UK's Bribery Act is causing headaches

Some shipping companies attempting to comply with the requirements of the UK Bribery Act 2010, which came into force on 1 July, could actually be building a case for their own prosecution.

The warning comes in an analysis by Ince & Co partner Kevin Cooper posted on the law firm's website.

He notes; “It has been reported that some shipping companies are keeping a record of any gifts or small payments that their employees or agents are obliged to make in order to “get things done” locally. The idea is that if they are open about their procedures, those procedures will be deemed adequate. In truth, they run a risk that those records may well form part of the evidence against them in any subsequent investigation and prosecution.”

Mr Cooper's analysis makes clear that he believes the Act puts the shipping industry in a particularly difficult position. He says that shipping is regarded as being at high risk of having to deal with corruption because of its operation in countries with known corruption risks, its interaction with foreign public officials who may require incentives to perform what is in fact their job and its use of foreign subsidiaries to act as intermediaries.

He says that the issue of facilitation payments to public officials to secure or expedite performance of their duties are of particular concern to the shipping industry. Such payments were already illegal under English law but the wide-reaching and extra-territorial nature of the new Act radically changes the situation. In many countries a ship’s master or agent will routinely be expected to make minor donations or gifts to port officials, for example during customs or cargo clearance or to obtain necessary permits. Shipowners fear failing to make these payments could have serious consequences such as manufactured deficiencies and expensive delays caused by officials expecting a “bonus” for doing their job efficiently.

Talks have been taking place members of the shipping industry and UK government officials and, Mr Cooper says, known “tariff” of facilitation payments in various ports around the world was quoted at a recent meeting as evidence of the inevitability of such payments being requested.

Mr Cooper's analysis goes in to considerable detail, painting a picture that is likely to concern most companies involved in global shipping operations.

He notes that discussions continue with the UK government to establish “whether any comfort can be provided during the 'transitional period' following 1 July”.

But he concludes: “Until such comfort is provided, shipowners will continue to face difficulty in deciding how best to implement the requirements of the Act.”

In a separate move Ince & Co announced today the opening of a new office in Monaco. The leading maritime law firm has been granted a licence to practise English law as Ince & Co Monaco SARL in matters relating to shipping and energy in the Principality.

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The International Chamber of Shipping’s (ICS) chairman Spyros M Polemis has written to the European Commissioner for Climate Action Connie Hedegaard urging the EU to support a compensation system linked to fuel consumption, or levy, rather than an emissions trading system for shipping.

Mr Polemis underlined the importance of the recent IMO agreement to amend MARPOL Annex VI to include a package of technical measures to reduce shipping’s CO2 emissions. Ms Hedegaard has already welcomed the IMO deal.

He wrote: “Most importantly, we believe that IMO is now well placed to continue the real progress it is making on Market Based Measures to help deliver further emissions reduction. We therefore strongly urge that the European Commission and EU Member States will continue to work for an agreement at IMO on MBMs, rather than develop regional measures.” Mr Polemis stressed that the shipping industry fears there could be serious market distortion if the EU tried to press ahead with a regional scheme. ICS believes that a 20% reduction in emissions per tonne of cargo moved per kilometre is a realistic goal that could be met by 2020, to a large extent driven by the introduction of Ship Energy Efficiency Management Plans (SEEMP), Earlier this year ICS’s member national associations agreed that a compensation system linked to fuel consumption, in the form of a levy, is the simplest solution and best suited for the shipping industry.

“The shipping industry,” Mr Polemis wrote, “has an instinctive dislike of needless complexity which we believe will be the result of any system based on emissions trading. ICS has therefore concluded that a fuel linked compensation system will be simpler to manage, more transparent and therefore more efficient in its own right. Our position is also shared by the European Community Shipowners’ Associations.”

Mr Polemis offered to discuss the details of how a compensation system might work with Commission officials.

He said: “We recognise that the European Commission’s formal position is that it remains open minded about what form of MBM it thinks is best suited to shipping internationally. In the next few months, we hope to share with you our more detailed thoughts on how a compensation fund agreed at IMO might work. In the meantime, we believe it most important that you continue to employ your influence within the EU institutions to help ensure that the European Commission remains focused upon working with EU Member States to reach an agreement on MBMs at IMO. We hope you can agree that this is far preferable to pursuing a regional solution, which we believe would be bad for the environment as well as being against the interests of both the European and international shipping industries.”

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Lloyd's Register (LR) has developed new procedures under the notation, ShipRight FDA ICE, to help assess designs and reduce the risk of fatigue damage in the hull structures of their ice-strengthened vessels.

There is increasing marine activity in cold-climate areas

LR says the timely move comes as changes in the exploitation of natural resources, the climate, world trade and marine infrastructure are increasing marine activity in cold-climate areas. Greater trade through the Arctic is driving demand for larger ice-class vessels, particularly oil tankers and LNG carriers. The Arctic is estimated to hold about 20% of the world’s remaining recoverable hydrocarbon reserves. Further exploration and transportation is expected off the coasts of Alaska, Canada, Greenland and Russia. In addition to hydrocarbons, large quantities of minerals may need to be shipped from the Arctic to ports in Europe and Asia.

The London-based classification society and Maritime London member says that it is increasingly important that the industry develops a better understanding of the risks involved, including the potential for fatigue to affect the strength of ships' hull structures.

Zhang Shenming, the project leader and a lead specialist in Lloyd’s Register’s marine product development department, says: “Designers and owners need to have confidence in the structural performance of the latest generation of large ships. The fatigue performance of these hull structures as the ships navigate in ice-covered waters is a key component in their operational capability and reliability."

Dr Zhang added: "This assessment will give operators and owners the confidence to operate in these demanding and challenging environmental conditions." The ShipRight FDA ICE assessment procedure examines ship-ice interaction loads, ice-load impact frequency, ice-load distribution, structural responses and the fatigue behaviour of hull structures in cold temperatures including associated fatigue responses. The fatigue-response assessment is determined for different winter conditions and ice thicknesses on typical routes for winter trade. Ships complying with the requirements of the procedure will be eligible to be assigned the notation ShipRight FDA ICE.

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A new report boosts a growing industry perception that abatement technology – scrubbers - will be increasingly attractive. “Outlook for Marine Bunkers and Fuel Oil to 2030”, by Robin Meech and FGE, says that implementing the IMO sulphur limit proposals by 2020 would be “virtually impossible”, requiring the refining industry to invest in more than 4 million b/d of extra secondary processing capacity, above that already scheduled.

The report concludes that under pressure from the impending marine emissions legislation, the mix of fuels used in the shipping industry will proliferate, that on-board scrubbing will become viable, initially for vessels operating in ECA areas, but subsequently for all newbuilds.

The report contains around 105 pages with over 50 tables/charts and provides a comprehensive update of the current legislation, how the shipping and refining industries are likely to respond as well as the implications in terms of bunker demand, price differentials and investments.

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Insurance broker Marsh has published a white paper looking at the insurance implications of piracy for shipping companies. Topics covered include:

a. insuring against loss of or damage to ships caused by pirates;
b. payment of a ransom to secure the release of a hijacked ship, cargo and crew;
c. issues to consider relating to marine kidnap and ransom insurance;
d. marine war risks and marine K&R insurance markets - a status report;
e. loss of hire following piracy;
f. the P&I position; and
g. the use of armed security.

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The UK's Maritime and Coastguard Agency (MCA) is seeking shipping industry views on proposed changes enabling it to implement Directive 2009/16/EC on port state control. The main changes are to introduce a risk based inspection scheme for foreign flag ships calling at EU ports and anchorages, to strengthen refusal of access rules for repeatedly detained ships and to place new reporting obligations on port authorities and pilots.

The deadline for submissions is 9 September.

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Braemar (incorporating The Salvage Association), formerly BMT Marine & Offshore Surveys, says it is poised to expand its marine surveying and consultancy services following its recent purchase by Braemar Shipping Services from BMT Group. India and South America are the company's key target areas.

In a statement the company says it is looking forward to taking advantage of the wider group’s extensive global office network to broaden its existing international expert marine surveying and consultancy service.

Nigel Clark, managing director of Braemar (incorporating The Salvage Association), said: “The Salvage Association is the standard bearer for the provision of damage survey reports and we are rightly proud of this. While this work remains our core business, we also provide a broad range of other technical and in-depth expert services to the maritime industry and we are excited to have this opportunity to expand our capabilities even further.”

He adds: “We plan to continue the great work of the Salvage Association as well as growing our marine consultancy businesses and the backing of Braemar’s extensive network of global offices will enable us to further extend its worldwide services.”

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Luke Readman has retired as chairman of Thomas Miller P&I after nearly 40 years of service to the members of the UK P&I Club. He has handed over leadership to current chief executive Hugo Wynn-Williams, who will be supported by deputy chairman Nigel Carden.

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The chief executive of UK based bunker trade association IBIA, Ian Adams, has resigned. IHe had been at the helm of IBIA since 2001 during which time the organisation has grown in size, reputation and influence. According to IBIA, he leaves the association in order to look after his family whilst his wife recovers from medical treatment.

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The Shipowners' Club, which specialises in P&I insurance cover for small and specialist vessels worldwide, says it has restructured the key departmental functions at its London branch. In a move intended to be part of an on-going drive to increase both customer focus and operational efficiency, the claims and underwriting teams will now be organised according to three distinct areas of responsibility, called syndicates. Within each syndicate underwriters and claims handlers will work alongside each other, bringing a greater degree of synergy to the club’s service delivery to members, a club statement says.

One syndicate will handle European business; another will manage the “rest of the world” accounts, which fall within the London branch’s realm of responsibility and a third syndicate will focus on the offshore sector. The latter is an area already prominent in the club’s portfolio and within which Shipowners' plans to develop its service offering further.

In announcing the changes Shipowners' CEO, Charles Hume, said, “We believe that the Club’s new operational approach will provide Members and their brokers with a rounded overall service, more attuned to their needs and will help to develop customers’ relations with a broader range of the Club’s staff, putting a larger degree of their skills at the Members’ disposal.”

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A new training programme aimed at preventing deaths and injury in enclosed spaces was launched on HQS Wellington by Captain Terry Jewell, Master of the Honourable Company of Master Mariners on 22 July. Videotel Marine International and Mines Rescue Marine new training series, “Entry into Enclosed Spaces” delivers a hard hitting message to both ship board and shore based personnel that will ensure that when working in enclosed spaces the correct equipment is used and good safety procedures become second nature.

“There is no excuse for the unacceptable casualties we have seen recently,” says Stephen Bond, deputy chairman, Videotel. “Again and again we hear of seafarers coming to grief in enclosed spaces. These incidents could have been avoided by an understanding of the dangers of entering enclosed spaces and the critical importance of following proper procedures. We are convinced that the Entry into Enclosed Spaces Training Series will help save lives.”

The package consists of six programmes covering awareness; preparation and procedures; equipment; enclosed spaces entry; emergency procedures and rescue; and the correct use of breathing apparatus. It is available in a range of formats - interactive CD-ROM, through Videotel on Demand (VOD) and VHS/DVD with supporting booklets.

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Maritime corporate communications firm Navigate PR is running its popular PR for non PR people training course again 18-19 October in London. The course is designed to give executives a thorough grounding in maritime PR giving them the basic skills to begin raising the profile of their company.

According to Navigate PR, the course will give attendees the confidence to speak to journalists, issue press statements, create journal articles, op-eds and thought leadership pieces, handle advertisements and arrange media events. The course also looks at social media, strategy and planning and takes a rounded view of how effective corporate communications can assist companies achieve their business aims.

Navigate PR specialises in the maritime sector and has a range of clients on its books including the Baltic Exchange, AET, Faststream and the Korean Register of Shipping.

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