MARITIME Autonomous Vessels Legal Regulatory and Insurance Issues

MARITIME Autonomous Vessels: Legal, Regulatory, and Insurance Issues Maritime Law Association Torts and Casualties Committee Meeting 2 May 2018 Alan M. Weigel BLANKROME Phone: (212)885 -5350 e-mail: aweigel@blankrome. com © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE.

The Legal Landscape May 2018 • Courts have not considered issues involving unmanned/autonomous surface or subsurface vehicles. • Recent (past five years) references to unmanned aircraft in U. S. cases: 43. • Recent (past five years) references to unmanned surface/subsurface vehicles in U. S. cases: 0. • Implications: • No clear guidance from the courts. • Existing cases provide imperfect analogies. © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 2

Autonomous Vessels: Nomenclature • UNMANNED MARITIME SYSTEMS: • • Unmanned Surface Vessels (USV) Unmanned Underwater/Undersea Vehicles (UUV) Maritime Autonomous Surface Ships (MASS) Autonomous Surface Vehicles (ASV) Unmanned Maritime Vehicles (UMV) Remotely Operated Vehicles (ROV) “Drones” or “Smart Ships” • AUTONOMOUS ≠ UN-MANNED • But what is a “vessel” or “ship”? © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 3

Levels of Autonomy © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 4

What Are Autonomous Vessels? © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 5

What is a vessel? • No universally accepted definition • “The word ‘vessel’ includes every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water. ” 1 U. S. C. § 3. • Broadly defined. • Designed or used to encounter “perils of navigation. ” • Manner of propulsion not relevant (whether by oars, sails, steam, towed by other vessel, tides, currents). • Transportation means “to convey or carry from one place to another. ” Includes “passengers, cargo, or equipment. ” • Every description of watercraft, including non-displacement craft and seaplanes, used or capable of being used as a means of transportation on water. ” COLREGS Rule 3 • 1982 U. N. Convention on the Law of the Sea (LOSC): Vessel or ship not defined • But, never construed as meaning “simply every floating object capable of bearing weight without sinking. ” © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 6

Some Examples From The Case Law • What is a “vessel”: • Unmanned, unpowered barge without sails, mast, or rudder • Drilling platform; floating dredges • Pumpboat used for pumping water from coal barges and capable of being shoved with poles or drawn by ropes, or towed • Scows without steam-power, sails, or rudders, and which were moved by being towed. • 18 -foot motorboat with 225 hp inboard engine operated as pleasure craft • Sea-Doo personal watercraft • Raft of logs • What is not a “vessel”: • Seaplane • Floating dock; floating drydock • Floating oil and gas production facility, moored miles offshore on Outer Continental Shelf, not practically capable of transportation on water • Permanently moored riverboat casino receiving power, computer, communication, water and sewer services from shore and not practically capable of being transported over water • Houseboat not designed to any practical degree for transportation over water, with no steering mechanism, movably only under tow, and with no power except through land line • Pipeline and supporting pontoons attached to dredge pumping spoil from channel • Submersible capsule which is major component of underwater system designed to service wellheads located on seabed © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 7

Implications of “Vessel” Classification • COLREGS • USCG considers that Rule 5 lookout obligations apply to all vessels including “unmanned crafts. ” Electronic means (e. g. , radar) understood to be secondary to a look-out maintained by “watching and listening” or “sight and hearing. ” • 46 CFR Subchapter “M” • Applies safety regulations governing the inspection, standards, and safety management systems of all towing “vessels. ” • Minimum manning. • • Jones Act Rendering assistance obligation Prevention Pollution from Ships (MARPOL) Safety of Life at Sea (SOLAS) Standards Training, Certification & Watchkeeping Seafarers (STCW) Compulsory Pilotage General Average. • Who is the Master to take the decision? © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 8

Current Projects • Svitzer Hermod • Rolls Royce/Svitzer demonstration project • 28 m long tug conducted remotely controlled maneuvers in Copenhagen harbor in November 2017 • Controlled from remote operating center • Yara Birkeland • 80 m autonomous container ship • Due to be launched in 2019 • Expected to operate autonomously by 2020 between three ports in southern Norway © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 9

Current Projects • Sea Machines Robotics - A. P. Moller-Maersk • Winter Palace ice-class containerships to trial perception and situational awareness technology • Installation of Light Detection and Ranging (Li. DAR) and perception software to augment and upgrade transit operations. © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 10

Industry Initiatives • USCG Navigation Safety Advisory Counsel (NAVSAC) • UK Maritime Automomous Systems Regulation Working Group (MASRWG) • EU Safety and Regulations for European Unmanned Maritime Systems (SARUMS) • CMI Interim Working Group on Unmanned Ships • Association for Unmanned Vehicle Systems International (AUVSI) COLREGS Working Group and UMS Advocacy Committee © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 11

Industry Initiatives • USCG: Unmanned Maritime Systems Best Practices • Safety and protection of the marine environment • Professionalism, standards, maintenance procedures • NAVSAC: Unmanned Maritime Systems Best Practices • UK Maritime & Coast Guard Agency: Autonomous Surface Ship Code of Practice • Lloyd’s Register: Code for Unmanned Marine Systems • CMI Working Group on Unmanned Ships: Regulatory Scoping Exercise For The Use Of Maritime Autonomous Surface Ships (Mass) submitted to IMO • Questionnaires to national maritime law associations • Analyze IMO conventions posing challenges to unmanned ships © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 12

Autonomous Vessels: Legal Liability • Compliance With Best Practices May Not Absolve Owner Of Liability • Governmental regulations do not necessarily measure the scope of an owner’s duty. Liability may be imposed for negligence even when no violation of regulations. Schlichter v. Port Arthur Towing Co. , 288 F. 2 d 801 (5 th Cir. 1961). • Regulations are a “minimum requirement. ” (i. e. , noncompliance usually leads to imposition of liability almost as a matter of course. Prudent navigation practice or “the exacting standards of seaworthiness” may require an owner to supply more than the bare minimum called for by regulations. Id. • Custom Also May Not Insulate An Owner From Liability • The standard of care is not limited to complying with customary practices. Troupe v. Chicago, Duluth & Georgian Bay Transit Co. , 234 F. 2 d 253 (2 d Cir. 1956). • Custom does not justify negligence. Tug Ocean Prince, Inc. v. United States, 584 F. 2 d 1151(2 d Cir. 1978) ("Methods employed in any trade, business or profession, however long continued, cannot avail to establish as safe in law that which is dangerous in fact. "). • “There are precautions so imperative that even their universal disregard will not excuse their omission. ” The T. J. HOOPER, 60 F. 2 d 737 (2 d Cir. 1932). • Court can reject a custom if wanting in due care. Stevens v. Seacoast Co. , 414 F. 2 d 1032 (5 th Cir. 1969). • Courts Must In The End Say What Is Required • An admiralty court may call upon an owner to supply more than the bare minimum required by statutory or regulatory law. Walker v. Harris, 335 F. 2 d 185 (5 th Cir. 1964) (Crewman died after abandoning sinking tug because life raft lacked certain equipment even though it complied with all regulations). © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 13

Defenses to Liability • Classification Society certification (ABS or LR Rules) • Shipowner’s Limitation of Liability Act/1976 Limitation Convention • Not drafted with autonomous vessels in mind. • What is an unseaworthy autonomous vessel? • Sensors, software, shore installations. • Training, certification, manning by shore personnel • Accident must be outside owners “privity or knowledge. ” • Negligence not that of a corporate officer, manager or superintendent. • Personnel at shore-based vessel operations centre? • Owner must demonstrate: • No prior knowledge of unseaworthiness which caused the loss. • The exercise of reasonable diligence (“must avail himself of whatever means of knowledge are reasonably necessary to prevent conditions likely to cause losses”). • Knowledge of software operating systems or sensor design? © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 14

Autonomous Vessels: Strict Liability/Products Liability • Is an autonomous vessel a “dangerous instrumentality”? • Shipowner or operator is strictly liable • A manufacturer can be held liable for manufacturing or selling a product that was “unreasonably dangerous” or in a “defective condition. ” Restatement of Torts, § 402 A. East River Steamship v. Transamerica Delaval, 476 U. S. 858 (1986) (products liability is part of the general maritime law) • “Unreasonably dangerous” or “defective condition”: • Negligent or defective design. • Risks inherent in the product outweigh its potential utility. • Negligent failure to warn of known defects. • For developers and builders: • • Sufficient warning to alert user to possible defects. Government contractor’s defense Licensing agreement indemnity provisions and/or liability limitations Express warranties © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 15

Autonomous Vessels and Insurance • Brokerage and Underwriting • Disclosures/Representations : Is disclosing proprietary software required? • What material facts must be disclosed to satisfy “utmost good faith” (US) or “fair presentation (UK)? • Coverage • What perils will be covered under Institute Time Clauses (Hull) (ITCH) or American Institute of Marine Underwriters (AIMU) Clauses? • Will ITCH and AIMU have to be adapted? • Adjusting • Streamlined by abundance of data • Automatic adjusting? • Advantages of decreased claims for unmanned ships. • 33% of claims are caused by personnel error • 40% of claims are personnel injuries • Elimination of maintenance and cure? © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 16

Autonomous Vessels and Insurance • “NEGLIGENCE OF MASTER, OFFICERS AND CREW” • Covered peril under British and American marine insurance hull clauses • Provided that such negligence has not resulted from a lack of due diligence by the assured, owners or managers. • What is the status of the programmer who designed the computer system that runs the autonomous ship? • Where does liability fall? • Can ship owners claim coverage for loss or damage to the vessel caused by the negligence of programmers? ’ © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 17

QUESTIONS? Alan M. Weigel Blank Rome LLP (212)885 -5350 aweigel@blankrome. com © 2018 BLANK ROME LLP. ALL RIGHTS RESERVED. PLEASE CONTACT BLANK ROME FOR PERMISSION TO REUSE. 18