Module 1

THE SHIPPING BUSINESS

A qualification for the P&I industry
produced by the International Group of P&I Clubs

2021/22
EDITION
 A qualification for the P&I industry
produced by the International Group of P&I Clubs

Module 1

The Shipping Business

 Published by the

International Group of P&I Clubs, 3rd Floor, 78/79 Leadenhall Street, London, EC3A 3DH

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means
(electronic, mechanical, photocopying, recording or otherwise) without the written permission of the publisher.

Copyright © International Group of P&I Clubs 2020

Author: International Group of P&I Clubs

The Author asserts moral copyright in the work.

Production, design and layout: Carmarmedia.co.uk,

the Institute of Chartered Shipbrokers

and Coracle Online Ltd

Front cover and chapter covers: Danny Cornelious

Ship images and illustrations: Institute of Chartered Shipbrokers

DISCLAIMER

While care is taken to ensure the accuracy of the information, no warranty of accuracy is given and users of that information are expected to
satisfy themselves that the information is relevant and suitable for the purposes to which it is applied. In no circumstances whatsoever shall
the contributors or the International Group of P&I Clubs be liable to any person whatsoever for any loss or damage whensoever or howsoever
arising out of or in connection with the supply (including negligent supply) or use of this information.
 Contents

CONTENTS

Introduction IV

Examination VI

Chapter 1: Shipping and world trade 1

1.1 Global economics and transport by sea 2
1.2 Commodities and their origins 3

Chapter 2: Marine hazards 15

2.1 The significant natural hazards to safe navigation 16
2.2 Limiting the risk posed by natural hazards 28

Chapter 3: Vessel types and characteristics 31

3.1 The measurement of vessels 32
3.2 Types of vessel 33

Chapter 4: Who’s who in the shipping business 52

4.1 The shipping industry and who supports it 53
4.2 Industry organisations 72

Chapter 5: Maritime regulation 79

5.1 International Conventions and the IMO 80
5.2 Important international conventions 84
5.3 The International Labour Organization (ILO) 86
5.4 Flag States 87
5.5 Safety of Life at Sea 91
5.6 Port State Control 95
5.7 Regional regulation 97

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Contents

Chapter 6: Law 103

6.1 The components of English law 104
6.2 The essential features of contract law 106
6.3 The essential features of the law of tort 108
6.4 Other remedies 111
6.5 Limitations 112
6.6 Insurance Law 114

Appendix 1 127

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 Introduction

P&I Qualification programme

Module 1 - The Shipping Business

Introduction
The content of this module forms part of the P&I Qualification (P&IQ) programme but
may also serve as reference material.

This module provides candidates with a high level review of the main features of the
shipping business, its importance in global trade, the regulatory environment in which
it operates, and the background to maritime law and marine insurance.

Assumed knowledge

None assumed.

What you’ll learn in this module

To succeed in the examination of this module you should take note of the learning
objectives for each chapter and the knowledge rating key below.

Guide to knowledge ratings

General background awareness necessary 1

Requires a knowledge of the major concepts and issues 2

Requires a thorough understanding of concepts as well as significant detail,

the ability to evaluate them and to apply them to various situations. 3

Learning objective

Your objective should be to learn the content of the chapters to the level required by
the knowledge ratings.

Chapter 1 Shipping and world trade Knowledge rating

Global economics and transport by sea 2

Significant trade routes for the carriage of

commodities and foodstuffs 2

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Introduction

Chapter 2 Marine Hazards Knowledge rating

The significant natural hazards to safe navigation 2

Mitigating the risks of natural hazards 3

Chapter 3 Vessel types and characteristics

Knowledge rating

The measurement of vessels 2

The main features of different vessel types 2

Chapter 4 Who’s who in the shipping industry Knowledge rating

The shipping industry and who supports it 3

The main industry associations 2

Chapter 5 Maritime regulation Knowledge rating

The role of the IMO 3

How international conventions are created and

implemented 3

The role of the flag state and the enforcement of

conventions 3

The ISM Code 3

The ISPS Code 3

The IMDG Code 2

The role of port state control 3

Certification requirements 2

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 Introduction

Chapter 6 Law Knowledge rating

The components of English law 2

The essential features of contract law 3

The essential features of the law of tort 3

The difference between contractual damages and

damages in tort 3

Other legal remedies 2

Limitation of liability 2

Limitation of time 2

Main features of the Marine Insurance Act, the

Insurance Act and the Enterprise Act 3

Examination
Exams are held twice a year in May and October.

The syllabus is examined on the learning text in this module. Unless specifically stated
in the learning text, students will not be examined on the appendices.

Refer to www.pandiq.com for the latest learning materials, syllabus and

examination dates and all other information on P&IQ.

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Chapter 1

X INTERNATIONAL GROUP OF P&I CLUBS

 Module 1

CHAPTER 1
SHIPPING AND WORLD TRADE
Chapter 1

What you’ll learn in this chapter

Shipping and world trade Knowledge rating

Global economics and transport by sea 2

Significant trade routes for the carriage of

commodities and foodstuffs 2

1.1 Global economics and transport by sea

Throughout the course of history the sea has been a key factor in man’s survival and
development. It has become a means of transportation for people and for goods. It has
also become a means of power. With over 70% of the earth’s surface covered by water
and the overland routes not always the most hospitable, the ability to move people and
goods by sea became an important resource and countries that pushed the boundaries
of knowledge and exploration grew wealthy and powerful as a result. The former empires
of the countries of Western Europe and, to some extent, the Roman Empire, were largely
founded on sea power.

Even today with the development of modern forms of transportation such as aircraft,
90% of world trade still travels by sea for the simple reason that it is easier and cheaper
to move large quantities of goods by sea, even though sea transport is not always the
quickest.

There are 44 countries in the world that are enclosed or nearly enclosed by land
(“landlocked”). Given that historically this was regarded as a position of disadvantage,
international agreements have been reached to provide those countries with access
to the sea. One example of this is the convention that made the River Danube an
international waterway by granting sea access to Austria, Hungary and Slovakia. The
United Nations Convention on the Law of the Sea now gives landlocked countries rights
of access to and from the sea. Even if a country has a long coastline, not all of it may be
readily accessible. In the case of Russia, for example, the northern ports and some in the
east are severely weather limited. This is the reason why access to warm-water ports in
the Black Sea was historically so important for Russia.

Convention regarding the Regime of Navigation on the Danube 1948

(see www.danubecommission.org/uploads/doc/convention-en.pdf).

Historic maps show various regular trade routes across the oceans of the world and
this concept of a regular pattern of linked ports continues to this day. Local traffic will
move close to the coast, generally in smaller vessels, and some of those vessels will
act as ‘feeders’ taking cargo to and from larger ports which act as hubs for the vessels
performing the long-haul routes. Often these hub ports are the only ports in the region
that can handle the scale of vessels used in deepsea transportation.

If we look at this map of one of the routes that Maersk advertises in its schedules, we see

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 Shipping and world trade

that, over a regular cycle, a route is taken which crosses from Asia to North America.

Busan
Vancouver
Seattle
Shanghai

Xiamen
Yantian
Kaohsiung

VANCOUVER, SEATTLE,
Canada United States
From Dept\Arr SUN TUE
KAOHSIUNG, Taiwan TUE 19 21
YANTIAN, China THU 16 19
XIAMEN, China FRI 15 17
SHANGHAI, China MON 13 15
BUSAN, South Korea WED 11 13

© A.P.Møller-Mærsk A/S: a Danish company with a fleet of more than 500 container
vessels as well as a significant presence in the tanker trades.
See their website www.maersk.com.

Action Step: Check the websites of other shipping lines to find out what
information they provide about the routes their vessels take.

1.2 Commodities and their origins

Now that many foodstuffs once regarded as seasonal are available in the supermarket
all year round and the ready availability of many other items which form part of
daily life in the developed world is assumed, it is well to remember where various
commodities originate and the nature of the journeys they undertake to get to their
respective markets. For example, citrus fruit travels from New Zealand to the northern
hemisphere, coffee travels from South America all over the world, bananas travel from
the Caribbean to Europe, melons travel from Israel to the United States of America,

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Chapter 1

the European Union imports potatoes from Egypt and so on.

This knowledge is particularly relevant to insurers who provide physical damage

insurance for the various cargoes. It is equally important for liability insurers as part of
their wider knowledge of the business in which they are engaged.

Commodities are goods which are bought and sold by traders around the world,
generally in large quantities or ‘bulk’. They fall into several main categories. While
a considerable portion of world trade consists of finished products coming, in
particular, from Asia-Pacific to North America and Europe in containers, sea carriage
is particularly suited for the carriage of raw materials because of their sheer mass.
This makes it commercially unviable to use other forms of transportation to move the
volumes required around the world.

Crude oil

This commodity tends not to be produced in the areas of the world that consume
the majority of it. Hence, North America, Europe and Asia-Pacific are all net importers,
despite the USA having access to both the Mexican Gulf and the Alaskan oilfields.
In 2019, the top ten net crude exporters (not necessarily the same as the top ten
producers) were Saudi Arabia, United States of America, Russia, United Arab Emirates,
Kuwait, Iraq, Iran, Kazakhstan, Nigeria and Canada.

Map of the crude oil trade showing the main trade routes

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 Shipping and world trade

Different types of crude oil have different viscosities. It can be a major challenge to get
it safely to its destination and then to offload the complete quantity there. Practical
problems arise from the necessity to keep it fluid enough to avoid it clinging to the
tanks and pipelines of the ship. Some crude oils are nearly solid unless kept at a
reasonable temperature. Should the cargo not be carried at the right temperature,
difficulties are likely to arise at discharge and there will be the potential for claims
from cargo receivers for short landing. It is virtually impossible to empty the cargo
tanks completely. Some so-called ‘unpumpable residues’ will remain on board
and this factor is well recognised in the industry. It is also possible that claims will
arise between shipowners and charterers for delay in redelivery of a ship or the
presentation of a ship on the following voyage with unacceptable dirty tanks.

Petrochemical derivatives of crude oil may not have the viscosity problems of crude
oil, but their safe carriage poses a variety of problems arising fundamentally from their
high potential for ignition and explosion.

Gas

The term ‘gas’ generally refers to one of two generic groups of products, namely
liquefied petroleum gas (LPG) and liquefied natural gas (LNG).

LPG consists mainly of propane and butane and is non-corrosive, odourless and
colourless. Propane boils at -43ºC and butane at -0.5ºC. LPG is generally transported
both chilled and compressed so that it maintains a liquid state.

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Chapter 1

LNG consists mainly of methane and boils at a far lower temperature than LPG
(-160ºC). Reducing either of these gases to a liquid reduces their volume considerably
(by 600 times) thus facilitating transportation from the production location to the final
destination. Transport is carried out by purpose-built vessels.

LNG and LPG both require liquefaction terminals in the exporting country and, at the
other end of the journey, receiving or regasification terminals in importing countries.

Exporting facilities are located in countries such as Algeria, Australia, Indonesia,

Libya, Malaysia, Nigeria, Norway, Oman, Qatar and the United Arab Emirates while
importation facilities exist in Belgium, China, France, India, Japan, South Korea, the USA
and the UK among others.

Action step: Review the website for Dragon LNG and see how natural gas is
used in the UK, both domestically and commercially.

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 Shipping and world trade

Coal

This is produced principally in Australia, Indonesia, Russia, China and South Africa and
is exported principally to Japan, Germany, India, Italy and Turkey.

Unless coal is transported in the correct way it may start to heat up during the voyage;
all coals have the potential to self-heat. In the case of some types of coal this can lead
to self-ignition. For many years, hull and machinery insurers made it a requirement
in their contracts (a ’warranty‘) that Indian coal would not be carried because it was
particularly susceptible to self-ignition. Further, coal can emit noxious gases and,
depending on its sulphur content, can also corrode the ship itself.

The safe carriage of such cargoes is subject to the International Maritime

Organization’s International Maritime Solid Bulk Cargoes Code (IMSBC Code). The
key element of this code is that shippers must provide sufficient information, relating
to both the physical and chemical properties of the cargo being loaded, to allow
adequate precautions to be taken. The particular properties of coal are not easily
identified by the human eye alone.

Ships’ Masters must therefore take care when carrying coal. In particular, the quality
of air in the holds needs to be monitored. For some coals, ventilation should be
absolutely minimal and for others it needs to be greater. In any event, the holds need
regular monitoring. Ideally, the vessel will be fitted with a system which allows the
quality of the air in the hold to be monitored remotely.

If the vessel is carrying coal with a high sulphur content and its hatchcovers are not
watertight, water which gets into the holds can mix with sulphur to produce sulphuric
acid. This will corrode the ship.

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Chapter 1

Ores

Iron ore is exported predominantly by Australia, Brazil, South Africa, Canada and the
Ukraine. The vast majority of it is exported to the Asia-Pacific region in particular to
meet the increasing demand of the Chinese steel mills.

Bauxite (aluminium ore) is produced mainly in Australia, China, Brazil, Indonesia,

Guinea and India and exported to northern Europe.

The safe carriage of ores is subject to the IMO’s Solid Bulk Cargoes Code (IMSBC Code)
but a number of ores, particularly if ground very finely, present a greater danger to
the vessel than the standard cargo. Should these ground ores exceed their optimum
moisture content, the vibration of the ship can release the water within the cargo,
creating an unstable slurry in the cargo holds.

This process is called liquefaction and it can seriously compromise the stability of the
vessel, particularly in rough weather.

Masters need to be watchful of this type of cargo and to familiarise themselves with
the types of cargo indicated in the IMSBC Code that have a tendency to liquefaction.
Those cargoes can be carried safely if their moisture content is below the critical level,
that is, below the ‘flow moisture point’, and the shipper must certify to this fact.

With these types of cargo it is of paramount importance that the vessel is weather-
tight throughout the voyage.

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 Shipping and world trade

Cement

Cement is produced principally by countries such as China, India, the United States of
America, Turkey, Brazil, Russia and Saudi Arabia, and, given its use as a basic building
material, is imported in most countries.

Large shipments will tend to be in bulk but cement can be carried both as bagged and
containerised cargo. It is important to take into account the various different grades of
cement when it is carried in bulk, as they differ in their specific gravities and therefore
in the volume of each that can be loaded.

Some cements are very dusty cargoes, so the chance of their contaminating other
cargoes or shoreside facilities is high. Care should be taken at loading and unloading
to cover other cargoes to prevent contamination.

Fishmeal

Fishmeal is a protein-rich substance obtained from fish and used as a food

supplement for poultry and other animals. Over 80% of the world production
comes from just 10 countries, with Peru and Chile dominant. Fishmeal is now used
worldwide, particularly in the fish farming industry. For more information see the IFFO
The Marine Ingredients Organisation website at www.iffo.net.

Fishmeal is a cargo that is susceptible to spontaneous combustion. When carried

in bulk, it is subject to the IMO Solid Bulk Cargoes Code (IMSBC Code). Ships should
be fitted with fire-fighting systems that can fill the hold with carbon dioxide (CO2).
Cargoes should be treated with an antioxidant before being loaded to minimise
the chances of heating and spontaneous combustion. Certification relating to the
antioxidant treatment should be provided to the carrier at the time of loading.

Fishmeal is also extremely pungent; it can be a major taint risk to any other
cargoes being carried. It can be carried in bulk, bags or containers, but the need for
watchfulness in relation to cargo heating is equally relevant for all three methods. It is
recommended that the temperature of the cargo be taken no less than three times
per day.

Fertiliser

This commodity includes cargoes such as guano, chalk, bonemeal and dried blood.
A fertiliser is a product that is added to soil to provide nutrients for the plants being
grown, so most fertilisers have the same basic chemical components in varying
proportions. The leading urea exporters include China, Qatar, Saudi Arabia, the
Ukraine, Iran and Egypt. Fertilisers are mostly carried in bulk. This enhances their
hygroscopic (water-attracting) potential, and when they dry out again they can cake.
Any fertiliser containing ammonium salts or urea must not come into contact with
alkalis and if heated, they will start to decompose, giving off toxic gases.

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Chapter 1

When carrying these cargoes, care must be taken to ensure they do not come into
contact with hot surfaces such as steam pipes or cargo lamps. Furthermore, no hot
work, such as welding, should be done in the vicinity of fertiliser cargoes.

Clean holds are very important for the carriage of fertilisers. Residues of cargoes such
as grain are of particular concern as there is a danger that, if the grain is diseased,
the fertiliser will also become infected. If the fertiliser were then applied on land the
disease or infestation would potentially become far more widespread.

Foodstuffs

Wheat is exported to Africa, northern Europe, Saudi Arabia and the Asia-Pacific region,
principally from the United States of America, Canada, France, Australia, Russia and
Germany.

The safe carriage of grain and related products is governed by the IMO Code for
the Safe Carriage of Grain in Bulk (SCGB). It is very important that, at the time of
loading, the holds are completely clean – no loose rust scale and no residues of
previous cargoes can be allowed even if they were grain cargoes. Insect infestation
can be prevented by appropriate fumigation. If the cargo arrives contaminated, cargo
interests will bring claims against the carrier.

The stability of the ship during loading is vital. Grain loading is subject to detailed rules
and regulations contained within the SCGB Code. Failure to comply with these can
lead to delays, additional claims and costs which might fall on either the shipowner or
the charterer.

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 Shipping and world trade

Soybeans are primarily produced in the USA, Brazil and Argentina and are shipped to
the Asia-Pacific region and northern Europe.

Cocoa is mainly produced in the Ivory Coast, Indonesia, Ghana, Nigeria, Cameroon,
Brazil and Ecuador and is shipped practically everywhere in the world.

Sugar comes in two forms. Sugar beet is viable in northern climates, and sugar cane
requires a warmer climate. The main sugar-exporting countries are Brazil, Thailand,
Australia, India and Mexico. It is shipped everywhere in the world. Although beet sugar
can be grown in colder climates, over 75% of the world production comes from the
cane form.

Coffee. The top five coffee exporters are Brazil, Vietnam, Indonesia, Colombia and
Ethiopia. The largest importers are the USA, Germany, Italy, France, and Japan.

Sugar, coffee and cocoa suffer from a common problem when they are transported
in bulk by ship. Condensation damage is a real risk in this trade because cargoes
usually come from a warmer climate to a colder one. Cocoa and coffee both have
a tendency to sweat and give off moisture if not ventilated properly. Sugar attracts
moisture (including that given off by a sweating cargo) and can also suffer very badly
from moisture damage. Cargo carried on a vessel with poor ventilation or without
watertight holds risks arriving severely damaged at destination.

Fresh fruit and vegetables: Much of what appears on the supermarket shelves
today has travelled a long way to get there, often by ship. Fruit and vegetables are
living organisms, so they ‘breathe’, giving off carbon dioxide. If this respiration is not
controlled, it will create heat. This will cause the fruit and vegetables eventually to
rot and decompose. This natural tendency is what insurers call inherent vice - a
characteristic or intrinsic attribute of the commodity concerned.

Although this intrinsic process cannot be avoided, it can be mitigated by the

shipowner controlling the atmosphere in which the goods are carried. This can be
achieved by ventilation – several air changes will be needed each hour – or by
refrigeration, which slows the process down.

Often the challenge for the shipowner is to manage the various needs of different
types of cargoes, even if they are all fruit and vegetables. Apples need to be carried in
a certain way, bananas in another and citrus fruits in yet another. Each cargo must be
kept away from any other that it might damage or be damaged by.

Commodities of these types used to be carried in so-called ‘general cargo’ or ‘break-

bulk’ ships or in ships equipped with refrigeration – the so-called ‘reefer’ ships. Today,
they are more commonly carried in containers which are equipped so that the
atmosphere within each container may be controlled by ventilation or refrigeration.

Where a cargo arrives damaged by inherent vice, the loss will probably fall upon the
cargo owner. The reasons for this are:

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Chapter 1

• cargo underwriters rarely cover inherent vice;

• carriers by sea may have a specific defence to claims for inherent vice under the
contract of carriage.

Cotton

Cotton is exported mainly from the USA, India, Australia, Brazil and Uzbekistan, and is
exported mainly to China, Indonesia, Turkey, Bangladesh and Vietnam.

Raw cotton is highly inflammable, has a tendency to ignite spontaneously and is

subject to the International Maritime Dangerous Goods [IMDG] Code which lays down
rules for the safe transport by sea of dangerous cargoes. Loading cotton requires
great care including the prior priming of the ship’s fire-fighting equipment and the use
of battery-operated fork-lift trucks. Should fire break out at sea the only option is to
seal the hatches and then flood the holds with carbon dioxide.

Steel

Steel is a key commodity. It is used for the building of ships and forms an important
part of many manufactured items. The world’s largest steel export producer is China
followed by Japan, South Korea, Russia and Germany.

Steel comes in a number of different forms, from partly processed or semi-finished

products such as coils, ingots or slabs to finished products such as pipes, tubes and
tinplated steel for the food industry.

As the semi-finished items will be further processed at the place of destination, they
are not generally wrapped for shipment but should be given some protection against
moisture by a coating of oil or grease. Even some stainless steels are not immune to
rusting to some degree so that even unwrapped items need to be protected from
moisture. Finished items should be appropriately packed.

Both finished and semi-finished steel products are prone to damage through bad
handling, particularly by loading machinery.

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 Shipping and world trade

Motor vehicles

Motor vehicles – both commercial and private consumer-based – are a major export
and import product for many countries. The principal exporters of motor vehicles are
Germany, the USA and Japan.

The map shown above is an example of a typical car carrier trade route (in this
instance, Wallenius Wilhelmsen Logistics), where the voyage brings vehicles from Asia
for discharge at European ports.

Containers

The use of a standard size metal box in which to transport goods on different modes
of transport was invented and patented in 1956 by Malcolm McLean, the owner of a
large US trucking company. He wanted to speed up the slow process of loading and
discharging cargo on a piece-by-piece basis, the norm at that time for moving cargo
from trucks to trains, to ships and into warehouses.

The basic concept of containerisation is simple. The container is a standard size steel
or aluminium box which is robust enough to carry a variety of various cargoes, to
withstand being loaded and unloaded from different means of transport and to bear
the weight of other containers being stacked on top of it.

Over the last 50 years the standard dimensions of a container have remained more
or less constant: 20 or 40 feet long, 8 feet wide and 8.6 feet high. A basic 20-foot
container is described as a TEU (twenty-foot equivalent unit) and this is the measure
in which the capacity of all container ships is stated. A 40-foot container is therefore
two TEUs.

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Chapter 1

Although originally developed for dry cargoes, containers now exist in a number
of specialist types, generally conforming to the standard external shape and size.
Containers are also now available for carrying liquids and refrigerated cargoes as well
as those of unusual shape and size, for which a container with no top (an ’open-top‘
container) or open sides (a ’flat rack‘) is appropriate.

The types of trades shown in the map above include:

• Asia to Europe and Australia – car parts, electrical goods, clothes, and toys;

• Australia to Asia – meat and dairy products, metals, timber, scrap metals;

• Europe to Asia – chemicals, timber, machinery, alcohol, metals;

• Europe to Africa – car parts, chemicals, paper, machinery, electronics;

• Africa to Europe – fruit, cocoa, copper;

• India to Asia – cotton, machinery, food products;

• the Middle East to Asia – aluminium, petroleum products, scrap metals;

• Asia to the Middle East – cars, machinery, textiles.

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 Module 1

CHAPTER 2
MARINE HAZARDS
Chapter 2

What you’ll learn in this chapter

Marine hazards Knowledge rating

The significant natural hazards to safe navigation 2

Mitigating the risks of natural hazards 3

2.1 The significant natural hazards to safe navigation

Navigating a ship from the beginning through to the end of a voyage requires
considerable skill and experience. The marine environment presents a number of natural
effects and hazards. As discussed above, shipping generally follows regular routes around
the globe and each year the same types of issues and claims arise. In the following topics
we explore these natural hazards, how they come about, and what can be done to take
advantage of them, avoid them or minimise their impact as appropriate. Every hazard can
produce a claim on the hull and/or liability insurer if it is not properly addressed.

• Currents

• Tides

• Overfalls

• Whirlpools

• Waves

• Swell

• Storm surges

• Freak waves

• Tsunami

• Wind

• Katabatic winds

• Windstorms

• Fog

• Ice

• Sandbanks and sandbars

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 Marine hazards

Favourable tides, currents and winds during a long voyage can reduce the voyage time
significantly, reducing the amount, and therefore cost, of fuel and other consumables
used during the voyage. Additional cost can also be incurred if a ship has to ’take the
long way round‘ to avoid bad weather, fog or ice, although by doing so, the ship may
avoid even more costly damage to itself, its cargo or its crew. The safe and efficient
navigation of ships involves the use of sophisticated satellite, weather forecasting and
routeing services by skilled navigators to ensure that the voyage is conducted in the
most efficient and economical way.

Currents

The oceans are in an almost constant state of flow. There are two types of ocean
current:

• Surface Currents – controlled by prevailing winds and atmospheric systems. These

roughly make up the top 400m of the ocean. These currents can also affect the
climate on land. Possibly the best known example of such a current is the Gulf
Stream, which makes north-west Europe, especially the UK, much more temperate
than any other region in the same latitudes.

• Deepwater Currents – also known as Thermohaline Circulation. These normally

occur below the 400m depth referred to above and make up the remaining 90%
of the ocean. They are controlled by changes in temperature and salinity as water
moves between latitudes. Unlike surface currents, deepwater ones have little
impact on the safe navigation of ships.

Coriolis effect
Currents in the northern hemisphere are pushed to the right due to the Coriolis effect
caused by the rotation of the earth. In the southern hemisphere they are pushed to
the left. This circular motion creates ‘gyres’, circular currents found in all ocean basins.

The five major ocean gyres

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Chapter 2

Tides

Tide refers to the rise and fall in sea levels caused by the gravitational forces exerted
by the moon and the sun on the earth as it rotates each day.

The height of each tide is primarily affected by how close the sun, moon and earth are
to being on the same axis. Atmospheric conditions and prevailing winds also affect the
height of tides.

Normally, there are two high tides and two low tides in each day. The ocean is
constantly moving from high tide to low tide, and then back to high tide. There are
about 12.5 hours between the two high tides.

Spring tides occur twice in each lunar month when the sun, moon and earth are
aligned. This alignment allows the gravitational effect of the sun and moon to combine
and cause the highest tides followed by the lowest tides in the lunar month, producing
the largest tidal range.

Neap tides occur when the moon is furthest from being aligned with the earth and
sun at a point where it exerts the weakest possible effect on the tides. Consequently,
neap tides have the smallest tidal range.

During spring tides the tidal flow is at its fastest; conversely, during neap tides the tidal
flow is at its slowest.

Tides are a worldwide phenomena but are normally only discernible where the depth
of water decreases close to land masses.

As with currents, the effect of tidal streams should not be underestimated. Not only
can tides significantly speed up, or slow down, a ship’s progress through the water,
they can also carry a ship significantly off course unless measures are taken to allow
for tidal drift.

Navigational charts show the depth of water below chart datum. To find out how
deep the water is at any given time, the height of the tide for that particular time must
be calculated and added to the depth shown on the chart to arrive at the overall
depth of water.

Where the depth of the ship below the waterline, normally referred to as draught,
exceeds the overall depth calculated above, then it must either wait until the tide has
risen to a point where there is a sufficient depth of water, or take a different route
through deeper water in order to arrive at its intended destination.

Berthing in tidal ports may be dependent on the height of the tide to ‘lift’ the ship over
shallow areas in the approaches or even at the berth itself where it might intentionally
dry out at low water.

Other ports ensure a constant depth within the port by building a lock, or locks,
through which ships must pass from the approaches, where they are subject to the

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 Marine hazards

changes of depth resulting from the rise and fall of the tide, into the port where there
is no rise or fall of water level.

Tidal ranges vary from one place to another; for example, in the Bay of Fundy in
Canada, the tide rises and falls over 16 metres, whereas in the Mediterranean there is
little or no tidal range.

• There are a number of sources of tidal information available to the navigators on

board a ship including:-

• tide tables as published by the national hydrographical office;

• tide tables as published by the local port authorities;

• various internet sources;

• tidal information as shown on the appropriate chart for the area in question.

Overfalls

Also known as ‘tidal rips’. These normally occur close to land when:

• there is a sudden change in depth;

• a sudden change in the seabed exists, such as found off a headland;

• two tidal streams flowing in opposing directions ‘collide’.

Overfalls would not normally be dangerous for a larger ship unless it loses power,
when the sudden movements caused by the confused sea may well cause injuries to
crew, cause cargo lashings to fail and provide the extra risk of grounding due to their
proximity to the coastline. For this reason, large vessels will avoid overfalls in just
the same way as smaller ones. One of the largest overfalls in the UK exists south of
Portland on the south coast.

Whirlpools

Whirlpools are the result of strong opposite currents (hot vs cold) colliding, or changes
in landforms along the coast or under the surface. They can also occur when the
incoming tide meets the ebb of the last tide. These are comparatively rare and will
be avoided by ships navigating through an area where they are known to exist. Like
overfalls, whirlpools tend to occur during a particular part of the tidal flow and hence
are not permanent features.

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Chapter 2

Waves

Waves are defined as an undulation of the sea surface caused by the local wind
conditions. Waves are particularly dangerous to ships when they are breaking. This
can happen purely as a result of wind speed or in combination with other factors such
as wind against tide or where the depth of water in the area is changing quickly. The
most obvious example of the latter is the breaking seas seen from a gently shelving
beach in strong wind conditions.

Swell

These are waves produced by a storm in some far-off area of the ocean that have since
travelled across the seas to arrive in the locality of the observer. Compared to waves
produced by local winds, swell generally has a much longer distance between crests,
(that is, wavelength) and rarely breaks. In their own right, such seas do not normally
present a risk to shipping; however, they can combine with waves to produce a dangerous
condition.

Storm surges

A storm is caused by an intense area of low pressure. As a result of this low pressure
the seawater level increases in the immediate area of the storm. This ‘bump’ in the sea
level can be carried along by the long waves generated by the storm, which often travel
faster than the storm itself. In deep water these long waves quickly dissipate. However,
when such waves are produced close to shallow waters their energy has no time to
dissipate and their speed reduces as the water depths decrease, causing the wave height
to increase. The combination of big waves and a ‘bump’ in the sea level can be a risk to
low-lying communities, including users of tidal ports. To avoid such events, the best place
to be is at sea and away from the coastline. Some tidal ports will order ships to leave and
proceed to sea when a storm surge is expected.

Freak waves

Freak waves or ‘rogue’ waves are relatively large and spontaneous ocean surface waves
are a threat to all ships, regardless of type or size. They are more precisely defined as
waves whose height is more than twice the significant wave height (SWH), which is itself
defined as the mean of the largest third of waves in a wave record. However, it is not
fully understood what causes these waves. Rogue waves are therefore not necessarily
the biggest waves found at sea; rather, they are exceptionally large waves for a given
sea state. They were thought to occur only in deep water or where a number of physical
factors, such as where strong winds and fast currents meet. However, recent satellite
imagery has shown such waves in comparatively shallow waters like the Baltic.

Reports often refer to such waves looking like a ‘wall of water’, meaning they are very
steep-sided as well as being very high in comparison to other waves encountered
before and after the rogue wave, and possibly preceded by a very deep trough.

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 Marine hazards

The areas of highest predictable risk appear to be where a strong current runs counter to
the primary direction of travel of the waves. The area near Cape Agulhas off the southern
tip of South Africa is one such area; the warm Agulhas Current runs to the south-west,
while the dominant winds are westerlies.

While seafarers can avoid these areas, we now know such waves can occur in areas
which do not have the characteristics referred to above. Fortunately, such waves are rare
events, hence the seafarer can only remain alert to their existence and have strategies in
place to deal with one should such a wave be encountered.

Examples of casualties attributed to rogue waves are:

• MS München (mid-Atlantic, December 1978) – lost at sea leaving only ‘a few bits of
wreckage’ and signs of sudden damage including extreme forces 20m above the
waterline;

• MS Louis Majesty (Gulf of Marseille, Mediterranean Sea, March 2010). An unexpected

pack of three waves of 26 feet hit the ship while it was on a cruise between
Cartagena and Marseille. Two passengers were killed in a lounge by flying glass from
a shattered window. Damage to the ship was done by the second and third waves.
While these waves were much lower than freak waves appearing in open oceans,
published evidence indicates that their behaviour was similar to that of freak waves.

Tsunami

A tsunami is a series of waves with a very large wavelength. Tsunami are caused by
sudden mass movement in the earth’s crust under the ocean as a result of earthquakes
and landslides. The resulting wave(s) is not always obvious in the open sea, but can travel
at up to 500mph (or 800 km/hr) in the open ocean. As the waves get nearer to land and
encounter shallower depth, their speed reduces, causing the wave to rise to potentially
disastrous heights capable of overwhelming sea defences and causing significant damage
inland. Ships at sea may not notice the tsunami wave but, should a wave hit the shore, and
a port area in particular, serious damage is likely. Should a tsunami warning be in place,
ships should, if time permits, head out of port into deeper water.

Diagram of a tsunami

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Chapter 2

Wind

Wind is caused by differences in air pressure, measured in millibars (mb), in the

atmosphere. At sea level air moves from an area of high pressure to an area of
low pressure. The greater the difference in pressure, the faster the wind becomes.
‘Normal’ pressure is approximately 1013mb. Pressure is depicted by isobars, meaning
lines of constant pressure. These lines are shown on weather charts. The closer
together these lines are means an increased ‘pressure gradient’ which forecasts
higher wind speeds. This is shown on the map below:

Low pressure systems, also referred to as cyclones, are associated with strong winds
and stormy weather.

High pressure systems, also referred to as anti-cyclones, are normally associated with
low winds, clear skies and droughts, and can feature extreme temperatures. In the
right conditions, such systems can still produce strong winds, so their reputation for
low wind speeds can be misleading.

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 Marine hazards

Katabatic winds

These offshore winds are caused by cold air descending from high ground down
towards the coast and ultimately offshore. This type of wind is most prevalent in
temperate or high latitudes where the coast is backed by snow-capped mountains. If
this natural flow of air down from the tops of mountains is held back by, for example,
warm air rising up the side of the mountain, the mass of cold accumulates near the
top of the mountains. When this mass of cold air overwhelms the rising warm air, it
rushes down the mountainside, gathering more air/mass and energy as it descends,
before rushing out to sea. This might only create a strong wind but, with the right
conditions, it can produce very high, and consequently damaging, wind speeds. There
is little or no warning of these winds. It can go from flat calm to storm force 10 in less
than a minute. Such winds are very dangerous for small craft and any ship at anchor.
Ships alongside a berth are equally at risk.

Windstorms

There are a number of descriptive words used throughout the world for such storms,
for example, hurricane, cyclone and typhoon. They are all intense low pressure
systems involving wind speeds up to 140mph (or 220km/hr) and gusting up to
160mph (260 km/hr). Such storms occur in the Atlantic, Pacific, and Indian Oceans.
Generally, these storms start within five degrees of the equator and take a westerly
track while turning slowly towards the North or South Pole and, in some cases, even
turn back on themselves. These storms are inherently dangerous and the science
behind predicting the path they will follow has still a way to go before it is 100%
accurate. The wind speeds involved produce huge waves, often breaking, capable of
dumping hundreds of tons of water on board a ship unlucky enough to find itself in
the midst of such a storm.

The combination of wind and waves is one of the most treacherous a Master of a ship
has to face, because it can not only threaten the watertight integrity of the ship but
also its stability, particularly if it is carrying a cargo which is likely to shift in the extreme
conditions. Weather conditions of this severity are described as ‘perils of the sea’ and
can afford a defence to cargo claims that are caused by them.

As early as 1704, Daniel Defoe (the celebrated English writer) described a storm that
visited the British Isles the previous November, using a 12-point scale that he called a
table of degrees. He refers to the scale being the ‘bald terms used by our sailors’.

Francis Beaufort devised the scale that now bears his name while serving on board
HMS Woolwich in 1805. By 1829 he had risen to being the hydrographer of the British
Royal Navy and in 1831, it was he who commissioned the famous voyage of the Beagle
on which Charles Darwin sailed. It was only in 1838 that the Royal Navy first instructed
its ships to maintain hourly information on wind speed and direction within their logs.

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Chapter 2

The Beaufort Scale

Force Wind Speed Standard

Sea Criteria
Number (Knots) Description

0 <1 Calm Sea like a mirror

1 1-3 Light air Ripples with the appearance of scales

are formed, but without foam crests.

2 4-6 Light breeze Small wavelets. Crests have a glassy

appearance and do not break.

3 7 - 10 Gentle breeze Large wavelets. Crests begin to break;

scattered whitecaps

4 11 - 16 Moderate Small waves with breaking crests. Fairly

breeze frequent whitecaps.

5 17 - 21 Fresh breeze Moderate waves of some length. Many

whitecaps. Small amounts of spray

6 22 - 27 Strong breeze Long waves begin to form. White foam

crests are very frequent. Some airborne
spray is present

7 28 - 33 Near gale Sea heaps up. Some foam from breaking

waves is blown into streaks along wind
direction. Moderate amounts of airborne
spray

8 34 - 40 Gale Moderately high waves with breaking

crests forming spindrift. Well-marked
streaks of foam are blown along wind
direction. Considerable airborne spray.

9 41 - 47 Strong gale High waves whose crests sometimes roll

over Dense foam is blown along wind
direction. Large amounts of airborne
spray may begin to reduce visibility.

10 48 - 55 Storm Very high waves with overhanging

crests. Large patches of foam from wave
crests give the sea a white appearance.
Considerable tumbling of waves with
heavy impact. Large amounts of airborne
spray reduce visibility.

11 56 - 63 Violent storm Exceptionally high waves. Very large

patches of foam, driven before the wind,
cover much of the sea surface. Very
large amounts of airborne spray severely
reduce visibility.

12 64+ Hurricane Huge waves. Sea is completely white with

foam and spray. Air is filled with driving
spray, greatly reducing visibility.

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 Marine hazards

The main Beaufort scale in its modern version has 13 categories (from 0 to 12), each
with a description, wind speed, wave heights and sea conditions. It is a tool of great
use and importance to anyone using the open sea. For more information on the
scale, see the Met Office website at www.metoffice.gov.uk/weather/marine/guide/
beaufortscale.html.

Fog

For fog to form, the air must contain moisture and there must be particles, that is,
dust, in the air around which the moisture can coalesce to form droplets.

Fog, like mist, consists of visible water droplets or ice crystals suspended in the air.
Where these conditions reduce visibility to less than 1km it is defined as Fog. Where
the same conditions result in a lesser impairment to visibility it is defined as Mist.

The most obvious problem is that fog restricts visibility. While modern technology
provides ‘electronic eyes’ in the form of radar, the use of the human eye is still a vital
tool in modern seafaring. Each ship/vessel needs to be aware of the position of other
ships/vessels using the same waters and to ensure that the ship travels only at a
speed which is safe for the given conditions.

The common types of fog are:

• Advection Fog

• Radiation Fog

• Valley Fog

• Freezing Fog.

Advection fog is the most common type encountered at sea. This is caused when
warm moist air passes horizontally over a cool surface. The warm moist air is cooled
to a point where the moisture within the air starts to form minute water droplets,
resulting in fog. Such fog is common around coastlines during the passage of a warm
front when warm moist air contacts cooler waters such as is found around the coast
of California in the spring and autumn.

Radiation fog is more of a problem ashore and close to the shoreline as it is generally
caused by the land cooling after sunset. The formation of radiation fog needs clear
skies and calm conditions, that is, no wind. The land radiates off the heat it has gained
during the day causing the air in contact with the land to be cooled to a point where
the moisture within the air starts to form minute water droplets which results in fog.
Commonly, the fog is less than a metre deep, although light winds can cause it to
increase in depth. Radiation fog normally dissipates soon after sunrise.

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Chapter 2

Valley fog is rarely a problem for shipping. As the name suggests, it happens inland
as warm moist air is forced up the sides of the valley, the air cools and can no longer
support the same amount of moisture, and fog is formed.

Freezing fog is very similar in its formation to advection fog but is only found in regions
with cold moist climates such as Scandinavia.

Ice

Ice comes in a number of forms, the principal ones being solid or ’pack’ ice, or floating
masses in the form of icebergs. The Arctic and the Antarctic are the obvious locations
where ice is expected but other areas of the world regularly traversed by ships are
also subject to ice at certain times of the year.

• Baltic – ice is generally present between November and March;

• St Lawrence River – January to March;

• St Lawrence Seaway – mid-December to beginning of April;

• East coast of Russia – October to May;

• Black Sea – January to March.

Some areas, like the St Lawrence Seaway, can be completely closed to traffic while
others will be kept open by icebreakers. While some ships are specifically built or
converted to navigate through ice, navigating even through surface ice exposes a
normal vessel to damage to its hull or its propeller. Cargo ships built to trade through
ice have specially strengthened hulls – see ’Ice Classification’ below.

Icebergs

Icebergs are large masses of ice, generally 90% below the surface, moving away from
the polar icecaps, having ‘calved’ – broken away from a glacier in warmer weather. One
of the positive outcomes of the Titanic tragedy (in 1912) was the development of what
is now called the International Ice Patrol which acts as a reconnaissance and warning
system for icebergs in the North Atlantic. This was established under the International
Convention for the Safety of Life at Sea (SOLAS) as a consequence of this loss.

One tool that hull underwriters can use to ensure some control of the risk of vessel
damage by ice is the concept of Ice Classification. At its most basic, this requires that
vessels shall have thicker hull plating and additional strengthening in place. There are
two main categories, that for Baltic Ice and that for Arctic/polar ice. While the different
classification societies might call the various levels of classification by different names,
their requirements are similar.

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 Marine hazards

The IMO has a set of guidelines for ships operating in waters covered by Arctic ice and
the International Association of Classification Societies (IACS) has standard guidelines
which all member societies, such as Lloyd’s Register and Bureau Veritas, follow.

The ice classification goes from PC1 (Polar Class 1) – a vessel classed to operate year
round in all polar waters – to PC7, a vessel classed to operate only in summer and
autumn in thin first-year ice.

The IMO has also adopted the International Code for Ships Operating in Polar
Waters (Polar Code) and related amendments, which is mandatory under both the
International Convention for the Safety of Life at Sea (SOLAS) and the International
Convention for the Prevention of Pollution from Ships (MARPOL).

The Polar Code entered into force on 1 January 2017 and covers the full range of
shipping-related matters relevant to navigation in waters surrounding the two poles –
ship design, construction and equipment; operational and training concerns; search
and rescue; and, equally important, the protection of the unique environment and
eco-systems of the polar regions.

The code requires ships intending to operate in the defined waters of the Antarctic
and Arctic to apply for a Polar Ship Certificate, which would classify the ship as:

a) a Category A ship - ships designed for operation in polar waters at least in

medium first-year ice, which may include old ice inclusions;

b) a Category B ship - a ship not included in category A, designed for operation in

polar waters in at least thin first-year ice, which may include old ice inclusions; or

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Chapter 2

c) a Category C ship - a ship designed to operate in open water or in ice conditions

less severe than those included in Categories A and B.

The issuance of a certificate requires an assessment, taking into account the

anticipated range of operating conditions and hazards the ship may encounter in the
polar waters. The assessment would include information on identified operational
limitations, and plans or procedures or additional safety equipment necessary to
mitigate incidents with potential safety or environmental consequences.

Ships will need to carry a Polar Water Operational Manual, to provide the owner,
operator, Master and crew with sufficient information regarding the ship’s operational
capabilities and limitations in order to support their decision-making process.

The chapters in the code each set out goals and functional requirements, to include
those covering ship structure; stability and subdivision; watertight and weathertight
integrity; machinery installations; operational safety; fire safety/protection; life-saving
appliances and arrangements; safety of navigation; communications; voyage planning;
manning and training; prevention of oil pollution; prevention of pollution from noxious
liquid substances from ships; prevention of pollution by sewage from ships; and
prevention of pollution by discharge of garbage from ships.

Sandbanks and Sandbars

A further hazard is that arising from sandbanks and sandbars that are typically found
in ports situated in river estuaries. The outward flow of water from the river and the
inward flow of water from the sea can cause sandbanks/bars to form and to shift.
Indeed, in some ports, the changes are so frequent that it is not always possible to
chart them. In approaching and departing from such ports, the Master is even more
reliant upon the local pilots, who should be aware of the latest changes in the channel
depths.

2.2 Limiting the risk posed by natural hazards

Navigating or trading warranties

Insurers do not control the operation of a ship; however, they use navigating or
trading warranties to make clear in insurance policies the restrictions that they wish to
put on the ship’s areas of operation. The current International Navigating Conditions
in use in the London insurance market give some quite specific co-ordinates in
relation to some of the restricted areas.

For example, this is the condition for the Baltic Sea:

1) Gulf of Bothnia north of a line between Umea (63° 50’ N. Lat.) and Vasa (63° 06’ N. Lat.)
between 10th December and 25th May.

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 Marine hazards

2) Where the ship is equal to or less than 90,000 DWT, Gulf of Finland east of 28° 45’ E.
Long. between 15th December and 15th May.

3) Ships greater than 90,000 DWT may not enter, navigate or remain in the Gulf of Finland
east of 28° 45’ E. Long. at any time.

4) Gulf of Bothnia, Gulf of Finland and adjacent waters north of 59° 24’ N. Lat. between 8th
January and 5th May, except for calls at Stockholm, Tallinn or Helsinki.

5) Gulf of Riga and adjacent waters east of 22° E. Long. and south of 59° N. Lat. between
28th December and 5th May.

In the St Lawrence area, there are special ice pilots to assist in navigating ships during
the early part of the open season when there is still plenty of ice around.

The P&I renewal date of 20th February represents the traditional date at which the
Baltic would be open to vessel traffic again.

Loadlines

While ships trade mainly in sea water they also encounter fresh water in rivers and
brackish water (a mixture of sea water and fresh water) in estuaries. Sea water is
denser than fresh water due to the quantity of salt it contains. Cold water is denser
than warm water. Vessels float higher in denser water than in less dense water with
the same load on board. This means that they have more reserve buoyancy in denser
water for a given load than they do in less dense water.

A vessel that is overloaded is clearly at greater risk of being overwhelmed in

hazardous sea conditions than if it is correctly loaded. Overloading can also result in
catastrophic failure of a ship’s hull. However, the more cargo that is carried the greater
the earnings of the ship operator. The temptation to overload a ship is therefore as
old as commercial shipping itself and measures have been taken to mark ships’ hulls
with a ’loadline’, to indicate a safe draught to which they can be loaded, since ancient
times.

Lloyd’s Register of Shipping made recommendations concerning safe loading draught

in 1835. In 1876 the Merchant Shipping Act in England made loadlines compulsory as
a result of a campaign promoted by a member of Parliament called Samuel Plimsoll
following the loss of several ships because of overloading. As a result, loadlines are
often referred to as ’Plimsoll lines’. The requirement was recognised internationally in
1930 by the International Load Line Convention. A new Load Lines Convention was
agreed in 1966 and this has been revised as ship design and technology has changed,
most recently in 2003. All ships trading internationally are now required to have
loadlines marked or painted amidships on both sides of the ship, together with the
deck line. These indicate how deep a ship may be loaded in various conditions.

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Chapter 2

Below is a diagram of a typical Plimsoll line for a ship classed with Lloyd’s Register,
indicated by the ‘L’ and ‘R’ at each end of the long horizontal line on the left.

As well as loadlines now having the force of law insurers are also keen to ensure that
ships do not load so much cargo that they submerge their marks.

The Convention as revised in 2003 requires that ships must carry either an
International Load Line Certificate or an International Load Line Exemption Certificate
and now also includes requirements concerning hatchcovers, cargo openings,
machinery space openings, doorways and ventilators.

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 Module 1

CHAPTER 3
VESSEL TYPES AND CHARACTERISTICS
Chapter 3

What you’ll learn in this chapter

Vessel types Knowledge rating

The measurement of vessels 2

The main features of different vessel types 2

Commercial vessels exist in many different forms, each with its own characteristics
which are specific to the types of cargo that they carry or the tasks that they
undertake.

This chapter explores the key types of vessel and their uses.

3.1 The measurement of vessels

The size of a ship can be specified in a number of different ways.

Gross or Net Tonnage – GT/NT

GT is a measure of the volume of a ship’s total internal spaces and shall not be
confused with measurements of mass or weight; although it is based on volumetric
calculations, it is a unitless index. In a similar manner, NT represents the volume of
the spaces available for cargo. The calculations necessary to arrive at the final GT and
NT figures shown on a vessel’s Tonnage Certificate are set out in the International
Convention on Tonnage Measurement of Ships, 1969 (Tonnage Convention).

Deadweight tonnage – DWT

This is the weight a vessel can carry expressed in metric tonnes or long tons including
fuel, stores and equipment as well as cargo.

Light displacement tonnage – LDT

This is the physical weight of the vessel. It is used when the vessel is sold for
scrapping. It measures the ship without fuel, cargo or water but with the engine and
equipment. As with DWT, LDT can be expressed either in metric tonnes or long tons.

Given the complexity surrounding the measurement of ships and the fact that many
charges, such as harbour and canal dues, are based on these measurements, it is
important that a uniform approach is adopted around the world. This is achieved
through application of the International Convention on Tonnage Measurement of
Ships, 1969, (the ’London Rules’) which applies to all ships built after July 1982 or, in
the case of vessels built before that date, from July 1994.

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 Vessel types and characteristics

3.2 Types of vessel

Bulk carriers

These are the backbone of seaborne trade. They perform the key function of moving
large amounts of raw materials in bulk from source to processing factories to support
power generation and manufacturing industry. ’Bulkers’ come in many different sizes.
The names given to the various types often indicate the restrictions applying to that
type of vessel in terms of the waterways through which it can pass.

The main categories of bulk carriers and their approximate deadweight are as follows:

• Handysize – up to 35,000 DWT;

• Handymax – 35,000 to 60,000 DWT;

• Panamax – 60,000 to 80,000 DWT – the maximum to transit the Panama Canal;

• Capesize – 80,000 DWT plus – too large for the Panama or Suez Canal, these vessels
travel via the Cape of Good Hope or Cape Horn.

Note that these size definitions are not universally accepted.

Vessels can be described as ’geared’ or ’gearless’. This identifies whether a vessel

is carrying its own cranes. A geared vessel has access to ports where there are no
shore-based cranes. This makes a geared vessel more flexible commercially.

Below is a diagram of a typical Panamax bulk carrier with engine and accommodation
at the stern of the vessel. The rest of the hull is used to the maximum capacity with
regular shaped holds which can take cargo either in a true bulk form, such as coal,
grain and ores, or in pre-packaged form, such as bags.

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Chapter 3

Cargo hopper tank for bleeding

Freefall Bridge
lifeboat Hatches
Hatch- Accommodation
cover

No.7 No.6 No.5 No.4 No.3 No.2 No.1

Hopper-shaped Engine
hold room
hold hold hold hold hold hold hold

Aft peak
Ballast
spaces Rudder Propeller Double-bottom tanks Forepeak

Side-rolling hatch covers

Engine
room

No.7 No.6 No.5 No.4 No.3 No.2 No.1

Aft peak
hatch hatch hatch hatch hatch hatch hatch

Key characteristics of bulk carriers:

• regular-shaped cargo spaces/holds;

• a variety of sizes available;

• can be geared or gearless;

• can carry either homogeneous bulk cargo that is not packed and all of the same kind
– such as grain or iron ore - or cargo that is pre-packed in some way.

Container vessels

These vessels are built specifically to carry containers as efficiently as possible

by stacking them on the vessel in rows across the ship. The holds are fitted with
guiderails into which the containers slot. A considerable proportion of the containers
carried on container ships are carried on deck in stacks up to eight or nine high,
secured by lashings and twistlocks. These lock into slots set in the corner castings of
the containers, locking each container on to the one above and/or below. The slots
are also used by cranes when loading or discharging containers.

The largest container vessels – ultra-large container vessels or ULCVs – can carry
more than 23,000 TEUs with a length of over 1200 feet and draught of over 50 feet.
They are used for intercontinental carriage but the number of ports deep enough to
accommodate them is limited because of their size. Smaller ‘feeder’ container ships
which can call at smaller ports carry containers to and from the deep ‘hub’ ports
served by the large ships.

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 Vessel types and characteristics

A typical panamax container vessel

Containers loaded
on deck
12-13 containers
wide
Bridge Containers loaded on deck Mast
Lifeboat Breakwater
Accommodation

Aft
peak Engine
room

Rudder
Propeller
Double-bottom
tanks
Underdeck stowage Containers loaded on deck Underdeck Forepeak

Aft
peak

Typical Length 294 Metres

Beam 32.3 Metres
Draught 12.04 Metres fresh water
TEU 4-5,500
Containers max 13 across
Air Draught 57.91 Metres
Dead Weight about 50,000 Tonnes
Main Engine 48,000 BHP
Speed up to 25 Knots

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Chapter 3

An example of a super post-panamax container vessel

Containers loaded 22 or more

on deck containers wide
Funnel Accommodation Bridge
Freefall Containers
loaded on deck Containers
lifeboat loaded on deck
Mast

Engine
room

Rudder Underdeck
Stern thruster Loaded Bunker Bow thruster
Double-bottom Propeller decks tanks
tanks
side
Stowage in holds tanks

Typical Length 360 Metres

Beam 50 Metres
Draught 15 Metres
TEU more than 13,000
Main Engine 105,000 BHP
Speed up to 20 Knots

Key characteristics of container vessels:

• regular-shaped cargo spaces/holds;

• carry only containers but the variety of cargoes loaded inside the containers is
extremely wide;

• large carrying capacity and potentially high-value cargo on board, the cumulative
value of which will usually far exceed the value of the ship and of any bulk cargo.
Thus, assuming an average value of cargo in each container of $25,000 – a
conservative figure, a 19,000 TEU vessel would be carrying nearly half a billion
dollars worth of cargo.

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 Vessel types and characteristics

Tankers

Tankers are used for the carriage of all types of liquids in bulk including crude oil,
oil products and chemicals. They can also be used for the carriage of vegetable oils,
molasses, wine and other food products. These vessels are constructed in a variety of
sizes depending on the trade in which they are deployed. The largest crude oil tankers
have reached a size of over 450m long, although this was an extreme example (the
Knock Nevis, originally called the Seawise Giant). The largest tankers are highly restricted
in terms of where they can operate. This has led to the development of offshore
loading and unloading facilities which enable large tankers to avoid the need to enter
ports for mooring at a conventional berth.

The diagram including the Knock Nevis below gives an idea of its impressive size.

Tankers fall into two main categories; those which predominantly carry crude oil or
other types of ’dirty’ or ’persistent’ oil, and those which carry refined products – which
are usually ’clean’ or ’non-persistent’ – and commodities such as chemicals and edible
oils. These product tankers, unlike crude tankers, are often equipped with a large
number of segregated tanks and with associated pipework which enable different

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Chapter 3

consignments to be loaded, carried and discharged without each contaminating the

other. The tanks may be specially coated or even made of stainless steel.

The main categories of crude tankers and their approximate deadweight tonnage are as
follows:

• Ultra-Large Crude Carrier (ULCC) – 320,000+DWT, used for the carriage of crude oil on
long-haul routes from oil producing countries to Europe, North America or the Far East;

• Very Large Crude Carrier (VLCC) – 200,000 to 320,000 DWT, used on similar routes to
the ULCC but with more flexibility in terms of port access, being slightly smaller;

• Malaccamax – a vessel which is the maximum size and draught to transit the Strait of
Malacca which has a depth of only 25m;

• Suezmax – 120,000 to 150,000 DWT, the maximum size able to transit the Suez Canal
while laden;

• Aframax – 80,000 to 120,000 DWT, a tanker so-called because it represents the largest
size of tanker featured in the Average Freight Rate Assessment scale published regularly
by the London Tanker Brokers’ Panel. An Aframax is too broad in its beam to be able to
transit the Panama Canal;

• Panamax – up to about 80,000 DWT, the maximum able to transit the Panama Canal.

A typical VLCC

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 Vessel types and characteristics

Typical Length 333 Metres

Beam 60 Metres
Draught 22.6 Metres
Size 305-320,000dwt
Main Engine 33,000 BHP
Speed up to 15 Knots

Bridge Hose cranes

port & starboard
Freefall
lifeboat Accommodation
Pump room Cargo manifold
& slop tanks

Aft Fore
peak Engine peak
No. 5 No. 4 No. 3 No. 2 No. 1
Starboard Port room
cargo cargo cargo cargo cargo
tanks tanks
tank tank tank tank tank

Double bottom tanks

Double sides for water ballast

Port slop tank

Port tanks
Engine Fore
room Starboard tanks peak

Starboard slop tank

Bridge Hose cranes

port & starboard
Freefall
lifeboat Accommodation
Pump room Fire monitor Walkway
& slop tanks

Aft Fore
peak Engine peak
No. 5 No. 4 No. 3 No. 2 No. 1
Starboard Port room
cargo cargo cargo cargo cargo
tanks tanks
tank tank tank tank tank

Double bottom tanks

Double sides for water ballast

Port slop tanks

Port tanks
Engine Fore
room Starboard tanks peak

Starboard slop tanks

A typical Suezmax

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Chapter 3

Typical Length 288 Metres

Beam 50 Metres
Draught 20 Metres
Size 155,000dwt
Main Engine 20,000 BHP
Speed up to 14 Knots

A typical Aframax tanker

Bridge
Freefall Cargo Hose cranes
lifeboat Accommodation manifold port & starboard
Slop tanks &
pump room

Aft Fore
peak peak
Starboard Port Engine No. 6 No. 5 No. 4 No. 3 No. 2 No. 1
tanks tanks room cargo cargo cargo cargo cargo cargo
tank tank tank tank tank tank

Double bottom tanks

Double sides for water ballast

Port slop tank

Port tanks
Engine Fore
room peak
Starboard tanks

Starboard slop tank

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 Vessel types and characteristics

Typical Length 250 Metres

Beam 44 Metres
Draught 14.6 Metres
Size 95-120,000dwt
Main Engine 17,000 BHP
Speed up to 14 Knots

A typical Panamax tanker

Bridge

Freefall Accommodation Cargo Hose cranes

lifeboat Slop tanks & manifold port & starboard
pump room

Aft Fore
peak peak
Starboard Port Engine No. 6 No. 5 No. 4 No. 3 No. 2 No. 1
tanks tanks room cargo cargo cargo cargo cargo cargo
tank tank tank tank tank tank

Double bottom tanks

Double sides for water ballast

Port slop tanks

Port tanks
Engine Fore
room peak
Starboard tanks

Starboard slop tanks

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Chapter 3

Typical Length 229 Metres

Beam 32.2 Metres
Draught 14 Metres
Size 65-75,000dwt
Main Engine 15,500 BHP
Speed up to 12 Knots

The main categories of product tankers and their approximate deadweight tonnage
are as follows:

• LR2 (Long Range 2) – 80,000 to 160,000DWT;

• LR1 (Long Range 1) – 45,000 to 80,000DWT;

• MR (Medium Range) – 25,000 to 45,000DWT;

Key characteristics of tankers:

• often carry potential pollutants;

• cargo often worth more than the vessel;

• often equipped with additional facilities for handling the cargo – for example,
heating coils in the tanks to ensure that cargoes of crude oil remain pumpable.

Gas carriers

Liquefied natural gas (LNG) (methane, ethane and ethylene) and liquefied petroleum
gas (LPG) (propane, propylene, and butane) are both a by-product of crude oil
exploration. They also exist independently of crude oil processing. Specialist methods
of sea-carriage have been developed to move these commodities in bulk around
the world. The key issue is the state in which the gas is carried. It is very inefficient to
carry as the volume of a gas is up 600 times greater than its volume when chilled and
compressed into a liquid. LNG and LPG have differing chemical properties so different
degrees of chilling and compression are required. Butane becomes a gas at -0.5°C,
propane at –43°C but ethane gasifies at –164°C, so LNG cargoes require more chilling
to maintain the liquid state.

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 Vessel types and characteristics

It is essential to ensure that the vessel can maintain the necessary chilling and
compression during the voyage. This is achieved by equipping specialised vessels
with tanks that are heavily insulated and are, in addition, constructed in a shape that
maximises their ability to hold liquid under pressure. The largest gas carriers are
around 100,000DWT.

The images on the following page illustrate an LNG carrier showing the spherical tanks
that are used in LNG carriers. This is one type of tank in use, the other most common
type being the membrane tank.

An example of an LNG ship with Moss spherical tank design

Segregated Bridge Ballast

Accommodation
ballast tank tank

Cargo
Engine No. 5 No. 4 No. 3 No. 2 No. 1
tank
room tank tank tank tank tank

Pump Double bottom

Hopper Drip tray Double
room
tank bottom

No. 5 No. 4 No. 3 No. 2 No. 1

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Chapter 3

Typical Length 290 Metres

Beam 42 Metres
Draught 10.7 Metres
Size 66,500dwt
Main Engine 45,000 BHP

Key characteristics of gas carriers:

• highly expensive to build and therefore often built only against long-term contracts
from producers/suppliers;

• expensive to repair and maintain;

• specialist machinery required to ensure cargo maintained in appropriate state.

Refrigerated vessels

These vessels are built to ensure that temperature-sensitive cargoes carried in them
reach their destination in the optimum condition. They are generally, although not
exclusively, used for the carriage of food products. They can provide various levels of
chilling either to ensure no change in the status of the cargo or, in the case of some
fruits and vegetables, to ensure that a controlled ripening process takes place during
the voyage. In a refrigerated vessel the complete holds themselves are insulated and
temperature controlled. Although referred to as ‘refrigerated’ (or ‘reefer’ vessels),
these vessels are also capable, if required, of maintaining the carriage of cargo in a
frozen state. Refrigerated cargo may also be carried in special refrigerated containers
on suitably equipped container ships. This has led to a reduction in the number of
specialised reefer vessels in service.

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 Vessel types and characteristics

An example of a reefer vessel

Key characteristics of refrigerated vessels:

• may be multi-functional to maximise their value to the operator;

• temperature-controlled holds and/or the ability to carry reefer containers;

• fitted with specialist machinery to monitor temperatures in the holds/containers.

Car carriers

These vessels are specially built to move large quantities of vehicles in the most
efficient way possible from manufacturing location to country of sale. They have many
decks which are interconnected by ramps. Larger car carriers can carry over 8,000
cars and are around 50,000DWT. Loading and unloading can be done in the shortest
time possible by driving the vehicles on to and off the ship – known as roll-on/roll-off
or ro-ro.

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Chapter 3

An example of a ro-ro car carrier

Key characteristics of car carriers:

• very high freeboard compared to other vessels;

• many car decks of relatively low height without transverse bulkheads, thereby
allowing vehicles to be driven into position;

• car decks accessed through roll-on/roll-off ramp rather than by means of cranes.

Roll-on/roll-off vessels including ferries

These vessels, commonly referred to as ’ro-ro vessels’, are designed to carry mixed
cargo that can be rolled on to and off the vessel, such as vehicles, trailers and
specialised machinery and equipment for major infrastructure such as power stations

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 Vessel types and characteristics

often known as ’project cargo’. Ro-ros are employed on both coastal and international
trades. They include the car ferries that trade in many parts of the world, carrying
both private passengers and their vehicles, and loaded commercial vehicles and their
drivers.

Ro-ro vessels vary greatly in size and can vary also in design. The traditional ro-ro
vessel is made of steel, like other vessels, and is powered by engines and propellers.
A later development is that of the smaller high-speed ferry, made of aluminium – to
reduce weight – and powered by gas turbines and water jets. Many ferry companies
have both types of vessel.
Bridge
Internal ramps

Engine
room

Double-bottom tanks
Rudder Propeller Main engine Forepeak
tanks

Hinged stern ramp Ramp to upper deck

Ro-ro lanes

A drawing of a typical ro-ro vessel

Key characteristics of ro-ros:

• Although they are used internationally, they tend to be used on shorter routes with
more port calls than other vessels

• can be built of lightweight metals and powered by methods other than traditional
engines;

• lighter ro-ros can travel at high speeds increasing the number of voyages that can
be completed in a given time.

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Chapter 3

A traditional ferry

A high-speed ferry

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 Vessel types and characteristics

Cruise and passenger ships

These are usually purpose-built to serve certain markets. These include the specialist
cruise around Antarctica or the mass market cruise around the Mediterranean or the
Caribbean. In many respects, passenger vessels resemble floating hotels. The largest
cruise ships are more than 1000 feet long and can carry more than 7000 passengers
and crew combined. They are the most expensive ships to build, with costs for the
largest ships now approaching $1 billion.

A typical cruise ship

Key characteristics of cruise ships are:

• large numbers of people on board, the ratio of passengers to crew may be up to

four to one;

• the crew is usually divided into two categories – a navigating crew and (much larger)
hotel crew.

Specialist vessels

The types of vessels within this category include:

• salvage tugs, or other tugs being used for salvage work (for example, port tugs).
One of the key aspects of these vessels is the significant power of the vessel in
comparison to its size, which it needs to perform the role for which it is designed;

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Chapter 3

A salvage tugboat

• vessels being used as drilling barges, or storage tankers;

A tender drilling barge

50 INTERNATIONAL GROUP OF P&I CLUBS

 Vessel types and characteristics

• Dredgers, pile-driving vessels, cable-laying vessels;

A dredger

A cable layer vessel

• Certain types of commercial diving support vessels.

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 Module 1

CHAPTER 4
WHO’S WHO IN THE SHIPPING BUSINESS
 Who’s who in the shipping business

What you’ll learn in this chapter

Who’s who in the shipping industry Knowledge rating

The shipping industry and who supports it 3

The main industry associations 2

Chapter 1 showed how the global economy is dependent on transport by sea. The
United Nations Conference on Trade and Development (UNCTAD) estimates that, in
2019, a total of 11 billion tons of cargo was carried on ships. This compares with about
6 billion tons in 2000. World trade continues to expand.

The efficient handling of the different commodities and products that make up
this vast quantity of cargo, and the different types of ships required to move them,
involves a chain of interrelated specialist service providers which together make up
the shipping industry as a whole. The role of each of the links in this chain is described
briefly below.

4.1 The shipping industry and who supports it

Vessel ownership is spread across the world but companies based in certain countries
that have built up expertise in the industry over many years tend to dominate
shipowning. Ships are owned by very large producers of cargo - for example, major
oil and mining companies – and by specialist shipowning businesses that have no
interests in cargo production. These may be owned by states and by public or private
companies. The largest shipowning companies control hundreds of vessels trading
worldwide. Some own only a handful of ships but trade successfully in a specialised
local or regional niche. Some shipowners specialise in one type of vessel. Others
prefer to own a number of different ship types to try to spread the risk of fluctuations
in demand for a particular cargo and ship.

Some ships – for example, large container ships – run to a regular published timetable
similar to a scheduled airline or railway. Potential customers wishing to ship cargo can
easily find out when a ship is sailing to the port of discharge required. Other ships
operate on an opportunistic basis, picking up suitable cargo as and when it becomes
available, without predetermined routes or timetables. These are known as ’tramp’
ships. They will often have to sail from a port of discharge to their next port of loading
with no cargo on board. This is known as a ’ballast voyage’ when the vessel is ’in
ballast’ – without cargo.

Identifying the nationality of ownership of a ship is not always easy. A ship’s nationality
is that of its ’flag state’ – the state in which the company which owns the ship and the
ship itself is legally registered and whose flag it flies. However, this may not be the
nationality of the company which has the commercial responsibility for operating the
ship. Equally, it may not be the nationality of those who have the controlling financial
interest (sometimes called the ’beneficial ownership’) in the company that is the
registered owner of the ship. Ships that fly the flag of a state that is not the country of

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Chapter 4

the beneficial ownership are known as ’foreign flag’ or ’flag of convenience (FOC) ships.

Such complex ownership structures may be put in place to enable beneficial owners
to take advantage of favourable regulatory and employment regimes in particular flag
states, to reduce the ability of claimants against the ship to attack the assets of the
beneficial owners, for financial or tax planning purposes, or for a combination of these
reasons (for more on flag states see Chapter 5).

Top 10 nations: Registered trading vessels, by deadweight tonnage

Position number Country 2020 (million DWT)

1 Panama 329

2 Liberia 275

3 Marshall Islands 262

4 Hong Kong, China 201

5 Singapore 140

6 Malta 116

7 China 100

8 Bahamas 78

9 Greece 69

10 Japan 40

- World 2,062

By contrast, UNCTAD reported in 2020 that the 10 largest shipowning countries –

including the proportion of their tonnage which is ’foreign flag’ - are, in descending
order:

• Greece

• Japan

• China

• Singapore

• Hong Kong

• Germany

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 Who’s who in the shipping business

• Republic of Korea

• Norway

• Bermuda

• United States

Countries like Panama and Liberia which have a registered tonnage disproportionate
to the size of the local economy are known as ’flag of convenience’ countries.
Shipowners are primarily responsible for all aspects of management of their ships
unless they choose to outsource some or all of them (for example, see Ship Managers
below). These management functions include crewing, supplying, provisioning,
maintaining and insuring the ships. Owners are also responsible for the quality of all
aspects of the vessel’s operation and compliance with the demanding international
regulatory requirements to which ships are subject. To balance all this they must
ensure that cargoes are obtained to generate enough income to ensure that the
ship can be traded at a profit. Given that the demands of the global economy are
continually fluctuating this is no easy task.

Action Step: Read through chapter 2 of the latest UNCTAD Review of Maritime
Transport which provides an overview of global tonnage ownership and tonnage
statistics.

Shipping banks and financiers

Most businesses, even if they have the funds available, choose not to purchase
their assets outright. They prefer to fund the purchase in part through loans or by
raising equity, and the shipping industry is no different. There are specialist shipping
banks established in the major shipping centres around the world which understand
shipowners and their operations, and are prepared to provide loans for the purchase
of new or secondhand ships. However, the prospective shipowner will normally be
expected to contribute a proportion of the purchase price.

The bank lending the money will want protection for its investment and the ship
will become security for the loan. Most loan agreements require the shipowner to
purchase insurance covering hull and machinery, war and P&I risks. In most cases,
the benefits under these policies are made over or ’assigned’ to the banks as part
of the security for the loan and formal ’notices of assignment’ are endorsed on to
the policies. This has the practical effect of making the bank the entity to which any
insurance proceeds will be paid. However, in terms of day-to-day operations, many
policies with notices of assignment also have loss payee clauses. This specifies exactly
how any claims payments should be made by insurers. The banks generally permit
funds to be paid to the shipowner directly but if the shipowner gets into financial
difficulties, the bank may require payment to them directly or payment in accordance
with their instructions.

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Chapter 4

Ship managers

A shipowner who decides to outsource some or all of the operational responsibilities

of ownership will employ a specialist ship management company to handle the task.
In some cases, the ship management company is owned by the same investors as the
ships they manage. In others, the management company is entirely independent of
the ownership of the vessels and is often referred to as a third-party ship manager.
Some owners contract out the management of only part of their fleet and retain the
management of the balance. Other owners outsource the operation and management
of their entire fleet but split the fleet across several ship managers as a means of
encouraging competition and benchmarking.

Large third-party ship management companies operate hundreds of ships owned by

many different interests. As very large businesses they seek to pass on to their client
owners, who may be relatively small companies owning relatively few ships, the cost
advantages that a large organisation can obtain.

The functions that are delegated by owners to ship managers include:

• sales/chartering: the team that generates the cargo to be carried and handles the
chartering of the vessels;

• operations: the team that runs the ships, arranges any repairs, organises
stevedoring where necessary, organises supplies for the ship including bunkers (fuel
for generators and engines) and arranges port calls;

• providing marine superintendents: they are responsible for seaworthiness, including

all aspects of crew management (although a large organisation might allocate the
crew role to a specialised department). This team monitors any repairs actually
being done, as well as managing the ongoing maintenance schedule of the fleet.
They are present at drydockings;

• providing engineering superintendents: their focus is on all aspects of the machinery

on board the vessel, including repairs and maintenance. They also deal with issues
relating to bunkering;

• crewing: the team which hires officers and crew for the ships under management
and maintains contacts with crewing agents on countries which specialise in
providing crew – for example, the Philippines;

• terminal operations: if the shipowner also owns terminals (the loading/discharging

facilities in the ports), this team is responsible for all aspects of cargo being loaded
on and discharged from ships at the company terminal.

Some ship managers also provide owners with advice on insurance, ship sale and
purchase, and the supervision of new buildings. An organisation chart from a ship
management company is shown below, as an illustration of the many functions for
which a typical ship manager is responsible.

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 Who’s who in the shipping business

A standardised ship management contract known as the SHIPMAN 98 sets out clearly
the rights and obligations of both owners and managers, and covers tasks such as
crewing, insurance, freight management, provisioning, bunkering and operations. If
the managers are also supplying crew there are other specialised contracts for these
purposes called CREWMAN A and B.

A ship manager undertaking technical management functions on behalf of the owner

is deemed to be ‘the Company’ under international regulations and responsible
for safe practice and a safe working environment on board, and for establishing
safeguards against all identified risks.

There is a professional body for ship managers known as InterManager which was
founded in 1991. The main purpose of this organisation is to raise the profile of ship
management and to ensure high standards through quality assurance accreditation.

Charterers

While some cargo producers and traders own ships to carry their own cargo – for
example, the major mining and oil companies - the majority do not. Instead, they may
choose to charter ships for a stated period or voyage rather than make the investment,
both financial and managerial, involved in owning a ship. Equally, a ship- owner may
decide to charter a ship from another shipowner if they have insufficient tonnage of
their own to carry cargo that they need to move. To charter a ship the charterer enters

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Chapter 4

into a contract with the shipowner or operator known traditionally as a charter party but
now more often as a charter contract or simply a charter.

The parties have a choice between a demise or bareboat charter, a time charter and a
voyage charter.

Sometimes a shipowner who has invested

in a ship may decide that they do not wish
to take responsibility for their crewing,
operation and management. They may
wish simply to take on the role of a passive
investor receiving a regular return on their
investment which is largely independent of
fluctuations in demand for cargoes or in the
rates which charterers and cargo owners
are prepared to pay to ship their cargo.
To do this the shipowner can enter into a
contract to allow a charterer full control and
management of their ship, including hiring
the officers and crew. This is known as a
demise or bareboat charter. These contracts
are usually long term – for example, for
20 years. They sometimes provide for the
bareboat charterer to buy the ship on a pre-
determined basis. Bareboat charterers are
sometimes referred to as ’disponent owners’.

Under a time charter the shipowner allows

the charterer the right to the commercial
exploitation of the ship on specific terms
including regular monthly payments for a
specified period.

Under a voyage charter the shipowner

undertakes to the charterer to carry a given
cargo on a given voyage. Under a time charter the price paid to the ship owner is called
‘hire’; under a voyage charter it is called ‘freight’.

It is quite possible for the same ship to be under bareboat, time and voyage charter at
the same time, as the diagram above shows. In such a case, the owner has a contractual
relationship only with the first of the charterers in the chain.

A contractual chain of this complexity can give rise to problems when a dispute
arises between two of the parties. It may then be passed up and/or down the chain
as parties seek to pass on the responsibility for the alleged cause of the dispute.
Normally, the intermediate charter contracts are on similar terms but that is not
always the case. Over the years, a number of standard forms of charter have been
developed to serve the needs of various trades.

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 Who’s who in the shipping business

Action Step: Look at the BIMCO website for further information on standard
forms of charter contract

Ship’s Crew

In the context of this section, ‘crew’ can be defined as the whole complement of the
ship’s company. On passenger ships and ferries this includes a significant quantity of
hospitality-related crew in addition to deck, navigation and engineering crew.

The importance of a good crew cannot be underestimated. The successful and safe
operation and maintenance of each ship is very largely in the hands of its crew.
Management of a large proportion of problems that vessels can encounter depends
on the quality of the crew on board the ship.

The number and qualifications of the crew are not a decision solely in the hands of
the shipowner or the Master. A vessel’s flag state controls the numbers of the crew
and each flag state issues what is known as a safe manning document (SMD) to the
shipowner or manager. Generally, all vessels have deck officers, engine room officers
and other crew. The SMD sets out the minimum requirements of the flag for a vessel,
taking into account both the qualification requirements that the flag state authority
sets out for officers and the practical operational issues in relation to the individual
vessel in question. Crew numbers do not increase proportionately to the size of the
ship. Modern technology means that even a very large vessel may only have 20 or so
crew on board.

The SMD sets out the number, categories and required qualifications of officers and
crew members that need to be on board the vessel.

The following table indicates the minimum number of officers required under UK
regulations which conform to international norms.

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Chapter 4

Guidance on appropriate manning levels - deck officers

Trading Size of Ship (GT) Number of officers to be carried - STCW 95

area Regulation

Master Ch. mate OOW Total

Unlimited 3000 or more 1 1 2 4

Unlimited 500 or more but 1 1 1 3

less than 3000

Unlimited less than 500 1 - 2 3

Near-coastal 3000 or more 1 1 1 3

Near-coastal 500 or more but 1 1 1 3

less than 3000

Near-coastal less than 500 - - 2 2

Guidance on appropriate manning levels - Engineer officers

Trading Registered Engineer officer Requirements

Area power (KW)

Chief Second OOW Total

Engineer Engineer Engineer

Unlimited 3000 or more C/E 2/E 1 3

Unlimited 750 or more but less C/E 2/E 1 3

than 3000

Unlimited 350 or more but less 2/E MEOL - 2

than 750

Near-coastal 6000 or more C/E 2/E - 2

Near-coastal 3000 or more but C/E 2/E - 2

less than 6000

Near-coastal 750 or more but less C/E 2/E - 2

than 3000

Near-coastal 350 or more but less SMEOL - - 1

than 750

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 Who’s who in the shipping business

It is an absolute requirement that the crew numbers on board must never go below
the minimum number specified. If, because of an emergency, the Master finds
themself one crew member short, they must contact the vessel’s flag state authorities
and request an ’exemption certificate’. If a certificate is granted it will only be for a
limited period and the remaining crew must still not work more than their permitted
hours, even with overtime.

When considering the number of crew required, the flag state authority requires
owners and operators to:

• make an assessment of the tasks, duties and responsibilities of the ship’s

complement required for its safe operation, for the protection of the marine
environment and for dealing with emergency situations;

• assess the numbers and grades/capacities in the ship’s complement required for
these purposes;

• ensure that the manning level is adequate at all times and in all respects, including
meeting peak workloads, and is in accordance with the principles contained in
the relevant Marine Shipping Notice issued to the vessel in case of changes in
trading area(s), operations, construction, machinery, equipment or operation and
maintenance.

International regulations require that all ships have English as the common working
language on the bridge unless another language has been established, not only as the
common language on board but also between ship and shore. Ships can be detained
by port authorities if the crew members cannot understand orders in English and
there is no arrangement for giving orders in a language that they can understand.

In times of high shipping demand there may be a worldwide shortage of trained and
experienced crew.

Cargo interests

The shipper – called the consignor in the United States of America – is the party that
is the supplier or owner of cargo shipped. The shipper contracts with the carrier –
either the shipowner or charterer – for the carriage of the shipper’s cargo.

The consignee (or receiver) is the party to whom cargo is shipped and to whom
delivery of the cargo is to be made under the contract of carriage.

Shipbrokers

Shipbrokers act as intermediaries between shipowners, charterers and cargo interests

in arranging for provision of ships to carry cargo where and when required. They also
act for shipowners in buying and selling ships, ordering new buildings from shipyards
and selling old ships for demolition (scrapping).

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Chapter 4

Sale and purchase brokers deal with new and secondhand vessels, both for further
trading or for demolition (scrapping). The large broking houses have departments
specialising in various different vessel types.

Chartering brokers specialise in matching cargoes with vessels to carry them. As with
sale and purchase brokers there is a tendency for brokers to specialise in certain
sectors. It is quite usual to find both sale and chartering broking functions in one
organisation.

Because shipbrokers act as intermediaries in contracts between ships and cargo

interests they have unrivalled knowledge of the pricing of shipping services. Large
shipbrokers have extensive research departments which monitor the economics of
the shipping market in great detail.

Action step: Visit the websites for both Clarksons and Braemar to see the
services they offer: www.clarksons.com and www.braemaracm.com

The Baltic Exchange

The amount of hire or freight that the shipowner can earn is largely determined by
market forces, in particular, the balance between demand and supply for the type
of ship in question at the relevant time. The Baltic Exchange has been the centre for
trading in ships and cargoes in the City of London for more than 250 years. Located
in St Mary Axe in the City, the Baltic’s origins go back to 1744 and the re-naming of
a coffee shop where shipowners and cargo traders met in Threadneedle Street to
the ’Virginia and Baltick’. A face-to-face trading room (similar to that in the Lloyd’s of
London insurance market) was built in 1823 when a set of rules was developed and
a committee of senior coffee house regulars was established to regulate trading
between shipowners, shipbrokers and cargo interests.

The bombing of the Baltic Exchange building in 1992 and the development of modern
trading led to trading now being done electronically or on the telephone between the
parties rather than face-to-face. The Baltic remains a key part of the shipping industry.
It now publishes freight indices, including dry cargo, bulk cargo and tankers of various
types, which form the basis of settlement of forward freight contracts.

One of the key indices for the dry cargo trade is the Baltic Dry Index (BDI) which is
published daily, made up of information from 20 key dry bulk routes. For more details
on the BDI visit http://www.balticexchagne.com/en/data-services/routes.html

Tankers are often chartered on a basis known as Worldscale. It is quite normal in the
tanker markets for cargo to be sold at least once, after loading and before discharge.

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This means that the destination of the vessel will not be known until long after it has
sailed from the load port. As a result, the tanker industry uses Worldscale, which
takes into account not only the different port costs but also different steaming times
to each of the ports. For a given Worldscale rate, the owners know they will earn
approximately the same equivalent time charter return, whichever port of discharge is
nominated in that range, at the applicable Worldscale rate per tonne of cargo.

Tanker scales were first introduced during the Second World War by the United
Kingdom and United States governments and after a number of changes, ‘New
Worldscale’ was introduced from 1 January 1989. The epithet ‘new’ was soon dropped
and it is generally understood that ‘Worldscale’ refers to the new scale.

Baltic indexes are used as benchmarks to enable the trading of forward freight
agreements (FFA). FFAs are contracts which enable parties to contract for the future
level of freight rates in a particular shipping market and so hedge their exposure to
volatility in freight levels. For more details on FFAs you may wish to review Simpson
Spence Young’s free FFA course: http://bit.ly/15kYwQH.

Operating Costs

Every shipowner or operator, when considering what the breakeven figure is for any
voyage or period of time, has to take into account that there are vessel operating
costs which they cannot avoid.

The chart opposite (courtesy of Moore Stephens LLP) indicates the relative
proportions of the costs that a shipowner has to incur. These costs fluctuate as do the
freight rates which cargo owners and charterers are prepared to pay. In periods when
operating costs exceed freight rates owners need deep pockets to be able to continue

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to trade.

Percentage breakdown of typical costs faced by a shipowner

45

40

35

30
% of overall

25

20

15

10

0
ning res airs ran
ce ral ce Oil Oil ost ost
Man Sto Rep n s u G ene ntenan F uel Diesel Port C pital C
I ai Ca
cM
e r iodi
P

The lay-up decision

When a vessel is not earning enough even to cover its running costs the owner must
seriously consider the available options. If there is no profitable employment for the
ship, there is unlikely to be a healthy sale and purchase market. This then leaves three
main options; to continue to trade the ship at a loss, to sell the ship for scrap, or to lay
it up. Lay-up means putting a ship into the equivalent of mothballs, pending a return
to healthier trading conditions.

There are two main forms of lay-up: ‘hot’ and ‘cold’.

• Cold: a long-term solution requiring extensive technical involvement and input.

Engines are usually completely drained of fluid and totally shut down. The crew is
paid off.

• Hot: a short-term solution involving some reduction in crewing and other costs but
maintaining the engine and other equipment in running order.

In deciding whether to go for hot or cold lay-up the owner considers such matters as:

• the likelihood of work in the medium to long term;

• lay-up costs;

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• reactivation requirements (and attendant cost implications), particularly from

underwriters, to put the vessel back on navigating policy.

The owner must involve a number of other interested parties, including hull and P&I
underwriters, in the decision as to whether and where to lay the vessel up.

Action step: Investigate what guidance the Clubs issue to their members about
lay-up.

Hull and machinery underwriters

Hull and machinery underwriters insure shipowners against physical loss and damage
to their ships, including their engines and equipment, and against liabilities arising out
of collision. Hull and machinery policies are limited to the value of the vessel although
this can be increased somewhat by agreement to take account of market increase in
value in the case of a total loss (’increased value’ or ’IV’ cover). Hull insurance markets
are widespread throughout the world. Historically, London, and in particular the
Lloyd’s market, has been dominant but that is less the case now. For many years there
have also been important international hull insurance markets in France, Germany,
Italy, Japan, Scandinavia and the United States of America. The vast majority of hull
insurance is underwritten by profit- making commercial underwriters but some hull
cover is underwritten by mutual insurance hull clubs.

Cargo underwriters

Cargo insurers insure cargo against fortuitous loss or damage occurring during its
transit from place of departure to place of destination. As with hull insurance, cargo
insurance is widely available from insurance markets throughout the world. Not
all cargoes carried in international transit are insured. The choice as to whether to
insure or not is taken by the cargo owner or determined by the cargo sale contract.
Most claims in respect of loss of or damage to cargo brought against shipowners or
operators responsible for the cargo are in fact brought by cargo underwriters under
rights of ’subrogation’ whereby the insured cargo owner passes to the underwriters
any rights to recover against the responsible party in exchange for coverage under the
insurance policy.

Protection and Indemnity (P&I) underwriters

Liabilities incurred by shipowners in the course of the operation of their ships are
covered under P&I policies.

Risks insured include liabilities for loss and damage to cargo, other vessels, shore
installations, personnel (both on board and ashore), pollution and wreck removal.

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The majority (about 90%) of the world’s oceangoing tonnage are entered for P&I
coverage with one of the 13 P&I Clubs which are Members of the International Group
of P&I Clubs. The Group has three main roles:

• co-ordinating the operation and regulation of the Clubs’ claims-sharing agreement

– the International Group Clubs Pooling Agreement. As at 2021, the International
Group Clubs reinsure each other for claims admissible under the terms of the
Pooling Agreement in excess of $10 million. Claims under the Pooling Agreement
are reinsured into the global marine reinsurance market to a limit of over $3 billion.
Above that level the Clubs continue to share claims up to a total limit per claim of
nearly $8 billion;

• providing a forum for International Group Clubs to develop common policies and
promote shipowners’ and operators’ interests in relation to liability insurance issues
with governments, international regulatory bodies and industry organisations;

• sharing information and advice about current legal and technical issues of concern
to the International Group Clubs and their Members.

There is also a healthy P&I market outside of the International Group Clubs - in
particular in the small ship sector - with a number of facilities offering P&I coverage
to shipowners and charterers with varying limits on cover e.g. British Marine Mutual,
RaetsMarine, Charterers P&I Club, Korea P&I, China P&I and Ingosstrakh amongst
others.

Legal expenses insurers

The commercial insurance markets can provide insurance for legal expenses incurred
in defending or prosecuting a civil claim. In the shipping business, freight, demurrage
and defence (FD&D or Defence) insurance covers the legal and other costs incurred
by owners, operators or charterers in pursuing or defending contractual claims under
charter contracts or other commercial agreements for freight, demurrage (money
owed for delay in loading or unloading cargo) or other sums due.

Most marine defence cover is provided on a mutual basis by P&I Clubs either insured
by the P&I Club itself or by an affiliated but separate Defence Club.

Professional Indemnity Insurers

The professionals described in this chapter who provide services to shipowners,

charterers, cargo interests and other service providers within the shipping industry
need insurance to protect them from claims for losses caused to clients by their
negligence, error or mistake and for the cost of defending such claims. This cover is

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available from commercial insurers specialising in the marine market and also from
mutual insurers such as the International Transport Intermediaries Club (ITIC).

Clients of professional indemnity insurers will include ship managers, brokers and
agents, crewing managers and agents, and adjusters, surveyors and other marine
technical experts, as well as P&I Club managers.

Insurance brokers

The insurance broker acts as an agent for its client in the negotiation and placing of
insurance for the client with the insurance market. In addition, the broker provides
expert advice to clients about the various products and markets available. Insurance
brokers act for all the different parties described above who require cover for the
liabilities they may incur in their particular role in the chain of relationships which
constitute the global shipping industry.

An insurance broker need not be located in the insurance market place in which
policies are placed. The larger broking houses have offices in major insurance markets
around the world to enable them to service international clients directly and to ensure
good local knowledge of available insurance providers.

Ships’ agents

A ship’s agent is engaged locally by the shipowner or manager to provide the ship with
all the services required during its call at a port. These include ensuring that pilots,
stevedores, berths and tugs are ready for the ship’s arrival. When the ship has arrived
the agent arranges for the supply of everything needed for the ship and crew from
bunkers to vegetables, as well as liaising with customs, port health officials and other
local authorities on the ship’s behalf.

It is common, especially in the bulk trades, for the charterer to have the right
to nominate the ship’s agent at the ports of loading and discharge. In these
circumstances the shipowner sometimes appoints a second agent to act specifically
as owner’s agent. Such an agent is sometimes called a ‘husbanding’ agent, since all the
ship’s needs in the way of stores, provisions and crew matters are channelled through
them.

Crew manning agents

Crew members can be sourced directly or the services of a crew manning agent can
be used. These services are available to both shipowners and operators looking for
crew and also to crew members looking for new employment.

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From the shipowner’s perspective, a good manning agent performs all the initial
screening of applicants including pre-employment medical examinations and can
also check that applicants have the abilities - including language skills - that their
certificates say they have. Some P&I Clubs have established pre-employment medical
examination programmes to screen crew for pre-employment illness which could lead
to claims for medical costs and repatriation expenses if the seaman in question were
engaged.

Manning agents can be found worldwide, but many are established in the traditional
source countries for seafarers such as the Far East, South East Asia and Europe.

Once the crew members have been identified and passed any fitness test required,
they will then be engaged using approved forms of crew agreement, the detail of
which the Clubs need to see. No person can be signed on to a ship for more than 11
consecutive months, as there is a requirement for at least four weeks’ holiday in each
year.

Once the crew have been engaged, the shipowner has a duty to ensure their ongoing
training. The Master is responsible for ensuring that new crew members are trained
before the ship sails and before they are assigned to any ship-board duties.

Classification societies

Classification societies, often abbreviated to ‘Class’, develop and maintain technical

standards for the construction of ships. This role extends to monitoring the design,
construction and ongoing maintenance of ships to ensure that they are fit and safe
to go to sea. Each society issues certificates of compliance with its requirements and
conducts regular surveys to ensure the necessary maintenance and/or repairs are
done in accordance with the rules of that society such that the ship remains ‘in class’.

The original committee, known as the Register Society, dates back to 1760. It later
became Lloyd’s Register. It printed the first Register of Ships in 1764 with the aim of
giving underwriters and merchants an idea of the condition of the ships they were
insuring or chartering. The hull was rated or ‘classified’ A, E, I, O or U, with A being the
best rating. The measure related to the quality of the vessel’s original construction and
its ongoing soundness (or otherwise). Equipment was rated G, M or B (good, middling
or bad). This was eventually replaced with 1, 2 or 3, leading to the development of A1
being the best quality there is– see the Lloyd’s Register website www.lr.org for more
information.

The classification process can be divided into several steps covering the entire life of
the vessel:

• a technical review of the design plans and related documents for a new vessel to
verify compliance with the rules of the society;

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• attendance at the construction of the vessel in the shipyard of a classification society

surveyor(s) and at the relevant production facilities that provide key components,
such as the steel, engine, generators and castings, to verify that the vessel is
constructed in accordance with the classification rules. Note that the classification
society does not list all/every component; often it lists a sample and gives a type
approval certificate;

• if a commercial trading vessel is not certified by a recognised classification society,

marine insurers are very unlikely to provide it with cover.

The following diagram (courtesy of DNV GL Group) shows the relationships during a
new building:

Supplies of
Co Component Orders
Shipowner
Shipyard
– Client –
o

Approval
o

Drawing

Subsuppliers
for

Test
C

Ce e
Survey of C o
Newbuilding o e
Industry
Co o
Ce e
of Class Testing of Components

National Statutory
Ce e

The important point to note from the diagram above is that the contractual
relationship during the building process is between the yard and Class rather than
between the shipowner and Class. The fees of the classification society form part of
the price of the ship. The owner receives their Class certificate from the yard on
payment of the final bill. From that point, the relationship between owner and Class
begins.

When the necessary surveys have been completed the shipowner’s request for the
issuance of a Class certificate will be considered by the supervising society and, if
the vessel is deemed satisfactory, the assignment of Class will be approved and a
certificate issued. The vessel is now ’in class’.

Once the vessel is in service the owner must submit the vessel to a clearly specified
programme of periodical class surveys to verify that the ship continues to meet
the relevant conditions for continuation of class. A vessel which is not continually
maintained ’in class’ under the rules of a reputable society will almost certainly find
that its insurances will be invalidated.

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The owner must tell the classification society immediately if any defects are noted
or damage occurs which could impact on the classification status. If so, the class
surveyors will inspect the ship and issue a ‘condition of class’ requiring the defect to
be rectified within a certain time frame. If it is a major defect, Class may require it to
be repaired immediately. If a ship has a ‘condition of class’, it still remains ’in class’.
If the condition is not rectified as required the vessel will go ’out of class’ and its
insurances will be prejudiced.

The maintenance of Class is of paramount importance to both P&I and hull

underwriters. It is a requirement of P&I cover that the vessel remains classed
throughout the period of entry with a society approved by the Club managers. Hull
underwriters will come off risk at the next port after any suspension, loss of Class or
change of Class from one society to another.

The classification societies and a ship’s flag state work together very closely to
implement much of the international maritime safety regime and, more particularly,
to avoid needless duplication of effort in surveying ships. (For more on flag states see
chapter 5).

Classification societies are not immune from litigation in the aftermath of maritime
casualties. In recent times there have been a number of high profile maritime
casualties involving both loss of life and pollution that have led to legal action being
taken against the society of the ship concerned. Allegations may be made that the
society has failed to ensure that the ship concerned was maintained in seaworthy
condition and that the society is therefore responsible for the casualty.

Action Step: Research the Erika casualty and find out what claims were made,
and by whom, against the relevant classification society. Start by looking at
www.iopcfunds.org/incidents/#1999-235-December.

Average adjusters

The word ‘average’ is derived from the French word ‘avarie’, which means damage. In
the insurance context there is a distinction between ‘particular’ and ‘general’ average.
Particular average means loss or damage to one insured interest. General average
denotes loss or damage that is shared between all interests involved in the voyage
(sometimes referred to as the ’marine adventure’) concerned.

Average adjusters are expert in the law and practice of marine insurance and general
average. They prepare claims under marine insurance policies which generally
involve loss of or damage to ships, cargoes or freight. They may also be called upon
to prepare statements of claim against third parties and to deal with the division of
recoveries from third parties.

General average is a particular area of expertise. Average adjusters are usually

instructed to collect general average security, and also salvage security, and to

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prepare general average statements and assist in effecting settlements in accordance

with those statements.

Average adjusters may be appointed by any party involved in a claim. Irrespective

of the identity of that party the average adjuster is obliged to act in an impartial and
independent manner.

Lloyd’s agents

Lloyd’s agents are appointed by the Lloyd’s Agency Department on behalf of the
underwriters at Lloyd’s. The Lloyd’s agency network consists of almost 260 Lloyd’s
agents and a further 260 subagents around the world. Most agents still provide
Lloyd’s with details of shipping movements and casualty information but their main
role is one of conducting or arranging surveys on ships and cargoes for insurers
and commercial interests throughout the world. In addition, almost 200 agents have
been granted authority to adjust and settle claims arising under Lloyd’s certificates of
insurance.

P&I Club correspondents

These organisations are the Clubs’ eyes and ears around the world and are usually
the first involved in any problems that arise with the operation of a vessel insured by
a Club. Most correspondents are independent commercial companies based in ports
around the world that specialise in assisting P&I Clubs and their members with the
handling of problems, claims and disputes arising in the ports, terminals and coastal
seas nearby. Sometimes law firms are referred to by Clubs as ’legal correspondents’
and a Club has both a ’commercial correspondent’ and a ’legal correspondent’ in the
same port.

Correspondents often represent more than one Club as well as commercial insurance
companies and Lloyd’s underwriters. If a situation arises where more than one of
their principals requires their services in the same case, a potential conflict of interest
arises. This can be resolved on a ‘first come, first served’ principle or by one client
deciding to use a different representative for that particular case.

Maritime lawyers

The large number of different parties and financial interests involved in the shipping
industry, and the hazardous nature of sea transport, means that the international and
national laws and regulations which apply to it are complex. The potential for disputes
and accidents is correspondingly high and the services of specialist maritime lawyers
are in great demand. A large proportion of charter and cargo contracts worldwide
specify English law and jurisdiction so that London is one of the principal centres of
maritime litigation. Other busy centres for the resolution of legal matters include New
York, Singapore and Hong Kong but the international nature of the industry means

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that almost all coastal nations have developed specialist maritime laws and courts
with a specialist group of maritime lawyers to assist and advise parties when required.

Surveyors and other experts

When a marine casualty occurs or a claim has arisen surveyors are used to establish
the facts – in particular, the extent of damage to the insured interest – and to
determine causation. Some surveyors are expert in ships’ hulls, others in ships’
engines, others in the different types of cargo. Their clients include shipowners
and charterers, marine underwriters, average adjusters, P&I Clubs, ship and engine
builders, classification societies, statutory authorities, the offshore industry, harbour
authorities and the legal profession.

In litigation and in arbitration, surveyors may act as expert witnesses. They also sit as
arbitrators, particularly in cases where there are technical issues to resolve. They may
act as technical advisers to marine enquiries and investigations, in a way similar to
that in which the Elder Brethren of Trinity House assist the Admiralty Judge in collision
cases.

There are many different types of expert in addition to surveyors. They include
naval architects, metallurgists, chemists, biochemists, economists and information
technology specialists. Depending on the circumstances of a case, their expertise may
be called upon to assist the parties and the court to understand what has happened
and why it happened, and to clarify where responsibility may lie.

4.2 Industry organisations

As well as individual professional players within the shipping industry, there are many
industry organisations representing many different aspects of the industry. As well
as representing their own sector interests in discussions with other sectors, many of
them also have consultative status at the International Maritime Organization (IMO)
which is discussed more in chapter 5. They can take part in the discussions between
member states and give the members the benefit of their technical expertise and
experience. Some of these organisations are often involved with issues important to
the International Group of P&I Clubs – which also has consultative status.

International Chamber of Shipping (ICS)

ICS is the principal international trade association for the shipping industry,
representing all sectors and trades and comprising various national shipowner
associations. Through this structure it can speak for a significant majority of
international shipping. Its aim is to act as an advocate for the industry on issues

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of maritime affairs, shipping policy, legal and technical matters, including ship
construction, operation, safety and management, and to develop best practice in the
industry.

International Transport Workers’ Federation (ITF)

The International Transport Workers’ Federation is a global federation of over 750

transport trade unions, representing 4.5 million transport workers of all types
worldwide. It represents transport workers’ interests in international bodies such as
the International Labour Organization (ILO). It has been involved with seafarers since
1896; its aim is to improve conditions for seafarers of all nationalities and to ensure
adequate regulation of the shipping industry to protect the interests and rights of the
workers. It has consultative status at the IMO.

Since 1948 the ITF has conducted a campaign against flag of convenience (FOC) ships.
It defines these as vessels ‘where beneficial ownership and control of a vessel … is
found to lie elsewhere than in the country of the flag the vessel is flying.’

The campaign has two elements; one political, designed to eradicate the flag of
convenience system overall and the other industrial, to ensure that seafarers who
serve on FOC ships are properly protected from exploitation. While the political
objective has not been achieved, the ITF has made considerable progress in achieving
its aims. One measure it has used with particular effect is industrial action directed
against individual ships or fleets by its affiliated shoreside unions worldwide ,
especially those representing dockers and tug services.

Over the last 50 years, the ITF has developed a set of policies which seek to establish
minimum acceptable standards applicable to seafarers on FOC ships. These policies
form the basis of the ITF Standard Collective Agreement, which sets the wages and
working conditions for all crew on FOC ships, regardless of nationality. All ships whose
crew are covered by a crewing agreement acceptable to the ITF are issued with a
Blue Certificate by the ITF Secretariat. About a quarter of all FOC vessels are presently
covered by ITF agreements. Compliance with ITF recognised agreements is monitored
by a network of ITF inspectors in ports throughout the world.

International Maritime Employers’ Committee (IMEC)

The International Maritime Employers’ Committee is the only international employers’

organisation dedicated to maritime industrial relations. IMEC and ITF together form
the Joint Negotiation Forum, who periodically negotiate industry-wide collective
bargaining arrangements for more than 100,000 seafarers of all nationalities serving
on ships registered in countries designated by the ITF as flags of convenience.

International Tanker Owners Pollution Federation (ITOPF)

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ITOPF was founded in the aftermath of the Torrey Canyon disaster, primarily to
administer the voluntary compensation scheme for damage by oil pollution that
was introduced soon after called TOVALOP (Tanker Owners Voluntary Agreement
concerning Liability for Oil Pollution). Alongside TOVALOP, in which shipowners’
interests participated, a parallel regime called CRISTAL (Contract Regarding an Interim
Supplement to Tanker Liability for Oil Pollution) was developed by the oil cargo
interests led by the major oil companies.

The objective of these two agreements was to provide on a voluntary basis the same
level of protection for the victims of a pollution incident as they would have had under
the oil pollution conventions that were being developed by IMO at that time. The
agreements acted as interim measures pending the widespread ratification of the Civil
Liability Convention (CLC) and Fund Conventions.

As a consequence of the significant number of oil spills that occurred in the 1970s,
ITOPF developed a technical function to provide advice on response efforts and an
objective assessment of the reasonableness of any clean-up efforts and claims for
compensation, under both the voluntary regimes and the conventions.

TOVALOP and CRISTAL were wound up in 1997 (the agreements were not renewed)
and the main focus of ITOPF today is the assessment of damage caused by spills and
the resulting claims for compensation; on contingency planning and advisory work;
on training and education, and on information services. Since 1980 ITOPF has had
consultative status with the IMO and the International Oil Pollution Compensation
Funds.

Although ITOPF was originally founded by tanker owners the rising incidence of
pollution from non-tankers has led to a widening of its membership. Since 1999
non-tanker owners and bareboat charterers have been eligible to become members.
Membership of ITOPF for both tanker owners and non-tanker owners is in practice
effected through their P&I Clubs, through which ITOPF is also funded.

With the entry into force of the Bunker Convention and the development of the
Hazardous and Noxious Substances Convention (although not yet in force) and its
2010 Protocol, ITOPF’s remit continues to widen. In the recent past it has advised on
spillages of cargoes as varied as containers and cereals.

Oil Companies International Marine Forum (OCIMF)

This is a body that comprises oil companies which have an interest in the shipment
and terminal activities relating to crude oil and related products. It is a voluntary
organisation which lobbies for good marine safety standards on behalf of the
oil industry. Its stated mission is to be the foremost authority on the safe and
environmentally responsible operation of oil tankers and terminals, promoting
continuous improvement in standards of design and operation.

Like ITOPF it was founded in 1970 soon after the Torrey Canyon disaster had brought
to the public’s attention the dangers involved in the carriage of large quantities of

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crude oil in tankers. OCIMF has some 90 members including all the oil majors.

OCIMF has consultative status at the IMO. It serves to co-ordinate the views of the oil
industry at IMO meetings and to review legislative and regulatory developments at
the IMO on behalf of its members. It has been one of the main drivers for improving
operational and safety standards for tankers, a drive born in part out of the need to
maintain a good public image for the oil industry.

OCIMF also produces numerous guidelines for its members either alone or in co-
operation with other industry bodies. These guidelines cover such varied issues as
piracy, lifeboat safety and mooring hawser strength. See www.ocimf.com for copies of
the relevant information papers.

Action Step: Find out more about the OCIMF Ship Inspection Report
Programme (SIRE) and how the inspections are conducted, when and by whom.

International Association of Classification Societies (IACS)

IACS, founded in 1968, is the international body representing the main classification
societies. It describes itself as dedicated to safe ships and clean seas, and seeks to
make a unique contribution to maritime safety and regulation through technical
support, verification, research and development. More than 90% of the world’s cargo-
carrying tonnage is covered by the design, construction and through-life compliance
rules and standards set by the nine member societies and one associate of IACS.

IACS summarises the mission of classification societies as follows:

The mission of classification societies is to contribute to the development and

implementation of technical standards for the protection of life, property and the
environment. Classification societies establish and apply technical requirements for the
design, construction and survey of marine-related facilities, principally ships and offshore
structures.

The IACS members are:

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For more information see the IACS website (www.iacs.org.uk).

There are other organisations offering classification but generally underwriters

prefer to insure vessels classed by IACS members. IACS is open to application for
membership from other classification societies and has qualitative membership
criteria and guidance for their transparent application and an independent appeal
board. It also offers the opportunity to participate in its technical work to non-member
classification societies and ensures that all current and future IACS resolutions and
technical background documents are made public.

International Association of Dry Cargo Shipowners (Intercargo)

Intercargo is a trade association for operators of bulk carriers in the international dry
bulk trades carrying cargoes such as coal, grain, iron ore and other bulk commodities.
Its main role is to work with its members, regulators and other shipping associations
to ensure that shipping operates safely, efficiently, environmentally and profitably.

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International Association of Independent Tanker Owners

(Intertanko)

Intertanko was formed in 1970 and performs for the tanker industry a service similar
to that performed by Intercargo for the dry bulk sector. Its membership is open to
independent (non-oil company and non-state controlled) owners and operators of oil
and chemical tankers. Independent owners operate some 80% of the world’s tanker
fleet and the vast majority are Intertanko members.

Society of International Gas Tanker and Terminal Operators

(SIGTTO)

SIGTTO is a non-profit-making organisation formed to provide high operating

standards and best practices in gas tankers and terminals throughout the world.
It produces technical advice and support to its 180 members including LPG/LNG
shipowners, managers, producers and terminal operators.

Chemical Distribution Institute (CDI)

The CDI was developed in the chemical industry to provide risk assessment systems
for the transportation and storage of bulk liquid chemicals. It was founded in Holland
in 1994 and is now managed by a board made up of representatives of the various
chemical companies. Its operational headquarters are now in the UK. It is the
counterpart for the chemical industry of OCIMF for the oil industry. All the world’s
major chemical companies are members.

It has several objectives which are centred on enhancing best practice surrounding
the safe storage and carriage of chemicals. The CDI provides inspection services for
both vessels and land-based installations to ascertain their compliance with regulatory
and industry standards.

Nautical Institute

The Nautical Institute is the international professional body for qualified seafarers
and others with an interest in nautical matters. It provides a wide range of services
to enhance the professional standing and knowledge of its members who are drawn
from all sectors of the maritime world. It offers its work to the industry in general, with
the objective of helping to improve the safety and efficiency of shipping.

International Salvage Union (ISU)

The ISU represents the interests of professional salvors worldwide. Its members
provide essential services for the world’s maritime and insurance communities
through their engagement in emergency response, marine casualty response,
pollution response, wreck removal, cargo recovery, towage and related activities.

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78 INTERNATIONAL GROUP OF P&I CLUBS

 Module 1

CHAPTER 5
MARITIME REGULATION
Chapter 5

What you’ll learn in this chapter

Maritime regulation Knowledge rating

The role of the IMO 3

How international conventions are created and

implemented 3

The role of the flag state and the enforcement of

conventions 3

The ISM Code 3

The ISPS Code 3

The IMDG Code 2

The role of port state control 3

Certification requirements 2

The maritime industry is subject to a network of rules and regulations created by

various international and national organisations and industry bodies. In this part of
the module we look at the various sources of the laws, rules and regulations that
govern the way those in the shipping industry go about their business and look more
closely at some of the important maritime industry organisations.

5.1 International Conventions and the IMO

International conventions are regulations devised by international bodies, many of
them under the protection of the United Nations, which are incorporated into national
laws by states that wish to adopt them. The International Maritime Organization (IMO)
is the principal international body involved with maritime affairs.

The IMO was set up by the United Nations (UN) in 1948 and first met in 1959

‘to provide machinery for co-operation among governments in the … regulation …. of

technical matters affecting shipping … maritime safety, navigation and prevention and
control of pollution.’

174 nations are members of the IMO and it has three associate members - Hong
Kong, China and Macao, China and the Faroe Islands. As noted in the previous
chapter, a number of international shipping industry organisations, including the
International Group of P&I Clubs, have consultative status at the IMO and can

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contribute to its deliberations.

The staff of the IMO numbers around 300 at its Headquaters in London, UK. As well
as its work on regulation the IMO is also heavily involved in education and training and
has set up three educational institutions:

• the World Maritime University, Malmö;

• the International Maritime Law Institute, Malta;

• the International Maritime Safety, Security and Environment Academy, Genoa.

The creation and development of ideas that form the basis for IMO conventions and
regulations is democratic in character with member states and non-governmental
organisations with consultative status all taking part in the process. Proposals for new
items on the IMO’s work programme and proposals for new, or amendments to existing,
mandatory instruments submitted by non-governmental organisations must be co-
sponsored by member governments.

If the main body of the IMO or other UN agency concerned gives agreement to a
new initiative the task is then delegated to the appropriate committee. Work in the
committees and sub-committees is undertaken by the representatives of member
states. The views and advice of intergovernmental and international non-governmental
organisations that have a working relationship with the agency concerned are also
welcomed in these bodies. Many of these organisations – such as the International
Group of P&I Clubs– have direct experience of the matters under consideration and are
therefore able to assist the work of the IMO in practical ways. The committee charged
with consideration of a new convention produces a draft document, which will then
be submitted to the Council and Assembly of the Organisation, with an accompanying
proposal for the scheduling of a specially convened conference, now commonly known
as a diplomatic conference, to consider the new convention. If agreed by the governing
bodies of the Organisation, a diplomatic conference will then be held to discuss and
adopt the new convention, based on the draft document developed by the relevant
Committee.

Within the IMO there are the following main committees:

• Maritime Safety Committee;

• Marine Environment Protection Committee;

• Legal Committee;

• Facilitation Committee;

• Technical Co-operation Committee.

All states that are members of the IMO are invited to the plenary session of every
committee or sub-committee, together with any states who are members of the UN.

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At such sessions, all IMO Member States have equal voting rights. In addition, UN
bodies and other organisations that have a formal relationship with the IMO can also
send delegations to the meetings.

Draft conventions are debated and amended at diplomatic conferences as necessary

and then adopted if approved. Once adopted, a convention is lodged with the IMO
Secretariat and is open for signature by member states. It can take many years for
a convention to be adopted by sufficient member states for it to come into force.
In many cases, development of existing and new conventions is driven by major
casualties that highlight areas where international regulation may be desirable.

Action Step: Go to the IMO website and find out what relevance the Titanic
disaster in 1912 has to international conventions still in use today.

A state can express its consent to be bound by a convention in the following ways.

Signature

Consent may be expressed by signature where the convention so provides or where

the intention of the state to give that effect to signature was expressed during the
negotiations. Most conventions contain a clause providing that a state may express its
consent to be bound by the instrument by signature, subject to ratification.

In such a situation, signature does not signify a state’s consent to be bound by a

convention; if a state is to be so bound its signature must be followed up by the
deposit of an instrument of ratification. A state may sign ‘subject to ratification’ to
indicate its intention to embrace a convention. In order to bring the convention into
force in its domestic law further constitutional procedures will need to take place in
the state itself.

Ratification

International conventions are ratified by depositing instruments of ratification. In most

democracies, the legislature authorises the government to ratify conventions through
domestic legislation. In the UK, legislation that gives effect to conventions is placed
before parliament before ratification. In the United States of America, on the other
hand, the consent of the Senate in Congress is required before a convention signed
by the administration can come into effect.

Accession

Most international conventions are open for signature for a specified period of time
after ratification and further provide that consent by accession is possible. Accession
is the method used by a state to become a party to a convention which it did not sign

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while it was open for signature. It is a way of ratifying conventions already signed by
other states. Accession requires the state in question to deposit an instrument of
accession with the ’depositary’ country or organisation specified in the convention.

Each convention contains a provision stipulating the number of ratifications required

to bring it into force. Thus the International Convention for the Safety of Life at Sea,
1974 (SOLAS ’74) required ratification by 25 states whose merchant fleets comprised
not less than 50% of the world’s gross tonnage before it could come into force.
Once in force, a convention applies to all states which have ratified it or acceded to
it. It does not apply to signatories that have not ratified it. The reason for a tonnage
‘trigger’ is to avoid entry into force of a convention that might have a large impact on
seagoing nations when ratified by a small number of countries with little or no real
interest in the subject matter. That said, it is unusual for maritime conventions dealing
with liability and compensation issues to contain a tonnage requirement to bring them
into force.

Once the required number of ratifications has been obtained a convention generally
comes into effect after a further period of time has elapsed in order to allow the
countries concerned to make the necessary legislative arrangements domestically to
implement its terms. This usually entails enacting the provisions of the convention
into national law. However, the fact that a convention has come into effect in some
countries does not mean that all IMO member countries will apply it. Indeed, many
conventions are only ratified and applied as part of their domestic law by a minority of
IMO member states.

It is also possible for a state or region to enact the provisions of a convention into
its domestic or regional law before the convention itself comes into force. Thus the
European Union introduced a requirement for the use of low sulphur fuel in port on 1
January 2010 whereas the equivalent IMO regime was not implemented until 2012.

Amendment of conventions

Conventions can be amended, updated or otherwise altered after their original

adoption. This can lead to different results in states that have ratified the updated
version and in those that have chosen not to do so. A good example of this is the
Convention on the Limitation of Liability of Maritime Claims (LLMC), by virtue of
which a shipowner is entitled to limit their liability after a casualty has occurred. This
convention currently has three versions, all with slightly different terms, primarily
in relation to the amount of the financial limitation that applies. Some countries

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still adhere to the original convention, dating from 1957, others have adopted the
1976 version and yet others the 1996 version. After a casualty has occurred this
diversity often gives rise to ’forum shopping’ by the lawyers for the parties involved
to found jurisdiction in a country whose version of the Limitation Convention is most
advantageous for their respective clients.

5.2 Important international conventions

In the maritime context the most important international conventions are those that
deal with safety, pollution avoidance, and liability and compensation. All major areas of
liability and safety at sea have been addressed, as can be seen from the list overleaf.
The provisions of the conventions are reviewed and updated by States when thought
necessary. The importance of the oversight of maritime legislation and regulation is
fundamental to the modern shipping industry.

Safety

Safety of Life at Sea (SOLAS) Convention, 1974, as amended, in particular its main
safety protocols concerning:

• Construction – Subdivision, stability, machinery and electrical installations on ships –

Chapter II-1;

• Fire protection, fire detection and fire extinction – Chapter II-2;

• Life-saving appliances and arrangements – Chapter III;

• Safety of navigation – Chapter V – it is under this chapter that ships’ routeing

systems/traffic separation schemes are established, as in the English Channel and
the Straits of Singapore;

• Carriage of Cargoes – Chapters VI and VII;

• The International Safety Management Code (ISM) – Chapter IX;

• The International Ship and Port Facility Security Code (ISPS) – Chapter XI-2;

• International Convention of Load Lines 1966 and the 1988 Protocol, in force
February 2000;

• Convention on the International Regulations for Preventing Collisions at Sea, 1972

(Colregs);

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• International Convention on Standards of Training, Certification and Watchkeeping

for Seafarers,1978, last amended in 2010 (STCW);

• ILO’s Maritime Labour Convention, 2006 – in force 2013 – establishing minimum

employment conditions on ships (MLC).

Pollution avoidance

• International Convention for the Prevention of Pollution from Ships, 1973, as

modified by the Protocol of 1978 relating thereto (MARPOL);

• Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other

Matter, 1972, in force 30 August 1975 (the Dumping Convention).

Liability and compensation

• International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969

• International Convention on Civil Liability for Oil Pollution Damage (CLC), 1992 - limits
increased in 2000, in force 2003;

• International Convention on the Establishment of an International Fund for

Compensation for Oil Pollution Damage (FUND), 1992– limits increased in 2000, in
force 2003;

• International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, in
force 2008;

• International Convention on Liability and Compensation for Damage in Connection

with the Carriage of Hazardous and Noxious Substances by Sea (HNS), 1996 –
Protocol 2010 not yet in force;

• Athens Convention relating to the Carriage of Passengers and their Luggage by Sea,
1974 – Protocol 2002, in force 2014;

• Nairobi International Convention on the Removal of Wrecks, 2007, in force 2015;

• Convention on Limitation of Liability for Maritime Claims (LLMC), 1957, 1976 and
1996 (see amendments of conventions previously discussed);

• International Convention for the Unification of Certain Rules of Law relating to Bills
of Lading (Hague Rules), 1924, in force 1931; The Hague-Visby Rules – Hague Rules

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as amended by the Brussels Protocol, 1968, in force 1977; The United Nations
Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules), in force 1982;

• The Rotterdam Rules – UNCITRAL Draft Convention on Contracts of Carriage of

Goods Wholly or Partly by Sea, 2009, not yet in force.

The Law of the Sea Convention

The United Nations Convention on the Law of the Sea (UNCLOS), also called the
Law of the Sea Convention or the Law of the Sea Treaty, defines the rights and
responsibilities of nations – rather than the shipping industry - in their use of the
world’s oceans, establishing guidelines for businesses, the environment and the
management of marine natural resources. The convention, concluded in 1982, came
into force in 1994. As of March 2021, there are 168 Parties to the Convention. It
imposes duties on and defines rights of states but it does not seek to regulate or
impose liabilities on the global shipping industry as such. It could be said that the
duties and aspirations to which states subscribe under UNCLOS are fulfilled in part by
their acceptance of the conventions published by the IMO.

5.3 The International Labour Organization (ILO)

The ILO is a UN agency whose objective is to bring together representatives of
governments, employers and workers to engage in common action to promote and
agree international treaties that result in decent or improved working conditions.
It has been in existence since 1919. It was established as a part of the Treaty of
Versailles. The underlying concept was that lasting peace would only be possible if
there was social justice throughout the world. Its focus is not just on those working in
the shipping industry.

The founding concepts of the ILO still form the basis of the Maritime Labour
Convention (MLC). The MLC was a codifying work to the extent that it sought to bring
together over 60 separate ILO labour standards, not all of which were implemented
by governments.

The flag state of a vessel to which the MLC applies, and any state party to the
convention administering a port where the vessel calls, may perform an MLC
inspection to ascertain whether it complies with the relevant standards required by
the MLC in relation to crew welfare, living conditions and financial security.

The MLC covers a wide range of matters concerning the employment conditions of
seafarers, such as working hours, standard of accommodation, health and safety,
working conditions, medical care, sick wages, the right to repatriation at no cost to
the seafarer and contractual compensation for injury sustained in a seafarer’s line of
duty. The MLC 2006 was amended by the ILO Governing Body in June 2014 following a
meeting of the MLC Special Tripartite Committee in the preceding April where certain
amendments were agreed. The amendments took effect in MLC States Parties from

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January 2017. They also introduced new liability and financial security certification
requirements ensuring that seafarers may claim up to four months’ arrears of
contractual wages and up to four months of other contractual entitlements directly
from the security provider following abandonment or severance of ties by the owner.
The various obligations placed upon member states are, in many cases, set out in
general terms so implementation in national law will depend on the manner in which
each state gives effect to the provisions of the MLC domestically.

There are a number of provisions in the MLC, as amended, that are of direct interest
to International Group Clubs:

• it imposes obligations on member states to ensure that seafarers are entitled to

repatriation provided by the owner or, absent the owner, the shipowner’s financial
security provider;

• in the event of abandonment seafarers are entitled to ‘necessary maintenance and

support’ prior to repatriation;

• and where the shipowner has unilaterally severed ties with the seafarer the seafarer
is entitled to contractual wages and entitlements;

• ships flying the flag of a state party must maintain financial security to ensure that
seafarers receive their entitlements in accordance with the MLC, as amended. Group
Clubs cover Members for the cost of maintaining, repatriating or deporting seafarers
in many circumstances, including injury or illness of a seafarer during the course of
their employment or following a casualty to, or wreck or loss of, the entered vessel;

• the MLC also requires shipowners to maintain financial security to ensure

compensation for 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.

The insurance cover provided by the Group Clubs can, if required, cover their
Members’ liability to pay compensation for personal injury, illness and death of
seafarers arising during the course of their employment and for such associated
costs as medical, hospital and repatriation expenses. However, in many jurisdictions
domestic employment legislation may require such insurance to be placed locally. A
few jurisdictions apply social schemes that entitle seafarers to claims for MLC liabilities
under such schemes.

5.4 Flag States

A ship is identified by flying the flag of the particular nation under whose jurisdiction
it falls and in which it is registered. A ship’s flag state has overall responsibility for the
implementation and enforcement of international and national maritime regulations
for all ships flying its flag.

The rights and responsibilities of flag states are laid down under UNCLOS (see The

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Law of the Sea above). Article 87 of UNCLOS provides:

The high seas are open to all states, whether coastal or landlocked. Freedom of the high seas is
exercised under the conditions laid down in this Convention and by other rules of international
law. It comprises, inter alia, both for coastal and landlocked States,

a) freedom of navigation;

Under UNCLOS Article 90;

Every State, whether coastal or landlocked, has the right to sail ships flying its flag on the high
seas.

This right comes with responsibilities. Indeed, the role of the flag state is central to the
proper administration of the world’s cargo-carrying ships and the application of the
network of international conventions described above.

Article 94 of UNCLOS requires each state to exercise its jurisdiction and control of
ships flying its flag by maintaining a register with particulars of all such ships except
those of very small tonnage (often defined as less than 500 tons) and applying its
domestic law and jurisdiction to the ship and its officers and crew. It is also required
to supervise the safety at sea of all its registered vessels including:

• ensuring the safety of its ships in construction, equipment and seaworthiness;

• supervising manning, labour conditions and crew training;

• use of signals, maintenance of communications and avoidance of collisions;

• surveys at appropriate intervals by qualified surveyors;

• provision of suitable charts, navigational equipment and instruments for safe

navigation;

• appropriate qualification of officers and crew, and their familiarity with the
application of international regulations concerning safety of life at sea, the
prevention of collisions, the prevention, reduction and control of pollution and
communication by radio.

Some countries – for example, Denmark, France, Germany and Norway - require
shipowning companies within their jurisdiction to register their ships under the
national flag. Other countries operate open registries which are open to ships owned
by any nationality. Open registries developed particularly after the end of the Second
World War, led by Panama and Liberia. The reasons for choosing an open register
are varied and include protection from taxes, differences in national regulations, and
different labour wage scales. Today, more than half of the world’s merchant ships
(measured by tonnage) are registered under open registries, the so-called ‘flags of
convenience’ referred to in the chart in chapter 4 of this module.

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A ship on bareboat charter may also be registered and in a different state from that
of the owner. This registration, in essence, temporarily permits a vessel to fly the
flag of another country while ownership continues to be registered in the underlying
(or owner’s) registry. It provides a welcome element of flexibility in a number of
commercial situations. Bareboat registration is specifically recognised in international
law as reflected in the provisions of UNCLOS.

Movement of ships between flags

A flag state accepting a ship transferring from the flag of another state should only
accept such a ship when it is satisfied that it is in compliance with international
requirements, and has survey reports confirming that the ship is in class. Flag states
whose ships transfer to other registers have an obligation to provide all necessary
information to the new flag state in which the ship is registered.

Infrastructure

A flag state should clearly have sufficient infrastructure, in terms of qualified and
competent staff, offices and equipment, to meet its obligations under international
treaties. Different flags have different approaches. For example, staffing may depend
on the extent to which flags delegate certain functions to bodies such as classification
societies.

Casualty investigations

In accordance with IMO Resolution A. 1075(28), and taking into account the provisions
of SOLAS and MARPOL, a flag state should carry out investigations of any ‘serious’ and
‘very serious’ casualty occurring to its ships, as soon as practicable after the casualty.
Flag states should also co-operate with other nations investigating casualties in which
ships flying its flag may be involved. The relevant findings of such investigations should
be forwarded promptly to the IMO, and should be made available to the industry and
other interested parties.

Participation at IMO and ILO meetings

In order to keep apprised of the latest international maritime regulatory

developments and contribute to the decisions made by the IMO, flag states should
attend all of the following IMO meetings:

• Maritime Safety Committee (MSC);

• Marine Environment Protection Committee (MEPC);

• Legal Committee (LEG);

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• IMO Council;

• Biennial meetings of the IMO Assembly.

If possible, flag states should also participate in IMO diplomatic conferences and
relevant technical sub-committees of the IMO, as well as major maritime meetings
of the International Labour Organization. All flag states, particularly those from
developing countries which might benefit from technical assistance programmes,
should also be encouraged to attend meetings of the IMO Technical Co-operation
Committee.

Consultation with shipowners

Flag states should have some form of consultative process to enable ship operators
to engage in discussions about maritime regulatory developments and other issues
relevant to the safe operation of ships flying their flag; for example, through the
mechanism of a national shipowners’ association.

Certification

The flag state issues and monitors various levels of certification, some of which are
required for all vessels and some only in relation to specific activities. These include
safe manning certificates together with matters such as ship safety, oil pollution
prevention, loadline, safety management, ship security, and dangerous goods.
Flag states work alongside classification societies in relation to certain aspects
of inspection and certification, usually because they do not have the necessary
resources available on a worldwide basis. As an example of this co-operation, the
UK flag authority (Maritime and Coast Guard Agency) works closely with the various
class societies to minimise duplication of inspection and certification and to reduce
disruption to vessels trading from port to port, while ensuring that regulatory
requirements are complied with.

Vessels have a variety of certification requirements, ranging from safe manning

through to radio function, some of which are managed through the classification
society and some through the flag state. All flag states will issue safe management
certificates, radio station licences and certificates of registry. The flag state may allow
the classification society to issue other certificates, such as SOLAS and MARPOL.

Supervision of surveys

In accordance with IMO Resolution A.739, flag states should establish appropriate
controls over so-called Recognised Organisations, such as classification societies,

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nominated to conduct statutory surveys of ships on their behalf.

Such controls should include determining that the Recognised Organisation has
adequate resources for the tasks assigned, and entering into a formal written
agreement covering the issues specified in A.739. Flag states should specify actions
to be followed in the event that a ship is not found fit to proceed to sea, and provide
information concerning national regulations that give effect to international maritime
conventions. A verification and monitoring system should also be established to
ensure the adequacy of work performed by organisations acting on a flag state’s
behalf.

Enforcement of conventions

As a minimum, flag states should have ratified and be prepared to enforce the
conventions described earlier in this chapter relating to:

• safety of life at sea;

• pollution from ships (MARPOL and CLC);

• Loadline Convention requirements. These were outlined in Chapter 2;

• standards of training, certification and watchkeeping of crew (STCW);

• Maritime Labour Convention.

5.5 Safety of Life at Sea

This subject is the concern in particular of the SOLAS Convention, which includes the
International Safety Management Code (ISM), the International Ship and Port Facility
Securiy Code (ISPS), the International Maritime Dangerous Goods (IMDG) Code, the
International Bulk Chemical Code (IBC) and the International Gas Carrier Code (IGC).

ISM Code

The ISM Code’s underlying objective is to provide an international standard for the
safe management and operation of ships, and for pollution prevention. All ships over
500GT are required to comply. Investigations into maritime accidents over the years
have highlighted human error as a major cause, as well as identifying shortcomings on
the part of both ship and shore staff in the area of ship management.

The ISM Code seeks to address the human error issue in two fundamental ways.
Firstly, it requires all vessels to carry an operations guide containing instructions
and information for the safe and efficient operation of the ship. Secondly, it requires

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shipowners to nominate a Designated Person (DP) within their management to

oversee the operation of the ships and to ensure that proper provision is made for
compliance with the operations guide. The DP or Designated Person Ashore (DPA) is
required to have access to the highest level of management in the company so that
company boards of directors cannot deny knowledge of shortcomings in the event
of an accident involving a breach of the code. They must develop their own safety
management system (SMS). This can take any form as long as it meets the provisions
of the ISM Code. The objectives of the code are:

• safety at sea;

• prevention of injury and loss of life;

• avoidance of damage to the environment and in particular, the marine environment.

The SMS must include the following:

• a safety and environmental protection policy;

• instructions and procedures to ensure the safe operation of ships and protection of
the environment, in compliance with relevant international and flag state legislation;

• defined levels of authority and lines of communication between and amongst shore
and shipboard personnel;

• procedures for reporting accidents and non-conformities with its provisions;

• procedures to prepare for and respond to emergency situations;

• procedures for internal audits and management reviews.

The fact that the ISM Code is mandatory should help to ensure compliance with the
rules and regulations and effective enforcement by flag states. The underlying hope
is that a safety culture will be developed and that, by creating an SMS, a shipowner or
operator can identify areas for ongoing improvement, thus leading to a reduction in
casualties.

Ships are audited every two years to ensure not only that they have a safety
management system but also that it is up to date and complied with. Audits are done
by the flag state authorities or by a classification society on the flag state’s behalf.

A document of compliance (DOC) is issued to a shipowner when the shoreside

aspects of the SMS pass the requirements of the ISM Code. The DOC is specific to
each ship type for which the SMS has been implemented at the time of the audit. A
copy of the DOC should always be on board each ship. The DOC is valid for five years
but requires annual re-verification.

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Following a successful audit, a safety management certificate (SMC) is issued to

each ship as long as the operating company holds a valid DOC for the shoreside
operations. The original SMC should stay with the ship with a copy held onshore. The
SMC is valid for five years but an interim review is required between two and three
years after initial issuance.

Action Step: Check the UK flag guidance for ISM compliance –

www.mcga.gov.uk.

ISPS Code

The attacks on the World Trade Center in New York and on the Pentagon in
Washington in 2001 have led to a significant tightening of security in ports and other
places. At a special conference in 2002 the IMO implemented changes to the SOLAS
Convention under the heading ‘Special Measures to Enhance Maritime Security’.

The ISPS Code applies to all passenger ships, cargo ships above 500 gross tons,
and mobile offshore drilling units as well as to any port serving ships engaged in
international voyages. Every ship must have a nominated and trained ship’s security
officer (SSO) and every shipping company a nominated company security officer (CSO).

The requirements under the code are that vessels have a security plan and clearly
nominated personnel with responsibility for security and regular drills. The ISPS Code
has particular significance in preventing stowaways from boarding the ship and in
managing the ship in areas of high piracy risk.

Action Step: Check to see what information the Clubs have issued to their
members about the ISPS Code

IMDG Code

Many countries have their own national laws concerning the packing and carriage of
dangerous goods, and any movement of those goods must take into account the laws
of the country where the journey started, of any country through which the goods will
pass and of the country of destination.

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The IMDG Code closely mirrors other codes for the carriage of dangerous goods by
other modes of transport published by the United Nations. It sets out rules for the
classification, packing and stowage of the goods, recognising that they need care and
attention and that some of them need to be kept well apart from other goods.

For easy reference the various categories of substance under the code have
identifying stickers that should be prominently displayed, for example, on the sides of
a container carrying the substances in question:

There are in fact only nine separate categories. The categories are as follows:

Class 1: Explosives

Explosives that fall into this class are generally subject to strict national legislation as
well as the IMDG Code;

Class 2: Gases;

Class 3: Flammable liquids

The key danger here is the escape of fumes which may be both flammable and toxic;

Class 4: Flammable solids, substances liable to spontaneous combustion,

substances which, when in contact with water, emit flammable gas

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These should be monitored for any unexplained rise in temperature;

Class 5: Oxidising substances and organic peroxides

These should be kept well away from combustible material. They can combust
spontaneously and some of them should be stored under controlled temperatures.
‘Oxidising’ means that the substance will give off oxygen, which will serve to fuel any
fire burning nearby. It also means combining with oxygen to produce an oxide – the
rusting process is a good example of this;

Class 6: Toxic and infectious substances

When carrying these substances the dangers to health must be considered;

Class 7: Radioactive material

The movement of goods in this category often requires state approval. If goods in
this category are to transit the Panama Canal special permission is required from the
Panama Canal Authority. Radioactive material should be packed in special containers
and stowed as far away from the crew accommodation as possible;

Class 8: Corrosive Substances

If goods within this category escape from their containers (usually drums) there will be
a danger both to human health and other cargoes and to the structure of the ship;

Class 9: Miscellaneous

This class includes any other goods not within the previous classes that are deemed
to be dangerous. Given that it is quite normal for shipowners to charge more for the
carriage of dangerous goods there is a significant risk, particularly with containerised
cargo, that the goods inside will not be properly described. The onus is on the shipper
to clearly identify the goods inside the container, including the proper technical name
for chemicals. This enables the shipowner to consult the IMDG Code to ascertain the
correct loading and carriage requirements.

Dangerous goods should be segregated where possible and care taken to ensure that
goods that will react to water are not stowed close to items that have a water base or
that might give off water during the voyage.

Action Step: Find out what guidelines the Clubs have issued to members about
the carriage of calcium hypochlorite.

5.6 Port State Control

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The key role played by the flag state in ensuring compliance with many aspects of
international law cannot be underestimated. However, some flag states are less
rigorous than others in requiring their shipowners to fulfil their obligations under the
international conventions discussed above.

Port state control (PSC) is a process by which a port state exercises authority over
foreign ships when those ships are in waters subject to its jurisdiction. The right to do
this is derived from both domestic and international law. States may enact their own
laws imposing requirements on foreign ships trading in their waters. In addition, states
which are party to IMO conventions are empowered to verify that ships of other nations
operating in their waters comply with the obligations set out in those conventions.

The purpose of PSC is to identify and eliminate ships which do not comply with
internationally accepted standards as well as domestic regulations of the state
concerned. When ships are not in substantial compliance, the relevant agency of the
inspecting state may impose controls to ensure that they are brought into compliance.

The maritime nations of the world have entered into nine separate international
agreements in relation to PSC called memoranda of understanding. The two largest
agreements in terms of members are called the Paris Memorandum of Understanding
on Port State Control (Paris MOU) and the Tokyo Memorandum of Understanding.
The Paris MOU was originally signed in 1982 and has as its members 27 maritime
administrations covering Europe and Canada. The Tokyo MOU has 18 members located
around the Pacific rim and came into effect in 1994. The United States of America is
party to neither agreement but port state control is conducted in US ports through the
US Coast Guard using the same underlying principles as the other MOUs state.

There are seven other MOUs:

• the Acuerdo de Viña del Mar, covering Latin America;

• the Caribbean MOU;

• the Abuja MOU covering West and Central Africa;

• the Black Sea MOU;

• the Mediterranean MOU;

• the Indian Ocean MOU;

• the Riyadh MOU.

In this way most of the world’s significant ports are covered by similar MOUs on port
state control whereby vessels coming into the ports of a member country are subject
to inspection by a local port state control inspector to ensure their compliance with
the requirements of the relevant conventions. The MOU members have agreed to
inspect a percentage of the vessels coming into their ports and they use IMO and ILO

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conventions as the measuring criteria.

Ships are identified for inspection using a central database and any vessel inspected
within the last six months is not inspected again. Priority is given to ships falling within
certain categories, such as those which have not been inspected recently, those
released from ports with a list of deficiencies to remedy in a set period of time or
those which have had class suspended for safety reasons in the last six months.

The inspection starts with a vessel’s documentation and certificates, and then moves
on to a physical inspection of the overall condition of the ship, including engine room
and accommodation. If there is reason to believe that the provisions of any of the
relevant conventions are not being complied with, that procedures are not being
followed by the crew or that they are not able to communicate freely with each other,
a more detailed inspection is triggered.

If the ship passes the port state inspection the Master is advised and the information
recorded on the central database.

If a ship has serious deficiencies it can be detained by the port authorities. Where the
deficiencies are clearly hazardous to safety, health or the environment, the authorities
will ensure that the hazard is rectified before the ship is allowed to proceed to sea.
The vessel’s flag state will be notified as soon as possible.

If the deficiencies cannot be remedied in the port of inspection the authorities may
allow the ship to proceed to another port, subject to any appropriate conditions to
ensure that the ship can so proceed without unreasonable danger to safety, health or
the environment. In this case, a follow-up inspection is normally carried out at the next
port.

All ships detained are recorded on the website of both the Paris and Tokyo MOUs and
can therefore be viewed by any party, including underwriters.

Action Step: Go to the Paris MOU website and take a closer look at the ships
presently under detention with particular reference to the flag states and
classification societies to which they belong.

Note that the Paris MOU also provides statistics by the flag of the vessel and on
the basis of this information, it publishes a White List, a Grey List and a Black
List showing the ‘performance’ of individual flag states in ensuring regulatory
compliance of vessels registered to the flag.

5.7 Regional regulation

Shipping is a truly international industry. As such, it should be regulated on an
international, rather than a national or regional, basis. The international legislative

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process for shipping through the IMO is a process that seeks to build consensus
through its consultation procedures. On occasions, this can produce quick results, as,
for example, in the case of the adoption of the ISPS Code.

In a further effort to speed up the legislative process, the IMO has also adopted
the so-called ‘tacit acceptance’ procedure whereby amendments to IMO regimes
are deemed to have been accepted by a given date unless prior to that date a
given percentage of the parties to the convention have registered objection to the
amendments.

Where draft legislation is slow some countries and regions become impatient and act
unilaterally. The difficulty for the shipping industry when this happens is that it is faced
with a potential multiplicity of different laws and regulations depending on the areas
in which it is trading. All this adds to the complexity of the business and increases in
costs which ultimately have to be borne by the consumers of shipping services.

European Union regulation and pollution incidents

A prime example of regional regulation is the maritime legislation adopted at the

European Union level in recent years. In the aftermath of the serious pollution
incidents, the Erika in December 1999 and the Prestige in November 2002, the EU
introduced a number of measures which were primarily designed to ensure safer
shipping and cleaner seas and are more commonly known as the ‘Erika packages I, II
and III’.

On 12 December 1999 the oil tanker Erika, broke in two 40 miles off the coast
of Brittany (France) resulting in more than 10,000 tonnes of heavy fuel oil being
discharged into the sea. The incident prompted the European Commission to propose
action at the European level in the form of the Erika packages that were, according to
the Commission:

“… designed to bring about a change in the prevailing mentality in the seaborne

oil trade. More powerful incentives are needed in order to persuade the carrier,
charterers, classification societies and other key bodies to give a higher profile to
quality considerations. At the same time, the net should be tightened on those who
pursue short-term personal financial gain at the expense of safety and the marine
environment.”

The Erika I legislative package was announced in March 2000 and contained measures
on port state control, classification societies and double-hull oil tankers:

1) Port State Control: Directive 2001/106/EC amending Directive 95/21;

2) Classification Societies: Directive 2001/105/EC amending Directive 94/57;

3) Double-hull oil tankers: regulation 417/2002 of 18 February 2002.

The Erika II package was presented in December 2000 and consisted of measures on

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monitoring, controlling and setting up an information system, a fund to compensate

victims of oil pollution and the creation of an EU Maritime Safety Agency (EMSA):

1) The introduction of a Community monitoring, control and information system for

maritime traffic: Directive 2002/59/EC of 27 June 2002;

2) Setting up a Compensation Fund for Oil Pollution in European Waters: Proposal

2000/0326/(COD);

3) Setting up a European Maritime Safety Agency: Regulation 1406/2002 of 27 June

2002.

The proposal to establish an EU compensation fund for oil pollution in European

waters was ultimately superseded by the discussions at the IMO/IOPC Fund level on a
Supplementary Fund Protocol to the 1992 IOPC Fund Convention, with the result that
the EU proposal was withdrawn.

In January 2004, the European Commission then announced a third maritime safety
package of legislative measures, more commonly known as ’Erika III’, that ultimately
resulted in the adoption of the following EU Directives and Regulation:

1) Directive 2009/21/EC on compliance with flag state requirements;

2) Directive 2009/15/EC and Regulation (EC) No. 391/2009 on common rules and
standards for ship inspections and survey organisations;

3) Directive 2009/16/EC on port state control;

4) Directive 2009/17/EC establishing a Community vessel traffic monitoring and

information system;

5) Directive 2009/18/EC establishing the fundamental principles governing the

investigation of accidents in the maritime transport sector;

6) Regulation (EC) No. 392/2009 on the liability of carriers of passengers by sea in the
event of accidents;

7) Directive 2009/20/EC on the insurance of shipowners for maritime claims.

Some feel that it is unfortunate that a region including a number of major shipping
nations should decide to act outside the accepted parameters of the IMO process
since this threatens the cohesion of IMO on which so much of its success as an
international legislative body has depended.

The danger is that if other regions follow the example of the EU, the proliferation of
regional regimes would render compliance ever more difficult for shipowners and
would undermine the ultimate authority of the IMO to legislate for the industry on a

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worldwide basis.

Equasis

The Equasis website was initially developed by the European Commission and the
French Maritime Administration. It collates safety-related information on ships from
both public and private sources and makes it available on the internet. It is additionally
supported financially by the maritime authorities of the UK, Spain, Singapore and Japan.

The main principles in setting up the Equasis information system are as follows:

• it should be a tool aimed at reducing substandard shipping, and it should be limited

to safety-related information on ships;

• it has no commercial purpose but addresses a public concern and should act
accordingly;

• it should be an international database covering the whole world fleet;

• it needs active co-operation with all players involved in the maritime industry;

• it will be a tool used for better selection of ships on a voluntary basis and there will
be no legal pressure for industry to use it.

Access to Equasis is freely available.

Action Step: Access Equasis and examine the information on various ships.

Ships’ Documentation

Compliance with the requirements of the various international, regional and national
laws and regulations which PSC authorities assess when vessels are inspected is
evidenced in part by certificates and documents which must be carried on each
vessel. Different types of ship require a different mix of documentation depending
on cargoes they carry but the overall burden on shipowners to have all regulatory
documentation up to date is very significant. To illustrate the complexity of the
administrative demands of the regulatory regime governing ship operations a
summary of the documents required published by IMO is set out in Appendix 1.

Club Certificate of Entry

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All Club Members are provided with a certificate of entry for vessels insured (’entered’)
which provides a reasonably detailed summary of the nature and extent of the
coverage provided to them. A Club certificate of entry is not strictly a ‘statutory
certificate’ since whether or not a ship has to have a certificate of entry on board
varies from jurisdiction to jurisdiction. However, since 1 January 2012 it has been
accepted as evidence of the compulsory cover as required by the European Union (EU
Directive on Insurance of Ship Owners for Maritime Claims, 2009/20/EC) as well as by
other coastal States for port entry purposes.

The certificate of entry details the name of the entered member(s), the name of the
vessel(s), the inception date (normally 20 February) and the particular heads of cover
that are excluded, for example, collision liabilities, fixed and floating objects liabilities
where cover for these are placed separately with the vessel’s Hull and Machinery
underwriters.

The terms of cover may be amended after inception. When this happens the Club
issues an endorsement to the certificate of entry, setting out the details of the
amendment and the date from which it is effective. Both the original certificate and
any subsequent endorsements must be taken into consideration.

Most Club rules provide that the certificate of entry and any endorsement to it are
conclusive evidence and binding as to the inception date, the terms and conditions of
cover and any variation thereof and its effective date.

Civil Liability Convention (CLC) Certificates

The Civil Liability Conventions of 1969 and 1992 set out provisions governing the
liability of shipowners for oil spills from their vessels. These conventions apply widely
throughout the world although the versions in force vary from one country to another.

The conventions apply to all ships carrying persistent oil in bulk as cargo. All such
ships carrying 2000 tons or more of ‘persistent oil’ as cargo and flying the flags of
states party to the convention must carry a certificate confirming their ability to
pay claims in accordance with the provisions of the convention if there is an oil spill
for which they are responsible. This evidence is provided by International Group
Clubs in the form of a Blue Card addressed to the vessel’s flag state. On receipt of
the Blue Card the flag state issues the vessel with a CLC certificate. This is kept on
board the vessel as the necessary evidence. Since the 1992 convention imposes
greater liabilities on shipowners than the 1969 convention, states party to the 1969
convention will accept CLC certificates confirming cover for 1992 convention liabilities.

Blue Cards are often issued by Clubs in an electronic format although some flag states
do still insist on hard copies.

If a Club decides to cancel a Member’s cover it must give notice to the Member’s

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flag state which has issued the CLC certificate. The issuing state must be given three
months’ notice from the date of termination of the Club’s cover. This means that the
Club has a potential exposure under its Blue Card issued to the flag state for three
months unless another certificate is issued on the basis of other arrangements
made by the ex-Member. If a claim arises during the notice period and the cancelling
Club has to pay claims under the Blue Card, its only recourse is to try to recover the
amount paid from the ex-Member who may well not be in a position to respond.

Other Conventions

The Athens Convention on passenger liabilities, the Bunker Convention, and the Wreck
Removal Convention all require owners to provide evidence of financial security.

US Certificates of Financial Responsibility (COFRs)

The US government has not ratified either the CLC or the Fund Convention. In 1990
it enacted the Oil Pollution Act (OPA 90) which addresses the same issue as CLC -
ships’ liability for oil pollution – with much higher limits of liability than CLC. Within this
legislation is a requirement similar to that contained in CLC that any vessel trading to US
ports must show evidence of ability to pay for any pollution liability that it might incur.

This certification is achieved by means of COFRs. These certificates are issued to

those vessel operators who can demonstrate that they can pay for damage done
by pollution and clean-up costs to the liability limits set under OPA 90. With a few
exceptions, any vessel over 300 gross tons and any vessel lightening or trans-shipping
cargo within the US Exclusive Economic Zone (that is, up to 200 miles off the US coast)
needs to comply with the COFR regulations to trade to the United States of America.

The penalties for failure to comply are severe, ranging from daily fines or seizure of
the vessel to banning of a vessel from US ports.

Obtaining a COFR

Application is made to the US Coast Guard (USCG) supported by evidence that the
applicant will be able to pay for its liabilities or has insurance that will respond to the
required level. The options available on the USCG application form as security for the
issue of COFRs are insurance, surety bonds, financial guaranty, self-insurance or other
services.

International Group Clubs do not provide the guarantees that the US authorities
require for issuance of the COFRs because the Group’s policy is to support legislative
consistency throughout the world by encouraging adoption of IMO conventions rather
than unilateral legislation by individual states.

Specialist COFR guarantee providers such as the Shipowners Insurance and Guaranty
Company Ltd (SIGCo), Shoreline and Arvak have therefore entered the market. Their
sole role is to provide the financial guarantees that the US authorities will accept in

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CHAPTER 6
LAW
Chapter 6

What you’ll learn in this chapter

Law Knowledge rating

The components of English law 2

The essential features of contract law 3

The essential features of the law of tort 3

The difference between contractual damages and

damages in tort 3

Other legal remedies 2

Limitation of liability 2

Limitation of time 2

Main features of the Marine Insurance Act, the Insurance

Act and the Enterprise Act 3

6.1 The components of English law

Law is defined in the Oxford English Dictionary as ‘the body of rules, whether formally
enacted or customary, which a state or community recognises as binding on its members’.
It has an impact on every area of our lives, both as individuals and as professionals. A
basic knowledge of legal concepts is essential to an understanding of the insurance
of shipowners’ and operators’ legal liabilities. The text below gives a brief overview of
some important aspects of general, maritime and insurance law. These subjects are
dealt with in more details in later modules.

English law today has three principal components:

• common law (including the system of equity);

• statute law;

• directives and regulations of the European Union.

Common law

The term ‘common law’ is used primarily to denote the law made (or interpreted) by
judges, based on decided cases. The development of the common law is governed by
the rules of precedence by which the reasons or principles of a decision given by a
higher court are binding on all lower courts.

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The term has other meanings in other contexts. For example, it can be used to distinguish
between the common law and equity. In this sense it is distinguishing between two
different sources or systems of judge-made (judge-interpreted) law. These developed
separately over a period of some 500 years but were amalgamated by the Supreme Court
of Judicature Acts of 1873 and 1875. Today they are administered as two parts of the
same system.

It can also be used to distinguish between common law jurisdictions, such as England, the
United States of America and most of the former Dominions of the British Empire where
judges interpret the law; and the “civil law” jurisdictions in continental Europe and many
other parts of the world where the law is laid down by the legislature and written in a
comprehensive legal code rather than interpreted by the judiciary.

Civil law

In addition to the distinction between the common law and the civil law in the sense
described above, the term ‘civil law’ is also used to denote law that is not criminal law.
In this sense, civil law refers to the body of law that governs the relationships of people
and organisations with one another whereas criminal law is part of the law governing the
relationship of people and organisations with the state, as representing society in general.

Statute law

The term can be used to distinguish between the English common law and statute law
made by Parliament.

EU directives and regulations

In addition to the statute law created through the parliamentary process, there is another
important source of statutory law in the United Kingdom today, namely the directives of
the European Union. The United Kingdom will not give effect to any EU Directive following
its withdrawal from the European Union on 31 January 2020, but such Directives already
implemented prior to this date will remain an important source of statute law in the
United Kingdom.

EU Directives are binding on the member states as to the result to be achieved. They must
implement the policy fully but they may choose the method of implementation, subject
usually to a time limit. If the provisions of a directive are unconditional, clear and precise
and intended to confer rights on the individual citizen, then the directive will have direct
effect, even before the implementing legislation has been enacted by the member state
concerned.

In addition to directives, regulations made by the European Commission, under powers of

delegated legislation, are binding on the member states ‘exactly as they are drafted and in
their entirety’, without the need for any enabling legislation.

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Under the treaties of the European Union, the final power of interpretation of directives
and regulations within member States lies with the European Court of Justice, based in
Strasbourg. This court is an independent entity with the function of ensuring that the
same interpretation of European legislation is applied in all the states of the European
Union.

Liabilities may be interpreted under many different systems of law depending on

the governing law of the contract or the place where the damage occurs. In general,
however, the basic principles of the law of contract and the law of tort are similar
in most jurisdictions. The discussion of contract and tort law below is based on the
position under English law.

6.2 The essential features of contract law

English law has no formal definition of a contract. The Shorter Oxford English
Dictionary defines a contract as:

a mutual agreement between two or more parties that something shall be done or forborne
(given up) by one or both; also, a writing in which the terms of a bargain are concluded; in
law, an agreement enforceable by law.

While there is no universally agreed definition of a contract, the basic principles

defining the formation of a contract can be determined with reasonable certainty.

They are:

• that the parties have made an agreement through a process of offer and
acceptance;

• that the parties have provided ‘consideration’ to each other. This means that each
party has given the other, and in turn received from the other, something of value. In
this context, a promise in exchange for a promise counts as ‘something of value’ and
therefore amounts to consideration;

• that the parties intended to create a legal relationship between them.

If all three elements are present, then – subject to certain exceptions – English law
recognises a legally binding contract. If one or more of these elements is missing the
arrangement will not be enforceable in law.

For a contract to be legally enforceable, a number of additional criteria must

be met:

• the offer and acceptance must match exactly otherwise no valid agreement has
been made. An agreement ‘subject details’ is not enforceable as the parties have
not yet reached a final agreement on all terms. A ‘yes, but…’ answer is not a clean
acceptance – it is probably a counter-offer;

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• there must be a meeting of the minds; the parties must have agreed on the same
thing. If they have not the contract will be unenforceable;

• if one party has been induced to enter into a contract in reliance on statements
made to them by the other party that turn out to be untrue, the innocent party will
be able to rescind – cancel - the contract;

• The parties must possess the legal capacity to enter into a binding contract. For
example, those under the age of majority do not in general have the capacity
to enter into an enforceable contract; neither do those who suffer from mental
incapacity;

• as a matter of public policy, the courts will not enforce a contract under which the
parties engage in unlawful activities.

These basic principles apply to every type of contract under English law but insurance
contracts have some additional and important aspects. Those relevant to P&I
contracts will be discussed below in the section on the Marine Insurance Act, 1906,
the Insurance Act, 2015 and the Enterprise Act, 2016.

Forms of contract

In general, English law does not require a contract to comply with any particular
formalities except for contracts relating to the sale or other disposition of an interest
in land. These must be in writing. Similarly, a contract of guarantee needs to be
evidenced, but not necessarily made, in writing. An oral contract is as enforceable at
law as a written contract provided its terms can be proved. Furthermore, a contract
may come into existence simply through the conduct of the parties. So a contract is
created by the sale of goods in a shop or by taking a ride on a bus or train although
no words may have passed between shopper and shopkeeper or between passenger
and driver or conductor.

Parties to a contract

The general rule in English law is that only the parties to the contract can have rights
and obligations under it. This means that a third party cannot acquire rights nor be
subject to any burdens under a contract to which they are not a party. This is so
even where the contract was specifically expressed to be for their benefit. In order
to obtain the contracted benefit the beneficiary has to persuade the promisee (the
person to whom the promise was made) to sue the promisor (the person who made
the promise) on their behalf. This doctrine is known as ’privity’ of contract.

This rule had its inconveniences. In the maritime context some of the inconveniences
of the doctrine were alleviated by the development of the so-called ‘Himalaya’ clause,
named after a vessel involved in a particular legal case involving this issue. Under
this clause servants, agents and sub-contractors of the contracting party, usually the
carrier by sea, were able to take advantage of defences to and limitations of liability

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available to the carrier under the contract of carriage.

Radical changes to the doctrine of privity have been introduced by the Contracts
(Rights of Third Parties) Act, 1999. This act aimed to provide a simple mechanism by
which two contracting parties could give a third party the right to enforce, in its own
name, a term of their contract to its benefit.

A failure to perform a contractual obligation is sufficient of itself to make the party in

breach liable to the innocent party. It is not necessary, unless the contract specifically
so requires, that the party in breach has acted carelessly, recklessly or wilfully.

6.3 The essential features of the law of tort

A tort is a civil wrong committed by one party against the other independently of any
contractual relationship between them. The victim can pursue a claim against the
’tortfeasor’ (the person who has committed the wrongful act) without there being any
formal relationship between them.

English common law has developed a number of specific torts such as nuisance,
trespass, defamation and conversion. In the shipping and insurance industries the
most important tort is that of negligence, as it is relevant to almost all types of loss
and damage encountered at sea and the insurance provided for them. The tort of
negligence has the following four requirements:

1) the existence in law of a ‘duty of care’ between the parties to which the law
attaches liability to carelessness;

2) a breach of the duty of care by the tortfeasor in that their conduct failed to
measure up to the standard set by the law (and from which damage has resulted);

3) damage resulting from the breach of duty;

4) a causal connection between the tortfeasor’s careless conduct and the damage.

The particular kind of damage to the particular claimant must not be so unforeseeable
as to be so remote that it would be unjust to hold the tortfeasor responsible for it.

The origin of the modern doctrine of the tort of negligence in English law is usually
taken to be the case of Donoghue v Stevenson which concerned an allegation by a
consumer against a manufacturer that the contents of a bottle of ginger beer were
contaminated by the decomposed remains of a dead snail (whether or not the
remains of the snail were ever there in the bottle was never determined).

In trying to formulate some general principles for the guidance of the courts in the
future, the judge described what has come to be known as the ‘good neighbour’
principle in the following terms:

The rule that you are to love your neighbour becomes, in law, you must not injure your

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neighbour and the lawyer’s question, “Who is my neighbour?” receives a restricted reply. You
must take reasonable care to avoid acts or omissions which you can reasonably foresee
would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer
seems to be – persons who are so closely and directly affected by my act that I ought
reasonably to have them in contemplation as being so affected when I am directing my
mind to the acts or omissions which are called in question.

Subsequent case law has developed the concept to the point where a three-stage test
was formulated by which for a duty of care to arise:

1) there should exist between the party owing the duty and the party to whom
it is owed a relationship characterised by the law as one of ‘proximity’ or
‘neighbourhood’;

2) the damage suffered should be foreseeable;

3) the situation should be one in which the court considers it fair, just and reasonable
that the law should impose a duty of a given scope on the one party for the benefit
of the other.

The last consideration represents an important safeguard against the possibility of

encouraging too much litigation. Indeed, the policy of the English courts is to develop
the tort of negligence incrementally and with caution.

A shipowner would clearly owe a duty of care to those who come on board the ship
as visitors, including stowaways, and to those such as stevedores who use the ship’s
equipment in the course of their work. A shipowner will also owe a duty of care
to all other ships in navigating their ship with particular reference to the Collision
Regulations established by the Convention on the International Regulations for
Preventing Collisions at Sea (COLREGs). Similarly, a carrier of cargo owes a duty of care
to the contractual cargo carried on board the vessel, and a port authority or terminal
operator owes a duty of care to ensure that visitors are not injured on its premises.

Strict liability

Whereas the tort of negligence requires a breach of a duty of care before the
tortfeasor can be held liable, there are other torts where liability does not depend
on such a breach. In these torts liability follows from the action taken regardless
of whether the tortfeasor has acted without due care. In such circumstances, the
tortfeasor is said to be strictly liable.

Examples of strict liability torts include:

• Conversion - the unjustified taking of someone else’s goods;

• Trespass - an unjustified intrusion into someone else’s property;

• Nuisance - the unjustified interference with someone else’s property or amenities;

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• Defamation - the unjustified damaging of someone’s reputation.

Statutory liability

Under English law, the conditions under which a statutory liability arises are usually
set out in the relevant law. Sometimes the statutory liability is based on negligence but
often on the basis of strict liability.

Examples of statutory liability are those introduced into English law to give effect to
international conventions. Thus the Merchant Shipping Act, 1995 introduces into
English law the provisions of:

• The International Convention on Civil Liability for Oil Pollution Damage (CLC);

• The Convention on the Carriage of Passengers and their Luggage by Sea (Athens
Convention);

• The Convention on the Limitation of Liability for Maritime Claims (LLMC);

• The International Convention on Salvage (Salvage Convention).

Damages

Whereas the consequences of a breach of a statutory liability are usually spelt out
in the relevant statute, the consequences of a breach of contract on the one hand,
and of committing a tort on the other, are that the innocent party is entitled to
compensation. This usually takes the form of monetary damages.

The philosophy that underlies the award of damages differs as between contract
and tort. In a case of breach of contract, the objective is to put the innocent party
back in the position in which it expected to be, had the contract been performed
in accordance with its terms. The damages in such a case are called ‘expectation
damages’. In tort the damages are designed to put the innocent party back in the
state they were in before the tort was committed. Such damages are described as
‘compensatory’ damages.

Punitive damages

In some legal systems, most notably the United States’ systems, ‘punitive’ or
‘exemplary damages’ may be awarded in addition to compensatory damages. Punitive
or exemplary damages are not designed to recompense the victim but to punish
the wrongdoer in cases where their conduct is seen as flagrant or outrageous. In
the case of the oil spill caused by the grounding of the Exxon Valdez in Alaska Sound
in 1989, punitive damages were awarded against Exxon, the owners of the vessel,
in the amount of US$5bn. These were later reduced to US$2.5bn. On appeal to the

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US Supreme Court the punitive damages were further reduced to US$507.5m, on

the principle that, in maritime law, a 1:1 ratio of punitive damages to compensatory
damages was the appropriate maximum.

The English courts do not award punitive damages but they will, in certain cases,
award what are known as ‘aggravated damages’. It has long been recognised that
aggravated damages may only be awarded in very limited circumstances. They tend
to be claimed most frequently in libel cases and so are unlikely to be relevant to
maritime claims under English law.

6.4 Other remedies

In addition to the right to claim damages under English law the innocent party may be
entitled to other remedies such as an injunction. This is an order given by the court
to restrain the other party from acting in breach of contract or requiring them to
cease their tortious conduct. More rarely, the court will issue an injunction requiring
the other party to perform their obligations under the contract. Such an injunction
is known as a ‘mandatory’ or ‘positive’ injunction: it requires the other party to do
something as opposed to stop it.

If the term of the contract that has been breached is a key provision of the contract
the innocent party may have the right, in addition to their claim for damages, to bring
the contract to an end. Similarly, if the innocent party has been induced to enter into
the contract in reliance on a statement made by the other party that turns out to be
untrue, they may have the right to rescind the contract from the very beginning.

Class actions

Some tortious acts can affect many or even many hundreds of people. Instead of
individuals suing the alleged tortfeasor on their own, English law provides a means
by which they can group together to sue as one entity and share the litigation costs.
In England such actions are taken by means of a group litigation order (GLO) issued
under the Civil Procedure Rules in cases which ‘give rise to common or related issues
of fact or law’.

A claimant wishing to join group litigation must apply to be entered on the group
register that the court establishes for each case. Judgement on one or more of
the GLO issues will bind all of the claimants on the group register. Take up of this
procedure has so far been modest – a list of GLOs is published on the court website.

The development of the ‘class action’ in the United States of America has been more
vigorous. There the action is regulated by the Federal Rules of Civil Procedure. The
trial judge determines, by reference to a number of established criteria, whether a
proposed class can be ‘certified’.

These criteria include:

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• Ascertainable class – class members must be ascertainable under objective criteria;

• Numerosity – the class must be so ‘numerous that joinder of all parties is

impracticable’;

• Commonality – there must be ‘questions of law or fact common to the class’;

• Predominance – the common issues of fact and law must predominate over
individual ones;

• Damages.

Once a class has been certified notice has to be given to all class members. A class
member may then decide to opt out of the class action if they believe that their case
is better than the class case. If they do not opt out they will then be bound by the
outcome of the class action and will not be able to bring their own individual case.

Class actions are very frequent in the US courts where they have been used to great
effect in the fields of securities, anti-trust and product liability litigation as well as in
maritime cases.

There is a clear move within the European Union to facilitate class actions in the
future. This is seen as a means of improving access to justice, particularly for
consumers and small businesses. The UK government, however, favours a cautious
approach.

Action Step: Research the Exxon Valdez case and find out what you can about the
class actions that followed.

What sort of individuals made up the class, who were they suing and why?

6.5 Limitations

Limitation of liability

A right to limit liability means that a person who is in breach of contract or who is a
tortfeasor can restrict or cap the amount of money that they might have to pay as
damages to the other party or parties.

Limitation of liability in relation to maritime matters in English law dates back to the
18th century. The concept was introduced as a matter of public policy to encourage
investment in shipping, then, as now, a high-risk business. In the course of time other
nations adopted a similar approach.

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Today, limitation of liability in maritime cases is governed by international conventions.

Three different levels of limitation are now in force in countries around the world since
the first Limitation Convention was agreed in 1957 (see Amendment of conventions
discussed previously). Some countries do not subscribe to any version of the
limitation conventions, relying instead on their national law. The principle of limitation
of liability for claims has also been incorporated in other conventions including the
CLC and Fund Conventions on liability for oil pollution and the Athens Convention on
liability for passenger claims.

The limit of liability varies as between claims for loss of life and personal injury on the
one hand and damage to property on the other. The size of the limitation amount
varies with the size of the ship, as measured by its tonnage.

In extreme circumstances a defendant can lose the right to limit their liability. For
example, under the 1976 Limitation Convention, the right to limit is lost if it is proved
that the loss resulted from the defendant’s personal act or omission, committed with
the intent to cause such a loss or recklessly and with knowledge that such loss would
probably result.

This test is much stricter than that applicable under the 1957 Convention. There, the
right to limit was lost if the casualty in question had resulted from the ‘actual fault or
privity’ of the owner. The stricter test was imposed as a counterweight to the greatly
increased limits introduced by the 1976 Convention. The rationale was that if the
shipowners and their insurers were to subject to these new high limits then it was fair
that the limits should be (virtually) unbreakable.

The United States of America has not signed or ratified either of the limitation
conventions. A shipowner’s right to limit its liability in the United States of America in
respect of a maritime casualty is governed by the Shipowner’s Limitation of Liability
Act. The limitation amount is based on the value of the ship at the end of the voyage (if
damaged, in its damaged condition) and pending freight. Where the ship is a total loss,
or a constructive total loss, and no freight is at risk, the resulting limitation amount
could be nil.

Under this act, an owner will not be permitted to limit where the casualty resulted
from negligence or a condition of unseaworthiness which was within their ‘privity
or knowledge,’ that is, of which they were, or should have been, aware. For these
purposes, the term ‘owner’ includes any member of management acting within the
scope of their duties.

Partly because, in certain cases, the limitation amount would be zero or close to zero
the courts in the USA have interpreted the ’privity’ concept against defendants to deny
them the right to limit in circumstances in which a defendant would be able to limit
liability under international conventions.

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Limitation of time

In order to provide a degree of certainty in the conduct of claims, all developed

systems of law provide for a time limit in which claims must be brought before the
courts. This is a general concept, not restricted to maritime law. Under English law, the
position is governed by the Limitation Act 1980.

This act provides that action in tort or contract must be brought within six years of the
date on which the cause of action arose. Where the damages claimed are in respect of
personal injuries to the plaintiff or any other person, then the claim must be brought
within three years from:

• the date on which the cause of action arose; or

• the date of knowledge (if later) of the person injured.

These general time limits for suit can be amended either by agreement between the
parties or by specific statutory provisions.

An example of a contractual time limit is the three-month time limit for commencing
arbitration contained in a standard form of charter contract or the nine- month time
limit for suit that is frequently found in the standard trading conditions of freight
forwarders.

An example of a statutory time limit under English law is the one-year time limit for
suit against the carrier by sea found in the Carriage of Goods by Sea Act, 1971 which
incorporates the Hague-Visby Rules.

6.6 Insurance Law

The Marine Insurance Act, 1906, the Insurance Act, 2015 and the
Enterprise Act, 2016

The Marine Insurance Act of 1906 (MIA) is headed ‘An Act to codify the Law relating
to Marine Insurance’. As a codifying act, its objective was to state the law on marine
insurance as it stood in 1906, in the light of the developments that had taken place in
the previous 200 years or so.

The English law of marine insurance has been further developed by case law since the
act came into force and, with effect from August 2016, the MIA has been amended by
the Insurance Act, 2015 (the 2015 Act), which received Royal Assent on 12 February
2015. In addition, the Enterprise Act, 2016 (the 2016 Act) received Royal Assent on 4
May 2016, and entered into force on 4 May 2017. While the MIA has not been repealed,
and most of its provisions remain unaffected and in force, certain key provisions of MIA
have been amended by the 2015 Act. The Insurance Act 2015 introduced substantial
changes to the laws governing disclosure in non-consumer insurance contracts,
including contracts with marine insurers. The 2015 Act set out new rules in relation to

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warranties and other contractual terms, and when insurers are allowed to reject a claim.

The MIA provides specifically that it applies to mutual insurance, except for its provisions
relating to premium, and that where its provisions may be modified, this can be
achieved in Club Rules. Prior to the 2015 Act, it was usual for the Clubs operating under
English law to include in their rules a provision that subjects the contract to the MIA.
Following the passing of the 2015 Act, Clubs whose rules are subject to English law have
introduced more detailed provisions dealing with the application to Club cover of the
provisions of the 2015 Act.

Action Step: Find the provisions in the rules of a Club which state the insurance
law to which they are subject.

Much of the MIA is devoted to hull and cargo insurance, rather than liability insurance.
The First Schedule to the MIA sets out the standard terms of the Lloyd’s SG policy (on
Ship and Goods) which had been in use since the 18th century, together with rules for
the construction of that policy.

The provisions of the MIA are set out under a number of headings. Some of the
provisions which are of importance to P&I insurance are briefly summarised below.

What is marine insurance?

Section 1 of the MIA defines a contract of marine insurance as:

a contract whereby the insurer undertakes to indemnify the assured, in manner and to the
extent thereby agreed, against marine losses, that is to say, the losses incident to marine
adventure.

Section 3 of the MIA then defines ‘marine adventure’ to include any ship, goods
or other moveables (‘insurable property’) that are exposed to maritime perils and
any liability to a third party that may be incurred by the owner of, or other person
interested in or responsible for, insurable property, by reason of maritime perils.

A typical International Group Club Rule will provide:

Unless otherwise agreed by the Managers in writing, a Member is covered against the risks
set out in Sections X-XX below [which will almost entirely represent liabilities to third parties]
in respect of any insured vessel.

Note that a marine policy may be extended to protect the assured against any land
risk which may be incidental to any sea voyage – a provision that has increased
significance with the introduction of door-to-door transport in the container trades.

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Insurable interest

It is a basic principle of insurance law generally that the law will only recognise and
enforce the terms of a policy if the insured has an insurable interest in the subject
matter of the policy. The MIA provides that every person has an insurable interest who
is ‘interested in a marine adventure’. A person is ‘interested in a marine adventure’
under the Act where the person ’stands in such a relationship to the adventure or to
any insurable property at risk in it that they might benefit from its safe arrival or be
prejudiced by its loss, damage or detention, or may incur a liability in respect of it.’

Ownership is not a prerequisite to having an insurable interest. A time-charterer of a

vessel has an insurable interest in relation to their liability to the shipowner for loss
or damage to the ship arising from their breach of the charter contract. Likewise, a
shipowner who does not own the cargo they transport has an insurable interest in
any liability they incur under the contract of carriage should it arrive damaged.

The assured has to have an interest in the subject matter of the policy at the time
of the loss. They need not have an interest at the time the policy is put in place. This
is particularly important in the case of cargo insurance where the beneficiary of the
policy is each successive purchaser.

If the assured does not have an insurable interest and has no expectation of acquiring
one, then the policy is deemed to be a policy by way of ‘gaming or wagering’. Such a
contract is void. The MIA prescribes in what circumstances a person will be regarded
as having an insurable interest.

Disclosure and misrepresentation – the 1906 Act

The 1906 Act set out a principle that is peculiar to contracts of insurance and other
contracts of a fiduciary nature, namely that such contracts are contracts of ’the utmost
good faith’ or ’uberrimae fidei’. This has the effect that if the utmost good faith was not
observed by one party to the contract, then the contract could be avoided or set aside
by the other party.

The ‘utmost good faith’ character of insurance contracts had a profound effect on
the duty of the insured in negotiating the contract with the insurer. The insured (or
broker on the insured’s behalf) was required to disclose every ’material’ – relevant
– circumstance that was known to the insured.. The insured was also deemed to
know every circumstance that the insured ought to know in the ordinary course of
business. A circumstance would be ’material’ if it would influence the judgment of a
prudent insurer in fixing the premium or determining whether they will take the risk.
The test was both objective and subjective in that the information must have been of
sufficient significance to have influenced the judgment of both a hypothetical objective
and prudent underwriter, and the actual underwriter who wrote the risk. Therefore,
if the actual underwriter would not have been influenced by a given circumstance,
had it been disclosed, the assured was not in breach of their duty of disclosure even
if, from the point of view of a hypothetical objective and prudent underwriter, the
circumstance would have been material.

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The 1906 Act provided some guidance as to what circumstances might not be
material in the absence of enquiry by the underwriter. These are as follows:

• any circumstance which diminishes the risk;

• any circumstance which was known, or presumed to be known by the insurer. The
insurer was presumed to know matters ‘of common notoriety or knowledge’ and
matters which an insurer ought to know in the ordinary course of their business;

• any circumstance as to which information was waived by the insurer;

• any circumstance which it was unnecessary to disclose because it was covered by a

warranty (see below) in the policy itself.

In addition to their obligation under the 1906 Act to make full material disclosure, the
insured was also required to ensure that any material representation (statement) that
they made in the negotiations for the insurance was true. A representation may be
either as to a matter of fact or as to a matter of expectation or belief. A representation
as to a matter of fact must have been true and it was true if it is substantially correct
- in other words, that the difference between what was represented and what was
actually correct would not be considered material by a prudent insurer. Where the
representation was as to a matter of expectation or belief it was treated as true if it
was made in good faith. A representation could be withdrawn or corrected before the
contract was concluded and where this was the case, the original misrepresentation
became irrelevant.

Where an insured failed to make proper disclosure or made a material

misrepresentation in negotiating for the insurance, the insurer had the right to avoid
the policy, that is, to treat it as if it had never existed. Where this happened the insurer
would be required to return to the insured any premium paid under the policy and
the insured would be required to repay to the insurer any claims paid under the
policy. Clearly, this presented problems in practice where the amount of the claims
exceeded that of the premium. In such a case the insurer will set off claims up to the
amount of the outstanding premium and then seek to recover the balance from the
former insured.

Although the insurer may have had the right to avoid the policy, they were not bound
to do so. The insurer could, if they wished, waive their right to avoid the policy and
confirm it. If they did so, they still retained the right – in the case of misrepresentation
but not in the case of non-disclosure – to claim damages. This right arises under the
Misrepresentation Act 1967. This introduced into English law the right of the innocent
party to claim damages – either in addition to or in substitution for the right to avoid
the policy – where the misrepresentation in question had been made in good faith.
The law had always recognised the right of the innocent party to claim damages where
the misrepresentation had been fraudulent.

The MIA provided that a court or arbitration tribunal considering a claim for avoidance
– cancellation - could declare the insurance contract as existing and award damages
instead if it appeared equitable to do so. It is difficult, however, to envisage examples

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of this in the insurance context.

Why did the law impose such draconian consequences upon an insured who made
a misrepresentation or failed to make full disclosure? The insured knows, or should
know, all that there is to know about the risk they are seeking to insure. The insurer,
on the other hand, will know nothing or next to nothing of the particular risk being
offered to them, other than what the insured is telling them. If the insurer decides, on
the basis of what they are told, to accept the risk, which may involve them in paying
losses many times greater than the premium they will receive, then it is only just that
they should be able to escape from the deal should the information given to them
turn out to be false or incomplete.

Disclosure and misrepresentation – the 2015 Act

In relation to disclosure obligations and the consequences of misrepresentation, the

2015 Act makes significant changes to the regimes established under the MIA.

The interpretation by the courts of the ’utmost good faith’ disclosure obligation
under the MIA resulted in many complexities and inconsistences. This obligation is
replaced under the 2015 Act by a duty to make a ’fair presentation’ of the risk (Section
3-7 of the 2015 Act). The new duty shares many of the features of the current MIA
duty of disclosure, although greater emphasis is given to the insurers’ roles in the
process of disclosure, with a Member potentially fulfilling its duty of fair presentation
by disclosing sufficient information to put the Club on notice that it needs to make
further enquiries.

Further, the remedies for breach of the duty to make a ’fair presentation’ of the risk
will be different, depending on whether they are deliberate or reckless breaches,
when avoidance is allowed, or innocent breaches, where a series of different remedies
are available (Section 8 of the 2015 Act). These include: where the insurer can prove
that but for the breach they would not have entered into the contract at all, avoidance;
where cover would have been provided but on different terms, the inclusion of those
different terms; where a higher premium would have been paid, a proportionate
reduction with right of recovery.

Action Step: Review Sections 3-7 of the 2015 Act.

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Warranties – the MIA

In the law of marine insurance, the word ‘warranty’ has a particular meaning. In the
MIA, a warranty is defined as a:

promissory warranty, that is to say, a warranty by which the assured undertakes that
some particular thing shall or shall not be done, or that some condition will be fulfilled, or
whereby he affirms or negatives the existence of a particular state of facts.

For example, an owner may warrant to their P&I Club that their vessel is engaged only
in the carriage of crude oil. If, without the permission of their Club, the owner then
engages the ship for the carriage of other cargo, their P&I cover comes automatically
to an end, without any intervention by the Club itself. The MIA provides that a warranty
is a condition that must be complied with exactly, whether or not it is material to the
risk. If it is not complied with:

the insurer is discharged from liability as from the date of the breach of warranty, but
without prejudice to any liability incurred by him before that date.

This is the case even where the breach has been remedied and the warranty complied
with before the loss occurs.

There are some circumstances in which a breach of warranty may be excused. Thus,
non-compliance is excused when, because of a change of circumstances, the warranty
ceases to be applicable to the circumstances of the contract or when compliance with
the warranty is rendered unlawful by any subsequent law. Furthermore, an insurer,
once they know about the breach, can decide to waive it.

In the context of P&I insurance, Member/Club relationships can be put at risk where
an unintentional breach of warranty has deprived the Member of their cover. Of
course, the situation could be righted if the Club agreed to waive the breach. In order
to avoid embarrassment of this nature, underwriters in the commercial market and
in the Clubs often qualify a warranty with the words ‘or held covered on terms to
be agreed’. The effect of these words is that, should a breach of warranty occur, the
insured does not automatically lose their cover; they have the right to require its
continuance on terms to be agreed with the insurer. If no agreement can be reached
the court will require the insurer to continue cover on the terms that a ‘prudent
underwriter’ would have agreed.

Warranties may be express or implied. The MIA contains several provisions covering
whether or not, and to what extent, a warranty is to be implied. Perhaps the most
important from the P&I point of view is that which states that in a time-policy - a policy
covering a period of time, such as a Club policy running from 20 February in one
year to 20 February in the next - there is no implied warranty that the ship shall be
seaworthy at any stage of the adventure. But the section goes on to provide that:

where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the
insurer is not liable for any loss attributable to unseaworthiness.

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The position under a voyage policy is different. In this case, the MIA requires that,
at the commencement of the voyage, the vessel shall be seaworthy for the purpose
of the particular adventure insured. ‘Seaworthy’ is defined as ‘reasonably fit in all
respects to encounter the ordinary perils of the seas of the adventure insured’.

Warranties – the 2015 Act

In the case of warranties, the strict position under the MIA has been diminished under
the 2015 Act, particularly in relation to the consequences of a breach of warranty.
Under the 2015 Act:

1) the ’basis of contract’ clauses (which were commonplace in club rules) which
convert all statements made by an insured when applying for insurance into
warranties, are ineffective (Section 9 of the Act);

2) breaches of warranty will suspend rather than discharge, an insurer’s liability.

There will be no liability for losses which arise whilst an insured is in breach, but
once that breach is remedied cover would be reinstated (Section 10 of the Act);

3) warranties or other terms, except those which affect the risk as a whole, will not
discharge the insurer from liability where the insured can prove that the relevant
breach would not have increased the risk of the loss which actually occurred
(Section 11 of the Act).

Action Step: Review Sections 9, 10 and 11 of the 2015 Act.

Fraudulent claims

The MIA made no express provision in relation to fraudulent claims. These were
dealt with under common law principles, resulting in a lack of clarity with regard
to an insurer’s right to refuse payment of genuine claims arising subsequent to
the commission of a fraudulent act but before this was discovered or the policy
terminated. The 2015 Act clarifies the law by providing expressly that an insurer will
not be liable for a fraudulent claim, can recover any sums already paid in respect of
such a claim and, by notice, can terminate the contract with effect from the date of the
fraudulent act (Section 12 of the Act).

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Double insurance

Double insurance describes the situation where for some reason the insured has
two or more policies that cover the same subject matter against the same risks. In
personal insurance this happens quite frequently because the general public is not
always aware of the extent of certain coverages it already has and buys more without
realising the overlap.

Action Step: Find the ‘double insurance’ rule in a Club’s rules.

In the world of commercial insurance, double insurance occurs more rarely, as

sophisticated insurance buyers are less likely to spend more premium than they have
to.

Where there is double insurance, the act provides that the insured may claim against
the insurers in such order as the insured chooses, but the insured will not be entitled
to recover more than the loss they have sustained. In claiming against one insurer the
insured must give credit for any recovery made from the other insurer. As between
the insurers each is bound to contribute rateably to the loss in proportion to the
amount for which they are liable under their contract. If one insurer pays more than
their proportion of the loss then they have the right to bring an action for contribution
against the other insurers.

Where there is double insurance in respect of liabilities, the likelihood is that the loss
will be equally apportioned between the two insurers subject to any special terms in
one or other of the policies. This is also the case where both policies contain ‘double
insurance’ clauses under which there is no cover for risks that are insured elsewhere.
Rather than give literal effect to such clauses, which would leave the insured without
cover for a risk that they had insured twice, the court will apply the equitable principle
of contribution, and require each insurer to contribute to the loss, usually on an equal
basis.

Deviation

The concept of deviation in the MIA is of particular importance to P&I insurers. The
act provides that the insurer is discharged from liability from the time of a deviation
when a ship, without lawful excuse, deviates from the voyage contemplated by the
policy, regardless whether the ship may have regained its route before any loss
occurs. Its significance in the P&I context is that a shipowner unreasonably deviating
from the contracted voyage may be deprived of the defences and limitations of liability
that they would otherwise have had under their contract of carriage. Without these
defences and limitations the shipowner and their Club would be exposed to a claim
without contractual defences and limitations. This has led the Clubs to exclude from

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their standard cover liabilities arising from an unreasonable deviation. In practice, the
shipowner will usually arrange in advance special insurance against the deviation risk
with the help of their Club.

Assignment

The concept of assignment is that an insured transfers their interest in a policy to a

third party, generally in exchange for some commercial benefit. When a shipowner
borrows money from a bank to purchase a ship by means of a ship mortgage the
bank will require that the policies of insurance on the ship are assigned to it. The
reason for this is to protect the bank’s interest in the ship which is the security for the
loan it has advanced. If, for example, the ship were to sink, the bank would be able
to recoup the outstanding balance of the mortgage from the proceeds of the hull
insurance policy. Note that in order to perfect the assignment, the assignee, in this
case the bank, must give notice of the assignment to the insurer.

Under the MIA, a marine policy is freely assignable unless it contains terms specifically
forbidding such assignment. Cargo policies are generally freely assignable to enable
them to pass from sellers to buyers down the transaction chain. However, both hull
and P&I policies contain clear wording forbidding assignment of the policies without
the express consent of the insurer. The rules of one Group Club read as follows:

No insurance given by the Association and no interest under these rules or under any
contract between the Association and any member may be assigned without the agreement
of the Managers in writing. Any purported assignment made without such agreement shall
be void and of no effect unless the Managers in their discretion otherwise determine.

In practical terms, a Club generally facilitates its Members by permitting the P&I cover
to be assigned to a bank provided that the Member and the bank agree the terms
of the Club’s standard ’Loss Payable Clause’. This clause permits the Club to handle
the insurance with the Member and to pay all claims directly to the Member without
reference to the bank, unless and until the bank gives the Club written notice that
the Member is in default under the mortgage agreement. If that happens then all
payments made by the Club thereafter will be re-directed to the bank.

Included and excluded losses

The MIA provides that, unless the policy provides otherwise, the insurer is liable for
any loss ‘proximately caused by a peril insured against’ and they are not liable for any
loss ‘which is not proximately caused by a peril insured against’. What this means in
practice is that when a claim is caused by a number of different factors the court will
have to determine which one of them was the proximate cause. This is particularly
important if some of the causes are insured perils, whereas others are not. The
proximate cause is not necessarily the last cause in a chain of causes; rather it is the
dominant cause – an issue that has to be determined on the basis of common sense.

Issues of causation can arise in claims under a P&I policy as they can under any other

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type of policy.

In addition to stating the general principle of proximate cause the act lists three types
of loss for which an insurer will not be liable. They are:

• any loss attributable to the wilful misconduct of the assured. This is qualified by the
provision that, subject to the terms of the policy, the insurer is liable for ‘any loss
proximately caused by a peril insured against, even though the loss would not have
happened but for the misconduct or negligence of the Master or crew’. This makes
clear that the wilful misconduct that avoids cover under the policy must be that of,
or very close to, the ‘governing mind of the company’, that is to say, at board or,
possibly, senior executive level. This is a high burden of proof for an insurer to meet;

• unless the policy provides otherwise, any loss proximately caused by delay, even
though the delay be caused by an insured peril;

• unless the policy provides otherwise, ordinary wear and tear, ordinary leakage
and breakage, inherent vice or nature of the subjectmatter insured, or any loss
proximately caused by rats or vermin.

While the exclusion of inherent vice is primarily a matter of cargo insurance it has
an importance in relation to P&I claims. Where the cargo interest has difficulties in
recovering their loss from cargo insurers because the claim is, in their view, one of
inherent vice, they will pursue their claim against the shipowner more vigorously.

Measure of indemnity

In the same way, the MIA has detailed provisions regarding the measure of indemnity
(the amount which an insured is entitled to recover under the policy) in respect of
many types of claim. The fundamental point is that the insured is not entitled to
recover more than the loss the insured has sustained.

As regards claims under a third party liability insurance the act provides:

Where the assured has effected an insurance in express terms against any liability to a
third party, the measure of indemnity, subject to any express provision in the policy is the
amount paid or payable by him to such third party in respect of such liability.

Sue and labour

The term ‘sue and labour’ is a term that derives from the Lloyd’s SG policy form. That
policy reads:

And in case of any loss or misfortune it shall be lawful to the assured, their factors, servants
and assigns, to sue, labour, and travel for, in and about the defence, safeguards, and

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Chapter 6

recovery of the said goods and merchandises, and ship, etc., or any part thereof, without
prejudice to this insurance; to the charges whereof we, the assurers, will contribute…

In modern language we would probably refer to ‘sue and labour’ as mitigation – that
is to say, the steps taken by the insured after the casualty to minimise any loss arising
from it. The act specifically provides that it is the duty of the insured and their agents:

in all cases, to take such measures as may be reasonable for the purpose of averting or
minimising a loss.

P&I insurers regard this obligation of the insured as sufficiently important to set it out
specifically in the Club Rules. The relevant provision from the rules of one Club reads:

It shall be the duty of the member and his agents at all times whether before, at the time of,
during or after the occurrence of any event or matter liable to give rise to a right of recovery
by a member from the Association to take all such steps … as may be reasonable for the
purpose of averting or minimising any expense or liability in respect of which he may be
covered by the Association.

Insurance policies frequently provide cover for the expenses incurred in ‘suing and
labouring’. Where they do so, the act makes clear that the:

engagement entered into is supplementary to the contract of insurance, and the insured
may recover from the insurer any expenses properly incurred pursuant to the clause,
notwithstanding that the insurer may have paid for a total loss.

In the P&I context, a typical ‘sue and labour’ clause might read as follows:

Sue and labour and legal costs

A. Extraordinary costs and expenses… reasonably incurred on or after the occurrence of any
casualty, event or matter liable to give rise to a claim upon the Association and incurred
solely for the purpose of avoiding or minimising any liability or expenditure against which
the Owner is wholly or, by reason of a deductible, partly insured by the Association, but only
to the extent that those costs and expenses have been incurred with the agreement of the
Managers or to the extent that the Directors in their discretion decide that the Owner should
recover from the Association. [Emphasis added]

Note the importance of the word ‘solely’; expenses must be incurred only for the
purpose of limiting a claim on the Club and incidental expenses incurred for other
reasons cannot therefore fall as sue and labour.

Clubs approach to the 2015 Act – ’contracting out’

The main driver for the changes contained in the 2015 Act was the protection of
consumers rather than commercial contracting parties. The 2015 Act, recognising the
difference in the knowledge of and the need for protection of commercial as opposed
to consumer contracting parties, contains a number of ’contracting out’ provisions.

124 INTERNATIONAL GROUP OF P&I CLUBS

 Law

With the exception of ’basis of contract’ clauses, commercial parties can contract out
of the new provisions discussed earlier and the Law Commission, during the drafting
process, envisaged that there would be widespread contracting out in sophisticated
markets, identifying marine insurance in particular.

Consideration was given by the Group to the impact of the new provisions, and to
whether or not Clubs should contract out of any or some of these provisions, and the
following recommendations were made to, and adopted by, Club boards:

(i) Non-disclosure/fair presentation of the risk

The new obligation to provide a fair presentation of the risk was perceived to be
favourable to the insureds. In particular, the insured’s obligation can be discharged,
not only by disclosure of all material facts but also by sufficient disclosure overall
to put a prudent insurer on notice that further enquiries are required. Conversely,
greater burden will be placed on insurers to ensure that all relevant material internal
information is available to the relevant underwriter. Similarly, changes to the law
in respect of what an insured or its agents knows, or is deemed to know, for the
purposes of discharging their obligations, are said to make the duty on the insured
less onerous. However, as a practical matter the relationship between a Club and
its Member is a close one. Both are sophisticated market participators, and entry or
renewal discussions are detailed and focused. A fair presentation, and a professional
assessment of the risk, are what both owners and Club would aspire to.

Accordingly, the Group managers recommended that Clubs accept the new
fair presentation regime in Sections 3–7 of the 2015 Act. On the other hand,
recognising the importance within a mutual of proper disclosure, it was nevertheless
recommended that provisions in Section 8 of the 2015 Act, in relation to remedies for
breach, were excluded, so as to reassert the principle that the failure to make a fair
presentation of the risk will allow the avoidance of the policy.

(ii) Warranties

So far as concerns warranties or other conditions of cover, for example, the warranty
or condition that the Member will comply with any requirement of class, the practice
adopted in relation to the provisions of the MIA was that cover is suspended during
the period of breach, so that the Member will not be entitled to any recovery from
the Club in respect of any claim arising during that period except at the discretion of
the directors of the Club. The 2015 Act broadly reflects Club practice, save in respect
of claims not causally connected with the relevant breach. However, again bearing in
mind the mutual nature of the risk and the availability of the directors’ discretion in
appropriate cases, the Group managers recommended that Clubs should contract out
of Sections 10 and 11 so as to preserve the status quo.

(iii) Fraudulent claims

Finally, whilst the clarification as to the treatment of fraudulent claims was seen as
helpful, the new 2015 Act provisions give rise to one important issue. Where an
insurance contract confers benefits on third persons who are not parties to the

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Chapter 6

insurance contract, the submission of a fraudulent claim by that third person will
not affect the rights of the parties to the contract (Section 13 of the 2015 Act). The
Pooling Agreement allows claims otherwise covered but asserted against persons
who are affiliated to or associated with the Member but not entered in the Club, to be
eligible for pooling. In the event that a fraudulent claim is submitted by an affiliate or
associate of a Member, it seems clear that such fraud should have the same impact
on the Members as provided by Section 12 of the act.

The Enterprise Act 2016

The 2016 Act entered into force on 4 May 2017 and includes one amendment to
the new 2015 Act, by implying into all contracts of insurance a term requiring the
reimbursement of claims within a reasonable time. The 2016 Act introduces certain
remedies for breach of that implied term including the possibility for the insured to
claim interest. Bearing in mind the mutual nature of the risks insured, and the manner
in which claims are handled by Clubs and under the International Group pooling
arrangements, these provisions did not appear to be appropriate in relation to the
cover provided by Clubs, and the eight affected Group Clubs elected to contract out of
this provision and to maintain the long-standing exclusion of the payment of interest
on Members’ claims. However, insurers will not be permitted to contract out of the
implied term in circumstances where the insurer deliberately or recklessly fails to
reimburse an insured’s claim within a reasonable time. Club Members will therefore
be protected to that extent.

Rights of insurers on payment

Once an insurer has made a payment to an insured, it is then entitled to take over the
rights of the insured and is subrogated to all the rights and remedies of the insured
in respect of the subject matter of the claim as from the time of the event causing the
loss. The word ‘subrogate’ means to take the place of another person in respect of
their legal rights. This entitles the insurer to pursue recovery against any third party
who might be responsible for causing the loss that the insurer has paid. In the P&I
context this occurs frequently because cargo underwriters, having paid a claim to the
cargo interests for loss or damage to the cargo that occurred during the sea carriage,
claim indemnity from the P&I Club’s Member for breach of the contract of carriage.

P&I insurers can themselves exercise rights of subrogation when they believe that
some third party is responsible for the claim which they have reimbursed to the
Member. This occurs, for example, in the case where the Member is liable under the
bill of lading for cargo damage but the damage was in fact caused by the Member’s
subcontractor such as a stevedore or a terminal operator. The Club rules provide
that, if a recovery is made, the Club is entitled to keep it up to the amount reimbursed
to the Member with interest. If the claim was subject to a deductible borne by the
Member then the interest will be divided between Club and Member pro-rata to the
amount paid by each.

126 INTERNATIONAL GROUP OF P&I CLUBS

 Module 1

APPENDIX 1
Appendix 1

4 ALBERT EMBANKMENT
LONDON SE1 7SR
Telephone: +44 (0)20 7735 7611 Fax: +44 (0)20 7587 3210

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
19 July 2017

LIST OF CERTIFICATES AND DOCUMENTS REQUIRED

TO BE CARRIED ON BOARD SHIPS, 2017

1 The Facilitation Committee, at its forty-first session, the Marine Environment

Protection Committee, at its seventieth session, the Maritime Safety Committee, at its
ninety-seventh session, and the Legal Committee, at its one hundred and fourth session,
approved the List of certificates and documents required to be carried on board ships, 2017, as
set out in the annex.

2 This work was carried out in accordance with the provisions of section 2 of the annex
to the FAL Convention concerning formalities required of shipowners by public authorities on
the arrival, stay and departure of ships. It is reiterated that these provisions should not be read
as precluding a requirement for the presentation for inspection by the appropriate authorities
of certificates and other documents carried by the ship pertaining to its registry, measurement,
safety, manning, classification and other related matters.

3 Since the issuance of FAL.2/Circ.127-MEPC/Circ.817-MSC/Circ.1462, several

instruments addressed in that circular have been amended. New instruments have been
added, including the International Convention for the Control and Management of Ships’
Ballast Water and Sediments, 2004 and Nairobi International Convention on the Removal of
Wrecks, 2007. Further, pursuant to a decision of the Legal Committee taken at its 103rd
session, this document is now also a LEG circular.

4 This circular lists only the certificates and documents that are required under
IMO instruments and it does not include certificates or documents required by other
international organizations or governmental authorities.

5 This circular should not be used in the context of port State control inspections for
which convention requirements should be referred to.

6 Member Governments are invited to note the information provided in the annex and
take action as appropriate.

7 This circular supersedes FAL.2/Circ.127-MEPC/Circ.817-MSC/Circ.1462.

***

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128 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 1

ANNEX

CERTIFICATES AND DOCUMENTS REQUIRED

TO BE CARRIED ON BOARD SHIPS, 2017

(Note: All certificates to be carried on board must be valid and drawn up in the form corresponding
to the model where required by the relevant international convention or instrument)

No. Contents Reference

1 All ships to which the referenced convention applies

International Tonnage Certificate (1969) Tonnage 1969,
An International Tonnage Certificate (1969) shall be article 7
issued to every ship, the gross and net tonnage of which
have been determined in accordance with the Convention.

International Load Line Certificate LL 1966,

An International Load Line Certificate shall be issued article 16;
under the provisions of the International Convention on LL PROT 1988,
Load Lines, 1966, to every ship which has been surveyed article 16
and marked in accordance with the Convention or the
Convention as modified by the 1988 LL Protocol, as
appropriate.

International Load Line Exemption Certificate LL 1966,

An International Load Line Exemption Certificate shall article 16;
be issued to any ship to which an exemption has LL PROT 1988,
been granted under and in accordance with article 6 of the article 16
Load Line Convention or the Convention as modified by
the 1988 LL Protocol, as appropriate.

Exemption Certificate1 SOLAS 1974,

When an exemption is granted to a ship under and in regulation I/12;
accordance with the provisions of SOLAS 1974, a SOLAS PROT 1988,
certificate called an Exemption Certificate shall be issued regulation I/12
in addition to the certificates listed above.

1 SLS.14/Circ.115, Add.1, Add.2 and Add.3 refer to the issue of exemption certificate.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 129

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 2

No. Contents Reference

Coating Technical File SOLAS 1974,
A Coating Technical File, containing specifications of the regulation II-1/3-2 and
coating system applied, where applicable, to dedicated II-1/3-11;
seawater ballast tanks in all types of ships and double-side resolution
skin spaces of bulk carriers of 150 m in length and MSC.215(82), as
upwards and cargo oil tanks of crude oil tankers, record of amended by
the shipyard's and shipowner's coating work, detailed resolution
criteria for coating sections, job specifications, inspection, MSC.341(91) and
maintenance and repair, shall be kept on board and MSC.1/Circ.1381;
maintained throughout the life of the ship. resolution
MSC.288(87) as
modified by circular
MSC.1/Circ.1381 and
amended by
resolution
MSC.342(91)

Emergency Towing Procedure SOLAS,

All ships shall be provided with a ship-specific emergency regulation II-1/3-4;
towing procedure. Such a procedure shall be carried on MSC.1/Circ.1255
board the ship for use in emergency situations and shall
be developed based on the guidelines developed by the
Organization.

Construction drawings SOLAS 1974,

A set of as-built construction drawings and other plans regulation II-1/3-7;
showing any subsequent structural alterations shall be MSC/Circ.1135
kept on board a ship constructed on or after
1 January 2007.

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130 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 3

No. Contents Reference

Ship Construction File SOLAS 1974,
A Ship Construction File with specific information should regulation II-1/3-10;
be kept on board oil tankers of 150 m in length and above MSC.1/Circ.1343
and bulk carriers of 150 m in length and above,
constructed with single deck, top-side tanks and hopper
side tanks in cargo spaces, excluding ore carriers and
combination carriers:

.1 for which the building contract is placed on or

after 1 July 2016;

.2 in the absence of a building contract, the keels of

which are laid or which are at a similar stage of
construction on or after 1 July 2017; or

.3 the delivery of which is on or after 1 July 2020

shall carry a Ship Construction File containing information
in accordance with regulations and guidelines,

and updated as appropriate throughout the ship's life in

order to facilitate safe operation, maintenance, survey,
repair and emergency measures.

Noise Survey Report SOLAS 1974,

Applicable to new ships of 1,600 gross tonnage and regulation II-1/3-12;
above, excluding dynamically supported crafts, high- Noise Code,
speed crafts, fishing vessels, pipe-laying barges, crane section 4.3
barges, mobile offshore drilling units, pleasure yachts not
engaged in trade, ships of war and troopships, ships not
propelled by mechanical means, pile driving vessels and
dredgers.

A noise survey report shall always be carried on board and

be accessible for the crew.

For existing ships, refer to section "Other certificates and

documents which are not mandatory – Noise Survey
Report" (resolution A.468(XII).

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 131

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 4

No. Contents Reference

Stability information SOLAS 1974,
Every passenger ship regardless of size and every cargo regulations II-1/5 and
ship of 24 m and over shall be inclined on completion and II-1/5-1;
the elements of their stability determined. The master shall LL 1966, regulation
be supplied with stability information containing such 10;
information as is necessary to enable him, by rapid and LL Protocol 1988,
simple procedures, to obtain accurate guidance as to the regulation 10
stability of the ship under varying conditions of service to
maintain the required intact stability and stability after
damage. For bulk carriers, the information required in a
bulk carrier booklet may be contained in the stability
information.

Damage control plans and booklets SOLAS 1974,

On passenger and cargo ships, there shall be permanently regulation II-1/19;
exhibited plans showing clearly for each deck and hold the MSC.1/Circ.1245
boundaries of the watertight compartments, the openings
therein with the means of closure and position of any
controls thereof, and the arrangements for the correction
of any list due to flooding. Booklets containing the
aforementioned information shall be made available to the
officers of the ship.

Manoeuvring booklet SOLAS 1974,

The stopping times, ship headings and distances recorded regulation II-1/28
on trials, together with the results of trials to determine the
ability of ships having multiple propellers to navigate and
manoeuvre with one or more propellers inoperative, shall
be available on board for the use of the master or
designated personnel.

Evaluation of the alternative design and arrangements SOLAS 1974,

Where applicable, a copy of the documentation, as regulations II-1/55.4.2,
approved by the Administration, indicating that the II-2/17.4.2, and
alternative design and arrangements comply with this III/38.4.2
regulation shall be carried onboard the ship.

Maintenance plans SOLAS 1974,

The maintenance plan shall include the necessary regulations II-2/14.2.2,
information about fire protection systems and fire-fighting II-2/14.3 and and
systems and appliances as required by regulation II-2/14.2.2. II-2/14.4
For tankers, additional requirements are referred to in
regulation II-2/14.4.

For passenger ships carrying more than 36 Passengers,

the maintenance plan should include low-location lighting
and public address system as required by SOLAS
regulation II-2/14.3.

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132 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 5

No. Contents Reference

Onboard training and drills record SOLAS 1974,
Fire drills shall be conducted and recorded in accordance regulation II-2/15.2.2.5
with the provisions of regulations III/19.3 and III/19.5.

Fire safety training manual SOLAS 1974,

A training manual shall be written in the working language regulation II-2/15.2.3
of the ship and shall be provided in each crew mess room
and recreation room or in each crew cabin. The manual
shall contain the instructions and information required in
regulation II-2/15.2.3.4. Part of such information may be
provided in the form of audio-visual aids in lieu of the
manual.

Fire control plan/booklet SOLAS 1974,

General arrangement plans shall be permanently regulations II-2/15.2.4
exhibited for the guidance of the ship's officers, showing and II-2/15.3.2
clearly for each deck the control stations, the various fire
sections together with particulars of the fire detection and
fire alarm systems and the fire-extinguishing appliances,
etc. Alternatively, at the discretion of the Administration,
the aforementioned details may be set out in a booklet, a
copy of which shall be supplied to each officer, and one
copy shall at all times be available on board in an
accessible position. Plans and booklets shall be kept up to
date; any alterations shall be recorded as soon as
practicable. A duplicate set of fire control plans or a
booklet containing such plans shall be permanently stored
in a prominently marked weathertight enclosure outside
the deckhouse for the assistance of shoreside fire-fighting
personnel.

Fire safety operational booklet SOLAS 1974,

The fire safety operational booklet shall contain the regulation II-2/16.2
necessary information and instructions for the safe
operation of the ship and cargo handling operations in
relation to fire safety. The booklet shall be written in the
working language of the ship and be provided in each crew
mess room and recreation room or in each crew cabin.
The booklet may be combined with the fire safety training
manuals required in regulation II-2/15.2.3.

Operations manual for helicopter facility SOLAS 1974,

Each helicopter facility, if fitted, shall have an operations regulation II-2/18.8.1
manual, including a description and a checklist of safety
precautions, procedures and equipment requirements.
This manual may be part of the ship’s emergency
response procedures

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 133

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 6

No. Contents Reference

Statement of acceptance of the installation of SOLAS 1974,
replacement release and retrieval system to an regulation III/1.5;
existing lifeboat LSA Code, para.
For all ships, no later than the first scheduled dry-docking 4.4.7.6;
after 1 July 2014, but no later than 1 July 2019, lifeboat MSC.1/Circ.1392/Corr.1
on-load release mechanisms not complying with
paragraphs 4.4.7.6.4 to 4.4.7.6.6 of the LSA Code shall be
replaced with equipment that complies with the Code.

Muster list and emergency instructions SOLAS 1974,

All ships shall be provided with muster list and emergency regulations III/8 and
instructions, which shall comply with the requirements of III/37
regulation 37 and be exhibited in conspicuous places
throughout the ship including the navigation bridge,
engine-room and crew accommodation spaces. In the
case of passenger ships, these instructions shall be drawn
up in the language(s) required by its flag State and in the
English language.

Ship-specific Plans and Procedures for Recovery of SOLAS 1974

Persons from the Water regulation, III/17-1;
All ships shall have ship-specific plans and procedures for resolution
recovery of persons from the water. Ships constructed MSC.346(91);
before 1 July 2014 shall comply with this requirement by the MSC.1/Circ.1447
first periodical or renewal safety equipment survey of the
ship to be carried out after 1 July 2014, whichever comes
first.

Ro-ro passenger ships which comply with regulation III/26.4

shall be deemed to comply with this regulation.

The Plans and Procedures should be considered as a

part of the emergency preparedness plan required by
paragraph 8 of the ISM Code.

Training manual SOLAS 1974,

The training manual, which may comprise several regulation III/35
volumes, shall contain instructions and information, in
easily understood terms illustrated wherever possible, on
the life-saving appliances provided in the ship and on the
best methods of survival. Any part of such information may
be provided in the form of audio-visual aids in lieu of the
manual.

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134 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 7

No. Contents Reference

Radio record SOLAS 1974,
A record shall be kept, to the satisfaction of the regulation IV/17
Administration and as required by the Radio Regulations,
of all incidents connected with the radiocommunication
service which appear to be of importance to safety of life
at sea.

Minimum safe manning document SOLAS 1974,

Every ship to which chapter I of the Convention applies regulation V/14.2
shall be provided with an appropriate safe manning
document or equivalent issued by the Administration as
evidence of the minimum safe manning.

Voyage data recorder system – certificate of compliance SOLAS 1974,

The voyage data recorder system, including all sensors, regulation V/18.8
shall be subjected to an annual performance test. The test
shall be conducted by an approved testing or servicing
facility to verify the accuracy, duration and recoverability
of the recorded data. In addition, tests and inspections
shall be conducted to determine the serviceability of all
protective enclosures and devices fitted to aid location.
A copy of the certificate of compliance issued by the
testing facility, stating the date of compliance and the
applicable performance standards, shall be retained on
board the ship.

AIS test report SOLAS 1974,

The Automatic Identification System (AIS) shall be regulation V/18.9;
subjected to an annual test by an approved surveyor or an MSC.1/Circ.1252
approved testing or servicing facility. A copy of the test
report shall be retained on board and should be in
accordance with a model form set out in the annex to
MSC.1/Circ.1252.

Nautical charts and nautical publications SOLAS 1974,

Nautical charts and nautical publications for the intended regulations V/19.2.1.4
voyage shall be adequate and up to date. An electronic and V/27
chart display and information system (ECDIS) is also
accepted as meeting the chart carriage requirements of
this subparagraph.

LRIT conformance test report SOLAS 1974,

A Conformance test report should be issued, on regulation V/19-1;
satisfactory completion of a conformance test, by the MSC.1/Circ.1307
Administration or the ASP who conducted the test acting
on behalf of the Administration and should be in
accordance with the model set out in appendix 2 of
MSC.1/Circ.1307.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 135

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 8

No. Contents Reference

International Code of Signals and a copy of Volume III SOLAS 1974,
of IAMSAR Manual regulation V/21
All ships required to carry a radio installation shall carry
the International Code of Signal; all ships shall carry an
up-to-date copy of Volume III of the International
Aeronautical and Maritime Search and Rescue (IAMSAR)
Manual.

Records for pilot ladders used for pilot transfer SOLAS 1974
All pilot ladders used for pilot transfer shall be clearly regulation V/23.2.4
identified with tags or other permanent marking so as to
enable identification of each appliance for the purposes of
survey, inspection and record keeping. A record shall be
kept on the ship as to the date the identified ladder is
placed into service and any repairs effected.

Records of navigational activities SOLAS 1974,

All ships engaged on international voyages shall keep regulations V/26
on board a record of navigational activities and incidents and V/28.1
including drills and pre-departure tests. When such
information is not maintained in the ship’s logbook, it shall
be maintained in another form approved by the
Administration.

Cargo Securing Manual SOLAS 1974,

All cargoes other than solid and liquid bulk cargoes, cargo regulations VI/5.6
units and cargo transport units, shall be loaded, stowed and VII/5;
and secured throughout the voyage in accordance with the MSC.1/Circ.1353/Rev.1
Cargo Securing Manual approved by the Administration.
In ships with ro-ro spaces, as defined in
regulation II-2/3.41, all securing of such cargoes, cargo
units and cargo transport units, in accordance with the
Cargo Securing Manual, shall be completed before the
ship leaves the berth. The Cargo Securing Manual is
required on all types of ships engaged in the carriage of all
cargoes other than solid and liquid bulk cargoes, which
shall be drawn up to a standard at least equivalent to the
guidelines developed by the Organization.

Material Safety Data Sheets (MSDS) SOLAS 1974,

Ships carrying oil or oil fuel, as defined in regulation 1 of regulation VI/5-1;
annex 1 of the International Convention for the Prevention resolution
of Pollution from Ships, 1973, as modified by the Protocol MSC.286(86)
of 1978 relating thereto, shall be provided with material
safety data sheets, based on the recommendations
developed by the Organization, prior to the loading of such
oil as cargo in bulk or bunkering of oil fuel.

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136 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 9

No. Contents Reference

Safety Management Certificate SOLAS 1974,
A Safety Management Certificate shall be issued to every regulation IX/4;
ship by the Administration or an organization recognized ISM Code,
by the Administration. The Administration or an paragraph 13
organization recognized by it shall, before issuing the
Safety Management Certificate, verify that the company
and its shipboard management operate in accordance
with the approved safety management system.

Document of Compliance SOLAS 1974,

A document of compliance shall be issued to every regulation IX/4;
company which complies with the requirements of the ISM Code,
ISM Code. A copy of the document shall be kept on board. paragraph 13

Continuous Synopsis Record (CSR) SOLAS 1974,

Every ship to which chapter I of the Convention applies shall regulation XI-1/5
be issued with a Continuous Synopsis Record. The
Continuous Synopsis Record provides an onboard record of
the history of the ship with respect to the information
recorded therein.

Ship Security Plan and associated records SOLAS 1974,

Each ship shall carry on board a ship security plan regulation XI-2/9;
approved by the Administration. The plan shall make ISPS Code. part A,
provisions for the three security levels as defined in part A sections 9 and 10
of the ISPS Code. Records of the following activities
addressed in the ship security plan shall be kept on board
for at least the minimum period specified by the
Administration:

.1 training, drills and exercises;

.2 security threats and security incidents;
.3 breaches of security;
.4 changes in security level;
.5 communications relating to the direct security of the
ship such as specific threats to the ship or to port
facilities the ship is, or has been, in;
.6 internal audits and reviews of security activities;
.7 periodic review of the ship security assessment;
.8 periodic review of the ship security plan;
.9 implementation of any amendments to the plan; and
.10 maintenance, calibration and testing of any security
equipment provided on board, including testing of the
ship security alert system.

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Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 10

No. Contents Reference

International Ship Security Certificate (ISSC) or SOLAS 1974,
Interim International Ship Security Certificate regulation XI-2/9.1.1;
An International Ship Security Certificate (ISSC) shall be ISPS Code, part A,
issued to every ship by the Administration or an section 19 and
organization recognized by it to verify that the ship appendices.
complies with the maritime security provisions of SOLAS
chapter XI-2 and part A of the ISPS Code. An interim ISSC
may be issued under the ISPS Code, part A, section 19.4.

International Oil Pollution Prevention Certificate MARPOL Annex I,

An international Oil Pollution Prevention Certificate shall regulation 7
be issued, after survey in accordance with regulation 6 of
Annex I of MARPOL, to any oil tanker of 150 gross
tonnage and above and any other ship of 400 gross
tonnage and above which is engaged in voyages to ports
or offshore terminals under the jurisdiction of other Parties
to MARPOL. The certificate is supplemented with a
Record of Construction and Equipment for Ships other
than Oil Tankers (Form A) or a Record of Construction and
Equipment for Oil Tankers (Form B), as appropriate.

Oil Record Book MARPOL Annex I,

Every oil tanker of 150 gross tonnage and above and regulations 17 and 36
every ship of 400 gross tonnage and above other than an
oil tanker shall be provided with an Oil Record Book,
Part I (Machinery space operations). Every oil tanker of
150 gross tonnage and above shall also be provided with
an Oil Record Book, Part II (Cargo/ballast operations).

Shipboard Oil Pollution Emergency Plan MARPOL Annex I,

Every oil tanker of 150 gross tonnage and above and regulation 37;
every ship other than an oil tanker of 400 gross tonnage resolution
and above shall carry on board a Shipboard Oil Pollution MEPC.54(32), as
Emergency Plan approved by the Administration. amended by
resolution
MEPC.86(44)

International Sewage Pollution Prevention Certificate MARPOL Annex IV,

An International Sewage Pollution Prevention Certificate regulation 5;
shall be issued, after an initial or renewal survey in MEPC/Circ.408
accordance with the provisions of regulation 4 of Annex IV
of MARPOL, to any ship which is required to comply with
the provisions of that Annex and is engaged in voyages to
ports or offshore terminals under the jurisdiction of other
Parties to the Convention.

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138 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 11

No. Contents Reference

Document of approval for the rate of sewage MARPOL Annex IV,
discharge regulation 11.1.1;
Untreated sewage from ships other than passenger ships resolution
in all areas and from passenger ships outside special MEPC.157(55)
areas that has been stored in holding tanks shall be
discharged at a moderate rate approved by the
Administration based upon the standards developed by
the Organization.

Garbage Management Plan MARPOL Annex V,

Every ship of 100 gross tonnage and above and every ship regulation 10;
which is certified to carry 15 persons or more shall carry a resolution
garbage management plan which the crew shall follow. MEPC.220(63)

Garbage Record Book MARPOL Annex V,

Every ship of 400 gross tonnage and above and every ship regulation 10
which is certified to carry 15 persons or more engaged in
voyages to ports or offshore terminals under the
jurisdiction of other Parties to the Convention and every
fixed and floating platform engaged in exploration and
exploitation of the seabed shall be provided with a
Garbage Record Book.

International Air Pollution Prevention Certificate MARPOL Annex VI,

Ships constructed before the date of entry into force of the regulation 6
Protocol of 1997 shall be issued with an International Air
Pollution Prevention Certificate. Any ship of 400 gross
tonnage and above engaged in voyages to ports or
offshore terminals under the jurisdiction of other Parties
and platforms and drilling rigs engaged in voyages to
waters under the sovereignty or jurisdiction of other
Parties to the Protocol of 1997 shall be issued with an
International Air Pollution Prevention Certificate.

International Energy Efficiency Certificate MARPOL Annex VI,

An International Energy Efficiency Certificate for the ship regulation 6
shall be issued after a survey in accordance with the
provisions of regulation 5.4 to any ships of 400 gross
tonnage and above before that ship may engage in voyages
to ports or offshore terminals under the jurisdiction of other
Parties.

Ozone-depleting Substances Record Book MARPOL Annex VI,

Each ship subject to MARPOL Annex VI, regulation 6.1 regulation 12.6
that has rechargeable systems that contain
ozone-depleting substances shall maintain an
ozone-depleting substances record book.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 139

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 12

No. Contents Reference

Fuel Oil Changeover Procedure and Logbook (record MARPOL Annex VI,
of fuel changeover) regulation 14.6
Those ships using separate fuel oils to comply with
MARPOL Annex VI, regulation 14.3 and entering or
leaving an emission control area shall carry a written
procedure showing how the fuel oil changeover is to be
done. The volume of low-sulphur fuel oils in each tank as
well as the date, time and position of the ship when any
fuel oil changeover operation is completed prior to the
entry into an emission control area or commenced after
exit from such an area shall be recorded in such logbook
as prescribed by the Administration.

Manufacturer's Operating Manual for Incinerators MARPOL Annex VI,

Incinerators installed in accordance with the requirements regulation 16.7
of MARPOL Annex VI, regulation 16.6.1 shall be provided
with a Manufacturer's Operating Manual, which is to be
retained with the unit.

Bunker Delivery Note and Representative Sample MARPOL Annex VI,

Bunker Delivery Note and representative sample of the fuel regulations 18.6
oil delivered shall be kept on board in accordance with and 18.8.1
requirements of MARPOL Annex VI, regulations 18.6
and 18.8.1.

EEDI Technical File MARPOL Annex VI,

Applicable to ships falling into one or more of the categories regulation 20
in MARPOL Annex VI, regulations 2.25 to 2.35.

Ship Energy Efficiency Management Plan (SEEMP) MARPOL Annex VI,

All ships of 400 gross tonnage and above, excluding regulation 22;
platforms (including FPSOs and FSUs) and drilling rigs, MEPC.1/Circ.795
regardless of their propulsion, shall keep on board a ship
specific Ship Energy Efficiency Management Plan (SEEMP).
This may form part of the ship’s Safety Management System
(SMS).

Technical File NOX Technical Code

Every marine diesel engine installed on board a ship shall 2008,
be provided with a Technical File. The Technical File shall paragraph 2.3.4
be prepared by the applicant for engine certification and
approved by the Administration, and is required to
accompany an engine throughout its life on board ships.
The Technical File shall contain the information as
specified in paragraph 2.4.1 of the NOX Technical Code,
2008.

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140 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 13

No. Contents Reference

Record Book of Engine Parameters NOX Technical
Where the Engine Parameter Check method in Code 2008,
accordance with paragraph 6.2 of the NOX Technical paragraph 2.3.7
Code, 2008 is used to verify compliance, if any
adjustments or modifications are made to an engine after
its pre-certification, a full record of such adjustments or
modifications shall be recorded in the engine's Record
Book of Engine Parameters.

Certificates for masters, officers or ratings STCW 1978,

Certificates for masters, officers or ratings shall be issued article VI,
to those candidates who, to the satisfaction of the regulation I/2;
Administration, meet the requirements for service, age, STCW Code,
medical fitness, training, qualifications and examinations section A-I/2
in accordance with the appropriate provisions of the 1978
STCW Convention and STCW Code. Formats of
certificates are given in section A-I/2 of the STCW Code.
Certificates must be kept available in their original form on
board the ships on which the holder is serving.

Fishing vessel personnel serving on board seagoing STCW-F 1995

fishing vessels shall be certificated in accordance with the article 6,
provisions of STCW-F Convention 1995. Formats of regulation 3
certificates are given in the appendix 1, 2 and 3 of the
Convention.

Records of daily hours of rest STCW Code,

Records of daily hours of rest of seafarers shall be section A-VIII/1;
maintained on board. IMO/ILO Guidelines
for the development of
tables of seafarers'
shipboard working
arrangements and
formats of records of
seafarers' hours of
work or hours of rest

International Anti-fouling System Certificate AFS 2001,

Ships of 400 GT and above engaged in international regulation 2(1) of
voyages, excluding fixed or floating platforms, FSUs and annex 4
FPSOs, shall be issued after inspection and survey an
international Anti-fouling System Certificate together with
a Record of Anti-fouling Systems.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 141

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 14

No. Contents Reference

Declaration on Anti-fouling System AFS 2001,
Ships of 24 m or more in length, but less than 400 GT regulation 5(1) of
engaged in international voyages, excluding fixed or floating annex 4
platforms, FSUs, and FPSOs, shall carry a declaration
signed by the owner or owner's authorized agents. Such a
declaration shall be accompanied by appropriate
documentation (such as a paint receipt or a contractor
invoice) or contain appropriate endorsement.

International Ballast Water Management Certificate BWM 2004,

Ships of 400 gross tonnage and above to which the regulation E-2
BWM 2004 applies, excluding floating platforms, FSUs
and FPSOs, shall be issued the certificate after successful
completion of a survey conducted in accordance with
regulation E-1.

Note: The item was added by the Secretariat as per the

relevant requirements of the International Convention for
the Control and Management of Ships' Ballast Water and
Sediments, 2004 (BWM 2004), which will enter into force
on 8 September 2017.
Ballast Water Management Plan BWM 2004,
Each ship shall have on board and implement a ballast regulation B-1;
water management plan. Such a plan shall be approved resolution
by the Administration taking into account guidelines MEPC.127(53)
developed by the Organization.

Note: The item was added by the Secretariat as per the

relevant requirements of the International Convention for
the Control and Management of Ships' Ballast Water and
Sediments, 2004 (BWM 2004), which will enter into force
on 8 September 2017.

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 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 15

No. Contents Reference

Ballast Water Record Book BWM 2004,
Regulation B-2
Each ship shall have on board a ballast water record book
that may be an electronic record system, or that may be
integrated into another record book or system and which
shall at least contain the information specified in appendix
II of the Convention. The ballast water record book entries
shall be maintained on board the ship for a minimum
period of two years after the last entry has been made and
thereafter in the Company's control for a minimum period
of three years.

Note: The item was added by the Secretariat as per

relevant requirements of the International Convention for
the Control and Management of Ships' Ballast Water and
Sediments, 2004 (BWM 2004), which will enter into force
on 8 September 2017.

Certificate of insurance or other financial security in Bunkers 2001, article 7

respect of civil liability for bunker oil pollution damage
Certificate attesting that insurance or other financial
security is in force in accordance with the provisions of this
Convention shall be issued to each ship having a gross
tonnage greater than 1,000 after the appropriate authority
of a State Party has determined that the requirements of
article 7, paragraph 1 have been complied with. With
respect to a ship registered in a State Party such certificate
shall be issued or certified by the appropriate authority of
the State of the ship’s registry; with respect to a ship not
registered in a State Party it may be issued or certified by
the appropriate authority of any State Party. A State Party
may authorize either an institution or an organization
recognized by it to issue the certificate referred to in
article 7, paragraph 2. This compulsory insurance
certificate shall be in the form of the model set out in the
annex to the Convention.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 143

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 16

No. Contents Reference

Certificate of insurance or other financial security in Nairobi WRC 2007,
respect of liability for the removal of wrecks article 12
Certificate attesting that insurance or other financial
security is in force in accordance with the provisions of the
Convention shall be issued to each ship of 300 gross
tonnage and above by the appropriate authority of the
State of the ship's registry after determining that the
requirements of article 12.1 have been complied with. With
respect to a ship registered in a State Party, such
certificate shall be issued or certified by the appropriate
authority of the State of the ship's registry; with respect to
a ship not registered in a State Party it may be issued or
certified by the appropriate authority of any State Party.
This compulsory insurance certificate shall be in the form
of the model set out in the annex to the Convention.

2 In addition to the certificates listed in section 1 above,

passenger ships shall carry:
Passenger Ship Safety Certificate SOLAS 1974,
A certificate called a Passenger Ship Safety Certificate regulation I/12;
shall be issued after inspection and survey to a passenger SOLAS PROT 1988,
ship which complies with the requirements of regulation I/12
chapters II-1, II-2, III, IV and V and any other relevant
requirements of SOLAS 1974. A Record of Equipment for
the Passenger Ship Safety Certificate (Form P) shall be
permanently attached.

Decision support system for masters SOLAS 1974,

In all passenger ships, a decision support system for regulation III/29
emergency management shall be provided on the
navigation bridge.

Search and rescue cooperation plan SOLAS 1974,

Passenger ships to which chapter I of the Convention regulation V/7.3
applies shall have on board a plan for cooperation with
appropriate search and rescue services in event of an
emergency.

List of operational limitations SOLAS 1974,

Passenger ships to which chapter I of the Convention regulation V/30
applies shall keep on board a list of all limitations on the
operation of the ship, including exemptions from any of the
SOLAS regulations, restrictions in operating areas,
weather restrictions, sea state restrictions, restrictions in
permissible loads, trim, speed and any other limitations,
whether imposed by the Administration or established
during the design or the building stages.

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 17

No. Contents Reference

Special Trade Passenger Ship Safety Certificate, STP 71, rule 5
Special Trade Passenger Ship Space Certificate
A Special Trade Passenger Ship Safety Certificate issued
under the provisions of the Special Trade Passenger
Ships Agreement, 1971.

A certificate called a Special Trade Passenger Ship Space SSTP 73, rule 5
Certificate shall be issued under the provisions of the
Protocol on Space Requirements for Special Trade
Passenger Ships, 1973.

Certificate of insurance or other financial security in PAL 1974 as modified

respect of liability for the death of and personal injury by PAL PROT 2002,
to passengers article 4bis;
A certificate attesting that insurance or other financial resolution A.988(24);
security is in force in accordance with the provisions of this Circular Letter No.2758
Convention shall be issued to each ship that is licensed to
carry more than 12 passengers, after the appropriate
authority of a State Party has determined that the
requirements of article 4bis paragraph 1 have been
complied with. With respect to a ship registered in a State
Party, such certificate shall be issued or certified by the
appropriate authority of the State of the ship's registry; with
respect to a ship not registered in a State Party it may be
issued or certified by the appropriate authority of any State
Party. A State Party may authorize an institution or an
organization recognized by it to issue the certificate. The
certificate shall be in the form of the model set out in the
annex to the Convention.

Pursuant to resolution A.988(24), States are

recommended to ratify the Athens Protocol as soon as
possible with the reservation that they reserve the right to
issue and accept insurance certificates with such special
exceptions and limitations as the insurance market
conditions at the time of issue of the certificate may
necessitate, examples being the biochemical clause and
terrorism-related clauses (Circular Letter No.2758 refers).

3 In addition to the certificates listed in section 1 above,

cargo ships shall carry:

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 145

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 18

No. Contents Reference

Cargo Ship Safety Construction Certificate SOLAS 1974,
A certificate called a Cargo Ship Safety Construction regulation I/12;
Certificate shall be issued after survey to a cargo ship SOLAS PROT 1988,
of 500 gross tonnage and over which satisfies the regulation I/12
requirements for cargo ships on survey, set out in
regulation I/10 of SOLAS 1974, and complies with the
applicable requirements of chapters II-1 and II-2, other
than those relating to fire-extinguishing appliances and
fire-control plans.

Cargo Ship Safety Equipment Certificate SOLAS 1974,

A certificate called a Cargo Ship Safety Equipment regulation I/12;
Certificate shall be issued after survey to a cargo ship SOLAS PROT 1988,
of 500 gross tonnage and over which complies with the regulation I/12
relevant requirements of chapters II-1 and II-2, III and V
and any other relevant requirements of SOLAS 1974.
A Record of Equipment for the Cargo Ship Safety
Equipment Certificate (Form E) shall be permanently
attached.

Cargo Ship Safety Radio Certificate SOLAS 1974,

A certificate called a Cargo Ship Safety Radio Certificate regulation I/12,
shall be issued after survey to a cargo ship of 300 gross as amended by the
tonnage and over, fitted with a radio installation, including GMDSS amendments;
those used in life-saving appliances, which complies with SOLAS PROT 1988,
the requirements of chapter IV and any other relevant regulation I/12
requirements of SOLAS 1974. A Record of Equipment for
the Cargo Ship Safety Radio Certificate (Form R) shall be
permanently attached.

Cargo Ship Safety Certificate SOLAS PROT 1988,

A certificate called a Cargo Ship Safety Certificate may be regulation I/12
issued after survey to a cargo ship which complies with the
relevant requirements of chapters II-1, II-2, III, IV and V
and other relevant requirements of SOLAS 1974 as
modified by the 1988 SOLAS Protocol, as an alternative to
the Cargo Ship Safety Construction Certificate, Cargo
Ship Safety Equipment Certificate and Cargo Ship Safety
Radio Certificate. A Record of Equipment for the Cargo
Ship Safety Certificate (Form C) shall be permanently
attached.

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 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 19

No. Contents Reference

Ship Structure Access Manual SOLAS 1974,
This regulation applies to oil tankers of 500 gross tonnage regulation II-1/3-6
and over and bulk carriers, as defined in regulation IX/1,
of 20,000 gross tonnage and over, constructed on or
after 1 January 2006. A ship's means of access to carry
out overall and close-up inspections and thickness
measurements shall be described in a Ship Structure
Access Manual approved by the Administration, an
updated copy of which shall be kept on board.

Cargo Information SOLAS 1974,

The shipper shall provide the master or his representative regulations VI/2
with appropriate information, confirmed in writing, on the and XII/10;
cargo, in advance of loading. In bulk carriers, the density MSC/Circ.663
of the cargo shall be provided in the above information.

Bulk Carrier Booklet SOLAS 1974,

To enable the master to prevent excessive stress in the regulations VI/7
ship's structure, the ship loading and unloading solid bulk and XII/8;
cargoes shall be provided with a booklet referred to in BLU Code
SOLAS regulation VI/7.2. The booklet shall be endorsed
by the Administration or on its behalf to indicate that
SOLAS regulations XII/4, 5, 6 and 7, as appropriate, are
complied with. As an alternative to a separate booklet, the
required information may be contained in the intact
stability booklet.

Document of authorization for the carriage of grain SOLAS 1974,

and grain loading manual regulation VI/9;
A document of authorization shall be issued for every ship Grain Code, section 3
loaded in accordance with the regulations of the
International Code for the Safe Carriage of Grain in Bulk.
The document shall accompany or be incorporated into
the grain loading manual provided to enable the master to
meet the stability requirements of the Code.

Enhanced survey report file SOLAS 1974,

Bulk carriers and oil tankers shall have a survey report file regulation XI-1/2;
and supporting documents complying with paragraphs 6.2 2011 ESP Code
and 6.3 of annex A/ and annex B, part A/part B, 2011 ESP (resolution
Code. A.1049(27), as
amended)

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 147

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 20

No. Contents Reference

Dedicated Clean Ballast Tank Operation Manual MARPOL Annex I,
Every product carrier of 40,000 tonnes deadweight and regulation 18.8;
above delivered on or before 1 June 1982, operating with resolution A.495(XII)
dedicated clean ballast tanks shall be provided with a
Dedicated Clean Ballast Tank Operation Manual detailing
the system and specifying operational procedures. Such a
Manual shall be to the satisfaction of the Administration
and shall contain all the information set out in the
Specifications referred to in subparagraph 8.2 of MARPOL
Annex I regulation 18. If an alteration affecting the
dedicated clean ballast tank system is made, the
Operation Manual shall be revised accordingly.

Condition Assessment Scheme (CAS) Statement of MARPOL Annex I,

Compliance, CAS Final Report and Review Record regulations 20 and 21;
A Statement of Compliance shall be issued by the resolution
Administration to every oil tanker which has been MEPC.94(46), as
surveyed in accordance with the requirements of the amended by
Condition Assessment Scheme (CAS) and found to be in resolutions
compliance with these requirements. In addition, a copy of MEPC.99(48),
the CAS Final Report which was reviewed by the MEPC.112(50),
Administration for the issue of the Statement of MEPC.131(53),
Compliance and a copy of the relevant Review Record resolution
shall be placed on board to accompany the Statement of MEPC.155(55), and
Compliance. MEPC.236(65)

Subdivision and stability information MARPOL Annex I,

Every oil tanker to which regulation 28 of Annex I of regulation 28
MARPOL applies shall be provided in an approved form
with information relative to loading and distribution of
cargo necessary to ensure compliance with the provisions
of this regulation and data on the ability of the ship to
comply with damage stability criteria as determined by this
regulation.

Record of oil discharge monitoring and control MARPOL Annex I,

system for the last ballast voyage regulation 31
Subject to the provisions of paragraphs 4 and 5 of
regulation 3 of MARPOL Annex I, every oil tanker
of 150 gross tonnage and above shall be equipped with an
oil discharge monitoring and control system approved by
the Administration. The system shall be fitted with a
recording device to provide a continuous record of the
discharge in litres per nautical mile and total quantity
discharged, or the oil content and rate of discharge. The
record shall be identifiable as to time and date and shall be
kept for at least three years.

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148 INTERNATIONAL GROUP OF P&I CLUBS

 List of certificates and documents required to be carried on board ships, 2017

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 21

No. Contents Reference

Oil Discharge Monitoring and Control (ODMC) MARPOL Annex I,
Operational Manual regulation 31;
Every oil tanker fitted with an Oil Discharge Monitoring and resolution A.496(XII);
Control system shall be provided with instructions as to the resolution A.586(14),
operation of the system in accordance with an operational as amended by
manual approved by the Administration. resolution
MEPC.24(22);
resolution
MEPC.108(49), as
amended by
resolution
MEPC.240(65)

Crude Oil Washing Operation and Equipment Manual MARPOL Annex I,

(COW Manual) regulation 35;
Every oil tanker operating with crude oil washing systems resolution
shall be provided with an Operations and Equipment MEPC.81(43)
Manual detailing the system and equipment and
specifying operational procedures. Such a Manual shall be
to the satisfaction of the Administration and shall contain
all the information set out in the specifications referred to
in regulation 35 of Annex I of MARPOL.

STS Operation Plan and Records of STS Operations MARPOL Annex I,

Any oil tanker involved in STS operations shall carry on regulation 41
board a plan prescribing how to conduct STS operations
(STS operations Plan) not later than the date of the first
annual, intermediate or renewal survey of the ship to be
carried out on or after 1 January 2011. Each oil tanker's
STS operations plan shall be approved by the
Administration. The STS operations plan shall be written
in the working language of the ship.

Records of STS operations shall be retained on board for

three years and be readily available for inspection.

VOC Management Plan MARPOL Annex VI,

A tanker carrying crude oil, to which MARPOL Annex VI, regulation 15.6
regulation 15.1 applies, shall have on board and
implement a VOC Management Plan.

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P&IQ | MODULE 1 THE SHIPPING BUSINESS 149

Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 22

No. Contents Reference

Document of approval for the stability instrument IBC Code para. 2.2.6;
All ships, subject to the IBC, IGC, BCH and GC Codes, IGC Code para. 2.2.6;
should be fitted with a stability instrument capable of BCH code para.
verifying compliance with intact and damage stability 2.2.1.2;
approved by the Administration, at the first scheduled GC Code para. 2.2.4;
renewal survey of the ship on or after 1 January 2016, but 2008 IS Code;
not later than 1 January 2021, having regard to the MSC.1/Circ.1229;
performance standards recommended by the MSC.1/Circ.1461
Organization. The Administration should issue a
document of approval for the stability instrument.

Certificate of insurance or other financial security in CLC 1969,

respect of civil liability for oil pollution damage article VII
A certificate attesting that insurance or other financial
security is in force shall be issued to each ship carrying
more than 2,000 tonnes of oil in bulk as cargo. It shall be
issued or certified by the appropriate authority of the State
of the ship's registry after determining that the requirements
of article VII, paragraph 1, of the CLC Convention have
been complied with.

Certificate of insurance or other financial security in CLC 1992,

respect of civil liability for oil pollution damage article VII
A certificate attesting that insurance or other financial
security is in force in accordance with the provisions of
the 1992 CLC Convention shall be issued to each ship
carrying more than 2,000 tonnes of oil in bulk as cargo
after the appropriate authority of a Contracting State has
determined that the requirements of article VII,
paragraph 1, of the Convention have been complied with.
With respect to a ship registered in a Contracting State,
such certificate shall be issued by the appropriate authority
of the State of the ship's registry; with respect to a ship not
registered in a Contracting State, it may be issued or
certified by the appropriate authority of any Contracting
State.

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 23

No. Contents Reference

4 In addition to the certificates listed in sections 1 and 3
above, where appropriate, any ship carrying noxious
liquid chemical substances in bulk shall carry:

International Pollution Prevention Certificate for the MARPOL Annex II,

Carriage of Noxious Liquid Substances in Bulk regulation 9
(NLS Certificate)
An international pollution prevention certificate for the
carriage of noxious liquid substances in bulk
(NLS Certificate) shall be issued, after survey in
accordance with the provisions of regulation 8 of Annex II
of MARPOL, to any ship carrying noxious liquid
substances in bulk and which is engaged in voyages to
ports or terminals under the jurisdiction of other Parties to
MARPOL. In respect of chemical tankers, the Certificate
of Fitness for the Carriage of Dangerous Chemicals in Bulk
and the International Certificate of Fitness for the Carriage
of Dangerous Chemicals in Bulk, issued under the
provisions of the Bulk Chemical Code and International
Bulk Chemical Code, respectively, shall have the same
force and receive the same recognition as the
NLS Certificate.

Cargo Record Book MARPOL Annex II,

Ships carrying noxious liquid substances in bulk shall be regulation 15.1
provided with a Cargo Record Book, whether as part of the
ship’s official log book or otherwise, in the form specified
in appendix II to Annex II.

Procedures and Arrangements Manual (P & A Manual) MARPOL Annex II,

Every ship certified to carry noxious liquid substances in regulation 14;
bulk shall have on board a Procedures and Arrangements resolution
Manual approved by the Administration. MEPC.18(22), as
amended by
resolution
MEPC.62(35)

Shipboard Marine Pollution Emergency Plan for MARPOL Annex II,

Noxious Liquid Substances regulation 17;
Every ship of 150 gross tonnage and above certified to resolution
carry noxious liquid substances in bulk shall carry on MEPC.85(44), as
board a shipboard marine pollution emergency plan for amended by
noxious liquid substances approved by the Administration. resolution
MEPC.137(53)

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Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 24

No. Contents Reference

5 In addition to the certificates listed in sections 1 and 3
above, where applicable, any chemical tanker shall
carry:
Certificate of Fitness for the Carriage of Dangerous BCH Code,
Chemicals in Bulk section 1.6
A certificate called a Certificate of Fitness for the Carriage
of Dangerous Chemicals in Bulk, the model form of which
is set out in the appendix to the Bulk Chemical Code,
should be issued after an initial or periodical survey to a
chemical tanker engaged in international voyages which
complies with the relevant requirements of the Code.

Note: The Code is mandatory under Annex II of

MARPOL for chemical tankers constructed before
1 July 1986.
Or
International Certificate of Fitness for the Carriage of IBC Code,
Dangerous Chemicals in Bulk section 1.5
A certificate called an International Certificate
of Fitness for the Carriage of Dangerous Chemicals
in Bulk, the model form of which is set out in the appendix
to the International Bulk Chemical Code, should be issued
after an initial or periodical survey to a chemical tanker
engaged in international voyages, which complies with the
relevant requirements of the Code.

Note: The Code is mandatory under both chapter VII of

SOLAS 1974 and Annex II of MARPOL for chemical
tankers constructed on or after 1 July 1986.

6 In addition to the certificates listed in sections 1 and 3

above, where applicable, any gas carrier shall carry:

Certificate of Fitness for the Carriage of Liquefied GC Code,

Gases in Bulk section 1.6
A certificate called a Certificate of Fitness for
the Carriage of Liquefied Gases in Bulk, the model form of
which is set out in the appendix to the Gas Carrier Code,
should be issued after an initial or periodical survey to a
gas carrier which complies with the relevant requirements
of the Code.

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 25

No. Contents Reference

International Certificate of Fitness for the Carriage of IGC Code,
Liquefied Gases in Bulk section 1.4
A certificate called an International Certificate of Fitness
for the Carriage of Liquefied Gases in Bulk, the model form
of which is set out in the appendix to the International Gas
Carrier Code, should be issued after an initial or periodical
survey to a gas carrier which complies with the relevant
requirements of the Code.

Note: The Code is mandatory under chapter VII of

SOLAS 1974 for gas carriers constructed on or after 1 July
1986.

7 In addition to the certificates listed in sections 1, and

2 or 3 above, where applicable, any high-speed craft
shall carry:
High-Speed Craft Safety Certificate SOLAS 1974,
A certificate called a High-Speed Craft Safety Certificate regulation X/3;
shall be issued after completion of an initial or renewal 1994 HSC Code,
survey to a craft which complies with the requirements of section 1.8;
the 1994 HSC Code or the 2000 HSC Code, as 2000 HSC Code,
appropriate. section 1.8

Permit to Operate High-Speed Craft 1994 HSC Code,

A certificate called a Permit to Operate High-Speed Craft section 1.9;
shall be issued to a craft which complies with the 2000 HSC Code,
requirements set out in paragraphs 1.2.2 to 1.2.7 of section 1.9
the 1994 HSC Code or the 2000 HSC Code, as
appropriate.

8 In addition to the certificates listed in sections 1, and 2

or 3 above, where applicable, any ship carrying
dangerous goods shall carry:

Document of compliance with the special SOLAS 1974,

requirements for ships carrying dangerous goods regulation II-2/19.4
The Administration shall provide the ship with an appropriate
document as evidence of compliance of construction and
equipment with the requirements of regulation II-2/19 of
SOLAS 1974. Certification for dangerous goods, except solid
dangerous goods in bulk, is not required for those cargoes
specified as class 6.2 and 7 and dangerous goods in limited
quantities.

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Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 26

No. Contents Reference

9 In addition to the certificates listed in sections 1, and
2 or 3 above, where applicable, any ship carrying
dangerous goods in packaged form shall carry:

Transport information SOLAS 1974,

Transport information relating to the carriage of dangerous regulation VII/4.1
goods in packaged form and the container/vehicle packing
certificate shall be in accordance with the relevant
provisions of the IMDG Code and shall be made available
to the person or organization designated by the port State
authority.

Dangerous goods manifest or stowage plan SOLAS 1974,

Each ship carrying dangerous goods in packaged form regulations VII/4.2 and
shall have a special list or manifest setting forth, in VII/7-2.2;
accordance with the classification set out in the MARPOL Annex III,
IMDG Code, the dangerous goods on board and the regulation 4
location thereof. Each ship carrying dangerous goods in
solid form in bulk shall have a list or manifest setting forth
the dangerous goods on board and the location thereof.
A detailed stowage plan, which identifies by class and sets
out the location of all dangerous goods on board, may be
used in place of such a special list or manifest. A copy of
one of these documents shall be made available before
departure to the person or organization designated by the
port State authority.

10 In addition to the certificates listed in sections 1, and

2 or 3 above, where applicable, any ship carrying
INF cargo shall carry:

International Certificate of Fitness for the Carriage of SOLAS 1974,

INF Cargo regulation VII/16;
A ship carrying INF cargo shall comply with the INF Code
requirements of the International Code for the Safe (resolution
Carriage of Packaged Irradiated Nuclear Fuel, Plutonium MSC.88(71), as
and High-Level Radioactive Wastes on Board Ships amended),
(INF Code) in addition to any other applicable paragraph 1.3
requirements of the SOLAS regulations and shall be
surveyed and be provided with the International Certificate
of Fitness for the Carriage of INF Cargo.

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 27

No. Contents Reference

11 In addition to the certificates listed in sections 1, and
2 or 3 above, where applicable, any Nuclear Ship shall
carry:

Operating Manual for nuclear power plant SOLAS 1974,

A fully detailed Operating Manual shall be prepared for the regulation VIII/8
information and guidance of the operating personnel in
their duties on all matters relating to the operation of the
nuclear power plant having an important bearing on safety.
The Administration, when satisfied, shall approve such
Operating Manual and a copy shall be kept on board the
ship. The Operating Manual shall always be kept
up-to-date.

A Nuclear Cargo Ship Safety Certificate or Nuclear SOLAS 1974,

Passenger Ship Safety Certificate, in place of the regulation VIII/10
Cargo Ship Safety Certificate or Passenger Ship
Safety Certificate, as appropriate.
Every Nuclear powered ship shall be issued with the
certificate required by SOLAS chapter VIII.

12 In addition to the certificates listed in sections 1, and

2 or 3 above, where applicable, any Ship operating in
Polar waters shall carry:

Polar Ship Certificate Polar Code,

Every ship to which the Polar Code applies shall have on part I-A Section 1.3
board a valid Polar Ship Certificate. The certificate shall
include a supplement recording equipment required by the
Code.

Polar Water Operational Manual (PWOM) Polar Code,

Every ship to which the Polar Code applies shall have on part I-A section 2.3
board a Polar Water Operational Manual (PWOM) as
required in part I-A section 2.3 of the Code.

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Appendix 1

FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 28

No. Contents Reference

Other certificates and documents which are not mandatory

Special purpose ships

Special Purpose Ship Safety Certificate 1983 SPS Code

In addition to SOLAS certificates as specified in paragraph 7 (resolution A.534(13),
of the Preamble of the 1983 SPS Code and 2008 SPS Code, as amended);
a Special Purpose Ship Safety Certificate should be issued 2008 SPS Code
after survey in accordance with the provisions of (resolution
paragraph 1.6 of the 1983 SPS Code and 2008 SPS Code. MSC.266(84), as
The duration and validity of the certificate should be amended),
governed by the respective provisions for cargo ships in SOLAS 1974,
SOLAS 1974. If a certificate is issued for a special purpose regulation I/12;
ship of less than 500 gross tonnage, this certificate should SOLAS PROT 1988,
indicate to what extent relaxations in accordance with 1.2 regulation I/12
were accepted.

The 2008 SPS Code applies the every special purpose ship
of not less than 500 GT certified on or after 13 May 2008.

Offshore support vessels

Offshore Supply Vessel Document of Compliance resolution

The Document of Compliance should be issued after MSC.235(82), as
satisfied that the vessel complies with the provisions of the amended by
Guidelines for the design and construction of Offshore resolution
Supply Vessels, 2006. MSC.335(90)

Certificate of Fitness for Offshore Support Vessels resolution A.673(16),

When carrying such cargoes, offshore support vessels as amended by
should carry a Certificate of Fitness issued under the resolutions
"Guidelines for the Transport and Handling of Limited MSC.184(79),
Amounts of Hazardous and Noxious Liquid Substances in MSC.236(82) and
Bulk on Offshore Support Vessels". If an offshore support MEPC.158(55);
vessel carries only noxious liquid substances, a suitably MARPOL Annex II,
endorsed International Pollution Prevention Certificate for regulation 11.2
the Carriage of Noxious Liquid Substances in Bulk may be
issued instead of the above Certificate of Fitness.

Diving systems

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 29

No. Contents Reference

Diving System Safety Certificate resolution A. 831(19),
A certificate should be issued either by the Administration as amended by
or any person or organization duly authorized by it after resolution
survey or inspection to a diving system which complies MSC.185(79),
with the requirements of the Code of Safety for Diving section 1.6
Systems. In every case, the Administration should
assume full responsibility for the certificate.

Passenger submersible craft

Safety Compliance Certificate for Passenger MSC/Circ.981, as

Submersible Craft amended by
Applicable to submersible craft adapted to accommodate MSC/Circ.1125
passengers and intended for underwater excursions with
the pressure in the passenger compartment at or near one
atmosphere.

A Design and Construction Document issued by the

Administration should be attached to the Safety
Compliance Certificate.

Dynamically supported craft

Dynamically Supported Craft Construction and DSC Code

Equipment Certificate (resolution A.373(X),
To be issued after survey carried out in accordance with as amended)
paragraph 1.5.1(a) of the Code of Safety for Dynamically section 1.6
Supported Craft.

Mobile offshore drilling units

Mobile Offshore Drilling Unit Safety Certificate 1979 MODU Code

To be issued after survey carried out in accordance with (resolution A.414(XI),
the provisions of the Code for the Construction and as amended)
Equipment of Mobile Offshore Drilling Units, 1979, or, for section 1.6;
units constructed on or after 1 May 1991, but before 1989 MODU Code
1 January 2012, the Code for the Construction and (resolution A.649(16),
Equipment of Drilling Units, 1989, or for units constructed as amended)
on or after 1 January 2012, the Code for the Construction section 1.6;
and Equipment of Drilling Units, 2009. 2009 MODU Code
(resolution A.1023(26),
as amended),
section 1.6

Wing-In-Ground (WIG) Craft

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FAL.2/Circ.131
MEPC.1/Circ.873
MSC.1/Circ.1586
LEG.2/Circ.3
Annex, page 30

No. Contents Reference

Wing–in–ground Craft Safety Certificate MSC/Circ.1054, as
A certificate called a WIG Craft Safety Certificate should amended by
be issued after completion of an initial or renewal survey MSC/Circ.1126,
to a craft, which complies with the provisions of the Interim section 9
Guidelines for WIG craft.

Permit to Operate WIG Craft MSC/Circ.1054, as

A permit to operate should be issued by the Administration amended by
to certify compliance with the provisions of the Interim MSC/Circ.1126,
Guidelines for WIG craft. section 10

Noise levels

Noise Survey Report resolution A.468(XII),

Applicable to existing ships to which SOLAS II-1/3-12 does section 4.3
not apply.

A noise survey report should be made for each ship in

accordance with the Code on Noise Levels on Board
Ships.

___________

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158 INTERNATIONAL GROUP OF P&I CLUBS

A qualification for the P&I industry
produced by the International Group of P&I Clubs