Autonomous Maritime Vessels - Who's Liable?

1. Introduction

The widespread emergence of autonomous driving systems (ADS), autonomous maritime vessels (AMV), and uncrewed aircraft systems (UAS) (collectively, AV) raises several questions regarding the liability issues arising from design flaws, malfunctions, accidents or other errors.

This paper focuses on the AMV aspects of these issues in addition to operational and testing requirements under the current framework in Australia. It is an excerpt of our broader paper on these issues generally for AVs.

We compare Australia’s current framework to that of our AUKUS alliance partners, the United Kingdom and the United States of America, using case studies and hypothetical scenarios to demonstrate the challenges in attributing liability where an AMV, UAS or ADS is involved.

2. Executive Summary

As global economies spearhead towards the use of autonomous maritime vehicles for commercial and defence purposes, the complexities associated with the operation and liability issues around AMVs in Australia have become more apparent.

The current national law applied to AMVs is inadequate, lacking the flexibility to accommodate their unique operational requirements. Both maritime defence and civil operators have expressed concerns about the reliance on case-by-case exemptions for AMVs under the existing regulatory framework in Australia.

The ratification of the COLREGs and other international maritime conventions into Australian maritime law provides a framework for AMVs to comply with an accepted international standard for safe operation. The current trajectory of academic and governmental opinion on AMVs is likely to lead to their eventual acceptance as ‘ships’ under international law, granting their operators rights as though AMVs are manned.

Regulation for AMVs in the defence space is likely to be less stringent, allowing the Australian Defence Force (ADF) to fulfil its intention to create a partially uncrewed force in the coming decades, but manufacturers should consider their obligations up until and past that point.

Liability issues related to AMVs in Australia under common law, legislation and Australian Consumer Law (ACL) remain untested. However, operators of AMVs should be aware of the potential for liability where AMVs cause damage or injury to others, particularly under the safety defect portions of the ACL.

3. Background

A number of systems exist for classification of AMVs in civilian and defence contexts. The major systems considered in this paper are:

• NATO’s SG/75 Four-Level Automation System (‘NATO’); and

• the International Maritime Organisation (‘IMO’) four-point taxonomy of maritime autonomous surface ships (‘MASS’).

PART I: Current Framework for Autonomous Maritime Vessels

4. Maritime Commercial and Private Vessels

There are a range of AMVs currently operating in Australia and internationally. These vessels are utilised for marine surveying, scientific research and oil and gas transport, such as the Yara Birkeland, a completely autonomous cargo ship operating at MASS Degree 4.

Currently, AMVs are subject to the same Australian regulatory framework applies to AMVs as other marine vessels, including for survey standards and crewing requirements. This is due to the broad definitions of ‘vessel’ in the Navigation Act 2012 (‘Navigation Act’) and the Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (Cth) (‘Marine Safety Act’) which encompass any kind of vessel used in navigation by water. Consequently, the Australian Maritime Safety Authority (‘AMSA’) oversees the operation of AMVs.

Before AMSA certifies a maritime vessel for operation, it must obtain:

• a Certificate of Survey issued by AMSA which states the vessel has complied with the Marine Safety Act; and

• a Certificate of Operation issued by AMSA which states the vessel’s operational class and its operational areas (and any other requirements).

However, AMVs operating without a responsible crew (i.e., operating at MASS Degree 3 or 4) are considered incapable of meeting the Certificate of Survey or operational requirements for having a responsible crew under Marine Order 503 and may not be granted the necessary approvals.

As a result, under the present regime, AMVs must obtain one of several exemptions from those requirements under the Marine Safety Act in order to operate.

The available exemptions are:

• For operation less than 90 days: exemption from certificates of survey, certificates of operation or load line certificate (Form 777);

• For operations extending beyond 90 days (where the following conditions apply):

  • AMVs less than 12m long and operating exclusively within 15nm of the mainland coast do not require a certificate of survey but do require an exemption for class C restricted operations. Vessels longer than 12m will require both. To obtain this exemption the AMV must meet several construction specifications.

• For longer operations (where longer than 12m or otherwise ineligible for the above):

  • Exemption from certificate of survey (Form 579); and

  • Specific exemption from certificate of operation (Form 547).

If a ship is operated without safety management systems or other precautions that ensure the safety of that vessel, the owner and master of that ship will be considered to have committed an offence, and will be criminally liable for a malfunction or other unsafe operation.

In circumstances where an AMV is ‘not safe if used for a purpose for which it was designed’ designers, manufacturers and suppliers of that autonomous system will be liable. Therefore it is foreseeable that a manufacturer/supplier will be liable for a vessel designed for the purpose of operating autonomously if it is not safe to be operated for that purpose.

Different regimes apply to AMVs when operating outside of Australia’s Exclusive Economic Zone. Under the United Nations Convention on the Law of the Sea (‘UNCLOS’) international law, ‘ships’ are afforded the following two sets of rights that are vital for states and their registered commercial vessels:

• rights of innocent passage, transit passage, freedom of navigation; and

• the right of sovereign immunity (for non-commercial state-run ships).

These rights (primarily the navigational rights) are crucial for shipping and commercial operations as they are necessary for navigating vital commercial sea routes.

Traditionally, UNCLOS assumes that ships require crew to meet its prescriptive requirements. UNCLOS imposes requirements on states to only register vehicles with adequately trained crew and equipped vessels as ‘necessary to ensure safety at sea’. However, UNCLOS also allows compliance in accordance with ‘generally accepted international procedures and practices’.

The flag state has broad duties to ensure it has effective jurisdiction over maritime vessels flying its flag under Article 94 UNCLOS. For AMVs, this will effectively mandate some form of legislative regime dictating liability of AMVs though, as discussed below, for the time being, existing legislation will likely permit their operation in international waters.

Submarines have the same rights of innocent passage as long as they navigate on the surface displaying their state flag. While underwater, subsurface AMVs, like crewed underwater vessels, operate in a legal grey-zone on the high-seas where their coverage by UNCLOS outside of innocent passage rights is unclear.

Whether states accept maritime AVs as ‘ships’ for the purposes of UNCLOS will dictate the nature of ‘international procedures and practices’. At present, many maritime nations have definitions of ships that would catch AMVs. Thus, if the current trend continues, remotely managed or autonomous maritime vessels will soon be considered capable of ensuring safety at sea, granting the aforementioned rights jus cogens and increasing exponentially the commercial value of AMVs to those states. The more this understanding is accepted as ‘standard international procedure and practice’, the more concrete the rights afforded to AMVs will become. Under this jurisdictional understanding, the responsible party in maritime incidents would likely be the ‘master’, or remote operator, who has ultimate jurisdiction over the ship as a captain would. Through vicarious liability, the owners of ships are then generally responsible.

However, compliance with the obligation of flag states to ensure that ships are safe includes ensuring that masters, officers and crew are aware of and observe regulations relating to preventing collision. The International Maritime Organisation’s Convention on the International Regulations for Preventing Collisions at Sea (‘COLREGs’) provide regulations for AMV collision avoidance with which all vessels currently must comply as ratified by Australian law under Marine Order 30.

The COLREGs are a form of ‘road rules’ for international waters and provide a baseline for establishing when an AMV has breached a rule and is liable for accidents caused by that breach. Similarly to UNCLOS, these definitions depend on what ‘ships’ are, but are quickly becoming accepted in international law as including AMVs. AMV systems are already in place that proclaim to comply with the COLREGs during passage at levels comparable or higher than those of human crew.

Presently, in Australia’s waters, compliance with COLREG applies only to the extent specified by the exemption that allows the AMV to operate. However, it is expected that the requirement for COLREG compliance certification will continue to be enforced for domestic AMV approvals, particularly to ensure that exemptions do not significantly compromise safety.

5. Maritime Autonomous Defence Vessels

Classifying Defence Vessels

Australia’s Marine Safety Act 2012 carves out ‘defence vessels’ and this has caused complications in regulating autonomous maritime surface and particularly subsurface vessels. A similar carve out exists for ‘naval vessels’ under the Navigation Act 2012.

AMVs are generally captured and regulated by the Acts. However, for the exemption for ‘defence vessels’ under the Marine Safety Act to apply, the vessel requires crewing by ADF personnel or that it is operated as a ‘naval auxiliary’. As a consequence, there is ambiguity as to whether uncrewed contractor operated ADF vessels (where technically owned by the ADF) are subject to that Act without a clear chain of liability.

In its submission to the current maritime framework for autonomous systems, the Trusted Autonomous Systems Defence Cooperative Research Centre (TASDCRC) highlighted that the current exemption process is inefficient, opaque and uncertain, leading to increased financial and opportunity costs for both vessel owners and AMSA.

Additionally, the existing framework fails to recognise or facilitate appropriate mechanisms for conducting testing. It does not reflect or support the strategic, regulatory and operational agility that modern defence forces, working closely with diverse industry stakeholders, require.

The appropriate classification of AMVs is critical in determining responsibility and liability. In international waters warships are permitted to exercise belligerent rights during maritime conflict. Article 29 of UNCLOS defines a 'warship' with four cumulative requirements, one of which is that it must be ‘manned by a crew under regular armed forces discipline.’ This definition, derived from the 1907 Hague Convention VII on the Conversion of Merchant Ships into Warships, is arguably outdated but still prescriptive. Based on a plain reading, AMVs do not meet this definition due to the absence of a crew, but again jus cogens appears to point to the acceptance of AMVs as warships.

Ultimately, from a maritime security perspective, resolving the issues of classification may not be necessary. Provided that an autonomous vessel qualifies as a ‘ship’ and is operated by a government for exclusively non-commercial purposes, it would enjoy similar rights as a warship under UNCLOS, including the rights of visit.

However, as such vessels may be ‘auxiliary’ vessels, they would be subject to attack under naval warfare laws without possessing the same belligerent rights and privileges as warships.

The present regulatory framework for defence maritime vessels consequently leaves defence AMVs vehicles treated separately from ADF-crewed vessels and creates barriers to the entry and operation of AMVs.

These barriers in international law do not appear as though they will hamper commercial prospects to develop AMVs for Australia or its AUKUS partners, all of which have plans to implement uncrewed warships in their naval fleets.

AUKUS regulation

The United States has no legislation dealing with development and deployment of (lethal) defence AVs at a federal level. US Department of Defence Policy presently only requires that AVs “allow commanders and operators to exercise appropriate levels of human judgment over the use of force”.

6. Liability for errors

Contractual Liability

Breach of contract enables a party who has suffered as a result of a party’s breach of an obligation under a contract to recover damages suffered as a result of that breach.

For an injured party to make out a claim for damages based on a breach of contract, that party would have to prove that a contract existed, that it was a party to the contract, that the contract contained either an implied or express warranty as to the operation of a system, that the warranty was breached and that it suffered loss or damage as a result of that breach.

A consumer is generally unable to pursue an AV manufacturer for the failure of an autonomous system, as usually the relevant warranties are not in the purchaser’s contract with the AV reseller but are in the contract between the manufacturer and the developer of the relevant software.

Astute purchasers of AV systems, such as the Commonwealth government and prime defence contractors are likely to negotiate contracts with suppliers of AV systems that contain warranties and performance guarantees as to operation of those systems, thus enabling breach of contract claims where systems fail to perform in accordance with contractual specifications. Performance specifications may be expressed in terms of a percentage of ‘correctly’ made automated decisions or otherwise.

In an ADF context, the ASDEFCON suite of contracts typically contain these types of terms but will contain (or contractors will seek to negotiate) liability caps and indemnities for manufacturers, and exclusions of liability for third party damage.

Tortious Liability

A claim based on the tort of negligence requires a party adversely affected by an AV incident to demonstrate that the party responsible for the AV, which may be the manufacturer, the owner or the operator, owed to the injured party a duty of care not to cause injury or loss and that if the AV malfunctioned, it was reasonably foreseeable that the injury or loss would be caused. It is arguable that a manufacturer of the equipment owes a duty of care to its ‘end consumer’, rather than to third parties who may be affected by the use of the equipment. However, for vehicles, there is authority for the view that an extended duty of care is owed to those ‘endangered by its probable use’. While this extended duty has been posited in relation to ADS, arguably the same contention could be advanced in relation to AMVs.

Determining whether a duty of care is owed, who owes it and to whom and whether the duty has been breached all pose challenges. Especially where an AV is utilizing “black box” machine learning protocols, it may be almost impossible to foresee whether the decisions of the AV may give rise to a risk of harm being caused and to whom the harm, if it occurs, may be caused. The decisions of the AV may simply be the result of the machine learning as intended. It will primarily depend on the type of fault and whether harm arising from a coding fault can ever reasonably be foreseen.

At present, the ultimate statutory (e.g. the ‘proper control’ requirements) and common law barrier to any plaintiff (e.g. driver/operator of a vehicle) is demonstrating that they made no intervening act or omission that caused the crash.

The responsibility of drivers for negligence has been upheld within the United States, where Tesla has been found not to be liable even where AV software failures have caused vehicles to swerve off roads, ending in fatalities. Similar principles are likely to apply to operators of AMVs who do not exercise proper supervision.

Government Departments

The Crown and government departments more generally are not afforded blanket immunity from tortious liability under Australian law and may have a duty of care even when acting within their authority. The tort of misfeasance allows those harmed by misuse of governmental powers to pursue damages caused by that misuse.

In the context of granting exemptions or permitting AVs to operate, the judicial position is presently that the government’s exercise of discretion for example through policy or application processes, can only result in negligence where there is no reason not to use the discretion to protect a plaintiff from harm. The high threshold required for misfeasance makes it unlikely to appear in AV contexts.

Defence Contexts For Tortious Liability

In ADF contexts, international operations give rise to the jurisdictional issue of determining where an action occurred and therefore, the law of which jurisdiction is applied to determine whether the action was tortious. This may give rise to a difficulty in applying Australian rules of tortious liability in the context of international operations.

The Commonwealth owes a limited common law duty of care to both civilians and ADF personnel. In civilian contexts, ADF members responsible for supervision of AVs may be protected by their statutory exclusion from liability while performing their duties in preparation for ‘an emergency’.

Crucially, any claim of negligence occurring in the course of ‘actual operations against the enemy’ will not be considered by the Courts, as the ADF has immunity from owing a duty of care in such operations. ‘Actual operations against the enemy’ does not include patrol or non-wartime manoeuvring and thus in a training scenario, the immunity does not apply.

People suffering harm from the malfunctioning of an ADF AV will still struggle to demonstrate that their harm was ‘reasonably foreseeable’, because the attribution-of-fault issue for machine-learnt behaviour will again apply.

However, as previously discussed, maritime AVs are expected to conform with COLREGs and other maritime law and thus, any collisions resulting from insufficient compliance with those rules (especially as mandated by ratified Australian law) and where not protected by Commonwealth immunity during actual operations, arguably will be ‘reasonably foreseeable’ for the purpose of proving negligence.

Additionally, breach of the COLREGs will constitute a breach of Marine Order 30 and thus the Navigation Act, attracting an additional penalty of 6,000 penalty units ($1.878 mil) to the vessel’s owner.

Statutory Liability

The Australian Consumer Law (ACL) under Schedule 2 of the Competition and Consumer Act 2010 (Cth) may provide a statutory avenue for a claim based on strict liability rather than a claimant having to satisfy the higher fault requirements of negligence.

The ACL applies to transactions involving ‘ships, aircrafts, vehicles, components, software and subassemblies’. Specifically purchasers of AVs may then rely on demonstrating that ‘vehicles’ and ‘software’ are, for example:

• not of ‘acceptable quality’: not acceptable safety and/or compliance with road rules for the price and condition of the AV; or

• not fit for the ‘disclosed purpose’: e.g., when advertised for safe autonomous operation.

Additionally, a purchaser may argue that the manufacturer has engaged in misleading and deceptive conduct or made false and misleading representations as to the level and reliability of automation of the AV.

Either the manufacturer of the AV itself, or the component/software manufacturer may be defendants in a claim under the ACL.

The present barrier to use of the consumer-based portions of the ACL is the current upper limit of $100,000 on the value of goods, as well as the effectiveness of disclaimers for demonstrating consumer expectations. Again, Tesla has successfully used disclaimers in the past (despite its use of the ‘Fully Self Driving’ label in the US) to defend such allegations in US jurisdictions. Although untested in Australia (as these technologies are not (yet) legal - see section 2), the effective disclaimers state, for reference:

“In a TESLA vehicle, before enabling Autopilot, you must agree to ‘keep your hands on the steering wheel at all times’ and to always ‘maintain control and responsibility for your vehicle.’”

Under Part 3-5 of the ACL, the manufacturers of AVs (of all types) also have duties to third parties to ensure the resilience and effectiveness of systems to the extent that they are free from defects for operation, such as GPS and sensory inputs. This has specific implications which are discussed below (see Defence contexts for ACL obligations) but are also applicable for civilian contexts.

In the UK, the Consumer Protection Act provides a regime similar to the ACL except that it puts a higher burden on the plaintiff to demonstrate that relevant standards, inspection and testing requirements were insufficient to prevent the defect.

Questions of liability in ACL actions are complex. As drivers of ADS (due to present statute) and other AVs will be expected to retain control in almost any context (for example, in J3016 Level 1-3 cars), manufacturers have multiple avenues to demonstrate that the vehicles meet statutory consumer guarantees, and that harm was caused by an individual’s inattentiveness or error.

The US Tesla case discussed above could arguably be an example of a vehicle not being fit for its ‘disclosed purpose’. The legal implication of Tesla’s claim of its vehicle being ‘Fully Self Driving’ as against its disclaimer has not been tested in Australian courts. Under the ACL, the application of relevant consumer guarantees cannot be excluded by contract disclaimers, but it is difficult to predict the force an Australian court will give to Tesla-type disclaimers stating that drivers must still retain proper control during autonomous operation. Australian courts have previously been sceptical of the effectiveness of such disclaimers in defeating misleading and deceptive conduct claims.

Assuming that a purchase of an AV falls within the ACL threshold, if a J3016 Level 5 AV could legally be operated in Australia and was involved in a crash caused by the malfunction or failure of its systems, the vehicle’s owner would likely have a claim against the manufacturer under the ACL that those systems were in breach of an ACL guarantee.

Such claims would necessarily depend on the advertising and the presented purpose of such vehicles. For example, advertising that an AV operates in compliance with road rules could trigger a claim for breach of a consumer guarantee if the AV did not do so. A similar basis for claim may arise from the malfunction of e.g. a driverless taxi where the passenger could claim against the taxi owner or the supplier of the self-driving technology.

Defence contexts for ACL obligations:

The ACL has been flagged as particularly relevant for defence contractors. A third party plaintiff, not necessarily a consumer, affected by a crash demonstrably caused by a “safety defect” in the AV will have a direct cause of action against the manufacturer (likely the defence contractor) under Part 3-5 of the ACL.

The relevant test for establishing that a safety defect existed is whether the AV’s safety parameters were ‘not such as persons generally are entitled to expect’.

Safety defects may be programming errors, manufacturing defects or design defects. Design defects may be apparent in the design documentation and manufacturing defects may be apparent on inspection. Programming errors, particularly in machine learning environments may be difficult to show as commented above.

Although ACL-based claims are flagged by academics as the best option for third party plaintiffs, several defences are available to manufacturers:

• that the defect did not exist at the time of supply of the AV (to the ADF, for example);

• the ‘cutting-edge defence’, i.e. that technology capable of detecting the defect did not exist at the time of supply;

• when targeting component/software manufacturers, that the component was only defective because of its inclusion in a larger design i.e., the software interacted poorly with a particular type of sensor placed by another party on an AV.

As in a negligence action, any non-compliance with COLREGs or other maritime law (including by having insufficient sensory input) resulting in harm is likely to be a safety defect under the ACL equally for ADF and civilian AMVs.

The following scenario is adapted from a rescue scenario example given by Dr. Walker-Munro. It is a detailed example of the application of a safety defect claim under the ACL in a defence context:

• An ADF-operated AMV is utilised in a training operation off Australia’s shores, on its way to a proving ground. The AMV navigates autonomously using sonar and other sensors to detect other vessels. However, its sensors do not properly detect a small fishing vessel, which it collides with and destroys the vessel while injuring the crew.

• The crew bring an action for a safety defect claim under Part 3-5 of the ACL. It is safe to assume that the Court will take jurisdiction over such a case as being ‘sufficiently connected’ to Australia.

• The plaintiffs will then have to face the challenge of identifying the safety defect to determine whether the AMV did in fact have a safety defect. This could be either demonstrating a design defect, i.e. insufficient design of the detection or navigation systems, or a manufacturing defect (i.e. poor wiring or obstruction/damage to the detection systems).

• Even if a safety defect demonstrably exists, the manufacturer may be able to make out the ‘state of the art’ defence i.e., if it can demonstrate that the AMV employed what was state of the art technology and no technology at the time of design/manufacture could detect the defect. For example, an error arising from an unknowable issue in machine-learning algorithms is likely to be undetectable until it has first presented itself.

• If the plaintiffs can demonstrate that a safety defect did exist and that it caused their injuries or loss, they may only recover damages for injuries/death or for damage to land, buildings or fixtures (not applicable in maritime contexts, except for private piers, etc.).

PART II. Emerging Regulatory Framework for AMVs in Australia

7. Domestic Reforms

The direction of AMV regulation is emerging through various recommendations and codes of conduct, but no maritime equivalent to the AV Safety Law has yet emerged in Australia.

It is clear that UNCLOS will continue to be of prime importance as states begin to accept AMVs as ‘ships’ of varying IMO Mass Degrees for its purposes.

The Trusted Autonomous Systems Defence Cooperative Research Centre recommended that the Marine Safety Act and Navigation Act be amended to reduce certification requirements for shorter-life-cycle AMVs and reduce reliance on AMSA issuing exemptions where the manufacturer must satisfy it that an exemption would not jeopardise marine safety. TASDCRC’s recommendations also specifically addressed the gap for defence AMVs. It recommended that the definition of defence vessel under the Navigation Act be amended to add an exclusion for AMVs intended for use or testing for defence purposes.

In response to these recommendations, the Independent Review of Domestic Commercial Vessel Safety Legislation accepted that the certification requirements should be simplified and that, in theory, the defence vessel definition is currently an issue. The exact method of any reform in this space is presently unclear.

The Maritime UK ‘Maritime Autonomous Ship Systems (MASS) UK Industry Conduct Principles and Code of Practice’ is a voluntary Code published in 2023 which sets out codes for operating maritime AVs under 24m in length. It has several requirements that will likely eventually inform Australian regulation:

• AV Operators will have to be trained and certified to the same level required for manned vessels equivalent to the relevant AV.

• that AV systems and their operators must comply with local and international navigational rules, including the COLREGs.

• that safety management systems on AVs should comply with any applicable guidelines or standards mandated or recommended by the International Maritime Organisation.

For a discussion on the broader issues of cybersecurity, public perception, and privacy law pertaining to all types of AVs, please refer to our complete paper on these issues which will be published in October 2024.

If you have any questions, please contact the authors Brett Cowell or Anna Young of our Defence team.

Brett Cowell, Anna Young and Alex Dorrington wish to thank Chriselle Alfred for her contribution to this insight.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.