THE ROLE OF RECOGNIZED ORGANIZATIONS IN THE CLASSIFICATION AND CERTIFICATION OF VESSELS

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The Court of Justice of the European Union addressed, in the judgment of 7 May 2020, case C-641/18, LG v. Ente Registro Italiano Navale and others (ECLI: EU: C: 2020: 349), the question about the nature classification and legal certification of ships performed by private entities on behalf of the States. The ultimate addressees of the obligation established under article 94 of the UN Convention on the Law of the Sea and under the International Convention for the Safety of Life at Sea or SOLAS Convention (respectively approved in Montego Bay on 10 December 1982 and in London on 1 September 1974, both ratified by all Member States) to adopt all necessary measures in order to safeguard safety at sea, are indeed the States, more particularly by making sure that vessels flying their flag are designed, built, and maintained according to structural, mechanical and electric prescriptions either established by a classification society recognized by national authorities or in accordance with the applicable national legislation providing for an equivalent level of safety.

In the domestic proceedings, the relatives of the victims as well as the survivors of a shipwreck occurred in the Red Sea back in 2006, involving the vessel Al Salam Boccaccio ‘98 flying the Panama flag, claimed before the Tribunal of Genoa both patrimonial and non patrimonial damages against the companies Rina Spa and Ente Registro Navale Italiano. The claimants held that the shipwreck had indeed been caused by the respondents’ classification and certification activities, which failed to detect and report the precariousness of the vessel. The respondents objected and upheld a State immunity exception, arguing that said activities were performed upon delegation of a sovereign State, i.e. the Republic of Panama, hence amounting to sovereign acts.

Within the request for a preliminary ruling, the referring judge asked the Court to clarify whether the claim would fit in the scope of the notion of «civil and commercial matters» provided for under article 1 para. 1 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, or, instead, in the notion of administrative matters, thus being excluded from the normative regime under the Regulation, and especially from the latter’s rules on jurisdiction. In the first case, the Court was also requested to clarify the impact of the customary principle on State immunity on the jurisdictional rules established under the Regulation and, more precisely, on the general rule under article 2 para. 1.

While presenting the national judge with the relevant criteria for the purpose of clarifying whether classification and naval certification as performed by the respondents are to be considered an «exercise of public powers» by virtue of powers «falling outside the scope of the ordinary legal rules applicable to relationships between private individuals», thus excluding the dispute from the scope of reg. 44/2001, the Court acknowledged that the basis of the demand had to be found in the national rules governing extracontractual and contractual responsibility. However, having recalled the need to examin the «content» of said activities, the Court pointed out that they were carried out by the respondents upon payment and by virtue of a contract with the shipowner, and that the mere fact that those activities were performed upon delegation of a State as well as in the pursuit of a «public purpose» (i.e. providing for the safety of the passengers of a vessel), is not enough to qualify them as «carried out iure imperii». In the Court’s opinion, in fact, the role of recognized organizations consists in the ordinary check of the conformity of a vessel with the requirements established under the applicable rules, a check that may lead to a withdrawal of the certificate that, nonetheless, is not performed via the resort to any discretionary power whatsoever. Recognized organizations lack discretionary powers, as they perform their activities in a previously as well as thoroughly established normative context. Hence, the withdrawal is nothing but the operational counterpart of the sanction established by the law. Plus, according to rule 6, letter c) and d), Chapter I of the SOLAS Convention, in the case of non conformity of a vessel, the recognized organization has to inform the authorities of the State, who are responsible for and under an obligation to guarantee the execution and efficacy of an inspection, and must adopt the adequate measures for that purpose.

The Court, thus, confirmed its previous case-law concerning freedom of esablishment and free movement of services, that already assessed that activities performed by companies acting as certifying entities do not fit in the exception established under Article 51 TFEU, because said companies are profit enterprises performing their activities within the realm of competition, with no decision-making power (see also judgment of 16 June 2015, Rina Services and others, C‑593/13, EU:C:2015:399, para. 16-21; 12 December 2013, SOA Nazionale Costruttori, C‑327/12, EU:C:2013:827, para. 50). In the mentioned case law the Court also confirmed that the exam of the financial and technical situation of enterprises undergoing certification, as well as the completeness and authenticity of declarations, certifications and documents by recognized organizations is not to be considered an activity implying decision-making autonomy connected to sovereign powers, as it is performed under the strictest control by the State, besides from being rigorously defined and regulated within the relevant national regulatory framework (cf. judgment SOA Nazionale Costruttorisupra, para. 54, and, by analogy, judgment of 22 October 2009, Commission c. Portugal, C‑438/08, EU:C:2009:651, para. 41; and judgment of 15 October 2015, Grupo Itevelesa and others, C‑168/14, EU:C:2015:685, para. 56). Hence, the Court established that «the immunity from jurisdiction of bodies governed by private law, such as the Rina companies, is not generally recognized with regards to classification and certification operations for ships, where they have not been carried out iure imperii within the meaning of international law», thus entrusting the referring judge with the ultimate decision concerning the actual existence of said circumstances in the case at hand.

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