Thursday 9 August 2018

Remember that UKSTC is not upheld in Australia!

The UK Standard Conditions for Towage and Other Services (UKSTC) is probably the world's most popular towage agreement. The 1986 version is the latest one and probably the most popular. It is used, sometimes by other names or in similar versions, worldwide, and is the go-to contract for people asked to tow other vessels. This is because it protects you from liability effectively.

The point is that small tugs often tow much, much more valuable vessels. They should not be responsible for damage done to them. Therefore, the conditions include (at 4(a)) a full exclusion of liability for damage to the other vessel, to the tug, to other property and for 'any claim by a person not a party to [the] agreement for loss or damage of any description whatsoever'.

So, a very wide exclusion. However, Australia is a good example of a country where the user needs to be careful. The courts in Australia have said that an exclusion clause of this sort is not allowable under Australian law (the Koumala)*. What is the effect? The court will strike the clause out, and you will return to a basic common law type allocation of liabilities, where you are fully liable in the event of negligence.

Can this be avoided? It can. The trick is to not have an exclusion clause (which is not allowed) but instead have a contractual limitation of liability clause (which is allowed). Limiting liability for these type of claims to, say AUS 1 Dollar would be such a nominal sum that the court might say the effect is to make the clause an exclusion of liability in all but name. Therefore, the recommended advice is to amend the conditions to limit liability to the value of the services provided, which might be a few hundred or thousand dollars.

It is important to remember, if doing this, that incorporation will be all important. There is no point having a perfectly amended contract if it is sitting in your office or available on request. You must make sure that, at the point of contracting, the consumer of the services is aware of the conditions as amended.

PNSL Berhad v. Dalrymple Marine Services Pty. Ltd. and Others [2007] QSC (Helman J., 19 April 2007)


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