Australian cruise ship passengers may have more legal rights than they think

Australians booking cruises overseas may be protected by Australian consumer law if something goes wrong at sea – even if their contract says otherwise, a University of Queensland study has found.

Dr Rosemary Gibson from UQ’s Law School analysed the legality of class action waiver clauses in cruise ship contracts and found they were essentially unenforceable under Australian consumer law.

“The cruise ship industry is a hotspot for mass claims due to disruptions like extreme weather, disease outbreaks and safety failures,” Dr Gibson said.

“Individual claims are often too small and costly to pursue, so joining a class action can be the only practical way for passengers to seek compensation and accountability. 

“But international cruise operators often use waiver clauses in their contracts to prevent passengers from joining together to bring claims.”

Dr Gibson found Australia provided the strongest protection for cruise passengers, compared to consumer law in the United Kingdom and the United States.

“Clauses that prevent passengers from joining or initiating class actions are typically void in Australia, and possibly even if the contract was signed overseas or governed by foreign law,” she said.

“Australian consumer law deems such clauses unfair because they shift dispute-resolution power towards the cruise line and limit passengers’ ability to pursue collective compensation efficiently and economically.

“The onus is on the cruise provider to prove the clause is reasonably necessary.”

Dr Gibson said class action waiver clauses were treated differently in the United Kingdon and the United States. 

“In the UK, the law leans towards protecting consumers from unfair terms, but the onus is on the consumer to establish a clause is contrary to ‘good faith’,” she said. 

“In the US, courts routinely uphold class action waiver clauses if they pass the ‘reasonable communicativeness’ test.

“This focuses on whether passengers had a fair chance to know the clause existed, not whether they actually read it, effectively barring them from class actions and facing higher costs if they pursue individual claims.

“Cruise lines can therefore shape the dispute process in ways that benefit the company, reducing the likelihood of a passenger making a claim.”

The infamous Ruby Princess case was a landmark decision involving a class action waiver clause, and has broader implications for companies operating in Australia.

A class action proceeding was brought against Carnival and Princess Cruise Lines for negligence and breaches of consumer law following a COVID-19 outbreak on board a vessel in early 2020, which saw 28 people die. 

“The companies relied on a class action waiverCLASS ACTION WAIVER CLAUSES IN CRUISE SHIP PASSENGER CONTRACTS clause to block a group of passengers from participating in the class action,” Dr Gibson said.

However, when the class action representative appealed the decision in the High Court of Australia, the clause was ruled as unfair and therefore void.

“The judgment affirmed that companies operating in Australia can’t sidestep local consumer protections,” Dr Gibson said.

“The lesson here is that cruise ship passengers shouldn’t assume everything in their contract is enforceable – these terms are drafted by companies with their own interests in mind.

“So, if something goes wrong, seek legal advice.”

The research has been published in Lloyd's Maritime and Commercial Law Quarterly.