Maritime Risk International · 1. the master should ensure crew are aware of Ebola risks, how the virus can be spread and how to reduce these risks; 2. ISPS requirements on ensuring

Maritime RiskInternational P&I, claims management and loss prevention Volume 28 Issue 7 September 2014

n UK adopts MLC

n Superyacht market review

n Salvage solutions analysed

Crimean ports Update on Ukraine crisis

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REGULARS

4 News 7 Our Mutual Friends24 Classified directory of services

FEATURES

8 News analysis: Crimea Mikhail Tsventoukh, of Interlegal,

outlines the latest situation in the Crimea

10 Talking shop: UK ports conference Linking up port to port: More

than 90 industry leaders discuss developments and challenges in the ports sector

11 Surveyors key to success The growth of project cargo

investment and the critical importance of marine warranty surveyors is outlined by insurer RSA

12 Is a fraudulent device also a fraudulent claim? Alex Kemp, of Holman Fenwick

Willan, reviews a case set to change market practice

EDITORIAL bOARDCharles b Anderson – Senior Vice President, Skuld North America IncDr Phil Anderson – Managing Director, ConsultISM LtdRuben T Del Rosario – Managing Partner, Del Rosario & Del Rosario, PhilippinesNazery Khalid – Maritime AnalystLeRoy Lambert – Partner, Blank Rome LLP, New YorkDerek Luxford – Partner, Hicksons, SydneyDr Colin Y C Ong – Managing Partner, Dr Colin Ong Legal Services, Brunei, Barrister & Arbitrator, Essex Court Chambers, LondonDr Z Oya Özçayir – Maritime Law consultant and Author, Izmir Law Bar, Turkey, Member of the IMO Rosters of Experts

SUbSCribe10 issues per year

In this issue

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www.hafnialaw.com

Phone: +45 33 34 39 00Fax: +45 33 36 39 20Aoh: +45 31 72 33 83

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Peter Schaumburg-MüllerMathias Steinø

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a

14 A new era for seafarers Nick Wilcox, of BDBF LLP, looks

at some of the legal and practical considerations of the Maritime Labour Convention

16 With an eye on the future Sarah Wallace, of the Standard

Club, looks at developments in offshore projects

18 The role of a cash buyer Shashank Agrawal, of Wirana

Shipping Corporation Singapore, reviews ship recycling in India

20 Time to build or convert? Superyacht refit and conversion

projects can be a viable alternative to a new build says Justin Turner, of Curtis Davis Garrard

22 Improving the safety of marine salvage operations Karien Hofhuis, of Bargemaster,

looks at a new solution for tricky salvage operations

4 | Maritime risk International

New requirements under the International Convention for the Safety of Life at Sea (SOLAS) to require all ships to have plans and procedures to recover persons from the water are among a set of SOLAS amendments which entered

into force on 1 July 2014. The SOLAS convention has been ratified by 168 States representing 98.77% of world merchant shipping tonnage.

The SOLAS amendments, adopted in 2012, were developed as part of the International Maritime Organization (IMO)’s work on large passenger ship safety. The aims are all ships are able to effectively serve as a rescue asset and have the right equipment to rescue persons from the water and from survival craft. The ship’s plans and procedures should take into account related Guidelines for the development of plans and procedures for recovery of persons from the water (MSC.1/Circ.1447). Ships constructed before 1 July 2014 are required to comply by the first periodical or renewal safety equipment survey after 1 July 2014, whichever comes first.

The implementation of the requirements on ships to which SOLAS does not apply is encouraged under a related MSC resolution, also adopted in 2012, which invites SOLAS contracting governments to determine to what extent the requirements should apply to: cargo ships of a gross tonnage below 500 engaged on any voyage; cargo ships of a gross tonnage of 500 and above not engaged on international voyages; passenger ships not engaged on international voyages; fishing vessels; high-speed craft; dynamically supported craft; special purpose ships; and mobile offshore drilling units. For seafarers, IMO has issued A Pocket Guide to Recovery Techniques (IMO I947E).

Also entering into force on 1 July 2014 was the new SOLAS regulation II-1/3-12, which requires new ships to be constructed to reduce on-board noise and to protect personnel from noise. Amendments to SOLAS regulation II-2/10 on fire fighting entered into force on 1 July 2014, to require a minimum of two two-way portable radiotelephone apparatus for each fire party for fire fighters’ communication to be carried. Further amendments require an on-board means of recharging breathing apparatus cylinders used during drills, or a suitable number of spare cylinders. Another amendment related to fixed fire-extinguishing systems, while other amendments replace all forms of certificates and records of equipment, including its 1988 Protocol, and further amendments relate to the forms of the Cargo Ship Safety Construction Certificate and Cargo Ship Safety Equipment Certificate of its 1978 Protocol. MRI

Global maritime organisations have issued health guidance on the risks posed to ships’ crews calling in countries affected by the Ebola virus. Meanwhile ship supplier Hutton’s Group has been responding to requests for information and

assistance from its maritime customers by highlighting the range of medical protective equipment available for use in pandemic situations.

Urgent guidance from the International Chamber of Shipping, International Maritime Employers’ Council and the International Transport Workers’ Federation advises that on vessels in high risk areas:1. the master should ensure crew are aware of Ebola risks, how the virus can be

spread and how to reduce these risks;2. ISPS requirements on ensuring unauthorised personnel do not board vessels should

be strictly enforced throughout the duration of port visit;3. masters should give careful consideration to granting any shore leave while in

impacted ports;4. shipowners and operators should avoid making crew changes in ports of an affected

country; and5. after departure crew should be aware of Ebola symptoms and report any occurring

symptoms immediately to the person in charge of medical care.John MacDonald, general manager of Hutton’s Medical, said “Sensible precautions

can be put into place immediately to minimise risks to vessels transiting affected areas and we are able to advise ship operators on what measures to take to prioritise the health of their crew.” MRI

Warning on Ebola outbreak

in briefbest performerLiberia has been confirmed as the best-performing major ship registry worldwide for the last three years in the latest statistics from the Paris Memorandum of Understanding (MoU) on port state control. The Paris MoU confirmed Liberia had the best detention rate during the last three years of those registries with more than 100,000 gt of shipping under their flag. Liberia’s detention rate was 2.03%, based on 82 detentions arising from 4,046 inspections. This positions it ahead of the Marshall Islands, which had a detention rate of 2.50% based on 63 detentions of 2,521 vessels inspected. Panama was in third place, with a detention rate of 4.89%, resulting from 305 detentions out of 6,238 inspections.

recycling coverEagle Ocean Marine, a fixed-premium P&I facility operated as a joint venture between a number of Lloyd’s syndicates and the American Club, has established a dedicated programme for the insurance of vessels on demolition/recycling voyages. The facility provides comprehensive liability insurance for both owners and the specialist professionals engaged in this increasingly significant and growing trade. Backed by the first-class security of underwriters at Lloyd’s, the new venture provides a highly-focused insurance product aimed at the distinctive needs of this important sector. • See p18 for more on recycling

ballast solutionThe International Chamber of Shipping (ICS) – in co-operation with a wide coalition of international shipping organisations – has submitted an important paper to the International Maritime Organization (IMO) that proposes a means of overcoming the serious implementation problems associated with the Ballast Water Management (BWM) Convention. The industry paper suggests a draft MEPC Resolution that could be adopted by IMO member states before the BWM Convention enters into force. The shipping industry’s paper has been submitted to the IMO Marine Environment Protection Committee (MEPC) which meets in October.

newS roUnD-UpSepteMber 2014

New SOLAS rules on rescue in force

Maritime risk International | 5

The American P&I Club has updated its advice on the handling of steel cargos, following some recent cases where the absence of pre-loading surveys increased the cost of steel cargo claims on discharge.

It first raised the problem in March 2002, making extensive recommendations to minimise the prospect of spurious steel cargo claims. The Shipowners Claims Bureau (the managers) state that, since then, members have for the most part followed the guidance and made progress in minimising and averting the risks, and consequent liabilities, involved with such cargos.

The club reminded members that it required the appointment of an experienced surveyor at the port(s) of loading to conduct a precautionary pre-load survey to: (1) assist the master in recording the apparent condition of the cargo prior to loading

so that, where appropriate, the mate’s receipts and bills of lading can be claused correctly as necessary; and

(2) verify that the vessel’s cargo hatch covers and other openings in way of the hold spaces are in sound condition.The club emphasised strongly that any failure to complete such a pre-load survey

will “prejudice the member’s cover for any cargo claims that are asserted against it and its vessel in connection with the subject shipment(s).”

As it has done since 2002, the club will always make a 50% contribution towards the cost of such surveys. However, should a cargo claim arise in connection with the voyage in question, the cost of the survey will be applied towards the claims file cost for that matter, subject to any applicable deductible. MRI

Club warning on loading of steel cargo


in briefAustralian reviewThe International Chamber of Shipping (ICS) has submitted comments to a comprehensive competition policy review by the Australian government. ICS supported the maintenance of important anti-trust exemptions. The provisions under Part X of Australia’s Competition and Consumer Act permit container shipping lines to organise consortia and other co-operative arrangements and have helped shipping markets to function smoothly. However, these arrangements are now subject to a “root and branch” review. ICS has highlighted Australia’s current treatment of international shipping is consistent with the competition regimes applied by Australia’s major trading partners, including nations in the Asia Pacific.

e-learning pushTwo clubs have announced moves on e-learning. The American P&I Club, together with with IDESS IT, has launched a new module covering compliance with The Code of Practice for the Safe Loading and Unloading of Bulk Carriers. It will familiarise crews with the requirements for bulk carriers, terminal operators and other parties involved in the safe handling of solid bulk cargos. The TT Club has announced its support for a unique learning initiative – Business on the Move. The educational tool is a board game suitable for school children as well as higher education students, management trainees and corporate continuous development schemes.

Caribbean approvalThe Caribbean Memorandum of Understanding on Port State Control (CMOU) held its 19th Committee meeting in Jamaica recently and approved the revised Code for the Safety of Small Commercial Vessels (SCV). Ambassador Dwight Gardiner, chairman of the CMOU and representative of Antigua and Barbuda, stated “The revision of the SCV Code will further strengthen the inspection capabilities of the member states of the CMOU thus ensuring the safety of small commercial vessels in our region is of utmost importance.”

The International Salvage Union (ISU) has released its annual statistics for 2013 showing a substantial industry with total revenues, not profit, of more than US$700m, up from just higher than $600m in the previous year. The numbers

are for salvage and wreck removal cases where revenue was received in 2013 which may be from contracts agreed in previous years.

ISU members provided 196 salvage services in 2013 which was exactly the same as the previous year. There are fluctuations year on year but the general trend, in line with improvements in ship and operational safety, is a reduction in the number of services provided each year. In 2013, ISU members also carried out 48 wreck removal operations compared with a five year average of 33 such operations each year.

In 2013 revenue from Lloyd’s Open Form (LOF) cases and associated SCOPIC income combined with income from other salvage activity has risen slightly to $264m from the previous year’s $237m. Lloyd’s Open Form continues to be an important contract for salvors with 48 LOF services performed, up from 37 previously. LOF revenues were $202m in 2013 up from $186m in 2012. In 2013, LOF revenue represented 76.6% of total salvage revenues, slightly down on the previous year’s 78.2% but slightly up on the five year average of 75.5%.

However the total salved value in LOF cases is down from $1.65bn to $1.23bn with an average salved fund of $17.44m. LOF revenues expressed as a percentage of the salved value are 16.3% in 2013 up from 11.23% previously. The five year average is 12.22%. These numbers are drawn from both settled cases and arbitrators’ awards.

The reason for the increase in LOF revenue as a percentage of the salved value in 2013 is that there has been a small increase in LOF cases and a very marked decrease in total salved funds. It indicates an increase in smaller value cases where it has been appropriate to reach a higher settlement or make a higher award to give the contractor a meaningful reward for their work. Wreck removal income has increased significantly from some $300m in 2012 to some $450m in 2013. That is probably due to the impact of a small number of substantial, well-known cases. Wreck removal revenues have increased generally in the past decade and now account for a substantial portion of the industry’s annual income. MRI

Salvage values up in 2013


Modern weather routing techniques have made facing heavy weather considerably less hazardous for the modern mariner than for his forbears. However such techniques are not a panacea and a new report from The

Swedish Club, Heavy Weather, has offered guidance on how to avoid the many problems associated with heavy weather conditions.

The Club explained how, with the correct preparation and procedures, a vessel can minimize the effects of sailing through heavy weather. The advice has been backed up by case studies demonstrating the best prevention against heavy weather casualties is to plan the route properly and to reduce speed and alter course as required.

Statistics show that that heavy lift, container and RoRo vessels are at the highest risk of suffering hull damage when sailing through adverse weather conditions, with the majority of all H&M heavy weather claims occurring in the Atlantic and Pacific oceans. On the other hand, most cargo claims occur on container vessels. RoRo vessels are of particular interest as heavy weather claims cover both damage to cargo, but also hull damage associated with incorrectly secured cargo.

Lars Malm, director, strategic business development & client relationship, said “This is a problem that affects not only the P&I side of our business but also our H&M claims handling. Typical claims include damage to/loss of cargo, structural damage to a vessel, or damage to machinery and equipment. These can result from poorly secured cargo hatches, improperly secured heavy cargo, and the phenomenon of parametric rolling – an instability inherent in some new hull forms.”

Yet as Malm explained “Warnings about the development of a hurricane or other serious weather phenomenon are usually available many days before the weather arrives. The key is how this information is being used and what preventive measures are being taken. We see examples of the crew not managing to avoid the heavy weather, not slowing down or altering course to avoid large waves pounding the vessel.”

And ports do not always offer a place of safety. “Ironically we have also dealt with cases of the damage that can be caused if the vessel stays in port when heavy weather is approaching,” he added. “There can be damage not only to the vessel itself but also to other vessels and facilities, in addition to an increasing risk of running aground.” Malm added “The best preventive measure any vessel can take against heavy weather damage is to slow down and to alter to a more favourable course.” MRI

Make light work of heavy weather

in brief


The North P&I club has warned its members to check new ships carefully before accepting delivery. The club said it has become aware of several of instances of potentially dangerous poor construction in the newbuilding market. Tony

Baker, head of North’s loss prevention department, said “We have been made aware of instances where newly constructed bulk carriers and general cargo ships have been delivered from the shipbuilder with partly completed or poorly constructed ladders in the cargo holds, for example.”

The club reported ships are being delivered with cargo hold access ladders, platforms and their cages constructed and secured to the bulkheads only by tack welds, rather than being fully welded. “When subject to a load or any other applied stress, such as vessel movement, the tack welds have failed and resulted in an unsafe access to and from the cargo hold. This introduces a very high risk of injury to crew members, stevedores and any third parties entering or leaving the cargo hold,” said Baker.

In addition to accidents North warned defects can also result in costly delays and port state control problems. While the cost of repairs for defects that fall within a newbuilding’s warranty period will often be recoverable from the shipbuilder, any costs incurred through consequential losses, were unlikely to be recoverable.

“Shipowners and their superintendents taking delivery of newbuildings in the current market need to be extra vigilant to ensure all parts of the ship – including hold access ladders – are defect free,” said Baker. “The first few months a vessel enters service are among the busiest, during which time hidden or previously unnoticed build defects will become apparent, potentially resulting in serious accidents and delays.” MRI

Warning of poor construction

Call on ports of refugeJohn Lyras, chairman of the London P&I Club, has called for concerted international action on the provision of places of refuge for ships involved in casualties. He said “Nearly 12 years after the Prestige disaster, it is particularly disappointing to receive reports of other shipping casualties where efforts to mitigate pollution or other risks have been hampered by a reluctance to provide the ships involved with a place of refuge.” Referencing the MSC Flaminia and the Maritime Maisie, Lyras said “There is no easy answer. But, as the Prestige incident illustrated, and as the risk potentially posed by other ships highlights, there remains a compelling need for further concerted international action in this area.”

Guide on LnGClassification society Bureau Veritas has published guidelines on LNG Bunkering, with the aim of speeding adoption of LNG as a ship’s fuel by kick-starting the LNG bunker chain. Jean-Francois Segretain, technical director, marine and offshore division, Bureau Veritas said “We really believe LNG has great potential as a clean fuel for shipping. But fears about its availability in the bunker chain are holding back owners from adopting it. Part of the issue is that ports and terminals wishing to provide LNG as bunkers and shipowners wishing to have LNG-powered ships do not have agreed international standard bunker procedures to work to.”

panama warningAs the Panama Canal prepares to celebrate its 100th anniversary, insurers have been warning of the increased risks that will arise from its plan to double the cargo-carrying capacity of ships transiting the waterway. In Panama Canal 100: Shipping Safety and Future Risks, marine insurer, Allianz Global Corporate & Specialty has identified the value of insured goods transiting the canal zone may increase by more than US$1bn per day following completion of the “Third Set of Locks Project”, which will see two new sets of locks constructed, creating a third transit lane for larger ships.


oUr MUtUAL frienDSSepteMber 2014

Warning of poor construction

iACS eLeCtS new ChAirMAn

Philippe Donche-Gay, executive vice-president and head of the marine & offshore division, Bureau Veritas, has been elected as chairman of IACS with effect from 1 July 2014.

He said “The great scope of IACS’s work goes on out of sight, focussing on the technical detail which helps keep shipping and shipbuilding safe and efficient. All 12 members are contributing resources in the form of 350 engineers who work on IACS work groups.”

SSAnew exeCUtive DireCtor

The Singapore Shipping Association (SSA) has announced Michael Phoon has been appointed as the new executive director of the SSA as a result of the forthcoming

retirement of Daniel Tan after 29 years of dedicated service to the Association.

Michael formally took over the position on 1 August. He has enjoyed a highly successful career at Hewlett Packard where he most recently held the position of director & general manager of the HP enterprise networking business unit for Southeast Asia, Taiwan and Hong Kong. Michael is also a certified master coach and has won a number of top awards including the HP CEO President’s Club in 2005 and 2007.

iSSMore AppointMentSInchcape Shipping Services (ISS) has appointed Matthew Phelps as senior vice president, procurement and operations integration. Reporting to Suren Thadani, chief operations officer of integration services at ISS, Matthew will head up a global team of experts in procurement and operations excellence and will be based in the UK head office.

Meanwhile ISS has appointed experienced maritime professional Henrique Schlaepfer as its new managing director Brazil. Based in Rio de Janeiro, Henrique will report directly to regional executive vice president, Jaime Otero.

Henrique served as a 2nd Naval Officer in the Brazilian Merchant Navy. He has gained experience in management positions with various companies such as CP Ship, Maersk, and Hapag Lloyd working throughout the region but mainly based in Brazil and Venezuela. Immediately prior to his new role at ISS, Henrique held the position of general manager Brazil for five years at Wilhelmsen Ship Services.

Liberian registrynew viCe-preSiDent

Alfonso Castillero, former director-general of the Panama Registry, has joined the Liberian Registry as vice-president. Alfonso spent 16 years in the Panamanian

maritime sector, rising through the ranks to become head of the registry and director-general of the merchant marine. He said “I am very excited to be joining the Liberian Registry, although of course I will miss my colleagues from Panama, from whom I part on extremely good terms.”

CanopiusMArine DiviSion LAUnChCanopius Group, the global specialty (re)insurance underwriting platform for NKSJ Holdings has separated its existing marine and energy unit into two. The marine division will continue under the leadership of Joyce Webb, who joined Canopius in 2004 and has more than 35 years’ experience in the marine insurance market. Joyce will focus on developing Canopius’s marine liability, cargo, specie and hull lines of business. The energy division will be led by Steve Warren, who is promoted to divisional underwriter. Steve and Joyce will report directly to global specialty CEO, Stephen Gargrave.

Argo internationalnew UnDerwriterArgo International, the Lloyd’s insurer and member of Argo Group, has appointed Jon Hamilton as an underwriter in its marine cargo division. He takes up his new position with immediate effect and will report to Paul Gooderson, cargo class underwriter.

Jon joined from RSA, where he was senior underwriter for marine cargo and specie. Prior to this, he spent more than

eight years underwriting marine cargo and specie at Hardy.

hutton’s Group StrenGthenS AberDeen teAMShip supplier The Hutton’s Group has strengthened its Aberdeen logistics team with the appointment of a new branch manager. Kirstene Wilson starts work at the firm’s Sinclair Road depot, having completed a week’s induction training at Hutton’s head office in Hull. Kirstene brings to her new role years of experience in both the retail, wholesale and logistics sectors, having worked previously for Makro and Strachan’s.

MAJ LeGAL offiCer GrADUAteS

From a class of 33 lawyers from 25 countries, the Jamaican r e p r e s e n t a t i v e , Vannessia Stewart, has received the prize for Best Overall Performance at the

International Maritime Law Institute (IMLI) in Malta. Legal Officer of the Maritime Authority of Jamaica (MAJ) Vannessia, who was a participant in IMLI’s 25th Master of Laws programme, also graduated with distinction. She received her award from Koji Sekimizu, secretary general of the IMO and Chancellor of IMLI.

hill Dickinsonnew AppointMentSHill Dickinson has strengthened its presence in the Asian shipping market. Formerly a partner at Clyde in Singapore, Chris Edwards joined the Singapore office in June. An as yet unnamed senior associate in Hong Kong will join the Singapore office in September as a legal director. Kennedys partner Anthony Woo will join the Hong Kong operation in September.

Meanwhile, the firm has promoted Darren Wall from its commodities team to partner. In addition, four members of its marine, trade and energy team have been promoted to legal director. They include: Colin Lavelle (shipping) based in Liverpool; Tony McDonach (PI & regulatory) in the London City office; Caroline Bridge (cargo & logistics) based in the Manchester office and also Shanna Ghose (shipping) in the Singapore office.


newS AnALySiS: UKrAineSepteMber 2014

On 27 March 2014 the UN General Assembly adopted a resolution on Ukraine, which called upon states, international organisations and other institutions not to accept any change in

the status of the Crimea and Sevastopol and to refrain from any action that could be interpreted as an admission of any changes to that status. After some time the contours of Russian-Ukrainian relations are looming up clearer.

Thus, a new status quo has emerged. However, the number of questions is not reduced. On the contrary, progress in resolving some problems creates a chain reaction setting in the agenda an increasing number of emerging issues that require solutions. Therefore, we’ll try to highlight a way to resolve one of the pretty painful relations in the field of maritime transport – a ship’s arrival at a port in the occupied territory, using the example similar in the sort of way to the situation in the Crimea.

A vessel’s call at the port of northern CyprusThe Republic of Cyprus was established by the Constitution of 16 August 1960. This Republic emerged as an independent state as a result of a complex international political process of gaining independence from Britain, which culminated in the so-called “Zurich-London agreements” in 1959. According to the agreement the UK, Greece and Turkey became guarantors of the independence, territorial integrity and security of Cyprus. In July 1974, with the support of the Athenian military, that pursued a policy of “enosis” (joining the island to Greece), Cyprus

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attempted coup. On 20 July 1974 Turkey as the guarantor state brought a 40000 contingent of troops on the island under the pretext of restoring the constitutional order and the protection of the Turkish Cypriots.

On 3 October 1974 the Council of Ministers of the Republic of Cyprus announced ports of Famagusta, Kyrenia and Karavostasi terminal closed to all vessels. The Port Authorities Act 1973 was amended in such a way that the master or owner of the vessel, which arrives and departs from a closed port or comes to a closed port, or stays there in violation of the rules, shall be guilty of an offense and shall be subject to imprisonment for a term not exceeding two years or to a fine (now no higher than €17,086), or such imprisonment and fine together, and in the case when a ship is registered in the Registrar of Cyprus ships, the court may decide to remove the vessel from that registrar.

Thus, the Republic of Cyprus announced of protection of its territorial sovereignty. International organizations, in particular, the International Maritime Organization (IMO), UNCTAD, the International Chamber of Shipping, as well as classification societies, insurance companies, diplomatic and consular offices of all countries, maintaining relations with the Republic of Cyprus, were made aware of this decision.

Despite the progress in resolving this political conflict, until recently, the masters of vessels entering the ports of the Republic of Cyprus after visits to the ports of Northern Cyprus, were under the threat of criminal penalties, including

Crimean ports: possible solutionsThe team at Interlegal, based in Kiev, outline the latest situation in the Crimea


newS AnALySiS: UKrAine

SepteMber 2014

imprisonment and a pretty serious penalty. It is known that, using the AIS, GPS and other means, to tracing the route of a ship is not particularly difficult today.

Situation in UkraineThe State Inspectorate of Ukraine on security in the maritime and river transport (Ukrmorrichinspektsiya) suggested closing the Crimean ports due to an inability to ensure the safety of navigation in their waters. At the request of the Ministry of Infrastructure and on behalf of the Ministry of Foreign Affairs of Ukraine, the Ukrainian Embassy in the UK has respectively informed the Secretariat of IMO, its member states and representatives of foreign companies accredited to the IMO. The essence of this information is to advise that Ukraine can not ensure an adequate level of maritime safety and compliance with its international obligations to the safety of human life at sea, search, rescue, etc. at the ports of Evpatoria, Kerch, Sevastopol, Feodosia and Yalta. Indeed, the actual loss of control over the Crimean ports by the Ministry of Infrastructure of Ukraine in connection with the occupation and subsequent annexation of the Crimean peninsula by the Russian Federation, creates the situation with the high level of risk, both in terms of safety of life, health and property on the approaches and in the water area of ports in the Crimea. So can Ukraine be indifferent to this situation? Definitely not.

In Ukraine, the Law “On the rights and freedoms of citizens and legal regime of the temporarily occupied territory of Ukraine” was adopted on 15 April 2014. This Act amended the Criminal Code of Ukraine with the Art 332-1. The article defines corpus delicti such as violation of the regime of entry into the temporarily occupied territory of Ukraine and exit from it. An essential feature of the subjective aspect of this crime is a special purpose: causing of harm to the interests of the state. The presence of such a goal is an attempt to diminish the potential of Ukraine in the economic, military, political, etc sphere. The body of the crime is designed as formal, so that it is not necessary for a guilty person to make actual influence to any component of the Ukrainian state. Just the one’s desire to diminish this potential is sufficient to prove the hostile attitude of the perpetrator to the state; however this attitude against Ukraine needs to be proved. It is also necessary to prove a violation of the rules of entry or exit to/from the occupied territories. These rules require, inter alia, for foreigners and stateless persons the availability of a special permit.

A case in pointIn this connection it is interesting to consider the widely discussed case with the M/V Huseyn Javid, which after entering the port of Feodosia headed to the port of Illichivsk where she waited on roads and then was gone, not standing for a day, yet the crew turned off the AIS transmitter. Public organisation “Council of Public Security” addressed the Illichivsk transport prosecutor’s office to open a criminal case on this.

One may assume that there exists an offence. Let’s remind ourselves: the ports of Evpatoria, Kerch, Sevastopol, Feodosia and Yalta were closed by the order of the Cabinet of Ministers of Ukraine, as well as some other checkpoints across the state border of Ukraine (Order of 30 April 2014 424-r “On the temporary closing of checkpoints across the state border and

control points”), so the ship’s call to Feodosia is already an act that violates the order of entry into the occupied territory of the Crimea. However, the Criminal Procedure Code of Ukraine was amended so that the pre-trial investigation of the crime provided for in Art 332-1 of the Criminal Code lies under the responsibility of the bodies of the Security Service of Ukraine.. Thus, the public turned somewhat to wrong address. Part 2 of Art 332-1 provides only qualifying elements and Part 3 thereof has a particularly aggravating feature, which is qualified by an organised group of persons. Qualifying features of Part 2 of Art 332-1 of the Criminal Code are preliminary agreement, repetition and the subject of the crime – the official who uses his official position.

In merchant shipping a large number of officials are employed who jointly decide on a ship’s entrance any port, so in this context Part 2 of Art 332-1 of the Criminal Code will possibly apply, while Part 3 of Art 28 of the Criminal Code, which defines the concept of an “organised group”, is unlikely to be appropriate to the context referred to in practice.

Criminal sanctions are complemented with administrative responsibility. In particular, the Administrative Code amended with Art 204-2. The objective part of this offence is virtually identical to the objective part of the referred crime – those are administrative in their nature relations in terms of inviolability of state borders of Ukraine. The composition of this offence is not inherently dangerous to society because when it is committed there is no specific goal to harm the public interest.

Isolation of the Crimean ports from the international transport market is progressing. We can, of course, assume that the shipowners themselves pragmatically refuse port calls to the annexed Crimea. Of course, one can also talk about banning calls to the Crimean ports through ISPS Code (The International Ship and Port Facility Security Code). The fact is that even if the authorities of the Russian Federation or the local authority will be able to effectively ensure the safety of navigation in ports in the occupied territory, formally IMO as a specialized agency of the UN does not recognise the certificate of compliance with the Code issued to any ship or the Crimean port by the Russian authorities.

In connection with the situation around the occupied Crimea a lot of legal conflicts arise. Given the complicated political situation and the complexity of private relations in the field of merchant shipping, it becomes clear that the legal situation in the Crimean peninsula is in need of a transparent legal settlement that could bring the necessary and sufficient level of certainty as to the legal regime for maritime business. When public and civil law complications develop, such resonances occur that foreseeing their legal effects, especially in the long and medium-term, is not easy. However, such efforts should not be left, as the level of life and degree of realisation of the rights and freedoms of man and citizen depends of the development of the economy. MRI

“isolation of the Crimean ports from the international transport

market is progressing”


The 6th Annual UK Ports Conference began with contrasting sessions from Remi Mayet, of the Ports and

Inland Navigation unit of the European Commission, and Richard bird, executive director of UK Major Ports Group, on the changing landscape of port policy in Europe.

Mayet spoke about the EU’s approach to supporting the connectivity of ports through the Trans-European Transport Network (TEN-T). This cornerstone of EU ports policy benefited UK ports significantly said Mayet, with 28 ports in the comprehensive network and 15 in the core network, which will be prioritised, being located in the UK.

Mayet then talked about the proposed Port Regulation which he said was an important tool to achieving transparent access to port services and a level playing field for ports. Through the PR, Mayet said, the Commission aimed to attract investment into ports and encourage modernisation of ports facilities. By ensuring the transparency of public funding, the PR will also help UK ports by avoiding unfair competition by subsidized ports.

Speaking from the perspective of major ports, Bird described a vibrant ports industry. Short sea container and RO-RO traffic with the EU had increased 340% since 1980 and overall the industry accounted for more than half of the UK’s international trade.

Put in this context, any changes to ports policy brought about by EU legislation would, said Bird, have significant implications for the UK. While UKMPG members broadly welcomed TEN-T as an important framework for the development of ports, Bird advocated some caution in unreservedly endorsing the strategy until consistent state aid guidelines were adopted across Europe.

Bird also expressed concern on behalf of UKMPG members about the Port Services Regulation. It was, he said, a “jumble of proposals” without a clear need for the legislation having been identified. The concern, said Bird, was they would

in fact lead to increased legal uncertainty, an inflexible supervisory regime and additional layers of bureaucracy and cost. All aspects which threatened competition and the vitality of the ports sector.

The theme of Europe was continued in a panel debate with contributions from Philip Grindrod, of the UK’s Department for Transport, and Isabelle Ryckbost, secretary general European Sea Ports Organisation.

It was also the theme of a presentation by Alison Oldfield, of Eversheds, on the expanding legal concept of “public authorities”. Taking as her topic the recent European Court decision of Fish Legal (a case involving the applicability of Environmental Information Regulations 2004 and water companies) Oldfield explored the potential for some of the activities of ports to be governed by public law and therefore be capable of challenge by judicial review proceedings.

Issues around European regulation were then rounded off with presentations by Nigel Gooding, from DEFRA, and Stephen Brooker, from the Marine Maritime organisation, on the subject of marine licensing and the protection of marine biodiversity found in UK waters.

In the afternoon the focus of the conference switched to the theme of

“ports as drivers for growth”.Presentations by John Wessel

(Canaccord Genuity), Philip Grindrod (Department for Transport) Stephen Taylor (Port Centric Logistics Partners) focussed on changing market trends and challenges of driving growth in the sector. There was also a panel debate involving John Tye (Port of Tyne) and Stephen Mackin (Eversheds).

The principal components of existing, and future, growth were examined by the speakers. The key role which trade with Asia has played in the growth of seaborne trade this year was highlighted. So too the comparative buoyancy of EU car exports. The future is bright too. The speakers predicted £5bn extra trade in the sector by 2026.

Wessel also looked at sources of investment for the UK ports industry. Private sector investment in ports, notably from pension funds, was, said Wessel, particularly strong. With a healthy yield and a competitive market for equity and debt financing in most developed economies the sector was an attractive one for investment.

The final presentation of the day was given by Taylor, who spoke on the idea of port centricity which he said was key to attracting investment into UK ports. While not a new concept it was one which could not be overlooked because it is critical if the UK is to compete effectively with the likes of Germany, Holland and Belgium in Europe for injections of capital investment.

Overall, the 6th Annual UK Ports Conference received very positive feedback and generated plenty of fresh ideas for future events. It highlighted many challenges and opportunities facing port owners and operators and facilitated important discussions between industry leaders. MRI

tALKinG Shop: UK portS ConferenCeSepteMber 2014

Linking up port to portIn June, the London office of Eversheds hosted the 6th Annual UK Ports Conference organised by the Waterfront Conference Company. More than 90 industry leaders gathered to discuss the developments and challenges in the ports sector

Alison Oldfield

“it was a ‘jumble of proposals’ without a

clear need for legislation having been identified”


CArGoSepteMber 2014

The global recovery remains patchy, but with overall growth predicted to rise from 2.9% in 2013 to 3.9% in 2015, attention is turning to the increasing investment in major construction projects

worldwide. The top 100 of these alone are estimated to be worth around US$650bn in 2014-16.

Two particular areas of interest are power and transport infrastructure. In the power sector, developing nations are looking to fuel the growth of their industrial demand. Their energy is coming both from conventional means and from newer and renewable sources, each with their own unique challenges. And in infrastructure there’s a push to improve both capability and access across all modes of transport. That ranges from the need to extend ports to cope with the “mega containerships” such as the triple E class (18,000 TEU+) to the building of completely new urban mass transit schemes like the Qatar Metro.

Most of these types of project will involve extensive high-value, high-risk extraordinary cargo movements and the need to ensure their safe, on-time arrival. It is now not uncommon to see single shipment values of more than $250m with weights in excess of 200 tonne shipped both by conventional and non-conventional means.

An example is the Dolwin 2 Transformer platform being shipped from the Middle East to Europe via Cape Horn. At more than 10,000t, 70m high and the size of a football pitch, this highly complex cargo movement poses a significant risk to the success of the overall Dolwin Offshore Wind Farm project. We understand the detailed risks inherent in these types of voyages, covering both the physical loss or damage and any subsequent potential financial loss such as delay in start-up or advanced loss of profits.

Every stage of the cargo movement must be assessed through a detailed understanding of the particular project and its unique risks. To achieve this, it is critical the right expertise is deployed; something which can vary wildly worldwide. This is where the importance of the marine warranty surveyor (MWS) comes in. As Henrik Uth, chief executive officer of the Survey Association, put it “In our experience the provision of specialist marine warranty surveyors is often the difference between a safe outcome and a disastrous one.”

The MWS works closely with all relevant parties; from the initial inland loading to final discharge at site and, in doing so, to evaluate all that is required to safeguard the movement. This includes liaising with the EPC, the shipper, the principle, the broker, the financier and the insurer. Examples of areas which would be reviewed include:• Route planning: can the cargo actually get to and from

the port? What is its weight and height, are there specific geological conditions, weather or seasonal issues, or socio/political aspects?

• Load/stow/sea fastening: what is the medium used to lift the cargo; the necessary capability, maintenance and certification; driver expertise; ship stability and trim; freeboard; welding media and local expertise; and any other dangers associated

from other cargos on board?• Transhipment(s): cargo is rarely moved via a single mode of

transit, so how is each stage managed and controlled?• Contingency planning: what must be done to ensure the

whole movement goes to plan; what is the paper work and customs documentation; what are the stowage plans and what contingencies are there in place should there be any issues, for example the identification of local repair options, alternative routing and ports of refuge?In 2013 a Code of Practice was published to assist underwriters

in ensuring a consistent approach by the MWS. Developed as a joint initiative by the International Underwriting Association & Lloyd’s Market Association, the code was published through the London-based Joint Cargo Committee (JCC).

The JCC Code of Practice has the following objectives:• clarify the roles and interactions of the project cargo surveyor,

the (re)insurer, the (re)insured’s broker and the (re)insured;• define the function of the project cargo survey scope of work;• outline approval criteria for project cargo surveying activities;• establish minimum standards for the performance of the

surveyor; and• define the lines of communication between the surveyor, the

(re)insurer, the (re)insured’s broker and the (re)insured. Nick Andrews, marine risk manager at RSA and a contributor

to the code, said “While there was universal acceptance that a marine warranty surveyor is essential for complex risk management, until this Code of Practice there were no defined guidelines to ensure a consistency of service worldwide. In developing these we believe that a framework has been established to assist the safe transportation of project cargo.”

Project cargo movements are on the increase and becoming ever-more complex. While it is critical to procure the services of a suitably qualified expert, in future the adoption of the Code of Practice will further assist in the mitigation of the enormous risks involved. With so much at stake, the right experts and a consistent approach will help achieve what everyone involved in the process really wants to do: avoid losses. MRI

Surveyors key to successThe growth of project cargo investment and the critical importance of marine warranty surveyors is outlined by insurer RSA

Henrik Uth


LeGALSepteMber 2014

We continue to see a steady flow of marine insurance cases in the English High Court, with London widely seen as the preferred forum for disputes of this kind. More often

than not, marine insurance contracts will apply English law regardless of where the assured is based.

These cases frequently consider the nature of warranties or the meaning of various perils under a hull and machinery policy. A trend, if one can be discerned, is that the courts seem to be reluctant to support underwriters who cast around for reasons to reject a claim. However, one case may be changing this trend in a fundamental way, such that the landscape for assureds presenting claims could be substantially changed.

background In January 2010 the DC Merwestone called at Klaipeda, Lithuania, to discharge a cargo of soya meal and load a cargo of scrap metal. During this time, the weather was exceptionally cold and the hatch covers and gangways froze over with ice. In order to open the hatches, the vessel’s crew had to chip the ice off the hatch covers. They then used the vessel’s emergency fire pump to blast the chipped ice away. When the crew had finished using the emergency fire pump, they drained the deck lines. However, they did not drain the pump of seawater and they failed to close the sea valve. As a result, some seawater remained in the pump and its filter. Given the extremely low temperatures, the water in the pump froze and expanded, causing the pump casing to

Is a fraudulent device also a fraudulent claim?Alex Kemp, of Holman Fenwick Willan, reviews a recent UK case which is set to change market practice

crack and the strainer lid on the filter to become distorted. The crack made the bow thruster space and the distortion common with the sea. While the vessel remained in the port, no water entered because the ice had frozen, creating a barrier. Yet after the vessel left the port, she entered warmer waters and the ice melted, allowing water to enter the bow thruster space. The main engine became submerged and the vessel was rendered incapacitated while sailing off the coast of Poland en route to Bilbao, Spain.

The bow thruster space should have been watertight. It is also fitted with a bilge alarm which should normally alert the crew to an ingress of water. However, the bulkhead between the bow thruster space and the duct keel was not watertight and therefore the water was able to ingress into the duct keel, which should also have been watertight. It was not and, as a result, water was able to enter the engine room. The vessel’s engine room pumping system was also deficient, which hindered the ability of the crew to stem the ingress of water.

high Court JudgmentIn the UK case of Versloot Dredging BV v HDI Gerling Industrie Verischerung AG and others [2013] EWHC 1666 (Comm), the owners brought a claim for €3.2m under the policy in order to repair the damage. In doing so they persuaded the first instance judge, Popplewell J, that the loss had been caused by “perils of the seas” and that the proximate cause of the loss was the ingress of seawater into the bow thruster room. Such a loss

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Alex KempAlex Kemp is a an associate at Holman Fenwick Willan

was a peril of the sea pursuant to Clause 6.1.1 of the policy which reads:“6 PERILS 6.1 This insurance covers loss of or damage to the subject-

matter insured caused by: 6.1.1 perils of the seas rivers lakes or other navigable waters . . .”

The Judge restated the meaning of peril of the sea noting that it is comprised of two elements:1. a fortuity giving rise to an event which is not bound to

happen; and 2. a fortuity which is “of the seas” (ie of a marine character).

Popplewell J found the seawater ingress could be considered a fortuity since it arose from an unexpected incident and it could further be considered “of the seas” because the accident was specific to the maritime nature of the adventure (despite the underwriters’ argument that the events leading to the issue with the emergency pump could have happened on land).

Otherwise the underwriters’ defenses under the policy failed, save for one. They argued the claim was forfeited on the grounds it was supported by fraudulent evidence given by the owners when they presented the claim to underwriters in 2010 and 2011. They said the owner had deliberately or recklessly given a false account of the casualty in a letter to underwriters’ solicitors. The false account was to the effect that a bilge alarm had sounded but had been ignored by the crew because they thought it was a false alarm caused by the vessel’s motion in heavy weather. It later emerged no crew member had reported to the owner that a bilge alarm had sounded.

Popplewell J found that this evidence was false and misleading and the assured had no reason to believe it was true and he was reckless in stating that the alarm had sounded. He also found the false account, or “device”, was intended to promote the claim.

Accordingly, Popplewell J rejected the owners’ claim. He expressed regret at having to do so since he considered the owners’ fraudulent conduct was only mildly culpable. It was not a carefully orchestrated deceit, but rather a reckless untruth told on one occasion only and abandoned well before the case went to trial. Popplewell J considered the forfeiture of the claim was disproportionally harsh in the circumstances and expressed the view that a more flexible test of materiality should be adopted. Such a test would permit the court to consider whether it was just and proportionate to deprive an assured of his substantive rights in light of all of the circumstances of the case. Although, as the law currently stands (in Agapitos vs Agnew [2003] QB 556), Popplewell J did not feel he had any other choice than to reject the claim in full.

Arguments before the Court of Appeal The owners were given permission to appeal Popplewell J’s decision and the hearing took place over three days in the Court of Appeal in the first week in July 2014. Judgment has not yet been handed down.

The owners argued the doctrine of fraudulent device should not be extended to fraudulent claims, ie that valid claims promoted by a fraudulent act or “device” should not be equated to fraudulent or exaggerated claims. In the latter case the underwriter is deceived; it is only in the former that he is defrauded. If it were extended, it should only be applied in

cases where it would be “just and proportionate” in accordance with the European Convention on Human Rights. It would not be just and proportionate on these facts because the owner had no subjective intention to promote the claim and had not sought to perpetrate a fraud. Moreover, the alleged misrepresentation was not material to the cause of the loss. They went on to argue the alleged fraudulent account was in fact not fraudulent given the access the underwriters had been permitted to the vessel and its crew and the exact nature of the letter.

The underwriters argued both fraudulent claims and fraudulent devices constitute such an egregious or flagrant breach of the duty of utmost good faith that forfeiture of the entire claim is justified irrespective of the other circumstances. They noted the utmost duty of good faith distinguishes a contract of insurance from other contracts and justifies the sanctions imposed by the fraudulent claims doctrine. The fraudulent device “rule” is necessary because otherwise an assured has a free hand to lie to the insurer about the facts surrounding a claim in an attempt to inhibit investigation of possible defences.

CommentaryWhatever the outcome of the Court of Appeal hearing, the impact for the marine insurance industry will be significant. If the Court of Appeal upholds Popplewell J’s decision the underwriting community will be handed a significant tool in rejecting claims. If they can demonstrate any aspect of the information passed to them in the investigation of a claim is inaccurate, they will be entitled to reject the entire claim. This will doubtless have a profound effect on the way marine claims of all classes of business are pursued. For example, there is a risk that it prompts a rush to litigate coverage disputes as the fraudulent device doctrine only applies to pre-litigation fraud, not post-litigation fraud. It may even reduce the attractiveness of the London market as a forum for writing insurance – from an assured’s point of view, the attractiveness of an insurance policy applying English law may be reduced in the light of this decision.

If the Court of Appeal overturn Popplewell J’s decision it will be a significant victory for assureds and a blow to the insurance community. Either way we would expect to see changes to marine insurance policies expressly to deal with the application of fraudulent devices, regardless of the outcome. MRI

• HFW acted for the assured in this case


eMpLoyMentSepteMber 2014

It is now more than a year since the Maritime Labour Convention (MLC) – the landmark international legal instrument which aims to ensure decent living and working conditions for all seafarers globally – began to

be enforced by the first 30 ratifying countries. In that time, ships flying flags of ratifying and non-ratifying

countries alike have been inspected in ports of ratifying countries and, in a number of reported instances, have been detained by port state control where they have been found to be non-compliant with MLC standards. Common reasons for detention have been poor hygiene onboard, underpayment of seafarers’ wages and missing seafarer employment contracts.

the MLC: an international “seafarers’ bill of rights”There is no doubt in my mind that the degree of ratification of the MLC on the international stage has been high. Further nations have validated the convention and continue to do so – since June, Iran, Belize, and Ireland have added their signature – bringing the total to 62. In fact, more than 80% of the world’s gross shipping tonnage now flies the flag of an MLC-sanctioned country.

A ratifying country has 12 months to enact the MLC in its domestic law and commence inspection of ships calling in port. As such there is a lag between ratification and enforcement, but over time the number of countries where enforcement of the MLC is ‘live’ is gradually increasing.

There are notable exceptions, however. The US is a particular case in point. Rather than ratify the convention, inspect its own vessels for compliance and issue official MLC certification in the form of the Maritime Labour Certificate and Declaration of Maritime Labour Compliance, it has adopted an alternative approach based on ship owners making voluntary statements of MLC compliance.

the UK perspectiveThe UK was not amongst the first 30 early MLC ratifiers. In fact, ratification took place relatively late, on 7 August 2013, since which time it had been extended to cover Bermuda, the Cayman Islands, the Isle of Man, and Gibraltar. The MLC entered into force in the UK and each of these countries on 7 August 2014.

The MLC has been enacted in domestic UK law in the form of a series of regulations. The MLC Survey and Certification Regulations, which cover the inspection of UK ships for MLC compliance and the issuing of the Maritime Labour Certificate and DMLC to be carried on board as prima facie evidence of compliance, have been in force and publicly available since 15 August 2013. However, much of the rest of the UK’s domestic MLC law has been subject to delay as it passed through the UK legislative process. For example, the regulations covering the minimum requirements for seafarers’ employment were only put before Parliament in mid-July 2014, with the final form of those

regulations only having been made publicly available shortly before entry into force.

While I am sure that ship owners, ship managers and crewing agencies subject to UK law will by now be familiar with the core principles of the MLC, the lawyers’ mantra that the ‘devil is in the detail’ is as applicable here as ever. Certainly, to my mind, it has not been ideal that the final form of parts of the UK’s domestic law has only been published shortly before enforcement began.

In some instances, the UK’s domestic MLC law goes further, and imposes higher standards, than the MLC itself requires – known in some quarters as “gold-plating”. For example, the MLC requires that the “shipowner”, as defined, has onboard complaints procedures in place, enabling the seafarer to complain about breaches of his rights under the MLC. The UK MLC regulations additionally require the shipowner to have ‘disciplinary and grievance procedures’ in place and for these to be included in the seafarer employment contract where the seafarer is an employee.

Those familiar with English employment law as it applies shore-side will be acquainted with the statutory requirement

A new era for seafarersThe Maritime Labour Convention came into force in the UK on 7 August when UK port state control began vessel inspection and enforcement. Nick Wilcox, of BDBF LLP, looks at some of the legal and practical considerations that this presents to shipowners

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that all employers have written disciplinary and grievance procedures in place which are accessible by their employees.The employee has the right to use the grievance procedure to bring a formal complaint about any aspect of his employment, for his grievance to be heard and dealt with by the employer fairly and the employee has a right to not be victimised for having made the grievance.

The requirement in the UK MLC regulations seems a clear move to bring seafarers’ employment rights on UK-flagged vessels more closely in line with their shore-side counterparts, enabling complaints to be brought about any aspect of their employment, rather than just those where the alleged breach of seafarer’s rights complained of derives from the MLC.

Some shipowners have taken the approach of combining the MLC onboard complaints procedure with the grievance procedure, whereas others have decided to operate two separate procedures. In view of the ability of the seafarer, in principle, to use the MLC onboard complaints procedure in a way that risks delay to the vessel if his complaint is not satisfactorily addressed, separate procedures are the preferable approach from the shipowner’s perspective.

the UK perspective: enforcementFormal inspection of ships calling at UK ports to verify MLC compliance, and enforcement in the event of non-compliance, commenced on 7 August 2014.

Port state control inspection for MLC compliance applies to ships irrespective of the flag they fly because of the MLC’s ‘no more favourable treatment clause’. This key part of the convention requires that ships flying the flags of countries that have not ratified the MLC are not put at a competitive advantage when compared with those that have. It is clear then the onus is therefore on port state control to carry out inspections of all ships for MLC compliance and, if the ship in question flies a non-ratifying flag, it may be subject to a slower, physical inspection than those that fly a ratifying flag and are able to produce the official MLC certification.

The early signs are that UK enforcement will be strict – in fact, even in the period before 7 August 2014, ships were detained in UK ports where there were concerns for seafarer welfare. For example, in October 2013, a Greek-owned, Marshall Islands-flagged ship named George was detained by port state control in Ellesmere Port in North West England because of the degree of unsanitary living and working conditions found on board.

The ship was reported to be in a filthy condition with 12 deficiencies relating to rotten food, out-of-date provisions, a cockroach infestation in the galley, and crew accommodation. A prohibition order was placed on the ship by port health officers, and this was lifted following cleaning and fumigation work. The surprising aspect of this detention was that the ship had already been inspected for MLC compliance by Lloyd’s Register and she had been issued with MLC certification.

Nick Wilcox

will the MLC make a difference?From the UK perspective, the MLC is a landmark piece of maritime labour legislation, codifying and, in some areas, enhancing seafarers’ living and working rights. Perhaps the most important feature is the inspection and enforcement regime, which, coupled with the “no more favourable treatment” clause, means the convention has “teeth”.

However, there is still a long way to go before seafarer conditions of employment can be considered comparable to those working shore-side. In particular, the valuable English statutory employment rights of employees to be protected from unfair dismissal and discrimination which are enjoyed by UK shore-side employees continue to only apply to a narrow section of seafarers.

This was illustrated in the recent Employment Appeal Tribunal decision in Hasan v Shell International Shipping Services in which, despite there being a number of ways in which Hasan’s employment was connected to England, he was unable to bring claims based on the statutory rights because the Tribunal lacked jurisdiction.

Hasan, a British national, was dismissed while working on a Singapore-flagged ship The Galea, owned by Shell Shipping, a Singaporean company. His employment contract was expressly subject to English law, he spent his leave in the UK and was paid in pounds sterling. Shell Shipping had entered into a manning agreement with an English company. Day-to-day management of Hasan was contracted out to a company registered in the Isle of Man.

Under the UK’s Equality Act legislation, a seafarer working wholly outside Great Britain and adjacent waters is only protected from discrimination if he is employed on a UK-registered vessel that has a port in Great Britain registered as its port of choice. As The Galea did not enter UK waters and Hasan was not working on a UK-registered ship when he was dismissed, he did not have protection under the discrimination legislation.

Neither did he have protection under the UK’s unfair dismissal legislation.To do so, he had to demonstrate that Shell Shipping resided or carried on business in England and Wales. The English and Manx companies were not agents of Shell Shipping and so the Tribunal did not have jurisdiction.

Although Hasan could not bring the unfair dismissal claim, it is worth noting recent changes to the Tribunal rules on jurisdiction mean it may be easier for future claimant seafarers to do so and it will be interesting to see whether such applications are successful. MRI

Nick Wilcox, is a solicitor at bDbF, LLP

“the lawyers’ mantra that the ‘devil is in the detail’ is as applicable here as ever”


offShoreSepteMber 2014

The Standard Club has been providing P&I cover for offshore operators’ third party liabilities since oil exploration started in the North Sea in the 1970s. During that time the industry has made

extraordinary advances as it searches for oil and gas in ever more challenging environments, tackles the tricky issue of decommissioning and pushes the boundaries in the area of alternative energy. The club covers many different types of operations – FPSOs, drilling rigs, salvage, supply boats, offshore construction vessels, heavy lift ships, wind farm installation ships and other ships carrying out a wide range of specialist operations. Each year we see new technological developments, and larger and more complex units and projects which stretch the resources of the oil companies to fund and develop. This article looks at some of the technical, contractual and P&I issues arising out of these advances in technology focussing on offshore maintenance and repairs, decommissioning and FLNG.

offshore maintenance and repairsThe search for oil is taking operators further offshore into deeper waters and often to remote and hostile areas. Brazil is a key example of this where some of its largest reserves are located in challenging deep and ultra-deep waters. The global offshore oil and gas industry has been forced to undergo a technical revolution in response to ensure access to a broader range of reserves around the world.

As FPSO technology is playing an increasingly important role in accessing oil in more remote locations, other players have also pushed the boundaries with their own technological developments and innovations. What is particularly impressive is that the Dockwise Vanguard, a semi-submersible heavy-lift vessel, is able to act as an offshore dry-dock, lifting enormous loads such as FPSOs to allow inspections, maintenance and

repair work to be performed at sea. To do so, the Dockwise Vanguard would submerge underneath the FPSO without it having to disconnect from its mooring system and with its flow lines still connected. It would subsequently rise and lift the FPSO out of the water. This method of dry-docking creates an obvious cost and time saving particularly for vessels which are far from a repair yard with dry-dock facilities.

The ability to dry-dock an FPSO offshore is something which until very recently had never been contemplated before. This brings a different type of exposure to the club. The risk of blow-out would be a major concern particularly if the FPSO was still producing while being dry-docked. Even if production on the FPSO was shut down, there is still a serious pollution risk as the FPSO could move and potentially tear out the risers and well equipment.

Although P&I clubs pool all claims above a specific amount between the membership of the International Group, certain activities and exposures which have been identified as too different from those experienced by mainstream shipping cannot fall within poolable cover or are subject to additional restrictions in order to be eligible for poolable cover. Heavy-lift vessels such as the Dockwise Vanguard fall into the latter category. For poolable cover to respond, liability for the cargo must be offlaid. However, when dry-docking an FPSO, the heavy-lift vessel itself is so integral to the operation of the FPSO that poolable cover would not respond in the circumstances and instead we would seek to cover the vessel under the standard offshore rules.

DecommissioningTechnology is also playing a significant role in more mature regions such as the North Sea where oil reserves have been exploited in the last few decades. Although production has been in decline in the North Sea since its peak around 2000, recent technological innovations and increased recovery techniques have meant that the life of offshore infrastructure has been

With an eye on the futureSarah Wallace, of the Standard Club, looks at developments in offshore: meeting insurance needs both now and in the future

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extended and existing reserves are being exploited even further. However, in the next two decades, a growing number of

installations are to be taken out of service and there is expected to be a huge increase in decommissioning projects in the North Sea as oil and gas infrastructure mature and facilities offshore become obsolete or uneconomical to sustain. The opportunities in decommissioning are significant. It is thought that as many as 478 platforms may need to be removed before 2045. Annual decommissioning expenditure in the North Sea has been forecast to exceed £1bn within the next few years with total expenditure projected at £30bn – £35bn between 2010 and 2040.

Aware of the future growth, the UK government has set out levels of tax relief on decommissioning expenditure and announced a package of measures on oil and gas taxation to support investment. This has been welcomed by the industry and has been paramount in encouraging investment which has in turn been vitally important in boosting technological developments and innovations.

The most notable advance in terms of offshore vessels has been the development of Allseas’ Pieter Schelte, a single-lift installation/decommissioning and pipelay vessel which is set to be the world’s largest vessel. The figures are striking. The twin-hull vessel is 382 metres long, 124 metres wide and has a unique slot between the two hulls to be used for installing or removing topsides and jackets. Its lift capacity is an impressive 48,000 tonnes for topsides and 25,000 tonnes for jackets. Pieter Schelte could potentially revolutionise large decommissioning projects by substantially reducing the time taken to remove both topsides and jackets. She has already won some major contracts including the removal of three platforms in Shell’s Brent field.

The risks present while the Pieter Schelte is operating are much the same as those for other installation and heavy-lift vessels. However, it is the scale of the objects which the Pieter Schelte is handling and the fact that it can install and remove topsides and jackets in a single-lift which creates a greater exposure.

As with any heavy-lift vessels, when involved in decommissioning, we would expect liability for the object being decommissioned to be offlaid in order for such vessels to be eligible for poolable cover. This should not create a major issue though as the decommissioned object is usually covered under a separate decommissioning all risks (DAR) policy. During the transportation phase, we would expect operators to contract at the very least on BIMCO Heavycon terms or similar.

fLnGAs oil and gas reserves start to diminish in some areas, demand for natural gas worldwide is growing rapidly, particularly in Asia. With this increased demand, offshore gas fields which were once considered logistically and financially unviable for exploitation have become a possibility with the development of FLNG (floating liquefied natural gas) technology. Offshore gas accounts for 31.3% (2013) of the total global production. This figure is set to increase significantly in the near future with the advent of numerous FLNG projects. With the Shell Prelude shortly entering service off the northwest coast of Australia, it is opportune to look at the issues at play in an area of unproven and untested technology.

Combining onshore LNG techniques with offshore oil and gas

development technologies, FLNG is not without its technical and operational challenges: remote locations exposed to the elements, scalability, storage (reducing sloshing, and its effects on stability), production, and offloading (connection leaks, material degradation failures or brittle fractures) to name but a few. If you then combine with a lack of common regulation, and the ratification of international agreements varying between affected states you start to get a flavour of the challenges faced by FLNG operators. These issues are no more prevalent than in the APAC region (with the exception of Australia), where there are no cross border regulatory frameworks that govern and oversee offshore activities, leading to lacunas in the operational and safety standards between states.

While the probability of major incidents on a FLNG unit is quite small, the industry has a history of being more reactive than proactive as significant regulations are only implemented following major accidents. Given the Prelude will measure 500 metres from bow to stern and weigh 600,000 tonnes fully loaded, it remains to be seen how traditional salvors would be able to respond to a major casualty involving the wreck of such a unit.

The Pooling Agreement has not yet expressly addressed the issue of FLNG technology, but it is envisaged that it would ultimately be approached in the same way to FPSOs. In its current drafting, such units are not eligible for pooling under the drilling and production operations exclusion.

Fortunately the club is able to provide a solution for its members under the standard offshore rules cover, much in the same way it has for FPSOs. P&I cover up to US$1bn can be provided under the standard offshore rules and offshore labilities extension under the club’s non-pool reinsurance program. The standard offshore rules would respond to the member’s liability in connection with the operation of the unit for personal injury/death/illness, pollution from the unit, wreck removal of the unit, FFO, collision, fines, and other contractual liabilities (subject to contract approval).

ConclusionWith new offshore vessels being developed which are novel in every respect, P&I clubs have to look at the new exposures these vessels present from both a risk and insurance perspective. In an ever evolving industry, the Standard Club is proud to offer its members the tailored liability insurance products they need to operate in the oil and gas industry as well as those in other specialist trades. As our members look to innovate, we will be doing the same. MRI

Sarah Wallace is a claims executive at the Standard ClubSarah Wallace


Companies within the ship recycling industry are known as cash buyers when they purchase a vessel with 100% cash. In turn, the cash buyer sells the vessel to a recycler in any one of the ship

recycling countries. For vessels purchased basis “as is”, the cash buyer takes over the vessel at the delivery port and then boards his own crew to sail the vessel. In the meantime, the vessel is re-flagged, given a new name and is given a fresh set of insurance cover for the voyage to the yards.

Wirana, upon delivery of the vessel in the Indian Subcontinent, accepts letters of credit (LC) as payment from their end ship recyclers and it is estimated at least 98% of vessels for recycling are sold via cash buyers. Therefore at all times the owners remain completely secure as their final payment for the vessel is NOT contingent upon receiving funds from the end ship recyclers.

the JudiciaryIndia has seen its fair share of litigations involving the ship recycling markets. In India the arrival of the MV Blue Lady in 2007 caused a huge uproar due to the alleged quantities of asbestos and other hazardous materials on her. The Supreme Court handled the matter and then laid down stringent regulations for the governance of the ship recycling industry and the salient features of the order were:• Submission of the Ship Recycling Plan. • Details of the vessel. • Ship recycling schedules with sequences of work. • Operational work procedures• Availability of work handling equipment and PPEs• Plan for removing of oil and cleaning of tanks. • Hazardous wastes handling and disposal plans. • Gas free for hot works certificate issued by the competent

authority for tankers. • Identification and marking of all no breathing spaces.• Identification and marking of all places likely to contain

hazardous wastes. • Confirmation that ballast water has been exchanged in

high seas. • Dismantling stage.• Waste water downstream stage.

recycling capacitiesIn India the ship recycling activities are carried out at Alang West Coast (Gujarat). Alang has 175 active and licensed and functional yards which are leased by the government of Gujarat for 10 years. To complement those yards, some yards exist at Jamnagar (Gujarat). The strength of Alang is that they rely upon the beaching tides to push the vessel onto the beach. Both Alang and Jamnagar are under the aegis of the Gujarat Maritime Board.

A few vessels are also beached at Mumbai which functions under the government of Maharashtra. However this port has its size restrictions and not all sizes of vessels can be recycled here.

In India there are more than 25 licensing bodies and the industry is extremely tightly regulated. At least 120 yards are certified with ISO 14001/9001 and OHSAS 18001 and at least 55 yards have the ISO 30000.

process of beachingA comparative life cycle assessment has been initiated of beachings compared to dry-docking in India, estimating the environmental footprint of each for both facilities construction and subsequent operation. In the preliminary analysis it could be clearly seen the beaching method practiced at Alang is far superior to the dry dock method.

The International Convention for the Safe and Environmentally Sound Recycling of Vessels (HK Convention 2009) is a welcome step since it has provided a convention that covers all operations so the health and safety of workers and prevention of pollution of the environment can be verified.

The perception that the Alang beaches are “killing fields” are grossly untrue. This allegation is without merit. Alang has an enviable safety record amongst most major industries in India. Sadly accidents do happen and while even one death is one too many hundreds of vessels are scrapped at Alang safely.

On the shores of Alang lies the RL Kalthia Ship Breaking Pvt Ltd which is Plot No 19. This is by far one of the finest green recycling plots at Alang, owned by Chintan Kalthia. The beauty of Plot No 19 lies in the fact that, despite recycling so many vessels, the accident rate at the yard has remained zero.

In the last year Plot No 19 has recycled six vessels totaling 67720 mT with zero accidents. Plot No 19 has recently updated its ISO certifications and it is now ISO 9001:2008, DIN EN ISO 14001:2009 and BS OHSAS 18001:2007. All the workers are full trained and certified by Gujarat Maritime Board (GMB). In addition workers are fully clothed and provided with adequate personal protection gear, including hard hats and boots.

Plot No 19 remains as one of the few green recycling units at Alang fully certified and capable of recycling large size vessels. The yard disposes wastes with the government-appointed GEPIL which is the certified nodal agency to collect the wastes from the recycling yard.

Ship reCyCLinG SepteMber 2014

The role of a cash buyer Shashank Agrawal, of Wirana Shipping Corporation Singapore, reviews the state of the ship recycling market in India

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Ship reCyCLinG SepteMber 2014

Shashank Agrawal is an Indian qualified Advocate and is vice president (legal) at Wirana Shipping Corporation Singapore

Shashank Agrawal

hK Convention As already mentioned, the HK Convention 2009 is a most welcome step since it has provided, for the first time, an international convention that addresses and systematizes all operations so the health and safety of workers and prevention of pollution of the environment, both at sea and ashore, can be ensured and verified.

The underlying part of this important Convention is that the HK Convention accepts beaching as the norm for recycling of ships and it does not prevent the selling of ships to the Indian subcontinent. Looking at the EU Ship Recycling Regulation (SRR), it will not be able to provide for ships flying the flag of the third country while going for recycling and therefore the answers lie within the HK Convention. Even Turkey, which is in the OECD, practices beaching for the recycling of its ships and does not employ the dry docking method. Clearly if the OECD country is able to successfully recycle ships so can the mirror image be drawn in the Indian subcontinent.

It must be noted that agencies such as ICS and others accept and encourage the process of beaching for the recycling of ships. This is indeed an encouraging sign for the times to come and reinforces the position of safe and sound beaching by yards in the Indian subcontinent.

Rakesh Khetan (Billu), CEO of Wirana, is a strong proponent of the HK Convention and of the rules and regulations for green recycling and safe and sound recycling of vessels. He works closely with the EU and other agencies for the development of recycling in the Indian subcontinent.

His emphasis has been to promote safe and sound recycling of ships across the spectrum and the team is strongly encouraged to guide shipowners on the best disposal methods available for their tonnage.

LegacyBy trading for approximately 25 or more years, owners tend to accumulate legal issues and outstanding claims and liens. The outer anchorage at the delivery port turns into the battleground for many owners and their creditors. Unfortunately the innocent cash buyer started getting involved in these battles for no contractual liability of theirs. On delivery, the vessels would be arrested sometimes just short of beaching and sometimes even on the beach. This causes serious hardships to the cash buyers who are in any event paying top dollar for each and every vessel, working on extremely low and limited margins, underwriting market conditions and now being forced to even underwrite such claims to which they had little or no connection.

We have seen recent cases wherein shipowners despite having clear and confirmed recaps of the fixtures with cash buyers tend to dishonour the confirmed recaps and resell the vessel to other cash buyers for higher prices. Often this leads to serious disputes and most likely force parties to approach the appropriate courts seeking reliefs including but not limited to seeking arrest of the vessel in question.

recycling verses breakingOften we see publications switching between the words “shiprecycling” and “shipbreaking” and perhaps the confusion stems from the “lack of knowledge” in the eventual end use of the vessel by the yards. During the process of ship recycling the

following items are recovered for re-use:1. Ship steel – used by the steel re-rolling mills to convert into

rods and bars, which are used in the infrastructural projects.2. Ropes and chains – these are generally re-exported or re-used3. Generators – used in garment manufacturing factories or in

the agricultural sector. 4. Boilers – used in rice and jute mills. 5. Furniture, beds, cots, bunks, cabin materials – used by

mid-tier households and/or by public hospitals, emergency camps, hotels, motels, hostels, Red Cross and YMCA etc.

6. Utensils, crockeries – used by households, emergency camps, hospitals and hotels.

7. Electrical items, electronic appliances, irons, heaters, insulators – re-used by industrial and agricultural units.

8. Sanitary wares, bathroom mirrors – used by mid-tier households and hotels.

9. Food items, bottled water, packed non perishable food stocks, biscuits, tinned food – bought by households and small hotels.

10. Glassware – bought by industries and showroom owners.11. Fridges – purchased by mid-tier households, small hotels

and factories.12. Pipes and fittings, wires, coils, rubber – agricultural and

domestic use. 13. Paintings/sofas/desks/chairs – households, hotels and

factories.14. Oil and other products removed – resold to licensed

factories. 15. Sludges, paints etc – disposed under the guidelines framed

by the Gujarat Maritime Board into specific incinerators. 16. Asbestos and hazardous materials – sent to the pre-

determined and government approved landfill sites after being appropriately bagged, itemised and sealed.

17. Rubber and other materials recovered – sent to the various recycling units.

In short, the recycling markets have developed a “reuse” market for every nut, bolt and the kitchen sink found on board the vessel. More than 8000 vessels have been scrapped at Alang since 1983, generating steel output in excess of 100m tons. In an average year Alang recycles about 350-400 vessels with annual sales turnover from this activity of about of about $1.8bn. Certainly “breaking” would not generate this revenue income. MRI


SUperyAChtSSepteMber 2014

This year is proving to be a good one for the superyacht sector, with commentators reporting an upward trajectory in newbuilding orders for the first half of the year. Some have reported that sales

have doubled compared to the same period in 2013. Renewed confidence in the economy has also fed through

to second-hand superyacht sales, helped by prices which are more competitive than the heady pre-recession days. Such buyers still show a preference to invest their money in the refit or conversion of an existing yacht to keep costs down. However there are legal challenges that will regularly crop up with the acquisition and conversion of an existing superyacht as an alternative to the construction of a newbuild.

Whether it comprises a change of the interior layout, the addition of a bathing platform, the construction of a helicopter landing platform or hangar, the provision of storage for a submarine, or the simple lengthening of the yacht, such a project entails significant risks and often experiences substantial cost overruns and delays, which can cause subsequent legal wrangling or, worse still, a formal dispute.

In a refit or conversion project it is the yard that will have to incorporate new designs and materials within a structure to allow the new and the old to operate together as an integrated whole. There are complications about consolidating new and existing materials which do not emerge with newbuild projects and these can lead to serious technical and commercial disputes.

Difficulties can often arise when new or additional materials alter the balance of stresses in the “old” sections of a yacht which have not been refitted or upgraded, perhaps even causing damage to other parts. In these circumstances the yard can easily find itself exposed to the risk of additional delays and costs arising from pre-existing defects in the yacht that it has committed to convert.

If it is agreed that the yard should bear such risk, it is usually sufficient for the yard to commit to doing whatever is necessary to refit the yacht so the yard can complete the conversion. However, yards will often look to address the issue by insisting that any repair works that are required to render the yacht suitable for refit or conversion are addressed

separately from the conversion itself. If there are issues arising from the condition or original build

quality of a second hand yacht, the yard will usually be entitled to recover from the owner any additional costs incurred from repairing pre-existing defects through a variation order within the framework of a lump-sum conversion contract. The yard may well seek to transfer the risk by providing for specific representations and warranties by the owner as to the condition of the yacht in the contract (or the accuracy of her plans and drawings), which the owner will seek to avoid or minimise in the contract negotiations.

A significant feature of a typical refit or conversion project is that the yacht is already built, and likely to be operational, and so the owner will want to minimise disruption to cruising and chartering opportunities. As a result, conversions are frequently structured so that the yard is permitted the bare minimum of time required to finish the work, and is asked to accept a potential liability to compensate the owner in liquidated damages for any further delay in the yacht’s redelivery which is beyond the agreed period.

Although in practice the damages agreed are unlikely to protect the owner in full against the consequence of delay in completion (ie the cost of chartering a comparable yacht for the period of delay), the level of liquidated damages to be paid for the delay in redelivery is a key area for negotiation in most contracts. Who prevails will ultimately depend on the parties’ bargaining positions.

The difficulties faced by the yard may also be compounded by its inability, in light of the yacht’s cruising commitments, to

Time to build or convert?Superyacht refit and conversion projects can be a viable alternative to a new build, but such projects carry their own particular risks and owners should plan accordingly says Justin Turner, of Curtis Davis Garrard

“owners and advisers must be aware of the particular challenges

and possible pitfalls associated with refit or conversion projects”


SUperyAChtSSepteMber 2014

undertake a detailed inspection before she arrives at the dock to begin the conversion work. To ensure the time schedule can be met, the yard may also have to undertake pre-fabrication works prior to the yacht’s arrival, which may significantly increase the technical and commercial risks.

It should also be noted that, whatever the agreed position is regarding the ownership of materials and equipment added to the yacht by the yard, title to the yacht, together with her machinery and on-board equipment at the point of her arrival at the yard, will always remain with the owner. It is also likely that the owner will retain physical possession of the yacht, with a full or skeleton crew on-board for the period of the conversion works.

Specific features of a refit or conversion project can give rise to a number of legal problems which the contract with the yard should address and some of these are considered below.

Clearly the most important issue for the owner and the yard in any conversion project is the precise scope of work which will be undertaken by the yard and its subcontractors. The issue is addressed by incorporating a detailed technical specification, together with various principal plans and drawings, within the contract framework.

Design and engineering are critical elements of the scope of work. Responsibility for these is sometimes assumed by the owners who may, for example, want their own designer to provide the interior or space design. However, depending on the level of its in-house experience, the yard may assume these responsibilities, at least in respect of the work that it will undertake directly. Often an owner provides the yard with

a basic design and engineering package from which the yard will prepare the detailed drawings upon which the works will be undertaken.

It is vital to specify within the contract the rules and regulations (most importantly class requirements) with which the yard must comply in carrying out the refit or conversion. The impact that the work might have on the yacht’s classification certificate, or indeed any flag state certificates, must be taken into consideration, as the addition of new equipment may have consequences for the compliance of the yacht, both in terms of the vessel certification and its safe usage. An example of this would be where a significant alteration to the hull structure or machinery alters the tonnage which could well affect the vessel’s stability or statutory fire safety requirements.

Resurveying, or indeed remeasuring, may be required to ensure the yacht’s continued safety compliance, but it may also affect crew certification and thus the ability of some individuals to work on the yacht. The yacht’s flag state and classification society should be involved at an early stage in the project so that any aspects of the work which are likely to have an impact on the yacht’s certification can be clearly identified early on in the process, planned for – and costed.

In addition to defining the works, the owner and the yard must also agree how the project will actually be carried out. This is usually achieved by provisions in the contract or the specifications dealing with procedures for plan and drawing approvals (with time limits by which either side must reply or comment to the other), progress reporting, the owner’s inspection and supervision rights as well as the co-ordination of the yard’s works with those of other subcontractors directly employed by the owner.

Owners and advisers must be aware of the particular challenges and possible pitfalls associated with refit or conversion projects. However, if the risks are identified and managed effectively, it is clear that this type of project is well worth an owner considering as an alternative to a newbuild. MRI

Justin Turner

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“there are complications about consolidating new and existing materials which do not emerge

with newbuild projects and these can lead to serious technical

and commercial disputes”

Justin Turner is a partner at the shipbuilding and offshore law firm Curtis Davis Garrard LLP and leads the firm’s superyacht practice


teChniCAL brief: SALvAGeSepteMber 2014

Although serious casualties have decreased in the last years (as outlined in Adamson, Lee. “Wreck-removal convention to enter into force.” International Maritime Organization N.p. 15 April

2014, accessed online 28 July 2014), shipwrecks continue to occur. Regulations, conventions and codes have ensured that safety is respected during salvage operations. However, the methods and equipment used by salvage contractors can still be improved.

Each salvage operation is a new context, one which can change from day to day. Salvage companies do not have a great deal of time to plan an operation in advance so they often end up relying on their experience from previous jobs. This leaves little room for innovation, improving equipment, safety, and new methodologies.

A well-known salvage operation that suffered many delays due to harsh environmental conditions is the salvage operation of the container vessel the MV Rena. The Rena ran aground of the coast of Tauranga New Zealand, ending up lodged in a slanted position, with many of its container stacks needing to be removed.

In no other industry are operations more complex and time sensitive than in the salvage industry. Potential oil spills and shifting wreckage make these high risk operations. In the case of the Rena, eight of the containers contained hazardous materials, not to mention the 1900 tonnes of oil on board. Safety, therefore, is of the utmost importance to ensure a successful recovery.

The container salvage operation of the Rena was conducted with traditional crane barge operations. Relatively small rotations of the barge due to swell resulted in large movements of the crane hook and load. This places onboard personnel and equipment at risk. Therefore, work was often interrupted, leading to a huge downtime, delays and cost overruns. To date, the norm has indeed been to halt all recovery activities and wait until the swell subsides. In some areas of the world this means that operations can be very difficult to execute.

An innovative and rapidly growing company in the maritime and offshore industry has developed a system which addresses these problems faced by salvage contractors time and time again. The system ensures safety in offshore lifting operations by compensating the wave induced motions of the vessel at the base of the crane. It developed the modular system, the Barge Master T700, which is easy to mobilise and can be places between vessel and crane to create a steady crane, making it the perfect tool for offshore salvage operations.

The system increases the safety of offshore lifting operations and thereby increases the workability. The increased workability achieved by using this system could have contributed to a faster salvage of the containers on the Rena. This in turn may have given enough time to remove additional oil from the ship before it broke in half.

Such a system will ensure that the crane is motion compensated and the hook remains steady with respect to the fixed world, resulting in:• safe working conditions at all times; • personnel onboard the grounded vessel can attach rigging

to the containers in a safe manner, without movement of the hook of the crane;

• containers will not swing, preventing any clashing whilst performing lifting operations;

• in a special motion control functionality the crane hook and

improving the safety of marine salvage operationsKarien Hofhuis, of Bargemaster, looks at a new solution for tricky salvage operations

Fig.2. Lifting a container at the North Sea

Fig.1. Motion compensated crane by applying the system, allowing safe container salvage operations of a grounded container vessel


teChniCAL brief: SALvAGe

SepteMber 2014

load can be motion compensated relatively to the barge deck. Allowing to place containers on the barge deck in a safe and controlled manner;

• decreased downtime and therefore decrease in project costs; and

• an increase in reliability of the project planning.

the technologyIn a three dimensional world, six degrees of freedom (DoF) need to be compensated to keep a platform from moving. Three degrees of freedom, one translation (heave) and two rotations (roll and pitch), are actively compensated by the Barge Master, a platform driven by three hydraulic actuators. By measuring the heave, roll and pitch and controlling the actuators supporting the platform to produce the counteractive motion, the platform is kept in an earth fixed steady position. The remaining degrees of freedom, two translations (surge and sway) and one rotation (yaw) of the vessel or barge can be constrained using a dynamic positioning or a traditional anchor system.

The T700 is providing a steady platform on which any type of equipment can be mounted, it has a lifting capacity of 160 mT at 20 m and a payload capacity of 700 mT.

Cost-effective and flexible solutionOften grounded container vessels are salvaged using a standard barge and crawler crane combination. A Barge Master can be rented as standalone unit and can be combined with a flat top barge and standard crane. Because the crane and barge can be rented worldwide only the Barge Master needs to be mobilised to create a motion compensated crane barge. Since the system

is fully containerised, mobilisation costs are kept to a minimum.Essentially such a system can be placed on any vessel. The system can be shipped anywhere in the world in standard sized containers, meaning flexibility and the ability to react and mobilise at a casualty site quickly.

the safety of personnelThere are many dangers associated with working in the salvage industry. Salvors are working in risky and difficult environment, with a team to whom they trust their lives. Moving objects and unstable equipment are some of the most dangerous aspects of the job. In the case of the Rena, it was even difficult to get salvors onto the wreck itself. These people were eventually landed by helicopter. A motion compensated crane could have provided a safer and more affordable method by transferring personnel onto the wreck via a man-riding bucket. MRI

Fig.3. BM-T700 load chart

Fig.4. Foundations of the Barge Master T700 being placed on a barge

Fig.5. The complete Barge Master T700 system

Karien HofhuisKarien Hofhuis heads marketing for barge Master bv


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