Round Table: Shipping & Maritime Law 2o13www.corporatel ivewire.com

Mohamed Idwan GanieLubis Ganie Surowidjojo

Brad BermanNorton Rose Fulbright

Wylie SpicerNorton Rose Fulbright

George ZambartasAbogado Portuario & Maritimo

Peter GloverNorton Rose Fulbright

Albert BadiaAACNI

Patrick MurphyClyde & Co LLP

Cristina Martinez RibasAbogado Portuario & Maritimo

Heidi WatsonClyde & Co LLP

Mohamed Idwan Ganie - Lubis Ganie SurowidjojoT: +62 21 8315005E: ganie@lgslaw.co.id

Dr. Ganie specializes in commercial transactions and commercial litigation, including alternative dispute resolution and has acted as an expert in a number

court and arbitration proceedings.

His expertise covers general corporate/company law, mining law, investment law, acquisitions, infrastructure projects/project finance, antitrust law, and shipping/aviation law.

A particular focus of Dr. Ganie’s practice is corporate governance and compliance. This includes legal compliance audits and legal ratings, which is a unique product of the firm.

Dr. Ganie is the Managing Partner of Lubis, Ganie & Surowidjojo. Under his management the firm has become Indonesia’s largest law firm, and has obtained its ISO certifications for (1) quality management, (2) legal services and (3) environmental quality management system (all issued by UK based Lloyd’s Register Quality Assurance) which has made LGS the only Indonesian law firm that has acquired and maintains such international quality standard certifications.

Dr. Ganie is an Independent Commissioner of P.T. Global Mediacom Tbk, the owner of Indonesia’s largest media company (television, radio, online news and printed media).

Brad Berman - Norton Rose FulbrightT: +1 212 318 3095E: brad.berman@nortonrosefulbright.com

Brad Berman is a partner in the New York office and has extensive experience in ship financing, corporate debt finance, offshore incorporation and Liberian law.

Prior to Joining Norton Rose Fulbright, Brad was a partner at another firm in New York. Prior to that, he served as executive director of the Liberian International Ship and Corporate Registry, the world’s second largest ship registry and a 60-plus-year-old corporate registry, where he oversaw all aspects of the Liberian corporate and shipping program, including corporate and other entity formation, and ship registration and mortgaging.

From 1983 to 1999, Brad practiced law In New York and specialized in ship finance and corporate law and regularly advised owners, operators, investors and lenders on corporate ownership structures, financing arrangements and vessel registration. In addition, he advised issuers and financiers on domestic and international corporate and securities matters, including Initial public offerings on the New York, Oslo and Hong Kong stock exchanges, leveraged buy-outs and international private placements.

Cristina Martinez Ribas - Abogado Portuario & MaritimoT: +34 9327 25236E: cmr@abogadoportuario.com

Cristina is practicing lawyer of the Barcelona Bar Association. Graduate in law from Universidad de Barcelona (1992), Master in maritime law and specialised in

port law. She acquired experience as a litigation lawyer at the law firm Bufete Berenguer Comas and at the shipping agent Witty SA. She was also a P&I correspondent for ship insurers of the International Group of P&I Clubs, starting at Witty, S.A. and setting up INDECO in year 2000. From 2006 to 21 June 2012 she gained experience in port and administrative law through her legal work at the Barcelona Port Authority Primer second prize in the Pablo Acero 2013 award of the International Association of Port Law. She holds the Cambridge Certificate of Proficiency in English and also speaks Spanish, Catalan and some French.

George Zambartas - Abogado Portuario & MaritimoT: +357 25373734E: gz.law@cytanet.com.cy

George holds a BA (Hons) in Law and Politics. He has extensive experience in shipping, ship financing, maritime claims, ship management and purchase/sales

of ships. He has undertaken ship registration, re-flagging, re-naming and parallel registration in all major registries around the world. After leaving the Commercial Litigation Dept of a Law Firm in the UK, he moved to Cyprus in 1999 as an in-house Legal Advisor for a leading global Shipping Company. In August 2008 he left the shipping law practice of Economides Dionysiou & Co to form Zambartas Law Offices (now L.G. Zambartas LLC). Some of his key areas of expertise are ship finance and dealing with the full range of maritime claims including ship arrests.

Albert Badia - AACNIT: +34 93414 6668E: albertbadia@aacni.com

Albert Badia is the Managing Partner of AACNI. Solicitor (England & Wales). Abogado (Spain). PhD in International Arbitration (Graduate School of Natural

Resources, Law, Policy and Management of the University of Dundee). LLM in Shipping Law (Southampton). LLM in International Trade (Barcelona). Diplomat in ompany Law (Barcelona). Fellow of the Chartered Institute of Arbitrators (London). Albert received a scholarship from The British Council and “La Caixa”. In the past, Albert was in-house Counsel of a shipping container line and of a Swiss trading house. He has lived and worked in England, Scotland, Switzerland and Spain. He is committed and dedicated to litigious activity and arbitration. He is member of the Board of the “Asociación Española de Derecho Marítimo” in Madrid, and of the Board of the International Commodities & Shipping Arbitration Service in London. He is also chief editor of the journal Arbitration Watch. He has published four books and a large number of articles. He is mentioned with praise by Chambers & Partners and by Legal 500.

Shipping & Maritime Law 2013

1. Have there been any recent regulatory changes or interesting developments?

Badia: One of the most buzzed news in the shipping industry has been the decision made by the European Commission about the “tax lease” legal regime. In June 2013, the Commission ordered the Government of Spain to claim back the tax benefits it had granted by statute to Spanish shipbuilders between 2007 and 2011. This decision has caused the demise of the tax lease regime for being contrary to EU competition rules.

For some, this was a long time coming since an EC decision of April 2007 found that the French tax lease scheme, which was similar to the Spanish, was equally against EU rules. The Spanish scheme granted tax benefits to shipbuilders and investors if these lease the ship while she was under construction.

The EU decision has struck the Spanish shipbuilders, who face the future with uncertainty and cast doubts about the stability of an industry which employs about 87,000 workers.

Ribas: There have been recent regulatory changes in Spanish Shipping Law in respect arrest of vessels (the Convention of 12 March 1999 on Arrest of Ships is applicable as from 14 September 2011); in respect passenger claims (Regulation 392/2009 of the European

Since last years’ Shipping & Maritime Law roundtable there have been a number of key de-velopments such as the implementation of the Maritime Labour Convention and the demise of the “tax lease” legal regime within the European Union. This year we spoke with eight experts from around the world to discuss the benefits and challenges which currently face the industry.

Wylie Spicer - Norton Rose FulbrightT: +1 403 267 8339E: wylie.spicer@nortonrosefulbright.com

Wylie is based in Calgary, Canada. He focuses on maritime and offshore oil & gas issues.

Wylie has more than 35 years experience. He has taught maritime law at law schools and has published extensively. Wylie has handled shipping disputes in many jurisdictions, both in courts and in Shipping Casualty Inquiries.

Wylie and Peter are members of Norton Rose Fulbright Shipping Team, providing advice to clients worldwide.

She has spoken at a number of conferences on the Martime Labour Convention and carried out industry training on it. Heidi is recommended as a “Rising Star” in the 2013 London Superlawyers list for employment advice.

Patrick Murphy - Clyde & Co LLPT: +971 4 384 4000E: patrick.murphy@clydeco.ae

Clyde & Co is a leading international law firm in the field of shipping,, international trade and commodities. Patrick Murphy is a Legal Director

in the Dubai office of Clyde & Co specialising in shipping and international trade disputes. He regularly advises shipowners, charterers and traders in a wide range of charterparty, sale of goods and commodity disputes. He also advises international traders and businesses in respect of the application of sanctions regimes against Iran and the implications for their continued operation.Peter Glover - Norton Rose Fulbright

T: +44 (0) 20 7444 2071E: peter.glover@nortonrosefulbright.com

Peter is a disputes lawyer based in London. He focuses on shipping and admiralty law.

Peter’s practice involves advising clients in relation to all aspects of ‘wet’ and ‘dry’ contentious and non-contentious matters. He has attended casualties worldwide and has particular expertise in tanker related claims and oil pollution matters.

In addition to shipping litigation, Peter advises on international trade issues and has appeared as an advocate for clients in board of inquiry and court environments.

Peter has a PhD in maritime law, is a dual qualified English and Australian lawyer, holds a Master Class 1 Certificate of Competency and has over 11 years experience in the maritime industry.

Heidi Watson - Clyde & Co LLPT: +44 (0) 20 7876 4480E: heidi.watson@clydeco.com

Heidi Watson joined Clyde & Co in September 2001 and became a partner in 2013. Her practice encompasses all aspects of contentious and non-

contentious employment law, including Tribunal and High Court proceedings, drafting contractual documents, advising HR and legal professionals on employee relations issues, handling team moves and restrictive covenants, and TUPE aspects of corporate deals and outsourcing arrangements. Heidi’s experience spans a number of Clyde & Co’s core sectors including insurance, transportation and energy, focussing on the marine sector as the Maritime Labour Convention comes into force.

by Flag States whereby all relevant ships flagged by a ratifying states will need to be certified and, once certified, they will be deemed to have complied with the MLC unless Port State Control obtain evidence of non-compliance. Importantly, non-ratifying state ships (which will not have MLC certification of compliance) do not avoid the Convention just because their Flag State has not ratified. If they call at a port of a ratifying state, they will be subject to Port State Control inspections and will need to have complied with the Convention’s minimum 14 requirements for seafarer living and working conditions. As things stand, 46 states have ratified the Convention making up 76.2% of world tonnage. Therefore, any internationally trading vessel will be subject to this regime in one way or another.

If any vessel is found to have either no MLC certificate or a Port State Inspector notices something which raises doubts about living and working conditions, Port State has the right to undertake a detailed inspection and ultimately detain the vessel until the issue is rectified. Such delays cost money and so operators are well advised to ensure they have their paperwork in order in compliance with the MLC. Many questioned whether this Convention would make an impact. This uncertainty was quashed when we saw two detentions within three weeks of the MLC entering force, with dozens more since then.

Berman: The Maritime Labour Convention 2006 (MLC) from August 20, 2013 presents significant regulatory changes. Adopted by 45 countries representing over 75% of the world’s gross tonnage, the MLC provides comprehensive bill of rights and protection for the world’s 1.2 million seafarers consolidating 68 international labour standards and 36 existing ILO conventions.

Vessels of 500 grt or over engaged in international voyages must be certified as being in compliance with the MLC, requiring a “Maritime Labour Certificate” and a “Declaration of Maritime Labour Compliance”.

Certificates last for a maximum of five years and require interim review between years two and three. New are certificates are required, on a change of owner, flag or substantial change to a vessel’s structure.

Zambartas: One of the major recent developments that has taken place on the regulatory front is the passing of a new law, namely “The Protection of Cyprus Ships Against Acts of Piracy and Other Unlawful Acts Law of 2012” which was published in the official gazette of the Republic of Cyprus and enacted on 15 June 2012, covering both the armed and unarmed protection of Cypriot flagged vessels.

Accordingly, the said Law has had major global significance and repercussions as it establishes (inter alia) a new set of rights and obligations of the shipowners, ship operators, crew managers and personnel of a ship as well as certification of the ship private security companies.

Parliament and Council on the liability of carriers of passengers by sea in case of accident is applicable as from 31 December 2012); and in respect cargo claims (Spain was the first country to ratify the Rotterdam Rules, despite these are still not in force). Currently, the draft of the General Sea-going Maritime Law is in Parliament for approval, which will repeal Spanish Code of Commerce of 1885.

Murphy: Yes. The Maritime Labour Convention 2006 (“MLC”) entered into force on 20 August 2013 in respect of the first 30 ratifying countries. Entry into force for other countries will take place 12 months after each ratification is registered by the International Labour Organisation. The MLC aims to transform shipping into a more socially responsible industry, manned by better informed seafarers operating in improved working and living conditions. The MLC is based on a certification system operated by Flag States whereby all relevant ships flagged by a ratifying state will need to be certified. Once certified, they will be deemed to have complied with the MLC unless Port State Control obtains evidence of non-compliance. Crucially, the “no more favourable treatment” regime in the MLC means that ships of non-ratifying states calling at ports in ratifying states will be subject to Port State Control inspections to ensure compliance with a minimum set of 14 requirements regarding seafarers’ working and living conditions. If these vessels do not comply with those minimum terms, they may encounter delays and possibly detention. Despite its relatively recent entry into force, there are already instances reported of vessels being detained in Denmark and Canada (both have ratifying countries) for MLC deficiencies.

Watson: On 20 August 2013, the Maritime Labour Convention (MLC) came into force giving seafarers employment rights in a way never before seen in the industry. The MLC is a major shift in maritime labour law by linking strong rights with flexibility in application and a strong regime of enforcement. It acts a bit like a European Directive, setting out laws and regulations which need to be implemented by states in the way that works best for them. By allowing this system of flexibility, it aims for and is likely to achieve almost universal application, a result which earlier Conventions have failed to achieve.

The aim of the Convention is to transform the industry into a more socially responsible industry, manned by better informed seafarers operating in improved working conditions. Shipowners have been supportive of this Convention because it is also intended to create a level playing field so that unscrupulous operators cannot undercut on price those operators already providing decent living and working conditions.

What differentiates this Convention from previous attempts to protect seafarer rights is the strong enforcement regime. The Convention is based on a system of certification operated

Ganie: Indonesia introduced a new shipping law in 2008, which governs the full range of issues concerning the shipping industry (from ship registration to operation of ports to court proceedings). Due to how the Indonesian legislative framework operates, in practice the law is not immediately effective, and requires implementing government and ministerial regulations. Consequently, the 2008 Shipping Law is being progressively implemented since 2008, although it is currently significantly behind the schedule of implementation that is set out in the Law itself. In the meantime, the implementing regulations issued under the previous Shipping Law continue to operate to the extent that they do not conflict with the 2008 Shipping Law.

Spicer: Perhaps what is most interesting is how complicated shipping regulatory compliance has become. With the myriad of new regulations, directions, codes etc. it is hard to keep up. Consequently, the EU has embarked upon a project (announced October 2013) aimed at simplifying the regulatory compliance and enforcement systems of national, international and EU Authorities. This three year project is called e-Compliance, it is intended to help vessel operators and authorities understand the various rules that applies to ships in different situations. This project involves 10 partners including classification societies, shipping companies and regulatory authorities.

For those with an interest in Arctic shipping, continuing development of the IMO Polar Code should be of interest. This code is intended to regulate shipping in the polar areas (Arctic and Antarctic). The Code will introduce new standards for shipping and activities in polar areas and will be of concern to any organisations using polar waters. It will include design, construction, equipment training, and environmental protection issues.

With the current upsurge in LNG transportation by sea it is prudent to keep an eye on the status of the Hazardous and Noxious Substances Convention (HNS). It does not look like this Convention will be coming into force anytime soon; however it will establish liability funds to be maintained by exporters and importers with respect to the particular substance being shipped.

2. Are there any compliance issues or potential pitfalls that organisations need to be cautious about?

Ribas: Shipowners calling to Spanish ports should be aware that the Maritime Labour Convention, 2006 (MLC 2006) adopted by the International Labour Conference of the International Labour Organisation (ILO), is enforced through Port State Control (PSC) inspections in port. Shipowners should also be aware that compliance with SOLAS is regularly checked through PSC Inspections. Vessels not complying with MLC 2006, SOLAS or other applicable Conventions could face not only a detention by the competent Harbour Master (Paris MOU), but also sanctions governed under the Spanish Port and Merchant Marine Law.

Murphy: One compliance issue that the shipping industry in general needs to be concerned about, particularly in the Middle East, is sanctions against Iran. The EU and US sanctions against Iran will affect the freedom and ability of ship owners, charterers, traders and persons providing services to the shipping industry to carry out day to day business. Shipowners/charterers must ensure they do not carry Iranian origin petroleum products or they risk losing their insurance cover from European based insurers. They also need to ensure that they do not charter their vessels to Iranian persons or they may find that various certificates and safety classifications are invalidated. Marine fuel suppliers and shipyards may need to ensure that they are not servicing Iranian owned vessels if they are European owned or are supplying key naval equipment or technology that originates in the EU. More generally, anyone dealing significantly with the Iranian shipping industry runs the risk of having penalties imposed on them by the United States. In short, customer due diligence is essential in the shipping industry to know exactly who you are dealing with and whether there are any sanctions implications.

Watson: As the MLC certificate is prima facie evidence of compliance, for those ships flagged by a ratifying state, shipowners should be getting their certification in order as quickly as possible and where ships are flagged by a non-ratifying state ensuring that they comply with the 14 minimum requirements. This is the easy part. The more difficult area to control will be crew complaints. If a member of crew complains to a Port State Inspector about living or working conditions, it will trigger a detailed inspection which could result in costly delays. The MLC requires the Port State inspector to notify onshore agencies about the complaint. This will include the unions such as the ITF which can lead to escalation of the issue outside of the shipowners control. We have certainly seen the unions flexing its muscles in this regard and ensuring all of their members are aware of this powerful right to complain. Under the MLC, the shipowner is required to have effective onboard complaints procedures for crew. As this is now a requirement, we are advising our clients to ensure their onboard managers are trained and ready to use those procedures (in a way that has perhaps previously not been seen as a priority) to ensure that complaints are contained onboard. If those procedures can be developed and implemented so that crew trust in them and see them working fairly, it is much less likely that they will make a complaint to a Port State Inspector or the unions.

Having seen the MLC in operation now for a few months, the key concern we are hearing from shipowners and managers is uncertainty. This is caused by the very flexibility which enabled this Convention to get such a high level of ratification. Each State has to implement its own laws to give the MLC effect. Whilst the ILO has issued model regulations and guidance for States, there have inevitably been some variations between States on the way in which the MLC has been applied. Therefore, we have seen a lot of confusion over which vessels and which individuals are covered by the MLC.

The rights found in the MLC are conferred on “seafarers”. This includes “any person who is engaged in or works in any capacity on board a ship”. This very broad definition has been interpreted by ILO guidance to exclude certain types of individual but States have implemented that guidance in differing ways. Confusion has arisen over categories of individual such as researchers, divers, superintendents, cruise ship entertainers with many states excluding these categories altogether. Shipowners also need to be aware that they have liability for any person on board the ship who falls within the MLC definition of seafarer, regardless of whether they are independent contractors or employed by a third party company. Therefore, we are advising clients to ensure there is a contractual confirmation from the third party employer or contractor that they are MLC compliant before they come on board.

The MLC applies to all ships. But what is a ship? There has been confusion particularly for the offshore industry with regards mobile offshore drilling units and jack up rigs, many of which when in transit act like a vessel. This is again determined by Flag States and the treatment has varied. Some, like Singapore, have excluded MODUs and jack up rigs altogether. Others have decided that when they are in transit under their own propulsion they will be subject to the MLC. This is all very well but until a MODU flagged by Singapore enters the port of a State which has taken the different view.

All of the obligations of the MLC are placed on the “shipowner”. This is the entity which signs the MLC certification. It can be the actual shipowner or a crew manager, whoever has taken responsibility for the MLC. It must be one entity which causes difficulty where responsibility for the matters covered by the MLC are split between numerous entities with no one party wanting to take full responsibility. It will be important then for shipowners and crew managers to have their contractual paperwork in order to ensure that whoever is named on the certificate there are appropriate indemnities between the parties to apportion liability appropriately.

For ship designers and builders there are requirements for new vessels with detailed provisions around cabin sizes and locations, as well as a myriad of other minimum living conditions. This will inevitably involve a rethinking around the ship design and there will inevitably be a financial impact of this.

Zambartas: In 2013 a number of very significant regulations came into force in Cyprus which need to be implemented by the relevant companies, including shipowners and shipmanagers We have selected some recent regulations which are now a part of Cyprus Law, namely:

Maritime Labour Convention 2006- entry into force of the Maritime Labour Convention, 2006 (Ratification) and for Matters Connected therewith Law of 2012 (Law No 6(III)/2012) was enacted on the 20th August 2013 (“MCL 2006”); a) Implementation of Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents enacted on 31 December 2012;

b) New MARPOL requirements under the revised annexes namely Annex IV (sewage), Annex V (garbage) and Annex VI (Air Pollution) entered into force on 1 January 2013

In the case of MCL 2006, serious compliance issues that the shipowners need to bear in mind include the thorough inspection ships which may result in further delays, fines and possible detention. Under MCL 2006, the shipowners will be held responsible for certain liabilities suffered by the seafarer, encompassing injuries, compensation and repatriation combined with an obligation to providing comprehensive and costly financial coverage and indemnity.

Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents imposes liability, compensation and compulsory insurance obligations for death of and personal injury to passengers and loss of or damage to luggage and vehicles and provides that the carrier is:

i. Strictly liable to pay compensation for the loss suffered as a result of the death of or personal injury to a passenger caused by a shipping incident up to an amount of SDR 250,000 (approximately USD 387,500) per passenger. If the loss or damage exceeds SDR 250, 000 the carrier is further liable up to a limit of SDR 400,000 (approximately USD 620,000) per passenger unless the carrier proves he was not at fault and ii. If the incident is not a shipping incident the carrier is liable up to a limit of SDR 400,000 (approximately USD 620,000) per passenger, if the claimant can prove fault or negligence on the part of the carrier.

As regards the MARPOL regulations, the country that the ship visits can conduct its own examination to verify the ship’s compliance in accordance with the international standards and can detain the ship in the event of significant non- compliance. When incidents occur outside such country’s jurisdiction or jurisdiction cannot be determined, the country refers cases to flag states, in accordance with MARPOL.

Ganie: Pursuant to the new Shipping Law, passed in 2008 with the relevant aspects coming into force in 2011, vessels operating between Indonesian destinations have to register in Indonesia and operate under the Indonesian flag, and with Indonesian crews, in accordance with the cabotage principle. Certain exemptions exist for oil & gas vessels, while otherwise the cabotage principle has been widely applied, including to trans-shipment terminals.

Additionally, the Negative Investment List places certain foreign ownership restrictions on Indonesian companies. This results in a requirement to find an Indonesian partner, which can be challenging given the funding contributions required to establish a shipping company.

3. Can you assess the risk management perception and trends?

Ribas: Due to Spain’s strategic location in terms of route of the main deep sea shipping lines, and exceptional location to access key markets in Southern Europe, Latin America and Africa, and also due to the increase in the number of calls of cruise and passenger vessels, Spain is, and has been, effectively implementing the International Ship and Port Facility Security (ISPS) Code.

Port Authorities and Harbour Masters direct and supervise the compliance issues of port terminals and of vessels calling to Spanish ports, in order to prevent risks related to security, pollution, dangerous goods, etc.

Watson: There has been a lot of scepticism in the industry about whether this Convention will make any difference other than putting further burden on those already exercising best practice in crew welfare. This was always going to come down to whether the Convention was enforced in the way it was intended. Whilst there has been an understanding that Port State would take a light touch for the first 12 months in order to give shipowners (and indeed Flag States who have struggled to get their laws in place) time to get their house in order, many were surprised to see several detentions within the first few weeks of the Convention coming into force. Given the many years it has taken to get this Convention in place, and given the investment in it by the unions, we can expect that there will be an equal amount of investment in ensuring that the pressure remains on Port State to make this Convention work.

We have certainly seen an upturn of interest in crew issues since the beginning of this year when shipowners were really starting to get interested in becoming MLC compliant. And the press reports around strict enforcement will only make that interest grow as shipowners and managers begin to feel the bite of enforcement. Now that shipowners (and in turn charterers) are seeing that this Convention can really cause delay in port (which costs money) we see the issue becoming more important for many in the industry.

Spicer: Driven by the casualties which have occurred in the offshore oil and nuclear industries in the last generation, risk management in shipping has changed dramatically from a check list of factual compliance to the industry focusing on safety culture, which can be defined as “the product of individual and group values, attitudes, perceptions, competencies, and patterns of behaviours that determine the commitment to, and the style and proficiency of, an organisation’s health and safety management” (UK HSC). The challenges to the shipping industry are a moving target and require great focus on this human dynamic, such factors as crew training, crewing levels and language barriers. The development of shipping in Arctic polar waters has also introduced risk profiles involved in ice navigation, design and construction demands etc.

The P&I Clubs have responded to these changes by offering courses to their members which

emphasize safety culture.

4. In recent years there has been a growing concern about the role of fatigue and sleepiness in maritime accidents. Are the concerns about excessive working hours of seafarers justified and how can an organisation limit potential consequences that this concern generates?

Ribas: There has been a growing concern about excessive working hours of seafarers since 1990, and it continues to exist. This concern is justified, given that most accidents are caused by human error, not technological or mechanical failure. An organisation can limit potential consequences establishing a positive safety culture onboard their vessels, investing in equipment, training facilities so that procedures are correctly implemented, training of employees and carrying out comprehensive audits and inspections will be a good investment compared to being involved in a serious accident.

Murphy: Fatigue certainly is a concern for the industry generally, particularly when a depressed market incentivises some owners to cut costs on crew expenditure. Fatigue has been the main or contributing factor in numerous maritime accidents, including the grounding of the Chinese bulk Carrier Shen Neng 1 on the Great Barrier Reef in April 2010. In that incident, the Vessel’s chief mate had only received 2 and a half hours sleep in the previous 38 hours. The International Labour Organisation (“ILO”) Convention 180 contains provisions, which have been included in the MLC which has recently entered into force that address seafarers’ hours of work and rest. They provide that the minimum hours of rest shall not be less than 10 hours in any 24 hour period and 77 hours in any 7 day period and these must not be divided into more than two periods. Organisations need to ensure that they not only adhere to the existing regulations, but have in place effective fatigue management systems. One can never completely eliminate the human risk-factor but you can certainly reduce it.

Ganie: Excessive working hours and their consequences are obviously a matter of concern. However, this is an issue that can be addressed through shift allocation. The more pressing concern is enforcement of rules on board and ensuring that the safety practices are more than just a tick-box exercise. This requires both training that explains the reasons for the practices and instils a sense of their purpose to the crews, but also a system for continuously monitoring and verifying that the systems are being implemented not only in form but also in spirit.

Spicer: Seafarer fatigue has been ongoing issue. The literature reflects the fact that this concern is real and frequently the cause of casualties. Instruments such as the Maritime Labour Convention in 2006 provide protection for seafarers with respect to living and working conditions as do the ISM Code and the STCW Convention. Ships registered with a flag

State which has not ratified these Conventions remain problematic. The ITF (International Transport Workers Federation) addresses this lacuna by use of its collective agreement which cover all ships in respect of which there is a Special Agreement between the ITF and an owner or operator. This collective agreement provides that the normal hours of duty are eight hours a day Monday to Friday. It also regulates overtime.

5. What are the key types of insurance and what aspects of insurance do firms frequently neglect?

Ribas: Generally speaking in terms of insurance, Spain hardly gives marine insurance a mention, and Spanish insurance companies place this risk under the policy of transport. This policy is divided into P&I / liability, Hull & Machinery (H&M) and cargo. In respect vessel and cargo, the key types of insurance are those of the ILU: Institute Time Clauses Hull and Institute Cargo Clauses (A and C). P&I insurance is compulsory for Spanish shipowners, and this is mostly covered by the Britannia Club. As H&M insurance is to protect the shipowners’ investment in the ship and covers the ship itself, the machinery and equipment, the typical hull and machinery claims are usually covered (such as total loss, grounding and collisions). Loss of time following damage to the ship is usually neglected. Declaring properly the value of the vessel or the cargo is also neglected, in order to pay a smaller amount of insurance premium.

Murphy: Marine insurance covers a broad set of risks incidental to a maritime adventure. These can range from risks to the vessel herself and the cargo, to freight, security interests in the vessel or cargo and third party liabilities. Typical cover for a shipowner is Hull and Machinery Insurance, insuring against damage to the vessel or her equipment, and Protection and Indemnity insurance, insuring against third party liabilities such as damage to cargo other vessels. Other covers which are less common but can also safeguard a ship-owner are Freight, Demurrage and Defence cover for legal costs, loss prevention and claims assistance that is outside the scope of other covers, and Kidnap and Ransom cover (which indemnifies a shipowner for the financial loss arising from a ransom payment made to pirates, for instance for the release of their vessel and/or her crew).

Watson: The MLC requires shipowners to have financial security (i.e. insurance) to cover crew sickness and injury, unemployment, and repatriation in circumstances including insolvency of the shipowner. Sickness and injury have long been covered by P&I Club cover but they have always refused to repatriate where there has been an insolvency situation. Many P&I Clubs have responded to the MLC by added cover in circumstances envisaged by the MLC so that existing Club cover will ensure compliance for shipowners. However, P&I Clubs fall short of offering to cover unpaid wages to crew in insolvency situations and whilst that is not

currently required by the MLC it is expected to become a requirement next year when the first amendments to the MLC are tabled. We do not expect P&I Clubs to cover this additional obligation and so the wider insurance market is stepping into the breach and starting to develop products which will provide financial security in these circumstances. The MLC also requires cover for the financial failure of manning agents and these products are now entering the market. However, a peculiar provision in the MLC provides that manning agents also have to provide insurance to cover the failure of the shipowner to honour its obligations to the crew (which could presumably include failure to pay wages) and seems to bring in the requirement to insure wages by the back door. We would question though whether affordable cover can be made available to manning agents and whether it is reasonably to be expected that a Port State inspector would want to see evidence of insurance cover held by the manning agent who supplied crew on a particular vessel during an inspection. It seems one step too far from reality but we will need to wait to see how this develops.

Berman: Generally, the following types of insurance are required for a commercial ship in international trade:

a) Protection and Indemnity with a member of the international group (liability coverage);b) Hull and Machinery (including cover for physical loss to the body and parts and machinery of the ship);c) Oil Pollution;d) Cargo (damage to the product); e) Freight (loss due to an accident); and f) Mortgage interest cover and additional perils oil pollution cover.

The responsible flag states require evidence of P&I and Oil Pollution cover prior to the registration of a ship.

6. How have advances in technology and geopolitical changes typified the contemporary trade market?

Ribas: Advances in technology and geopolitical changes have resulted in Spain adjusting to the ascendency of Asia and Latin America, the increase of world trade and thus, the increase in port calls to Spanish ports (increase of port taxes) despite the vessel’s stay in port has significantly reduced in number of hours / days.

Ganie: The shipping industry has seen a slowdown during the global financial crisis, which can be seen in the decline of shipping rates, which have in turn had an effect on commodity markets due to changes in logistic costs. Specifically, we have seen the excess capacity causing financial troubles for some well established companies and even sales of newly delivered vessels due to a lack of potential for utilisation.

On the other hand, the reduced shipping rates have resulted in new markets becoming feasible for certain commodities, the most notable from recent times being the shipment of American coal to Asia, which has been caused by a combination of lower shipping rates and a displacement of coal by shale gas in the source markets.

7. While the global shipping trade market is still mostly based on regional exchanges of goods, we are now witnessing a significant growth of maritime freight in transpacific trade. How has this affected the role of network analysis and solutions, particularly in?

Ribas: In the case of Spain, the significant growth of maritime freight in transpacific trade, has been solved by the increase in commercial activities by Port Authorities and Spanish/Autonomic Governments towards the cruise industry and the short sea transport, resulting in an increase of the number of cruise and passenger vessels and the ro-ros involved.

8. What difficulties arise as a result of multinational transactions?

Ribas: As a result of multinational transactions investments in infrastructure, modes and terminals, as well as marketing and financing, have increased; financial activities have seen a concentration among major global financial centres. There is an increase in global and regional interdependence and there are strong competitive pressures. In many cases, private transport providers have difficulties to act independently.

Berman: International transactions present their own unique difficulties and challenges. Specific planning, financial and corporate structure, and implementation issues require close examination. Some of the unique characteristics of an international transaction include:

a) Competing legal systems that provide different results requiring an understanding of the unique aspects of local law;b) Difficulty in conducting due diligence;c) The need for professional advisors (lawyers, accountants, brokers, etc.) in a multiple of jurisdictions;d) Language and cultural issues;e) Managing tasks from many locations;f) Currency exchange and payment issues; andg) Dispute resolution.

Ganie: We have seen an increase in commercial disputes and litigation due to cancellation of contracts and defaults in payment obligations, which has also been reflected in maritime disputes, and has had follow-on repercussions by resulting in related maritime disputes. We anticipate that insolvencies will increase in the near and medium term future and that along with a need for debt restructuring and bankruptcies this will also result in a range of related maritime disputes, not least due to the currently falling Asian currencies combined with debt

that is often denominated in USD.

In resolving these, arbitration is preferable in the maritime sector due to a number of reasons, the main being certainty and expediency. The underlying reasons for these are that shipping activities necessarily involve a wide range of jurisdictions and often divergent legal regimes; as a result, if domestic law and courts were relied on, this would introduce a significant amount of uncertainty into the business transactions.

9. The United Nations Conference on Trade and Development reported (April 2013) that developing countries have been increasingly fuelling global economic growth and that increased specialisation in the supply of maritime transport services has gathered traction. What jurisdictions and specialisations are currently providing the greatest opportunities?

Ribas: In Spain, increased specialisation in the supply of maritime transport services has been also gathering traction. Both public and private interests have been considering various infrastructure and activities related to logistics and supply chain management as high priority projects for capital allocation. This often takes the form of logistics zones linked to intermodal terminal facilities, such as ports, rail yards and barge terminals. Jurisdictions providing the greatest opportunities are China, a key area of investment, South America and in short, Africa.

Berman: The BRIC countries (Brazil, Russia, India and China) all require significant infrastructure development – roads, power plants, housing, hospitals and schools. The movement of steel, iron ore, fuel and other raw material are essential for such growth. China’s huge demand for these products led to a boom in seaborne trade in 2004 to 2008. Similar growth and demand should be expected in much of South America, Africa and Southeast Asia. As these second and third world countries develop, the movement of raw material is essential for their growth and ships will be in demand.

Ganie: Indonesia is significant market for shipping considering its economic growth and substantial population, and being an archipelago nation, utilises a significant number of vessels for both domestic and international shipping. Additionally, Indonesia contains a number of important maritime routes, such as the Strait of Malacca, the Sunda Strait, which has resulted in significant maritime traffic passing both through and in immediate proximity to Indonesian waters.

An interesting aspect of the Indonesian market is that while Indonesia exports a number of commodities, it at the same time runs a trade deficit, meaning that there are also substantial volumes of goods being imported. In fact, it is commonly accepted that the logistics of shipping products from other Asian nations to Indonesian economic centres are better than domestic shipping between the nation’s islands. Government policies that are being advanced to address these issues, and business opportunities that present themselves due to such circumstances, should be expected to have an increasingly significant impact on the

industry in the near future.

10. Because Maritime transport is highly fossil fuel dependent, rising energy prices and fuel costs continue to pose a great challenge for the sector as they can have a dampening effect on growth as well as cause an upward pressure on fuel costs and ship operating expenditure. Are there any alternative fuel types or technological advances on the horizon?

Ribas: Representatives of Repsol Gas Natural, Det Norske Veritas, Bureau Veritas, Trasmediterranea and Enagas have agreed that LNG will replace certain types of fuel in those areas where legislation requires a reduction of pollution, as it happens in the Baltic Sea. Repsol understands that all type of vessels (tuggs, ferries, containerships, cruise ships) can use LNG. By 2020 the ports of Barcelona, Valencia and some ports in the Canary Islands will have infrastructures for the supply of LNG. Transmediterranea and Gas Natural have now been testing two twin vessels usually operating between Barcelona and the Balearic Island, the “SORROLLA” and the “FORTUNY”, and LNG is proving to be more cheaper during vessel’s stay in port.

Murphy: With significant reductions due in 2015 and 2020 to the sulphur content of marine fuel, alternative fuels are being looked at in more detail. LNG is the most talked about alternative fuel, with zero sulphur emissions and reduced CO2 emissions. However, it would require a dramatic investment in infrastructure to retrofit existing vessels and to build new vessels to burn LNG not to mention the significant investment that would be required in new shore based LNG storage facilities and bunker barges. There is also the “chicken and egg” problem of which to invest in first: LNG supply infrastructure or vessels? More viable short term solutions include scrubbers being fitted to vessels to remove sulphur and particulates from exhaust emissions or burning marine gasoil rather than marine fuel oil, but the costs of both are not insignificant.

Ganie: For customers of the industry the economic slowdown has resulted in decreased prices, even when considering the price of fuel, which have in turn opened up new, longer, routes that have previously been cost prohibitive. As such, the effect of the slowdown may not have necessarily been a catalyst for the adoption of new fuel types and technologies, and the vessels are still largely in operation, and are in fact transporting cargo that would not have previously been shipped over such distances.

Glover: Sail is being considered for blue water passages and there are a number of experimental ships presently engaged in testing / demonstrating this concept.LNG has passed from being an embryonic idea and is now gaining traction – at least in SECA areas in Europe (but fuel availability at the dock side continues to be a problem). It would be reasonable to expect that as facilities for the bunkering of LNG increase in availability the number of ship owners that are willing to consider powering their new builds with LNG will increase.

11. As environmental sustainability is increasingly recognised as an important consideration for transport, what can the Shipping & Maritime sector do to help meet environmental goals?

Ribas: Actions to help meet environmental goals are being adopted by some Spanish ports such as the Port of Barcelona, which has activated the “Eco-calculator”, an adequate tool that allows shippers and operators to calculate the CO2 emissions, and by some Spanish shipowners such as TRASMEDITERRANEA and REPSOL as explained in the previous answer.

Murphy: The sector is undergoing important changes driven by concerns about sulphur emissions. Currently, three Emission Control Areas (ECAs) in the North Sea, Baltic Sea and off the US coast restrict the sulphur content of marine fuel oil burned within those ECAs. The sulphur content of marine fuel oil burned outside ECAs must not exceed 3.5% but within ECAs the limit is 1.0%. However, from January 2015 that limit drops to just 0.1%, which will cause a dramatic shift away from burning fuel oil to burning marine gasoil within ECAs. From 2020, the global sulphur limit applicable outside ECAs is due to decrease to 0.5% (i.e. half of the current limit within ECAs) from 2020. There are, however, concerns within the industry that there is already very little time left to make the necessary investments in the infrastructure, notably refineries, necessary to cater for this change increase in demand for low sulphur fuel oil and for gasoil.

Ganie: Considering the economic downturn any changes will be coloured by business considerations of the players rather than non-mandatory programs or even regulation (which would be difficult to introduce given the current strained financial conditions). Having said this, however, certain green initiatives are able to provide cost savings, and these are the types of initiatives that one would expect to be successful in the near future, not just due to the environmental considerations but due to the much more pragmatic focus of the industry players on their costs.

Glover: There has, and continues to be, plenty of debate on this. A few points come immediately to mind. These include improvements in hull design and modification to existing hulls; changes in paint toxin criteria, scrubber technologies, cleaner fuels, slow steaming, improvement in engine design, increases in pollution penalties etc.

12. What key trends do you expect to see over the coming year and in an ideal world what would you like to see implemented or changed?

Ribas: Over the coming years the situation will continue to be as we have seen it as from 2010 in Spain: the focus will continue to be on strategic acquisitions and joint ventures and the increase of the number of cruise and passenger vessels. What we would like to see implemented are incentives (e.g. fiscal) and greener transport technologies and anti-competitive behaviour

from Port Authorities and transport operators.

Watson: We certainly expect to see more detentions of ships for breach of the MLC. We would hope that as Port State and Flag State bed into their new obligations, there will be a finessing of the enforcement regime so that the system works as it was intended. We expect that crew issues will remain on the agenda into next year, particularly if the issue of insurance for unpaid wages is added to MLC obligations. And certainly the unions will continue to use their new found power to keep this issue at the top of the agenda.

Ganie: There are significant numbers of new vessels being delivered in the near term, which will either result in further pressure on shipping prices or in the retirement of older vessels. How this plays out, combined with the beginning economic recovery in the United States and the less certain situation in Europe remains to be seen. Moreover, there appears to be pressure on certain economies in Asia, which adds further uncertainty into the supply-demand equation of shipping volumes.

Glover: It is difficult to say what key trend would occur over the period of a single year given the usual slow rate of response (short of jarring legislation) to most aspects of the maritime industry by industry participants. But if I was to offer a view it would be to say it would be reasonable to expect an increase in the regulatory burden on shipping (globally) and increasing difficulty in retaining high quality officers at competitive employment rates in an environment characterised by low freight rates and high demand for senior officer skills.