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object of going anywhere

Vessels (in this case, a jet ski), reasoning that the words “used in navigation” require some kind of “ordered progression from one place to another.”In the UK context, it would therefore appear that if the

FLNG facility in question is capable of “ordered progression” from “one place to another” (e.g. relocation from one site to another), it may qualify as a “ship” under the

Merchant Shipping Act

Rendering of Shell’s FLNG. Prelude Photo from Shell.

and, as a result, the own- ers, manager, charterers and operators of will focus on the question of what makes such FLNG facility would be afforded the a facility a “ship” for purposes of the beneft of the limitation of liability regime.

LLMCs. Unfortunately the word “ship”

Although the issue has never been tested is not defned in the LLMCs, so we need before the courts, the question of how to look to other conventions, sources of frequently a particular FLNG facility relo- legislation and case law for guidance.

cates (and by what method) could well be

In the UK, the LLMC has been imple- a secondary consideration of the court in mented domestically by the Merchant determining whether such facility should

Shipping Act 1995, which defnes a be regarded as a “ship.” “ship” to include “every description of a 3. vessel used in navigation.” The inclu- Purpose of the ship 4. sion of a vessel “used in navigation” is In 1945, the English Court of Appeal an important practical refnement of the was asked, in Polpen Shipping Company defnition of what constitutes a “ship” Limited v. Commercial Union Assurance but there is still signifcant room for Company Limited, to determine whether interpretation of what it means to be a a seaplane should be regarded as a “vessel” and “used in navigation.” “ship” for the purposes of the Merchant

Looking to recent case law in both the Shipping Act (as in force at the time). compensation regime for environmental to beneft from the liability limits set by UK and the US provides a useful indica- The court stated that in order to deter- damage caused by spillages of hazardous such conventions, the specifc facility in tion of how a court would go about defn- mine whether a craft should be regarded and noxious substances (including LNG) question would need to fall within the ing the key characteristics of a foating as a “ship” for the purposes of the by ships at sea. scope of the defnition of a “ship” (in facility that must be present (or not pres- Merchant Shipping Act, a court should •

Federal Limitation of Shipowners’ the context of the LLMCs) or a “seagoing ent) in order for such foating facility to look to a craft’s “purpose” and stated

Liability Act in 1851 (US Limitation Act): vessel” or “seaborne craft” (in the context be regarded as a “ship” or a “vessel” for that a “ship” requires a “hollow structure

Like the 1957 LLMC and 1976 LLMC of the Bunker Convention and HNS the purposes of attracting limited liability intended to be used in navigation (i.e. (neither of which have been adopted Convention (once ratifed)) or a “vessel” under the various international regimes. intended to do its real work on the seas by the United States), limits shipowner (in the context of the US Limitation Act). A review of the relevant case law in or other waters, and capable of free and liability for damages to third parties aris- the UK and the US suggests that it will ordered movement thereon from one

What constitutes a ing out of the ship’s operation. be the satisfaction or non-satisfaction place to another).” In applying this rule “ship” or a “vessel”?

of certain criteria that will be critical in to the facts of case, the court determined

Applicability of shipowner liability The provisions of the LLMCs clearly determining whether a particular FLNG that a seaplane’s real work is to fy as it limitation regimes to FLNG facilities indicate that the convention is intended facility can be regarded as a “ship” for was constructed for that purpose, and

Given the potentially enormous risk to apply to all “ships” other than “drill- the purposes of attracting limited liability its ability to foat and navigate short dis- exposure that is now a reality of operat- ing ships or foating offshore platforms under the various regimes. tances is merely incidental to that work.

ing offshore, one might assume that it connected to the seabed.” Applying the same logic, it could

United Kingdom would be clearly established whether or To determine the applicability of the be argued that an FLNG facility’s main 1. Use of the ship in navigation not the owners, charterers and operators LLMCs to an FLNG facility, we must function is the production, storage and 2. In 2005, in R v. Goodwin, the English of any FLNG facility are entitled to limit therefore determine that the facility is a offoading of LNG or the receipt, stor-

Court of Appeal considered the practical their liability under conventions such “ship” and that it is neither a “drilling age and regasifcation of LNG and thus, meaning of the phrase “used in naviga- as the 1957 LLMC, 1976 LLMC, the US ship” nor a “foating offshore platform although it may be capable of free and tion” and concluded that a “ship” for the

Limitation Act, Bunker Convention and connected to the seabed.” While there ordered movement across waters, the purposes of the Merchant Shipping Act

HNS Convention (once ratifed). In real- may be some interesting questions as to FLNG facility is not a “ship” because its will not include craft that are simply used ity, the scope of coverage of such conven- whether a particular FLNG facility might navigational function is merely inciden- for having fun on the water without the tions is a somewhat grey area. In order fall into the latter category, this article tal to its main function. oedigital.com July 2014 | OE 69 068_OE0714_Vessels2_VinsonElkins2.indd 69 6/20/14 7:20 PM