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Ioannis M. Pavlakis Silina Pavlakis - Moschou Vienna PEOPIL Annual Conference 11 - 13 September 2014 Pavlakis Moschos & Associates Law Offices Piraeus.

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Presentation on theme: "Ioannis M. Pavlakis Silina Pavlakis - Moschou Vienna PEOPIL Annual Conference 11 - 13 September 2014 Pavlakis Moschos & Associates Law Offices Piraeus."— Presentation transcript:

1 Ioannis M. Pavlakis Silina Pavlakis - Moschou Vienna PEOPIL Annual Conference September 2014 Pavlakis Moschos & Associates Law Offices Piraeus - Greece

2 The Key Players in the Shipping Industry – “The World’s First Genuinely Global Industry” Beneficial Owner Registered Owner Flag-state of the ship The Manager and Operator of a ship or of the fleet The Classification Societies The insurers, including third party civil liability insurers Maritime Authorities of states of registration of vessel & Port Authorities of states where the vessel sails Multi-national crews

3 Sea Service and the Inherent Dangers [1] Sea service is hazardous and seafarers are exposed to conditions and dangers that result to damage to their health, minor or serious injuries, even death. Perils of the sea and related risks:  Heavy weather (storms, waves, winds etc.)  Collisions  Sinking  Capsizing  Piracy (lately)

4 Sea Service and the Inherent Dangers [2] A ship is a floating factory with complex and dangerous machinery in a limited space:  Fires  Explosions  Smoke and noxious fumes  Handling of heavy machinery and cargo Adverse working conditions due to extreme climate and weather conditions of heat, ice, humidity, etc.

5 Sea Service and the Inherent Dangers [3] Limited or no access to medical and hygiene facilities Limited space, forced cohabitation and work with colleagues from different nationalities, languages, cultures, characters, under the absolute authority of the master/officers, with no access to shore for months No leaves, long absence from family and residence, but also restricted and difficult contact with home and beloved persons

6 Seafarers’ Accidents Cost to the Shipping Industry Shipping safety has greatly improved during the last decades. However, seafaring remains one of the most dangerous professions, and both the fatality and serious personal injury rate is much higher (some ten times higher or more) than the fatality and serious personal injury rate in the general workforce. UK P&I Club has stated that “the shipping industry is paying out more than $300 million a year to meet seafarers’ claims for injury, illness or death”. Personal Injury claims represent the second most expensive class of claims paid by P&I clubs.

7 Main Causes of Seafarers’ Personal Injury Claims [1] Slips & Falls Falling Objects Strains Burns, Fire and Explosion Injuries Machinery and Equipment Injuries Enclosed Spaces, toxic gases Mental harm, suicides (psychological disturbances, depression, illusions)

8 Main Causes of Seafarers’ Personal Injury Claims [2] Violence between crew members Work related illnesses (heart attack, heat-stroke or frostbite, malaria, mesothelioma and asbestosis, chemical poisoning, cancer, etc.) Aggravation of illnesses due to lack of proper and timely treatment

9 UK P&I Club

10 Need for Harmonization of Maritime Standards [1] In view of the multiple laws, countries, authorities and entities that have a word in the operation of shipping enterprises, it became very early necessary for the international shipping community to issue and enforce rules and regulations which will apply internationally, irrespectively of flag, nationality, shipowner etc.

11 Need for Harmonization of Maritime Standards [2]

12 Need for Harmonization of Maritime Standards [3] The International Maritime Organization (IMO), the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships, in its almost 60 years of history has adopted numerous safety regulations of major importance, such as:

13 Need for Harmonization of Maritime Standards [4]  SOLAS: International Convention for the Safety of Life at Sea, 1974, as amended *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013

14 Need for Harmonization of Maritime Standards [6]  MARPOL: International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013

15 Need for Harmonization of Maritime Standards [7]  STCW: International Convention on Standards of Training, Certification and Watchkeeping for Seafarers as amended, including the 1995 and 2010 Manila Amendments *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013

16 Need for Harmonization of Maritime Standards [8]  COLREG: Convention on the International Regulations for Preventing Collisions at Sea, 1972 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013

17 Need for Harmonization of Maritime Standards [9]  LLC: International Convention on Load Lines, 1966 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013

18 Need for Harmonization of Maritime Standards [10]  IMDG Code: International Maritime Dangerous Goods Code (Amendments to SOLAS chapter VII (Carriage of Dangerous Goods) adopted in May 2002 made the IMDG Code mandatory from 1 January 2004)  Many other

19 Need for Harmonization of Maritime Standards [11] The International Labor Organization (ILO), which in 1946 became the first specialized agency of the newly formed at the time United Nations, has over the years adopted numerous legislative instruments that promote social justice, human and labour rights, and advance the creation of decent and safe working conditions for workers of all industries, including the maritime sector. ILO Conventions on seafarers working conditions include:

20 Need for Harmonization of Maritime Standards [12]  Minimum Age (Sea) Convention, 1920  Officers' Competency Certificates Convention, 1936  Hours of Work and Manning (Sea) Convention, 1936  Minimum Age (Sea) Convention (Revised), 1936  Wages, Hours of Work and Manning (Sea) Convention, 1946  Seafarers' Annual Leave with Pay Convention, 1976

21 Need for Harmonization of Maritime Standards [13]  Merchant Shipping (Minimum Standards) Convention, 1976 (and 1996 protocol)  Repatriation of Seafarers Convention (Revised), 1987  Labour Inspection (Seafarers) Convention, 1996  Recruitment and Placement of Seafarers Convention, 1996  Seafarers' Hours of Work and the Manning of Ships Convention, 1996

22 Need for Harmonization of Maritime Standards [14] THE IMO and ILO Conventions are international legal instruments, and as such are:  binding only for countries that have ratified them, and  not directly applicable, but rely and require implementation by member states into their domestic law. Upon implementation, they form mandatory rules and regulations superseding Seafarers' individual employment contracts providing otherwise.

23 Maritime Labour Convention (MLC), 2006

24 ILO MARITIME LABOUR CONVENTION 2006 Adopted by government, employer and workers representatives at the 94th Maritime Session of the ILO held in Geneva, Switzerland, on 23 February The very large number of existing ILO maritime Conventions, many of which were overlapping, conflicting or outdated, made it difficult for governments to ratify and to enforce all of the existing international labour standards. Development of “an instrument which brings together into a consolidated text as much of the existing body of ILO instruments as it proves possible to achieve”.

25 Consolidation of 36 Conventions Since 1920 the ILO has adopted some 40 maritime labour Conventions and 29 maritime labour Recommendations covering a wide variety of issues, including recruitment and placement, minimum age, hours of work, safety, health and welfare, labour inspection and social security. The Convention consolidates, revises and modernizes in a single legal instrument 36 out of the 40 ILO maritime labour Conventions and one Protocol.

26 Phasing Out of Existing Conventions The Conventions and the Protocol that are consolidated will be gradually phased out as countries that have ratified those Conventions ratify the MLC, Countries that ratify the MLC, 2006, will no longer be bound by the existing Conventions when the MLC, 2006, comes into force for them. Countries that do not ratify the MLC, 2006, will remain bound by the existing Conventions they have ratified, but those Conventions will be closed to further ratification.

27 “Fourth Pillar” of International Maritime Law International Regulatory Regime for Quality Shipping SOLASSTWCMARPOLMLC International Convention for the Safety of Life at Sea, 1974 (as amended) International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 (as amended) International Convention for the Prevention of Pollution from Ships, 1973 (as amended by Protocol of 1978) Maritime Labour Convention, 2006

28 Entry into Force The MLC 2006, entered into force on 20 August 2013, 12 months after the date on which there were registered ratifications by at least 30 Members of the ILO with a total share in the world gross tonnage of ships of at least 33 per cent (requirement set by Article VIII, paragraph 3 of MLC 2006). For countries ratifying the Convention after 20 August 2012 the Convention enters into force 12 months after the date that the country’s ratification is registered (Article VIII, paragraph 4, MLC 2006).

29 MLC 2006 Ratification Status (Sept. 2014) Ratified & in Force Ratified but not in Force yet Ratifications by 64 Countries representing more than 80% of world GT of ships In Force in 48 Countries

30 Structure of the Convention MLC 2006 Articles - Legal & Procedural Matters - General statements of principle, obligations & rights - Definitions Regulations - Core rights & general principles on specific matters - Basic obligations of member states The Code - Details for the interpretation of the Convention Part A Mandatory Standards Part B Non Mandatory Guidelines To be given due consideration in implementing the Convention

31 The Five Titles of the Convention – Minimum Standards & Enforcement [1] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement MLC 2006

32 The Five Titles of the Convention – Minimum Standards & Enforcement [2] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Minimum Age Medical Certification Training & Qualification Recruitment & Placement

33 MLC 2006 The Five Titles of the Convention – Minimum Standards & Enforcement [3] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Written Employment Agreements Payment of Wages Hours of Work & Rest Annual Paid Leave Compensation arising from ship’s loss or foundering

34 MLC 2006 The Five Titles of the Convention – Minimum Standards & Enforcement [4] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Individual Sleeping Rooms Design, Ventilation, Lighting, Heating etc. of Private & Common Areas Sanitary Accommodation Recreational Facilities, Mail and Ship Visit Arrangements Food and Catering

35 MLC 2006 The Five Titles of the Convention – Minimum Standards & Enforcement [5] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Medical Care Onboard & Ashore Sickness and Injury Costs Born by Shipowners Health & Safety Protection & Accident Prevention Access to Shore-based Welfare Facilities Social Security

36 MLC 2006 The Five Titles of the Convention – Minimum Standards & Enforcement [6] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Flag-State Responsibilities Port-State Responsibilities Labour Supplying Responsibilities

37 Multi-level System of Enforcement & Compliance [0]

38 Multi-level System of Enforcement & Compliance [1]

39 Maritime Labour Certificate (MLC Certificate) [1] Issued by the competent authority of ship’s Flag-State or by a recognized organization duly authorized by the Flag-State for this purpose

40 Maritime Labour Certificate (MLC Certificate) [2] Issuance after inspection & certification of 14 areas in the working and living conditions of seafarers as complying with MLC Valid for a period that shall not exceed 5 years. Valid only if accompanied by a Declaration of Maritime Labour Compliance (DMLC)

41 Maritime Labour Certificate (MLC Certificate) [3] Intermediary inspections by Flag- State at intervals that shall not exceed 3 years.

42 Declaration of Maritime Labour Compliance (DMLC) [1] PART I Completed by the competent authority of ship’s Flag-State or by a recognized organization duly authorized by the Flag-State for this purpose Reference to the relevant details of the national requirements implementing the MLC

43 Declaration of Maritime Labour Compliance (DMLC) [2]

44 Declaration of Maritime Labour Compliance (DMLC) [3]

45 Declaration of Maritime Labour Compliance (DMLC) [4]

46 Declaration of Maritime Labour Compliance (DMLC) [5]

47 Declaration of Maritime Labour Compliance (DMLC) [6]

48 Declaration of Maritime Labour Compliance (DMLC) [7] PART I I Completed by the shipowner Shipowner identifies measures adopted to ensure ongoing compliance with the national requirements between inspections, as well as the measures proposed to ensure that there is continuous improvement

49 Declaration of Maritime Labour Compliance (DMLC) [8]

50 Declaration of Maritime Labour Compliance (DMLC) [9] PART I I Certified and endorsed by the competent authority or recognized organization of Part I

51 Multi-level System of Enforcement & Compliance [2]

52 Multi-level System of Enforcement & Compliance [3]

53 Multi-level System of Enforcement & Compliance [4]

54 Multi-level System of Enforcement & Compliance [0]

55 EU and the MLC 2006 [1] The EU does not (and cannot) participate as a full member of the ILO and has no right to become a contracting party to any of the ILO Conventions. The ILO constitution is only open for states. To overcome this difficulty EU initially issued Council Decision 2007/431/EC, by which it “authorized” (effectively obliged) EU member-states to ratify the MLC 2006 (those parts falling under Community competence) and provided that member-states should make efforts to take the necessary steps preferably before 31/12/2010.

56 EU and the MLC 2006 [2] Subsequently, most of the provisions of MLC 2006 were transposed into EU law by means of numerous Directives:  Council Directive 2009/13/EC implemented the “social partners” agreement on the MLC 2006 (reached in May 2008 between the European Community Shipowners’ Association (ECSA) and the European Transport Workers’ Federation (ETF), following consultations that were already initiated between the “social partners” in September 2006 in light of the MLC 2006), and amended the existing EU legislation on seafarers’ working conditions (Directive 1999/63/EC) by effectively reproducing the wording of the standards and regulations of Titles 1 to 4 of the MLC 2006.

57 EU and the MLC 2006 [3]  Directive 2009/16/EC (recast directive) reformed the EU's Port State Control scheme and made specific but mere reference to the MLC 2006 (Preamble, para. 5 and Annex IV). Was in 2013 amended by  Directive 2013/38/EU amended Directive 2009/16/EC so that in the list of documents and certificates to be presented at port-state control inspections are included the MLC 2006 Maritime Labour Certificate and the Declaration of Maritime Labour Compliance. The scope of Port-State Control inspections was extended to cover all MLC 2006 requirements.

58 EU and the MLC 2006 [4]  Directive 2013/54/EU concerning certain flag state responsibilities for compliance with and enforcement of the MLC 2006, obliges member-states to provide for effective and appropriate enforcement and monitoring mechanisms ensuring compliance of the ships flying their flags with the provisions of MLC 2006 and Council Directive 2009/13/EC. Deals with the credentials and powers of the personnel in charge of compliance monitoring as well as the on board complaint procedures, the handling of complaints and the corrective measures in the terms of the MLC  The Directive does not impose an obligation on member- states to issue the MLC Certificate and the DMLC.

59 EU and the MLC 2006 [5]  Directive 2009/20/EC (part of the so-called “Third Maritime Safety Package” comprising two Regulations and six Directives) provides that as of 01/01/2012 the shipowners of all ships of 300 gross tonnage or more, irrespective of type, must have P&I or other type of insurance in place that covers maritime claims subject to limitation under the 1976 Convention on Limitation of Liability for Maritime Claims, adopted by the International Maritime Organization (IMO), as amended by the 1996 Protocol.

60 EU and the MLC 2006 [6] This obligation (compulsory P&I insurance) applies to ships: (a) flying the flag of the EU member-states (including member states of the European Economic Area - EEA); (b) irrespective of flag they are flying, calling at the ports of the EU/EEA member -states; and (c) irrespective of flag they are flying, operating within the territorial waters of the EU/EEA member-states, if in conformity with international law.  As of the same date (01/01/2012), EU/ EEA member-states are obliged to carry out inspections of ships calling at their ports or operating within their territorial waters for this purpose.

61 MLC’s Input to Seafarer’s Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [1] ICONS (International Commission on Shipping) reported a few years ago that: “For thousands of today’s international seafarers life at sea is modern slavery and their workplace is a slave ship”. There was an absolute necessity for the introduction of a new, widely accepted and broadly enforced convention on seafarers’ rights and working conditions. ICONS (International Commission on Shipping) reported a few years ago that: “For thousands of today’s international seafarers life at sea is modern slavery and their workplace is a slave ship”. There was an absolute necessity for the introduction of a new, widely accepted and broadly enforced convention on seafarers’ rights and working conditions.

62 MLC’s Input to Seafarer’s Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [2] Codification and unification of numerous conventions and regulations in a single coherent legal instrument Codification Revision, modernization and update of seafarers’ working conditions legal framework Revision & Update Outdated and low ratification status maritime legal instrument came together in one coherent piece of legislation likely to achieve near universal ratification WideRatification

63 MLC’s Input to Seafarer’s Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [3] Protection by indirect application to all ships and all persons working at sea (now estimated at over 1,5 million persons) - “No more favourable clause” (Article V, para. 7, MLC 2006) Indirect Application Expansion of application to all types of ships, including (for the first time) pleasure ships and yachts Expansion of Protection Establishment of almost universal rules and global minimum standards for the protection of seafarers’ safety, health and rights, irrespectively of ship’s flags and seafarer’s nationality Universal Bill of Rights

64 Conversion of Codes of Practice into Enforceable Law [1] Codes of Practice, such as the as the ILO Codes of Practice: “Accident Prevention on board Ship at Sea and in Port, 1996” & “Ambient Factors in the Workplace, 2001” which provide for numerous safety regulations that up to date had been used for purposes of general guidance, and were not treated by courts as “safety regulations” per se, become enforceable law

65 Conversion of Codes of Practice into Enforceable Law [2] Practical importance in numerous jurisdictions (e.g. Greece):  Full compensation (pecuniary & moral damages) to seafarers in case of sea accident is awarded only when a specific enacted safety regulation has been violated (mere violation of the general "duty of care" entitles them to restricted non- fault compensation)  The legislative approval of the ILO Codes of Practice (which were not treated by Courts as “safety regulations”) in the course of ratification of MLC, shall enable seafarers to claim for full compensation on the basis of breach of the respective codes of practice.

66 More Responsible Parties for Seafarers’ Safety & for their Claims Shipowner (Broader Concept) Flag-State Inspectors Flag- State per se Flag- State’s Competent Authorities & Recognized Organizations  Direct action against “shipowner” as defined by MLC  Relief from burden of proving “beneficial ownership”  Enables or makes easier to secure jurisdiction in the Courts of shipowners country of actual business. “Compensation shall be payable in accordance with national laws and regulations for any loss or damage suffered as a result of the wrongful exercise of the inspectors’ powers.” (Standard Α5.1.4.) “In all cases, the Member shall remain fully responsible for the inspection and certification of the working and living conditions of the seafarers concerned on ships that fly its flag.” (Regulation ) Possible additional defendants in case the conditions onboard the ship do not comply with the MLC Certificate & DMLC (i.e. the Convention standards) issued by them.

67 Broadening the Definition of a “Shipowner” MLC Definition of Shipowner “the owner of the ship or another organization 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 organization or persons fulfill certain of the duties or responsibilities on behalf of the shipowner”  Irrespective of the particular commercial or other arrangements regarding a ship’s operations and the identity of the “actual” owner of the ship, there must be a single entity, “the shipowner”, that is responsible for seafarers’ living and working conditions.

68 1 st Amendment to the MLC [1] – Abandoned Seafarers & Security for Contractual Claims Less than 8 months from the date the MLC 2006 came into force, government, employer and worker delegates, at the 103rd annual meeting of the ILO, overwhelmingly voted (April 11, 2014) in favour of approving amendments to the MLC 2006, in order to: (a) better protect abandoned seafarers, and (b) provide financial security for compensation to seafarers and their families in cases of a seafarer’s death or long-term disability.

69 1 st Amendment to the MLC [2] – Repatriation & Financial Assistance to Abandoned Seafarers Obligation for an expeditious and effective financial security system to assist seafarers in the event of their abandonment, aiming at providing direct access, sufficient coverage and expedited financial assistance in terms of access to adequate food, accommodation, drinking water supplies, essential fuel for survival onboard the ship, necessary medical care, payment of outstanding wages and other entitlements due from the shipowner, and for coverage of repatriation costs Obligation for a financial security certificate or other documentary evidence for this purpose onboard all vessels

70 1 st Amendment to the MLC [3] – Financial Security for Seafarers’ Contractual Claims Obligation for a system of financial security to assure compensation of seafarers for contractual claims, i.e. any claim which relates to death or long-term disability of seafarers due to an occupational injury, illness or hazard as set out in national law, the seafarers’ employment agreement or collective agreement Obligation for a financial security certificate or other documentary evidence for this purpose onboard all vessels

71 1 st Amendment to the MLC [4] – Entry into Force Unless there is significant disagreement when they are circulated to governments that have ratified the MLC 2006, these new requirements will enter into force by early 2017 The amendments to the Convention (when and to the extent that they will come into force) will for the first time:  make compulsory the insurance coverage for seafarers’ claims in cases of abandonment (as a general rule no such insurance is provided until today even on a voluntary basis) as well as for seafarers’ contractual compensation claims (customarily provided by P&I Clubs), and  give seafarers the right to direct access against the financial security provider. NOTE: The amendments are notified to Members whose ratification of the MLC, 2006, was registered prior to the date of the Conference’s approval. These Members have a period of two years from that notification (unless the Conference decides upon a different period) to express a formal disagreement to the amendments. The amendments enter into force six months after the end of that period unless more than 40 per cent of ratifying Members, representing not less than 40 per cent of world gross tonnage, have formally expressed their disagreement with the amendments. A ratifying Member that expresses its formal disagreement within the prescribed period will not be bound by the amendments. After entry into force of the amendments, the Convention may only be ratified in its amended form.

72 1 st Amendment to the MLC [5] – Direct Action against the Insurer (?) [1] The Basic Principle: “Pay to be Paid” Rule  P&I Clubs insurance cover has been traditionally indemnity insurance  the assured shipowner or ship manager must first pay and discharge his liability towards the third party in order to trigger the P&I’s Club duty to indemnify him Exceptions Introduced for tortuous liability:  International Convention on Civil Liability for Oil Pollution Damage, 1969,  International Convention on Liability & Compensation for Damage in Connection with the Carriage of Hazardous & Noxious Substances by Sea, 1996,  International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001  the Nairobi International Convention on the Removal of Wrecks,

73 1 st Amendment to the MLC [6] – Direct Action against the Insurer (?) [2] Currently no provision at international level for a direct action against P&I Clubs or other insurers for seafarers’ contractual compensation claims or claims related to their abandonment Exceptional available option in some jurisdictions: subrogation claim

74 1 st Amendment to the MLC [7] – Direct Action against the Insurer (?) [3] The amendments to the MLC provide that: (a) the financial security system for abandoned seafarers shall provide to seafarers “direct access” to “sufficient coverage and expedited financial assistance”, (b) the financial security system for contractual claims must ensure that “the claim for contractual compensation may be brought directly by the seafarer concerned, or their next of kin, or a representative of the seafarer or designated beneficiary”.

75 1 st Amendment to the MLC [8] – Direct Action against the Insurer (?) [4] P&I Clubs are rather skeptical of such changes The UK P&I Club in a Legal Briefing dated November 2010 on the MLC 2006 stated: “P&I Club cover will respond to the majority of the requirements [of the MLC 2006] but has significant gaps and will not cover, for instance, repatriation after insolvency and claims for unpaid wages, nor will it respond directly to seafarers' claims for compensation as opposed to indemnifying the owner. …” Most P&I Clubs up-to-date contend that the MLC and its amendments do not and should not give seafarers a direct action against the insurance providers and object to the establishment of such a right

76 1 st Amendment to the MLC [9] – Direct Action against the Insurer (?) [5] Main Objections of P&I Clubs Public protection of a claimant is required in tortuous liability; not in contractual relations, as parties negotiate rights and obligations and enter agreements willinglyPublic protection of a claimant is required in tortuous liability; not in contractual relations, as parties negotiate rights and obligations and enter agreements willingly 1 A right to proceed directly against the insurer, deprives the latter of his defenses under insurance contract (pay to be paid, willful misconduct of shipowner etc.)A right to proceed directly against the insurer, deprives the latter of his defenses under insurance contract (pay to be paid, willful misconduct of shipowner etc.) 2 P&I insurance would cease to be indemnity insurance (makes good loss of insured) and would become liability insurance (makes good damage sustained by claimant).P&I insurance would cease to be indemnity insurance (makes good loss of insured) and would become liability insurance (makes good damage sustained by claimant). 3 True for cargo claims but not for crew members who in most cases are not in a position to negotiate the terms of their employment Other pieces of legislation (e.g. IMO Civil Liability Conventions – CLCs) provide that insurers can avail themselves of the defense of willful misconduct of the shipowner as a defense in a direct action. P&I Clubs can quickly amend and adapt their contracts, policies and products to address such changes

77 Critical Considerations on the MLC in Practice [1] – The “Value” of MLC Certificates [1] The MLC certification regime (MLC Certificate & DMLC): (a) resembles the classification societies' certificates for ships and the quality standards' certificates (ISO) for products, services etc.. (b) aims to provide a standardized/globally recognized assurance that seafarers onboard MLC certified ships are “living and working in a healthy and safe environment" and that their basic labour rights (salaries, working time, leaves et.) are respected. (c) implies that the authority issuing, renewing, and endorsing the MLC Certificate and the DMLC is strictly regulated and is falling under internationally accepted standards of performance, and that a strictly regulated and internationally approved procedure is followed for this purpose.

78 Critical Considerations on the MLC in Practice [2] – The “Value” of MLC Certificates [2] However:  Flag-State Authorities issuing and endorsing the MLC Certificate and the DMLC, especially in the case of vessels flying flags of convenience, are not subjected to uniform, strict and internationally accepted regulations and procedures.  Unless no room is left to “substandard” flag states’ agency to uncontrollably issue and renew the certificates, the MLC certification regime may not have the intended beneficial results.

79 Critical Considerations on the MLC in Practice [3] – The “Value” of MLC Certificates [3]  Reliance by Port-State Control & Authorities on the MLC Certificates & DMLCs as prima facie evidence that the ship fully conforms with all MLC requirements, will restrict Port-State Control inspections, and will enable ships holding MLC certification by “substandard” bodies to get away with violations of crews’ rights.  Given that according to the MLC Port-State Control inspections are voluntary and discretionary, and that the presentation of a valid MLC Certificate & DMLC is prima facie evidence that the ship is in full compliance with MLC standards, it is questionable whether there will be in practice a sound mechanism of ensuring compliance of ships with the MLC requirements beyond the boundaries of their flag state.

80 Critical Considerations on the MLC in Practice [4] – Certification will Benefit Seafarers or Shipowners? [1] MLC Certificate & DMLC Administrative Level Undoubtedly beneficial for seafarers as it enforces on a day to day basis better protection for their health, safety, working conditions and their rights in general Litigation Level The prima facie evidence of compliance will most likely create numerous problems to claimants: - shipowners will use certificates as evidence of lack of wrongful act or omission on their part - seafarer will have burden of proving that shipowner acted against what has been officially certified - turning against inspectors or flag-states that issued the certificates will be very difficult due to not easy access to evidence, complex administrative procedures, immunity of public bodies in some jurisdictions

81 Critical Considerations on the MLC in Practice [5] – Certification will Benefit Seafarers or Shipowners? [2] MLC Certificate & DMLC A Beneficial Approach for Seafarers  Every incident leading to personal injury or death to be held as the result of a violation of the MLC standards of safety and health onboard and the seafarer to be entitled to full compensation for his damages.  The shipowner to be relieved only in case he proves that the accident was not due to violation of the MLC requirements. However, even in this case, a non-fault low compensation will have to be provided for the seafarer/his bereaved family.

82 Concluding Thoughts [1] Since August 2013, when the MLC 2006 came into force, a number of ships in several countries have been detained following Port-State Control inspections for non compliance with the MLC 2006 requirements. All detentions have lead to the adoption of measures and to interventions making the detained vessels MLC compliant. At the same time, the shipping industry is intensifying the efforts and the training with respect to MLC 2006 which had already begun since its adoption in 2006, thus setting new floor standards and a different culture for on board service and practices.

83 Concluding Thoughts [2] Notwithstanding the fact that it has been a year since the Convention came into force, it is still early days for the MLC. Its effectiveness and success remain to be seen. Indisputably the MLC 2006 will play a significant role in personal injury litigation, as, inter alia, it sets new standards, brings new players in the litigation arena, and to a greater or lesser extent influences the process of proving facts and establishing liability. The extent to which these international changes will be to the benefit of the claimants will be tested before the competent Courts at national level.

84 Pavlakis Moschos & Associates Law Offices 66 Filonos & 2 nd Merarhias str., Piraeus - Greece Tel.: – Fax: –


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