Legal Implications of the ISM Code

Dr. Phil Anderson BA(Hons.) D.Prof. FNI, MEWI, ACIArb., AMAE, Master Mariner

Let us never forget.....

• The ISM Code was never intended to create new interparty liabilities. The Code was formulated with the clear purpose of improving and extending standards of maritime safety !

• HOWEVER...

• Has the ISM Code been high-jacked by the lawyers?

The Law

• Not much new– Carriage of Goods– Marine Insurance– Personal Injuries– Collisions etc– Environmental

• Requirement to have DOC and SMC – H&M and P&I

The Tests

• Exercise of due diligence• Duty of care• Fault and privity• Wilful misconduct• Recklessness • Utmost good faith

The Tests

• ‘…In the law of carriage of goods by sea neither seaworthiness nor due diligence is absolute. Both are relative, among other things, to the state of knowledge and standards prevailing at the time…’

• Lord Sumner – Bradley & Sons Ltd. v. Federal Steam Navigation Co (1926) 24 Ll.L.Rep.446; (1927) 27 Ll.l Rep. 395

The Tests

• ‘…Seaworthiness must be judged by the standards and practices of the industry at the relevant time, at least so long as those standards and practices are reasonable…’

• Mr Justice Cresswell – Papera Traders Co Ltd & others v. Hyundai Merchant Marine Co Ltd & Another ( The ‘Eurasian Dream’); (2002) 1 Lloyd’s Rep. 719

Compliance with the Code

• Contractual claims and disputes

• Civil actions

• Criminal actions

The bench mark

The Benchmark

• The way the ship operator manages safety!

The Benchmark

• The ISM Code / the SMS– The way it has been developed– The way it has been implemented– The way it is operating in the Company and

on board the ship on a day-to-day basis

Bench Mark

• But does such a bench mark actually exist?

The Causal Chain

ACCIDENT

FAILURE OF

SMS

INEFFECTIVE

DPA

DPA – Superhero or Fall guy??

• The DPA is exposed.....BUT...

• They are not on their own – the buck is unlikely to stop at the desk of the DPA...

Issues of Attribution

Issues of Attribution

• Where does the buck stop?

• The role of the highest levels of management

• The role of the Designated Person

• Who is the alter ego?

• Does it matter?

The Designated Person• The Dilemma…

‘The errant shipowners Achilles heel’• “The “blind eye” shipowner is faced with a “catch 22” situation. If he

hears nothing from the designated person, he will be bound to call for reports, for it is inconceivable there will be nothing to report. If the report is to the effect that all is well in a perfect world, the shipowners would be bound to enquire how that could be, as the safety management system is clearly intended to be a dynamic system which is subject to continuous change in the light not only of the experience of the individual ship, and of the company as a whole, but also of the experience of others in the industry.”

• Lord Donaldson – The ISM Code: the road to discovery

The Company Verification, Review and Evaluation

• All roads lead to the board-room table

• How worried should we be?

The Benchmark

• The ISM Code / the SMS– The way it has been developed– The way it has been implemented– The way it is operating in the Company and

on board the ship on a day-to-day basis

• If something does go wrong and we find ourselves facing prosecution – are we insured for the costs of defending ourselves?

• Is there a difference between:

• A ‘no-blame’ culture

• A ‘just’ culture?

A question of evidence

A Question of Evidence

• Safety Management Manual(s)

• Checklists

• Records

• Reports– Internal and external audits– Safety committee meetings– Company review meetings

• Should we realistically expect an ex Master or ex Chief Engineer – for example – to be able to pick up the batten and run with a DPA’s job?

The Designated Person

• Circular MSC-MEPC.7/Circ5 – ‘Guidelines for the Operational Implementation of the International Safety Management (ISM) Code by Companies’

• Circular MSC-MEPC.7/Circ.6 – dated 10 October 2007 and titled ‘Guidelines on the qualifications, training and experience necessary for undertaking the role of the Designated Person under the provisions of the International Safety Management (ISM) Code’

Conclusion

• Has the ISM Code been high-jacked by the lawyers?

• Where are all the prosecutions?

Bench Mark

• Does such a bench mark actually exist?

• How worried should we be?

• If something does go wrong and we find ourselves facing prosecution – are we insured for the costs of defending ourselves?

• Is there a difference between:

• A ‘no-blame’ culture

• A ‘just’ culture?

• Should we realistically expect an ex Master or ex Chief Engineer – for example – to be able to pick up the batten and run with a DPA’s job?

Conclusion• Legal liability will be measured against the

ability of ship operators to manage safety.• The demonstration of that ability will

become evident from the way in which they have set up, implemented and operate their SMS.

• The focus will quickly fall upon the DPA and how he / she is performing their job!

• But the buck wont / might not stop there!

The End

Flowchart For Problem Resolution

Don’t Mess With It!

YES NO

YES

YOU IDIOT!

NO

Will it Blow UpIn Your Hands?

NO

Look The Other Way

Anyone ElseKnows? You’re STUFFED!

YESYES

NO

Hide ItCan You Blame Someone Else?

NO

NO PROBLEM!

Is It Working?

Did You Mess With It?

YES

Dr. Phil AndersonBA (Hons.), D.Prof., FNI, AMAE,MIEW, Master MarinerManaging Director

philanderson@consultism.co.uk www.consultism.co.uk