Media Coverage

Jon Waldron, partner and practice group leader in Blank Rome’s maritime group, was recently quoted in a Lloyd’s List article that discussed the MLC 2006 regulations. Full article below:

Industry sources say that support from class societies, as recognised organisations, has been mixed. 

Shipping pleads for clearer rules of engagement.

Confusion over the lines of responsibility in the new MLC 2006 could disrupt its implementation as shipmanagers call for legal clarity to define the term shipowner.

Under the MLC, the shipowner is described as “the owner of the ship or another organisation or person, such as the manager, agent or bareboat charterer, who has assumed the responsibility for the operation of the ship from the owner and who, on assuming such responsibility, has agreed to take over the duties and responsibilities imposed on shipowners in accordance with this convention, regardless of whether any other organisation or persons fulfil certain of the duties or responsibilities on behalf of the shipowner”.

This definition has caused confusion, leading both shipowners and managers to seek to clarify their roles.

Guidance from the International Association of Classification Societies states that the MLC shipowner should be the entity that holds the International Safety Management Document of Compliance.

If the vessel is managed in-house, things are simple: the shipowner will be the ISM DoC holder and therefore the shipowner under MLC.

However, if the shipowner employs a third-party manager, in most cases the shipmanager will be the ISM DoC holder, which causes problems as certain shipmanagers are unwilling to be identified as the MLC shipowner.

Shipmanagers’ Argument:

“We fail to understand how anybody can consider how a service provider, such as a third-party manager, can come under the definition of MLC shipowner. There is no ambiguity in the definition,” said V.Ships group director Matt Dunlop.

The International Labour Organisation’s definition makes it clear that the owner of the vessel cannot escape from his or her obligations under MLC, he said.

Mr Dunlop said IACS’ guidance that the shipowner under MLC should be the entity that holds the ISM DoC had only added to the confusion.

“This is clearly incorrect under the definition and imposes great financial responsibilities on the third-party manager that the ILO originally intended for the true shipowner,” he said.

Support from class societies, as recognised organisations, has been mixed depending on the department in question, Mr Dunlop said.

Third-party managers have many flags within their fleets. V.Ships has 32 flags, 18 have ratified the convention, and all have different interpretations.

Shipowner View:

Inconsistency in interpretation plagues shipowners. Some flag states insist that the DoC holder is the shipowner; others indicate that the DoC holder and the registered shipowner might be jointly named on the certificate, International Maritime Employers’ Council chief executive Giles Heimann said.

“These challenges are primarily caused by the requirements of the ISM Code vis-à-vis those of the MLC as there are different roles and responsibilities encompassed by the two conventions,” he said.

“Ultimately the interpretation and definition of shipowner will be down to individual flag-state legislation; however, this interpretation does vary.”

Class Societies:

Class societies have found themselves playing piggy in the middle, as companies request their service but they act on behalf of the flag states.

This worries the class societies on an operational level and they have generally found the ILO’s use of the term shipowner in relation to MLC to be “unhelpful”.

MLC stipulates that the shipowner must be a single entity that has overall responsibility for seafarers’ living and working conditions.

In practice, although some responsibility remains with the shipowner, much of it falls to the shipmanager or operator, but it is not always clear who will sign the Declaration of Maritime Labour Compliance.

There are concerns that the practice of one party signing the Maritime Labour Certificate and the other signing the DMLC will lead to real problems in terms of accountability. Although this practice may be accepted by the flag state in question, there is no way to know how port state control will react.

There could be practical consequences of having two names on the documents, which goes against the ILO’s desire to have a single entity responsible for seafarer welfare. It also makes it difficult to know who recognised organisations should contact in the event of a problem.

Under MLC, it is possible for either the conventional shipowner or the shipmanager to be named as the shipowner and there is no “wrong” or “right” answer, Bureau Veritas maritime labour department manager Boris Gruden said.

This part of the definition, “who has assumed the responsibility for the operation of the ship from the owner”, is the part of the definition of the ISM Company DoC holder, he said.

For that reason it may be assumed that the MLC shipowner and the ISM company are the same entity, Mr Gruden said.

However, if the DoC holder is declared the MLC shipowner, an agreement should be made with the owner of the ship which defines responsibility of both parties, he said.

As some parts of the MLC requirements are also covered by the ISM system established by the DoC holder, the easiest way to create an MLC related system is to upgrade the ISM system with missing MLC requirements.
This is possible in cases where the DoC holder is declared as MLC shipowner, according to Mr Gruden.

On the other hand, the last part of the ILO’s definition: “regardless of whether any other organisation or persons fulfil certain of the duties or responsibilities on behalf of the shipowner” gives provision to MLC shipowner to delegate certain part of duties to other organisation, he pointed out.

“The owner of the vessel, if declared as the MLC shipowner, may delegate part of the responsibilities to the ISM DoC holder but remain generally responsible for this part also,” he said.

“As the MLC related system has to be created and established by the MLC shipowner, in this case registered owner or BB charterer, it needs to have the organisation and the structure which will fulfil all requirements of MLC, especially the part which is not covered by management agreement.”

Mr Gruden acknowledged that some flags have specified that the ISM company must be the MLC shipowner and that others have defined the MLC shipowner under the terms of the convention.

“This also proves in some way that both understandings may be correct and that the ultimate entity to be asked and who shall define this requirement is the flag,” he said.

Legal Opinion:

Blank Rome partner Jonathan Waldron said MLC, as an international legal instrument, does not apply directly to shipowners, ships or seafarers.

Instead, it relies on implementation by countries through their national laws or other measures. After which the national law or other measures would apply to shipowners.

“As such, the definition of ‘shipowner’ may be further clarified by the member state,” Mr Waldron said.

“However, in my view, as confirmed by ILO guidance, it would appear that the intention of the MLC is to have one entity assume the responsibility of shipowner regarding seafarer living and working conditions. This entity can be the shipowner itself or the shipmanager, but not both.”

Clyde & Co partner Heidi Watson said the definition of a shipowner under MLC has caused huge headaches and it has been one of the key issues since drafting.

“Some managers have been reluctant to sign the DMLC. It is true to say that the complex relationship between owner, manager and crew doesn’t sit well with one person taking overall responsibility and this is not assisted by the confusion over who signs the certificate,” she said.

Ms Watson said the problem had been exacerbated because various flag states are taking different approaches.

Some state the MLC shipowner must be the owner of the vessel, others such as Panama, Liberia and Cyprus, state that it can be the manager but with a power of attorney from the owner. Others have suggested that joint names should be acceptable.

Commercially, the answer is to agree clear contractual arrangements that detail which party will bear the costs of an MLC breach that may arise from delays caused by non-compliance.

“MLC 2006: Who is the Shipowner and Why Does it Matter? “by Liz McMahon first appeared in the August 22, 2013 edition of Lloyd’s List . To learn more about Lloyd’s List, please visit www.lloydslist.com.

The International Labour Organization (ILO) launched a Database on the Maritime Labour Convention 2006 (MLC).  The site includesnational determinations, social security issues and a list of recognized organizations among others.

The information contained in this database has not been reviewed by the ILO supervisory bodies and does not imply any approval of compliance with the Maritime Labour Convention, 2006 by the International Labour Organization.

Maritime Labour Convention 2006

Maritime Labour Convention 2006 (MLC 2006) will enter into force on 20 August 2013when, together with SOLAS, MARPOL and STCW, it will become the “fourth pillar” of the international maritime industry’s regulatory framework.

Background

MLC 2006 is intended to provide all seafarers with decent working and living conditions regardless of nationality or flag. It is also designed to address any concerns that may arise if such conditions fail to meet flag Administration requirements regarding compliance with the Convention. In broad terms MLC 2006 covers the payment of wages, safe and secure working and living conditions, fair contractual employment terms and a right to medical care.

Ratification

In August 2012 the Philippines became the thirtieth country to ratify MLC 2006, thereby achieving the required number of ratifications by member states representing at least 33% of the world’s gross tonnage. Consequently the Convention will enter into force on 20 August 2013. An estimated 40,000 ships will need to obtain MLC 2006 certification by this date.

Applicability

The requirements apply to:

1. ships of 500 gross tonnes or over, engaged in international voyages; and

2. ships of 500 gross tonnes or over, flying the flag of a member state and operating from a port, or between ports, in another country

The requirements do not apply to vessels navigating entirely within internal waters, sheltered waters or areas where port regulations apply or other waters closely adjacent to these areas. Similarly fishing vessels, naval vessels and their auxiliaries and traditional craft such as dhows and junks are not required to comply with the provisions.

MLC 2006 also expands the definition of a seafarer. This term now applies to anyone employed to work on board a vessel covered by the Convention. Consequently personnel without operational or navigational responsibilities who may not have been classified as seafarers in the past, for example hotel staff on passenger ships, now fall within the ambit of this definition. However, flag Administrations in conjunction with the social partners (i.e. representative organisations of seafarers and shipowners) may agree exceptions.

Convention Requirements

The full text of MLC 2006 may be downloaded from the ILO website. Copies are available in English, French, Spanish, Arabic, German, Portuguese, Russian and Chinese.

The Convention is split into three sections; articles, regulations and the code. The articles and regulations set out the core rights, principles and basic obligations of the ratifying flag Administrations. The code itself, which is incorporated into the regulations, deals with the implementation of the Convention and consists of two parts; Part A which is mandatory and Part B which provides guidelines on the implementation of Part A. The regulations and Parts A and B of the code are arranged under five main headings as follows:

Minimum Requirements for Seafarers to Work on a Ship

1. Minimum age

2. Medical certificate

3. Training and qualifications

4. Recruitment and placement

Conditions of Employment

1. Seafarers’ employment agreements

2. Wages

3. Hours of work and hours of rest

4. Entitlement to leave

5. Repatriation

6. Seafarer compensation for the ship’s loss or foundering

7. Manning levels

8. Career and skill development and opportunities for seafarers’ employment

Accommodation, Recreational Facilities, Food and Catering

1. Accommodation and recreational facilities

2. Food and catering

Health protection, Medical Care, Welfare and Social Security Protection

1. Medical care on board ship and ashore

2. Shipowners’ liability

3. Health and safety protection and accident prevention

4. Access to shore-based welfare facilities

5. Social security

Compliance and Enforcement

1. Flag State responsibilities

2. Port State responsibilities

3. Labour-supplying responsibilities

Inspection and Certification

The operators of vessels falling within the scope of the Convention are required to develop plans to ensure that they comply with MLC 2006 in accordance with flag Administration requirements. Once completed, the flag Administration or a Recognised Organisation (RO) approved or appointed by the flag Administration, will review, survey and approve the plans to ensure that they are satisfactory.

For certification to be issued, the flag Administration or RO will inspect the vessel to verify that the working and living conditions on board comply with flag Administration requirements, focussing on fourteen key areas:

1. Minimum age

2. Medical certification

3. Qualifications of seafarers

4. Seafarers’ employment agreements

5. Use of any licensed, certified or regulated private recruitment and placement service

6. Hours of work or rest

7. Manning levels for the ship

8. Accommodation

9. On-board recreational facilities

10. Food and catering

11. Health and safety, and accident prevention

12. On-board medical care

13. On-board complaint procedures

14. Payment of wages

If compliance with the above is confirmed, the vessel will be issued with a Maritime Labour Certificate. The vessel will also be provided with a Declaration of Maritime Labour Compliance (DMLC) summarising the implementation requirements of the flag Administration together with details of how compliance has been achieved.

A Maritime Labour Certificate is valid for a maximum period of five years and is subject to a renewal inspection by the flag Administration or RO within three months of the date of expiry. In addition, an intermediate inspection will held between the second and third anniversary dates. Renewal inspections and intermediate inspections are no different in terms of their scope and depth.

If substantial alterations are made to the accommodation after certification has been issued, an additional inspection will be necessary.

An interim Maritime Labour Certificate, valid for a maximum period of six months, may be issued to a new ship upon delivery, to a ship which changes flag or if another company assumes responsibility for the operation of the vessel. Although a separate DMLC is not required, an interim certificate will only be issued once the following conditions have been satisfied:

1. The fourteen key areas listed above have been inspected and, as far as reasonable and practicable, have been found to be acceptable

2. The company has demonstrated that the vessel has adequate procedures to comply with the Convention requirements of the flag Administration

3. The Master is familiar with flag Administration requirements regarding MLC 2006 and the responsibilities for its implementation, and

4. The relevant information for producing a DMLC has been submitted to the flag Administration or RO

Only one interim certificate may be issued, and a detailed inspection must be completed prior to the date of expiry in order to obtain a full term Maritime Labour Certificate.

The DMLC is split into two sections and is to be attached to the Maritime Labour Certificate. Part I, issued on behalf of the flag Administration, lists the fourteen key areas and confirms that they reflect national requirements. Part II, signed by the flag Administration or RO, summarises the measures taken by vessel’s operator to ensure compliance between inspections.

The vessel is also required to maintain a record of all subsequent inspections or verifications carried out, along with details of any significant deficiencies found and the dates when they were rectified. Such details are to be added to the DMLC or appended to it, and are to be made available to seafarers, flag Administration inspectors, port state control (PSC) officers, shipowners and seafarers’ representatives as may be required.

Copies of the Maritime Labour Certificate and the DMLC are to be posted in a conspicuous place on board, accessible by all seafarers.

Although vessels of less than 500 GT, or not engaged in international voyages, or not operating from or between foreign ports do not need to obtain MLC 2006 certification, the flag Administration is still required to visit such vessels at intervals not exceeding three years to inspect the fourteen key areas.

If a vessel is not required to obtain MLC 2006 certification due to its size or trading pattern, the operator may ask the flag Administration or RO to certify the vessel on a voluntary basis if they wish to demonstrate compliance to interested parties such as PSC inspectors or seafarers’ organisations.

Port State Control

Recognising that flag Administrations may not have time to inspect or certificate all of their registered vessels before 20 August 2013, ILO Resolution XVII requests flag Administrations and port states to give due consideration to allowing ships to continue to operate without MLC 2006 certification for one year after the Convention enters into force provided that their inspectors have no evidence that such ships are not complying with the requirements. However, it should be borne in mind that the first thirty countries to ratify the Convention are not legally bound by ILO Resolution XVII.

It is important to note that MLC 2006 includes a “no more favourable treatment clause” to ensure that vessels do not benefit from being registered with a non-ratifying flag Administration. Indeed, vessels flying the flag of non-ratifying countries may face increased scrutiny by PSC officers if they do not possess MLC 2006 certificates or have not been assessed against the general provisions of the Convention by a reputable organisation.

A vessel’s Maritime Labour Certificate and DMLC may be checked during routine PSC inspections. However, a detailed inspection of one or more of the fourteen key areas may be carried out if the PSC officer has “clear grounds” for believing that the vessel may not complying with flag Administration requirements regarding MLC 2006. The term “clear grounds” includes:

1. Concerns regarding the validity of the vessel’s MLC 2006 certification or documentation

2. Indications that the vessel may have changed flag to avoid compliance with MLC 2006

3. Working or living conditions which do not appear to meet the requirements

4. A complaint alleging that the living or working conditions on board do not fulfil the requirements

In the event of a complaint about working or living conditions, the inspection will generally be limited to issues falling within the scope of the complaint. However, any concerns arising from the findings may provide the PSC officer with clear grounds for carrying out a detailed inspection thereafter.

If a detailed inspection determines that the working or living conditions on board fail to meet MLC 2006 requirements, the deficiencies will be brought to the master’s attention together with deadlines for their rectification. Deficiencies which are considered to be significant or relate to a complaint will be reported to the seafarers’ and shipowners’ organisations in the country where the inspection took place, and the vessel’s flag Administration and the relevant authorities at the vessel’s next port of call may be informed, possibly resulting in another PSC inspection. A copy of the report may also be sent to ILO’s Director-General together any comments received from the vessel’s flag Administration.

If the findings of a PSC inspection conclude that the conditions on board are clearly hazardous to the safety, health or security of the crew, or that there has been a serious or repeated breach of Convention requirements or that seafarers’ rights have been violated, the ship may be detained until such issues have been rectified or an action plan has been agreed with the PSC officer.

Examples of circumstances that may lead to a ship being detained include:

1. The presence of any seafarer on board under the age of 16

2. The employment of any seafarer under the age of 18 in work likely to jeopardise their health or safety, or in night work

3. Insufficient manning, including situations caused by the removal under-age seafarers

4. Deficiencies constituting a violation of fundamental rights, or a breach of employment or social rights

5. Repeated cases of seafarers lacking valid medical fitness certificates

6. Repeated cases of seafarers not in possession of valid seafarer’s employment agreements (SEAs), or with SEAs containing clauses constituting a denial of seafarers’ rights

7. Seafarers repeatedly working beyond the maximum hours of work, or having less than the minimum hours of rest

8. Heating, air-conditioning or ventilation systems that are not working adequately

9. Food and drinking water where the quantity and quality is not suitable for the intended voyage

10. Accommodation, including catering and sanitary facilities, that is unhygienic or with missing or malfunctioning equipment

11. Repeated cases of non-payment of wages, or the non-payment of wages over a significant period, or the falsification of wage records or the existence of more than one set of wage accounts

12. Deficiencies regarding the vessel’s medical guide, medicines or medical equipment

Preparing for Compliance

Since MLC 2006 incorporates a number of older Conventions, operators may find that their vessels are currently complying with many of the requirements specified by their flag Administrations. Similarly, the overlap between MLC 2006 and existing IMO Conventions such as STCW may mean that some requirements are already addressed in the Safety Management System.

However, with less than seven months to go before MLC 2006 becomes mandatory, Members who have not yet started to prepare for compliance are urged to do so without delay.

Reference Material

The International Shipping Federation recently launched a second edition of its “Guidelines on the Application of the ILO Maritime Labour Convention” which includes a CD containing essential reference material and a checklist to aid compliance. Members may obtain a complimentary copy of this useful publication from the Loss Prevention department on request.

For further information on MLC 2006, please see:

• ILO Maritime Labour Convention Webpage

• Maritime Labour Convention 2006 – Frequently Asked Questions

• ILO Guidelines for Flag State Inspections under the Maritime Labour Convention 2006

• Guidelines for Port State Control Officers carrying out inspections under the Maritime Labour Convention 2006

  Source: West of England

The ILO Maritime Labour Convention (MLC) will enter into force in August 2013 and employers will need to be ready .

To help shipping companies and crews ensure compliance, ISF has updated and expanded its comprehensive guide, originally published shortly after the MLC was adopted.
The new ISF Guidelines address in detail the obligations of ship operators including inter alia:

1. Seafarers’ employment contracts

2. Oversight of manning agents

3. Working hours

4. Health and safety

5. Crew accommodation

6. Catering standards

7. Seafarers’ welfare

The ISF Guide also contains:

1. Guidance on MLC certification (including the

2. Declaration of Maritime Labour Compliance)

3. Port state control

4. On board complaint procedures

5. Compliance checklist

Plus – accompanying CD containing full text of the Guide (with a ‘search’ function), the full text of the MLC itself, plus other useful documentation

Copies can be ordered now from Marisec Publications.