofield 1992 2 LLR where a jet-ski was not a ‘vessel used in navigation’. This approach follows the position in statute whereby the Merchant Shipping Act 1995 refers to a ship at Section 313 to ‘include every description of vessel used in navigation’.
However, in later cases such as Perks v Clark 2001 2 LLR, the court found that where navigation is a significant part of the function of a jack-up unit then it may be considered as a ship. However, the court did concede that there was ‘an issue of the degree as to the significance of the navigation’ and that this would be a question for a fact-finding tribunal.
Whilst this is a decision from the Australian courts relating to an ROV, it may prove to be persuasive in other jurisdictions. The case serves as a useful reminder that with increasing technological trends in shipping, the admiralty courts have to adapt to take into account new technologies and new practices whilst maintaining a balanced commercial view. It remains to be seen how the courts will treat more modern shipping vessels such as autonomous underwater vehicles (AUVs), autonomous surface vehicles (ASVs) and unmanned surface vehicles (USVs).
Club cover and ROVs
Poolable cover responds to members’ liabilities in respect of covered P&I risks that relate to an entered ship. The club’s rules, which are based on the International Group of P&I Clubs’ Pooling Agreement, includes a wide definition of what constitutes a ship. The definition refers to vessels that may be used ‘in navigation or otherwise on, under, over or in water or any part of such ship, or any proportion of the tonnage thereof or any share therein’.
Poolable cover excludes liabilities arising out of the operation by the member of submarines, mini-submarines and diving bells, which includes ROVs and other underwater vehicles (rule 5.14(1)). The exclusion will only apply if it is the member who is carrying out or is responsible for the ROV operations. When the entered ship has been chartered out as a platform for ROV operations and the ROV is being operated from the ship by another party, the exclusion will not apply.
If the member is responsible for the operation of the ROV, the club is able to provide a limited extension of cover in respect of the excluded liabilities. The extension will only cover third-party liabilities arising out of the operation of the ROV. It will not cover damage to or loss of the vehicle itself but can respond to the cost of its wreck removal.
For more information, please refer to the club’s Offshore Contracting guide.
We are grateful to Ashwin Nair of local legal correspondents Cocks Macnish in Perth, Australia for contributing to this article.
This article intends to provide only general guidance on the above issues, arising as a matter of Australian and English law. It is not intended to provide legal advice in relation to any specific query. In case of any doubt, the member should not hesitate to contact the authors, or their usual club contact.
Source: Standard Club