The English High Court, by order of 13 July 2020 ( EWHC 1846 (QB) – Hamida Begum vs. Maran (UK) Ltd), allowed a lawsuit by which the widow of a worker who died in a fatal accident at a scrap yard in Bangladesh sued the last shipowner of a tanker sold for scrapping to a “cash-buyer” for damages.
Justice Jay of the Queens Bench Division of the High Court stated in his very carefully reasoned decision that the last owner of a ship sold for scrapping has a duty of care also towards the workers at the scrap yard. If – as the claimant’s side argues and if necessary has to be clarified in the subsequent proceedings – the working conditions at the scrap yards in Bangladesh are as catastrophic as it is reported, then the last owner should not have sold the ship to Bangladesh for scrapping but only to a country where better working conditions prevail. The decision mentions China or Turkey as a better example and the judge found that the price obtained for the ship would not have been USD 404 per ton, but only around USD 255 per ton.
From this price alone, as well as from the fact that the agreed quantity of bunker on board at the time of delivery would have allowed the ship to sail to Bangladesh, but not as far as China or even Turkey, the judge concluded that the seller knew that the ship would be scrapped in Bangladesh.
The High Court has not already decided that the last owner was actually liable for the working conditions in Chittagong. However, Judge Jay found that there are very strong arguments in favour of this and that it would not be unreasonable to hold the last shipowner (or possibly also the mortgaging bank or the insolvency administrator who takes the decision to scrap in Bangladesh) liable. The only way to avoid this liability would be to provide for scrapping in a country with higher labour protection standards. Sofar the High Court only decided that the claim is not completely without possible merits, but whether or not the claimant will succeed has to be decided in the proceedings on the merits in which the allegations have to be proven and defendant’s side will be allowed to raise further arguments.
From a legal point of view, the reasoning of the High Court appears to be very broad from a German perspective and in some aspects almost politically motivated. Nevertheless, this decision does create a risk for those who opt for scrapping in Bangladesh if a serious accident occurs there. The English judge ruled that there was a liability “cutthrough” through all the contract levels and did not consider it as a valid defence for the defendant’s side that the seller had sold “at arms length” at a market price and had also obtained confirmations that the dismantling would be carried out in accordance with health and safety regulations. If this decision is upheld, it would make it impossible to exonerate oneself from liability through appropriate contractual arrangements and the only conclusion would be that a ship cannot be sold to Bangladesh for scrapping without incurring the risk of liability.
Appeal against the decision has been allowed and appears to have been lodged already. It remains to be seen whether the decision will stand.