Until recently it all seemed like ‘science-fiction’, however, the self-driving truck and the self-sailing ship are now turning into reality. In October of last year the tech company Otto, a subsidiary of ‘taxi-company’ Uber, carried out the first test drive with a self-driving truck. It was a 200 km drive in the state of Colorado, United States. The cargo: 50.000 cans of beer. The driver simply drove to the freeway where after he engaged the system and the software took over for him.
The technology does not require a special vehicle, it can be built into existing trucks. Uber is not the only techgiant interested in autonomous cars and trucks, other companies such as Google, Apple and Tesla also see opportunities in the technology. In shipping, companies such as Kongsberg Maritime, Rolls-Royce and Damen Shipyards are investing heavily in autonomous vessels. Kongsberg even announced recently that it is building an autonomous coaster for fertilizer company Yara, which is due to set sail as soon as next year.
From a legal perspective it is interesting to look at the possible liabilities a carrier could be confronted with in case of a car crash or maritime casualty involving an autonomous truck or vessel. For example, there was an incident in the Netherlands where a vessel sailed into a weir near the town of Grave, leading to water spilling out and flooding the land behind it. What if this accident would have been caused due to the defect in the control system of an autonomous vessel? Would the shipowner be able to invoke force majeure or would he be liable towards the injured parties? When it comes to liability it should be differentiated between extra contractual liability towards third parties on the one hand and contractual claims, such as a contract of carriage, on the other. Both types will be discussed in this article.
Maritime causalities and car crashes
From both the law itself as well as the case law of the Supreme Court of the Netherlands follows that the owner of a transportation vehicle is liable for the collision damage incurred by third parties in the event that the damage is caused by the fact that the transportation vehicle did not meet the standards that it, given all circumstances, should have met. This could possibly be the case in case damage would be caused by a failure in the operating system of an autonomous vehicle. The consequence thereof is that the owner of the vehicle would then be liable for collision damage.
From both the law itself as well as the case law of the Supreme Court of the Netherlands follows that the owner of a transportation vehicle is liable for the collision damage incurred by third parties in the event that the damage is caused by the fact that the transportation vehicle did not meet the standards that it, given all circumstances, should have met. This could possibly be the case in case damage would be caused by a failure in the operating system of an autonomous vehicle. The consequence thereof is that the owner of the vehicle would then be liable for collision damage.
If an autonomous truck would collide with a biker or a pedestrian the owner would also be liable based on the Dutch Road and Traffic Law (Wegenverkeerswet). Due to the fairly strict case law regarding this subject the owner of the autonomous truck shall not be able to invoke force majeure against the biker or pedestrian in case of an accident as a result of a failure in the operating system.
However, the situation would be different if the autonomous truck would collide with another vehicle. In case the operating system should be deemed a defective product then the owner of the truck would not be liable for the damage resulting from the collision. The liability would in that case lie with the manufacturer of the operating system. In other words, the injured party would have to claim damages from the manufacturer of the operating system and not from the owner of the truck.
This rule does not apply to ships. With ships the damage caused by a fault in the operating system is part of the owner’s risk. The shipowner cannot escape from liability toward a third party by pointing to the manufacturer. This however does not mean that the owner of a ship, when he would be held liable, cannot hold the manufacturer liable himself due to a fault in the product.
Cargo damage
A collision does not merely cause damage to third parties, it also causes damage to the cargo of the vessel. Generally the carrier of the cargo is liable for this damage based on the contract of carriage. However, this could be different in case the damage is caused by hidden defects in the vessel itself. A malfunction in the operating system of an autonomous vessel could be seen as such a hidden defect. Nevertheless the carrier even in those circumstances has to take care of the vessel in such a way as can expected from a careful carrier. In other words: if the carrier does not maintain its vessel properly, it cannot escape liability by claiming there was a hidden defect.
A collision does not merely cause damage to third parties, it also causes damage to the cargo of the vessel. Generally the carrier of the cargo is liable for this damage based on the contract of carriage. However, this could be different in case the damage is caused by hidden defects in the vessel itself. A malfunction in the operating system of an autonomous vessel could be seen as such a hidden defect. Nevertheless the carrier even in those circumstances has to take care of the vessel in such a way as can expected from a careful carrier. In other words: if the carrier does not maintain its vessel properly, it cannot escape liability by claiming there was a hidden defect.
An example is the situation wherein the carrier knows that the operating system does not function properly in certain areas. In that case there would be no hidden defect. The carrier then has to ensure that the ship is sailed manually in that area or, at least, that a crew member is stand-by in the wheel-cabin, should the system fail. Should the carrier decide to not take any precautions it cannot escape liability by stating that the collision was caused by a hidden defect.
In case of carriage by road the law and the CMR-convention state that a carrier is also liable in case the damage is caused by a defect of the vehicle. In other words: In case the cargo is damaged due to a malfunction in the operating system of the autonomous truck, then the road carrier is liable for the cargo damage. Of course, in that case, the carrier can hold manufacturer liable for the damage.
If a carrier wants to prevent claims from cargo interests due to cargo damage as a result of a malfunction in the autonomous operating system, it can choose to include an exoneration clause in the contract of carriage, keeping in mind the mandatory provisions from national law and conventions. The cargo interests would have to agree to such an exoneration clause.
Limitation of liability
Whenever damage is incurred as a result of a collision, it could be interesting for the owner of the vessel (and its insurers) to limit its liability by establishing a limitation fund. This can be done through petitioning the court. The amount of the limitation fund is dependent on the size of the vessel and is determined by a calculation method laid down in law. Petitioning the court for such a limitation can be beneficial if the total damage of involved parties exceeds the limitation fund. The owner of the vessel that collided with the weir in Grave also petitioned the court for a limitation fund.
Whenever damage is incurred as a result of a collision, it could be interesting for the owner of the vessel (and its insurers) to limit its liability by establishing a limitation fund. This can be done through petitioning the court. The amount of the limitation fund is dependent on the size of the vessel and is determined by a calculation method laid down in law. Petitioning the court for such a limitation can be beneficial if the total damage of involved parties exceeds the limitation fund. The owner of the vessel that collided with the weir in Grave also petitioned the court for a limitation fund.
Liability cannot be limited however in case the damage is caused by recklessness or willful misconduct. However, this is only in exceptional cases. Generally it will not soon happen that an owner of an autonomous inland waterway vessel cannot limit it liability. However, what if the manufacturer of the operating system told the owner that the system does not work properly in certain area’s? For example , regarding the Grave accident: what if the manufacturer had indicated that the system might not work properly near Grave and would have advised to sail manually in that area, but the owner nevertheless used the autonomous system? In that case it is likely that the court would rule that the owner of the vessel acted ‘recklessly’ by ignoring the warning of the manufacturer. The shipowner could then not limit its liability and would be liable for the full amount of the collision damage. In a case such as the Grave accident the owner would then be confronted with enormous claims for damages.
Vis-à-vis their contractual counterparty road-, sea- and inland waterway carrier can generally limit their liability for cargo damage based on the applicable laws and conventions. However, also in that case there is an exception in case of recklessness or willful misconduct of the carrier.
Hacking of the operating system
Another risk with autonomous transportation is that the operating system could possibly be hacked by criminals or terrorists. In the event that a terrorist would be able to – for example – ram a gas carrier, this could have catastrophic consequences and lead to many lost lives. This invokes the question whether the carrier would then be liable for the damage. Most likely the carrier would in that case be able to escape liability by invoking force majeure. However, in the case of hacking, it is important that the software of the operating system is properly updated. In case the carrier would neglect to update the software according to the instructions which leads to terrorists abusing a backdoor in the operating system, this could lead to the carrier being (jointly) liable for collision damage.
Another risk with autonomous transportation is that the operating system could possibly be hacked by criminals or terrorists. In the event that a terrorist would be able to – for example – ram a gas carrier, this could have catastrophic consequences and lead to many lost lives. This invokes the question whether the carrier would then be liable for the damage. Most likely the carrier would in that case be able to escape liability by invoking force majeure. However, in the case of hacking, it is important that the software of the operating system is properly updated. In case the carrier would neglect to update the software according to the instructions which leads to terrorists abusing a backdoor in the operating system, this could lead to the carrier being (jointly) liable for collision damage.
Lastly – take out proper insurance
From the aforementioned it is clear that a carrier that decides to operate autonomous sailing or driving vehicles will be confronted with all sorts of new risks. The risks are difficult to assess, and all the larger, due to the fact that the technology is still in baby shoes. It is therefore advisable for carriers to consult with their insurers and insurance brokers in order to properly insure against these risks. As the incident in Grave earlier this year has shown, the possible liabilities with which a carrier can be confronted can be enormous. Therefore it is of the utmost importance that a carrier is properly insured.
From the aforementioned it is clear that a carrier that decides to operate autonomous sailing or driving vehicles will be confronted with all sorts of new risks. The risks are difficult to assess, and all the larger, due to the fact that the technology is still in baby shoes. It is therefore advisable for carriers to consult with their insurers and insurance brokers in order to properly insure against these risks. As the incident in Grave earlier this year has shown, the possible liabilities with which a carrier can be confronted can be enormous. Therefore it is of the utmost importance that a carrier is properly insured.
