Will the UK's Equality Bill cause havoc on British shipping?

The Chamber of Shipping and seafarer's union Nautilus International remain poles apart over the the Equality Bill which set to go through Parliament in the next few weeks.

In the latest issue of the Chamber's newsletter Making Waves the shipowners' body says that it is “make or break time” for the future of British shipping. It claims the current proposals for regulations under the Equality Bill will have disastrous consequences for the UK flag if they are passed into law in their current form.

Up to now, operators of ships registered in the UK have been able to employ seafarers recruited abroad at rates of pay based on the cost of living in their countries of domicile.

The Chamber says that the Equality Act 2010 (Application of Part 5 to Seafarers) Regulations, as drafted, would require any seafarer to be paid at the rate that a UK resident seafarer would expect to earn, irrespective of the costs of living in his or her country of domicile. to save UK flag. The Chamber claims that, of some 360 UK-registered ships in international commercial trades, 172 – or 43% of the total UK trading fleet – are likely to flag out if the regulations are adopted as drafted. It says that even if the law requires British rates to be paid only to seafarers from other EEA Member States, 141 ships, or 38% of the total UK trading fleet, are likely to be lost to the flag.

The union's general secretary Mark Dickinson says in the latest issue of the Telegraph: “The plain truth is that it is illegal under EU law to discriminate in this way and doing nothing is not an option.”

However the Chamber says it has received the opinion of a Queen’s Counsel that paying seafarers recruited abroad at rates based on a basic rate for the job plus a sum to reflect living costs in the countries where they live would not breach European anti-discrimination laws – even if such rates were lower than those that would be paid to seafarers who live in the UK.

Mr Dickinson says: “During the consultation over the proposals, the industry had six months to come up with a workable solution but failed – largely because the owners were not prepared to support collective bargaining and a recognition of international benchmarks.”

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A recent legal decision has given useful guidance regarding a number of issues that have been concerning shipowners, cargo owners and their insurers arising from the piracy problem off Somalia according to Clyde and Co.

In its latest Update on Piracy the firm notes that, in Masefield v Amlin, the Judge noted that whilst it might be said that payments of ransom encourage further seizures, particularly where insurance is usually in place, in practice there is little option but to pay a ransom where that is the only effective means (absent diplomatic or military intervention) to remove vessel crews and property from harm.

The judge also also noted that the payment of ransom is not illegal under English law. The case was primarily focussed on insurance coverage issues and the claimant's primary argument that where a vessel is captured by pirates there is an actual total loss straightaway irrespective of later recovery was rejected.

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Maritime London has welcomed a number of new companies into membership. These include:

Southampton Solent University www.solent.ac.uk & www.warsashacademy.co.uk Capco Trust Holdings www.capcotrust.com
BankServe Insurance Services www.bmsgroup.com
Securewest International www.securewest.com
Halcyon Recruitment www.halcyonrecruitment.com

For a complete list of Maritime London members see www.maritimelondon.com/ml_members.htm

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Mutual insurer International Transport Intermediaries Club (ITIC) says it has seen an increase in the number of professional indemnity claims made against the professional service providers who are its members.

The club warns that the increase is likely to continue as a result of the trend towards privatisation in what have traditionally been public sector-dominated disciplines such as hydrography.

ITIC communications director Adam Jacobson says, “The world is becoming increasingly litigious, and ITIC has seen an ever-increasing volume of professional indemnity claims made against its members, which include maritime professionals such as marine surveyors, naval architects, class societies and a number of hydrographers. In addition to insuring their exposure to liability with a reputable insurer, hydrographers and other service providers should devise best working practice guidelines which should be issued to, and followed by, all staff in order to minimise the likelihood of claims occurring in the first place.”

In the latest issue of its newsletter, The Wire, ITIC notes that, over the course of the last few years, the trend has been for former governmental hydrographic organisations to be privatised, joining the existing privately owned companies in the oil & gas and ports & harbours sectors. And it says that, as this trend continues, it is increasingly likely that third parties and contractual partners will attempt to hold such hydrographic service providers liable for losses they may have suffered whilst relying on the services they provide. Claims can be extensive and, the club says, “extremely expensive”.

ITIC refers to the 1983 Swedish Supreme Court decision in the Tsesis, in which a Russian tanker of that name ran aground after striking a rock in Swedish territorial waters which was incorrectly marked on the chart. The court held that the Swedish Hydrographic Office was liable for the consequences, including the damage to the ship. The court also held that, because the chart was defective, this was a defence for the owner to any claim for the clean-up costs of the spillage and any pollution claims.

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BIMCO has warned that the International Maritime Organisation and other international bodies represent the only viable vehicle for regulation of a global industry, and that the regulation of shipping should be undertaken principally through these bodies, if a "patchwork" of local regulation is not to emerge.

In its new publication "Reflections 2010" BIMCO argues for the the need to keep regulation global, and "control the forces of unilateralism, regionalism and the tendency to make local laws, which threaten to make the operation of internationally trading ships chaotic". Its four main strands are "the compelling need to prevent shipping regulation becoming fragmented, the importance of recognising IMO as the agency to govern shipping’s response to greenhouse gas emissions, the contribution of the human component and the need for positive action on piracy".

The publication represents the BIMCO ‘bird’s eye view’ of the most critical and difficult issues currently facing the industry according to BIMCO president Robert Lorenz-Meyer. He says that industry needs to tackle these key threats regardless of today’s "challenging commercial pressures".

BIMCO says the disappointing outcome of the recent UNFCC/COP15 conference creates an uncertain climate for shipping as it goes forward, as there is still no common view on the treatment of marine transport, with even more pressure on IMO to deliver solutions acceptable to both industry and society

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Maritime London will be publishing a directory containing the contact details of UK based companies providing professional services to the international shipping industry.

Available online, the directory will also be distributed at the Maritime London pavilion during Posidonia 2010 and by post to shipping companies globally.

All companies will be provided with a free entry, but advertising space and enhanced listings are also available.

See www.maritimelondon.com/media_pack2010.pdf for full details or contact Will Bixby.
E: wbixby@navigatepr.com

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Maritime London member Lloyd’s Register (LR) says that it will play a major role in a two year programme to test the suitability of bio-diesel for use in powering marine engines. The feasibility study will take place on board the Maersk Line container ship Maersk Kalmar but LR has already brought a team of its experts together in Rotterdam to carry out an in-depth hazard and risk analysis of the bio-fuel installation.

An LR statement says that the bio diesel FAME (fatty acid methyl esters) used for the test will be based on sustainable crops grown in temperate regions or reused oils. This would appear to be aimed at deflecting growing criticism of bio-fuels on the grounds their use stimulates increased palm oil production at the expense of rain forest. Initially, the scope of the tests will involve using a blend of between 5% and 7% biodiesel, with the blend percentage being steadily increased.

"One of the aims of the tests is to establish the degree to which issues experienced by the automotive industry in the use FAME, will be duplicated on board ship, in particular the impact on storage stability, handling and its subsequent use in the engine. Where adverse effects are arising it is hoped to find solutions to overcome them." says Kim Tanneberger a specialist in LR’s Strategic Research Group (SRG).

Collaborators in the biodiesel project are Maersk Line, Maersk Tankers, Maersk Supply Service, Maersk Drilling, Maersk Ship Management, Lloyd’s Register’s Strategic Research Group, and a consortium of Dutch subcontractors.

The project is being part funded by the Dutch government and co-ordinated by Maersk Maritime Technology (MSM). LR says that, in theory, FAME can be used in pure form as an engine fuel but it has a number of shortcomings as a fuel, putting aside the high costs and limited availability compared to petroleum derived fuels.

Problems include: • storage stability • adverse reaction of materials to it (acidity, surfactant properties of FAME) • susceptibility to microbial growth • adverse effects on instrumentation of the bilge water system • poor cold flow properties (cloud point and pour point) • impact on the level of NOx emissions emitted • variation of quality of supply world wide depending on feedstock.

"Exploring the behaviour of our engines and storage tanks and knowing the change in air emissions by using FAME blends onboard will give us valuable knowledge of the opportunities and challenges" says Lasse Kragh Andersen, senior environmental specialist at Maersk Maritime Technology.

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Additional visa requirements a possibility

Seafarers could face having to get many more visas if the UK and the Netherlands do not ratify an international convention quickly according to seafarers' union Nautilus International. The union says it is stepping up its campaign to persuade the Dutch and British governments to sign up to the international convention on seafarer identity documents.

Nautilus is warning ministers in both countries that ‘seafarers could face continuing waves of additional visa requirements and shore leave restrictions will become the norm’ if they do not ratify the ILO Convention 185, which was ‘fast-track’ adopted in 2003 in response to the 9/11 terrorist attacks in the United States. At the end of February, Russia became the 17th country to sign up to the convention, with a declaration of provisional application by one further ILO member state.

But Nautilus general secretary Mark Dickinson says he is concerned that neither the UK nor the Netherlands have ratified the convention or given an indication of when they might sign it.

"In the UK, it seems that some legal and practical issues need to be resolved, while the Dutch government has questioned the value of ratification,’ he explains. Nautilus says there are now signs that the Obama administration sees support for the convention as a priority.

“We are stepping up the pressure, as this convention is very important for our members and we need more widespread ratification to protect seafarers’ rights to shore leave and simple transit to their ships without the need for additional travel visas,” Mr Dickinson adds.

Cleopatra Doumbia-Henry, director of the ILO’s international labour standards department, comments: “We are convinced that with this Seafarers’ Identity Document, the ILO will contribute both to safer shipping through positive identification of bona-fide seafarers, and to making life easier for the seafarers concerned.”

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The diplomatic spat over the Falkland Islands that has erupted in recent weeks could have significant implications for shipping. In particular the Argentine government's announcement that ships sailing between Argentina and the Falkland Islands South Georgia or the South Sandwich Islands will need permits may both create problems and opportunities regarding the supply of bunkers to vessels operating in the disputed waters around the islands.

Exploratory oil drilling began last month in waters north of the Falkland Islands, whose sovereignty remains contested by the United Kingdom and Argentina. The commencement of hydrocarbons exploration activities has led to diplomatic protests from Buenos Aires as well as the measures requiring Falklands-bound shipping in Argentine waters or ports to obtain pre-visit authorisation.

Reuters quotes John Dalby, chief executive of maritime security company MRM as saying: “If a company wants to establish a platform out there serious consideration should be given to chartering a relatively small tanker loaded with fuel oil and marine diesel and ship-to-ship transfers could then be conducted, weather permitting, en route.”

Meanwhile IHS Jane’s Americas analyst Robert Munks has claimed, “It is vital to stress that the current resurgence of interest in the Falklands carries no risk of military conflict between the two countries.”

He says: “Argentina’s return to democracy in 1983 and its pledge to pursue its claim to the ‘Malvinas’ through peaceful means underline that the military option is no longer viable. Indeed, the military balance of power in the South Atlantic is also substantially different from the time of the 1982 conflict, with the UK having qualitatively improved its defence posture on the islands at the same time as Argentina’s military capabilities have stagnated and so are little better than at the time of the previous conflict in 1982.”

“A further intensive round of diplomatic activity from the Argentines will now concentrate on shoring up regional support for its case from other Latin American countries and presenting its annual case to the UN Decolonisation Committee in June,” continues Mr Munks.

According to this analyst there will now be a period of relative calm for some six to eight months while four companies undertake exploratory drilling in a range of concessions around the islands, during which Buenos Aires will maintain a heightened level of diplomatic activity.

The next crucial development will come if or when any substantial and exploitable oil reserves are confirmed, he predicts. Any discovery would be certain to give added impetus to Argentine protests, which, given the relatively hard-line posture of Argentine President Cristina Fernández de Kirchner, could escalate into a number of retaliatory measures including trade sanctions or action to reduce transport and communication links to the islands.

Mr Munks concluded, “Even under this scenario, such tensions would not lead to any prospect of renewed, large-scale military hostilities between the United Kingdom and Argentina.”

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The London Maritime Arbitrators Association is celebrating its 50th Anniversary on 18 March with a ‘sell out’ conference and dinner at the Guildhall. LMAA says that 675 guests are attending a the celebratory event in the Great Hall, Guildhall next week.

Lord Clarke of Stone-cum-Ebony and Mark Jackson, chairman of the Baltic Exchange are the guest speakers. During the day the LMAA is hosting a major conference which will be opened by Lord Lloyd of Berwick and 200 participants from all over the maritime arbitration world are expected to attend. As part of the celebrations the Lord Mayor of London is hosting a reception at Mansion House the previous evening, 17 March.

Bruce Harris, Chairman of the organising committee says: “This event has been 2 years in the planning and we hope to achieve a memorable and multi-faceted celebration that does the LMAA proud.”

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