In January 2013, the claimant's vessel, Parsifal III, ran aground at Carrot Shoal, near Peter Island, in the Territory of the Virgin Islands. As a result, the keel was damaged and approximately 30 tons of lead shot spilled onto and around the reef at Carrot Shoal. The local authorities became aware of the spill in late February of the same year and commenced investigations. These investigations revealed that the yacht Parsifal III was the source of the spill. The captain eventually reported the incident to the authorities in the Virgin Islands on 28 February 2013. On 31 July 2013, the claimant filed a limitation claim seeking to limit its liability of all claims arising out of the grounding to the equivalent of 167,000 SDRs ie USD 250,000.00 as prescribed by s 396(b)(ii) of the British Virgin Islands Merchant Shipping Act 2001 (the Act).

The respondent opposed this limitation claim and submitted that in any event the amount of SDRs was no longer applicable based on the United Kingdom Merchant Shipping (Convention on Limitation of Liability for Maritime Claims) (Amendment) Order 19981 (the 1998 Order) which increased the amount from 167,000 to 1,000,000 SDRs. This Order was purportedly incorporated into the law of this Territory by the BVI Merchant Shipping (Adoption of United Kingdom) Enactments Order 2005 (the 2005 Order).

Section 464 of the Act provides that the 'Governor in Council may, after consultation with the Secretary of State for Transport of the United Kingdom, by Order apply to the Virgin Islands as part of the law of the Virgin Islands, subject to such exceptions, adaptations and modifications as may be specified in the Order, any enactment of the United Kingdom to which this section applies.' By the 2005 Order, the Governor purported to exercise this delegated power to incorporate the named United Kingdom enactments into the Virgin Islands pursuant to s 464 of the Act. Section 1 of the 1998 Order provides that it will come into force on the date on which the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976) enters into force in respect of the United Kingdom. The Protocol effectively increased the limitation provisions prescribed by the LLMC 1976 which had been applied in section 396(b)(ii) of the Act.

The claimant contended, amongst other things, that the adoption of the 1998 Order was unconstitutional on the basis that the increase in SDRs had been effected by delegation of legislative power which is contrary to the principle of separation of powers. The basis of the claimant's claim of unconstitutionality was that s 464 of the Act purports to grant the Governor legislative power in breach of the Constitution and the doctrine of separation of powers and is therefore null and void. Alternatively, the claimant argued that, even if s 464 of the Act is itself constitutional, the method chosen by the Governor to implement its usage by the 2005 Order was unconstitutional, void and of no effect being an executive rather than legislative act. By way of further alternative, the claimant contended that s 464 entitles only the application of 'any enactment of the United Kingdom' to the Territory. The claimant contends that the 1998 Order and the 1999 Regulations are not enactments and so any purported incorporation would be ultra vires s 464 and of no effect.

The claimant therefore sought a declaration that the increase in SDRs was null and void and that the proper limitation amount for the claimant's vessel is 167,000 SDRs as provided for by the unamended s 396(b)(ii) of the Act.

Held: Judgment for the claimant.

Section 464 of the Act is a clear acknowledgment of the principle of a legislature's power to delegate. In circumstances where the claimant has failed to identify any legislative or common law bars to the exercise of this power, the court cannot conclude that the section is unconstitutional merely on the basis that it conflicts with the separation of powers doctrine.

Although maritime affairs fall within the ambit of the elected government of this Territory, the United Kingdom government has the sole responsibility to deal with defence and international relations matters in all of its dependencies and overseas territories. Like all other overseas territories, the BVI is not on its own a member of the International Maritime Organization and cannot be a signatory to the relevant international Conventions. These Conventions are signed by the United Kingdom government and extended to these territories and given effect through local legislation or adaptation of the relevant English legislation. The peculiar context therefore touches and concerns matters of broader international obligations and the obvious need for confidence based on a uniformity of approach in matters of international maritime law. It is clear that the entire purpose of this express provision is to speedily bring into force under s 464 legislative developments which post-date the Act, thereby keeping it up to date, without the necessity of engaging the normal parliamentary process.

The limitation amount of 167,000 SDRs prescribed in s 396(b)(i) of the Act is drawn from the LLMC 1976. Article 21 of that Convention makes provision for the alteration of the limitation amounts on the basis of a significant change in their real value. Article 6 of the Convention was amended by a 1996 Protocol which increased the amount. The revised art 6.1.b was given effect in the United Kingdom Statutory Instrument No. 1258 of 1998 (the 1998 Order) which has been adopted by the BVI in the 2005 Order.

In this case, instead of going through the full formality of legislating the changes to the Merchant Shipping regime, the BVI legislature has adopted an alternative course which directs the Governor in Council to apply his mind to existing and future legislation which is enacted by another legislature for another jurisdiction and adopt and extend it to the Territory subject to any exceptions, adaptations and modifications which are deemed necessary or appropriate. In doing so the legislature has clearly laid down a policy which directs the Governor in Council to apply and implement such legislation once he has consulted with the United Kingdom secretary of state. This legislative tool has been applied in other jurisdictions and its validity has been accepted. 

However, under s 464 of the Act and 2005 Order, the Governor in Council may not only apply as part of the BVI law any existing enactment of the United Kingdom, but also any future or amended enactment. In the absence of an affirmative or negative resolution procedure the legislature cannot anticipate or establish what amendment or amendments would be carried out or whether they would be of a sweeping policy-changing character or whether they would be suitable in all the circumstances. The BVI legislature has thereby surrendered its essential function in favour of the executive. As drafted, section 464 of the Act represents an abdication or effacement by the BVI legislature contrary to the Constitution and is therefore void. The purported application to the Virgin Islands of the 1998 Order and the 1999 Regulations pursuant to section 464 of the Act is therefore also null, void and of no effect. The liability of the claimant is limited to the specified amount calculated in accordance with the unamended s 396(b)(ii) of the Act to the equivalent of 167,000 SDR.