Page 10 - The flag March 2016

INTERNATIONAL GROUP OF P&I CLUBS PROVIDE NEW INSURANCE ARRANGEMENTS FOR SHIPOWNERS’ LIABILITY FOR ABANDONMENTThe development of MLC 2006, and the 2014 amendments, involved a degree of co-operation between Governments, shipowners, and seafarers. The entry into force of MLC over three years ago had limited consequences for P&I Clubs. However, even before the Convention came into force in August 2013, it was clear that future amendments would extend the scope of the Convention and lead the International Group Clubs to adapt to new liabilities on behalf of their shipowner members.Clubs have issued MLC Regulations 2.5.2 and 4.2.1 certi cates in the name of the Registered Owner as a matter of policy. This is partly because the Registered Owner will always be the shipowner under the MLC de nition of shipowner and partly because the party named on the DMLC may not be an insured person for the purposes of P&I insurance. The Bahamas has accepted this arrangement.The obvious feature of nancial security is that it provides a mechanism for eligible claims to be paid to a ship’s crew. There is nothing revolutionary about this when looking at payment of compensation due under the employment contract or collective bargaining agreement for injury, disability or death.However, the MLC Amendments introduce additional obligations on the Clubs including accepting claims directly from crew members. Clubs in the International Group already have an agreed policy to pay seafarer death and injury claims and in general terms the security andcerti cationrequiredunderRegulation 4.2.1 is familiar territory for P&I Clubs.The same cannot be said of the nancial security required under the new Regulation 2.5.2. This extends to liabilities for repatriation of crew, essential needs such as food, accommodation and medical care and up to four months outstanding contractual wages and entitlements in the event of abandonment. lt is this requirement which has created some tough challenges and led Clubs into unchartered waters.Insurance and reinsuranceThe Boards of all International Group Clubs are of the view that unpaid wages and repatriation costs should be covered by their clubs, but not by the current International Group pooling and reinsurance arrangements so a new solution had to be developed. For this reason, the liabilities consequent upon abandonment will not fall within the scope of the International Group’s existing pooling and reinsurance arrangements. Instead the IG Clubs have joined together in arranging separate reinsurance for liabilities under MLC Standard2.5.2 Certi cates. This risk is new to the marine reinsurance market and while capacity is signi cantly lower for abandonment and back wages risks than for traditional maritime risks, the Clubs and their reinsurers have shown their versatility, and it has been possible to place reinsurancewhichwillcoverexposureofUSD 200 million on a per eet basis.ProgressMLC has been rati ed by 81 States representing92%ofworldgrosstonnage.This is a major achievement for ILO and the States that have given effect to the Convention. It also means that International Group Clubs face a real challenge in assisting shipowners in complying with the nancial security requirements. It is even more challenging for States both as ag states and as port states. Clubs have taken the initiative by introducing MLC Certi cate wording and new procedures to an informal correspondence group of States representing a cross-section of all MLC States, including The Bahamas. This has been necessary in order to ensure the uniformity which is essential to a workable system. It is also a clear demonstration of the strength of the International Group system and this has been recognised in the way that innovative solutions for shipowners have facilitated the entry into force of the 2014 amendments to MLC.The 2014 amendments to The Maritime Labour Convention 2006 require shipowners to compensate seafarers for death or long-term disability, and outstanding wages and repatriation costs. These liability provisions are accompanied by a requirement to maintain insurance or other nancial security, and from 18 January 2017, ships registered in MLC States were required to have speci c nancial security certi cates on board.10SEARCH AND RESCUE NEWSM.V. IVAR REEFERThe M/V Ivar Reefer whilst on passage to Coquimbo, Chile on the morning of the 15 January received a call from Quintero VTS via satellite phone requesting the vessel render assistance to the four crew of a stricken shing boat. The Master of the M/V Ivar Reefer responded immediately and altered course towards the shing boat’s known location approximately 8nm to the south. The location of the shing boat was nally determined when a parachute are highlighted their location.The M/V Ivar Reefer approached the shing boat and commenced disembarking the four crew via the vessel’s pilot ladder. The crew of the M/V Ivar Reefer reacted professionally to ensure the four crew of the shing boat were recovered on board safely. Once on board the Master and crew extended their hospitality by ensuring the journey toLos Vilos was as comfortable as possible prior to disembarking.WWW.BAHAMASMARITIME.COM