Maritime Law: Beware of the Boat That Comes to Help in an Emergency (English/Spanish)

June 04, 2013

I received a very frustrating phone call the other day from an individual that owned a small open fisherman that found himself in a predicament and he wanted my help. He was enjoying himself in the South Florida waters, when he found himself in an emergency situation and his vessel capsized; thankfully with no injury to himself or anyone else aboard. He did the right thing and called the U.S. Coast Guard on Channel 16 VHF-FM (156.8 MHz). Almost immediately, a commercial salvor arrived to help.

This individual went on and continued to do the right thing by doing what most maritime lawyers recommend, negotiate the terms before the marine assistance company attempts to assist. This was done and agreed and the salvor tied his line to the vessel. Unfortunately, in the course of his assistance, the salvor grounded the vessel he was attempting to salve in a marine sanctuary. What he did next is astounding--he untied the vessel and took off, leaving this poor man worse off than when he first called the Coast Guard.

A salvor may be liable for additional damage caused by its fault in performing salvage. Where the rub comes in is that there is a split of authority as to whether simple negligence or gross negligence/willful misconduct is the standard of proof. As professional salvors are held to the standard of experts, that standard should more easily fall into the category of gross negligence while other "helpers" that are not salvors will be held to the standards of reasonable seamen.

This sad case is a wake up call for those individuals that insist on operating their watercraft without insurance. If this man would have had insurance, his insurer would certainly paid for the damage and then gone after this errant salvor for negligent salvage. This man also did not have a towing plan, a sort of AAA for boats, that he could call if he gets himself into a "situation". While there is a difference between towing and salvage under the law, these plans assist boat owners in narrowing the distinction by requiring that marine assistance companies distinguish between simple towing and/or soft groundings and the more serious and expensive salvage efforts where distress or danger exist.

Towing assistance provides help for breakdowns and light groundings. The far more expensive salvage claims are covered only by marine insurance policies. If the salvor wants to do the job but does not know what the cost will be but will make claim afterwards, the final amount will be decided one of three ways -- negotiation with your insurance company; binding arbitration or;  through litigation in federal admiralty courts. It pained me to tell this man that because he did not have insurance, litigation was essentially his only option. 

The best protection against a salvage bill or a negligent salvor is adequate insurance. Boaters should make sure the policy provides for salvage up to the full value of the boat, not a percentage of its value and that there is no deductible for salvage costs. 

I am happy to review any insurance policy you may have that you will be relying on in meeting the potential risks of boating. If you are interested in contacting me, you may do so at mov@chaloslaw.com.

Spanish Translation

Cuidado con el Bote Que Viene a Ayudar en Caso de Emergencia

Recibí una llamada telefónica muy frustrante el otro día de un individuo que poseía un pequeño pescador abierto que se encontró en una situación difícil y quería mi ayuda. Estaba disfrutando de las aguas del sur de la Florida, cuando se encontró en una situación de emergencia y su buque naufragó, afortunadamente sin lesiones a sí mismo o a cualquier otra persona a bordo. Él hizo lo correcto y llamó a la Guardia Costera de los EE.UU. en el canal 16 de VHF-FM (156.8 MHz). Casi de inmediato, un salvador comercial llegó a ayudar.

Este individuo siguió y continuó haciendo lo correcto, haciendo lo que más abogados marítimos recomiendan, negociar las condiciones antes de la empresa de asistencia marítima intenta ayudar. Así se hizo y estuvo de acuerdo y el salvador ató su línea al bote. Por desgracia, en el curso de su asistencia, el salvador encallo el bote que estaba tratando de salvar en un santuario marino. Lo que hizo a continuación es increíble - que desató el bote y se fue, dejando a este pobre hombre peor que la primera vez que llamó a la Guardia Costera.

Un salvador puede ser responsable de los daños adicionales causados or su culpa en el desempeño de salvamento. Cuando el problema se presenta en es que hay una división de la autoridad en cuanto a si la mera negligencia o negligencia / intencional falta grave es el estándar de la prueba. Como salvadores profesionales se mantienen al nivel de expertos, esa norma debería caer más fácilmente en la categoría de negligencia grave, mientras que otros "ayudantes" que no son salvadores se llevará a cabo a las normas de los marineros razonable.

Esta triste caso es una llamada de atención para las personas que insisten en hacer funcionar su bote sin seguro. Si este hombre hubiera tenido seguro, su compañía de seguros sin duda sería pagado por los daños del bote y luego va tras este salvador errante de salvamento negligente. Este hombre tampoco tenía un plan de remolque, una especie de AAA para los barcos, que podía llamar si se pone a sí mismo en una "situación". Si bien existe una diferencia entre el remolque y salvamento conforme a la ley, estos planes ayudan a los propietarios de botes en la reducción de la distinción, al exigir que las empresas de asistencia marinos distinguir entre los esfuerzos de rescate más serios y costosos en los que son mas sencillo y / o encallos en suave arena.

Asistencia de remolque proporciona ayuda para las averías y varadas luz. Las demandas de rescate mucho más caros están cubiertos sólo por las políticas de seguro marítimo. Si el salvador quiere hacer el trabajo, pero no sabe cuál será el costo, sino que hará reclamar después, la cantidad final se decidirá una de tres maneras - negociación con su compañía de seguros, arbitraje o, a través de litigios en el ministerio de marina federal tribunales. Me dolió decirle a este hombre que, debido a que no tenía seguro, el litigio era esencialmente su única opción.

La mejor protección contra un proyecto de ley de rescate o un salvador negligente es un seguro adecuado.

Los navegantes deben asegurarse de que la políza prevé rescatar hasta el valor total del bote, no un porcentaje de su valor, y que no hay deducible para los gastos de salvamento.

Maritime Law: Passengers Get Refunds After Cruise Fire

June 03, 2013

Five days after 25 major cruise companies adopted a passenger bills of rights which promises full refunds for trips that are cancelled due to mechanical failure, a fire broke out aboard a Royal Caribbean ship May 27, 2013. 

Damage on the Royal Caribbean ship Grandeur of the Seas is pictured as the ship is docked in Freeport May 27, 2013. (Vandyke Hepburn, Reuters).

The fire caused so much damage that the rest of the cruise was cancelled and the 2,224 passengers were to be flown from the Bahamas back to Baltimore. Royal Caribbean said on its website that most public areas and staterooms were safe and that power, propulsion and communications systems were not interrupted. The bill of rights for passengers appears that it could not have come at a better time.

The bill of rights includes the following: 

The right to disembark a docked ship if essential provisions such as food, water, restroom facilities and access to medical care cannot adequately be provided onboard, subject only to the Master's concern for passenger safety and security and customs and immigration requirements of the port. The right to a full refund for a trip that is canceled due to mechanical failures, or a partial refund for voyages that are terminated early due to those failures. 

The right to have available on board ships operating beyond rivers or coastal waters full-time, professional emergency medical attention, as needed until shore-side medical care becomes available. 

The right to timely information updates as to any adjustments in the itinerary of the ship in the event of a mechanical failure or emergency, as well as timely updates of the status of efforts to address mechanical failures. 

The right to a ship crew that is properly trained in emergency and evacuation procedures. 

The right to an emergency power source in the case of a main generator failure. 

The right to transportation to the ship's scheduled port of disembarkation or the passenger's home city in the event a cruise is terminated early due to mechanical failures. 

The right to lodging if disembarkation and an overnight stay in an unscheduled port are required when a cruise is terminated early due to mechanical failures. 

The right to have included on each cruise line's website a toll-free phone line that can be used for questions or information concerning any aspect of shipboard operations. 

The right to have this Cruise Line Passenger Bill of Rights published on each line's website. 

This incident follows the various incidents plaguing Carnival ships earlier this year that I have blogged about. The Miami Herald has also reported on this latest incident. If you are interested in receiving a copy of the Miami Herald article, you may seek a copy by writing to me at mov@chaloslaw.com.

Marine Terminal Liable for Submerged Abandoned Anchor

May 16, 2013

Today the 3rd Circuit in the ATHOS I matter issued a critical maritime ruling that held that a marine terminal may be liable for a major casualty that occurred when a vessel, on approach, struck a submerged abandoned anchor. 

Picture of ATHOS I after casualty taken from www.ceoe.udel.edu

The facts of the case are simple: as the oil tanker M/T ATHOS I neared Paulsboro, New Jersey, after a journey from Venezuela, an abandoned ship anchor lay hidden on the bottom of the Delaware River squarely within the ATHOS I’s path and only 900 feet away from its berth. Although dozens of ships had docked since the anchor was deposited in the River, none had reported encountering it. The ATHOS I struck the anchor, which punctured the ship’s hull and caused approximately 263,000 gallons of crude oil to spill into the River. The cleanup following the casualty was successful, but expensive.

The appeal was the result of three interested parties attempting to apportion the monetary liability. The first party (actually two entities consolidated as one for our purposes) includes the ATHOS I’s owner, Frescati Shipping Company, Ltd., and its manager, Tsakos Shipping & Trading, S.A. (jointly and severally, “Frescati”). Although Frescati states that the spill caused it to pay out $180 million in cleanup costs and ship damages, it was reimbursed for nearly $88 million of that amount by the United States (the “Government”)—the second interested party—pursuant to the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. In order to recoup the unreimbursed losses, Frescati made claims in contract and tort against the third interested party—a set of affiliates known as CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Coast Oil Corporation (jointly and severally, “CARCO”)—which requested the oil shipped on the ATHOS I and owned the marine terminal where it was to dock to unload its oil. Specifically, Frescati brought a contract claim for CARCO’s alleged breach of the safe port/safe berth warranty (jointly and severally, “safe berth warranty”) it made to an intermediary—Star Tankers, Inc.--responsible for chartering the ATHOS I to CARCO’s port, and alleged negligence and negligent misrepresentation against CARCO as the owner of the wharf the ATHOSs I was nearing when it was holed. The Government, as a statutory subrogee that stepped into Frescati’s position for the $88 million it reimbursed to Frescati under the Oil Pollution Act, has limited its claim for reimbursement from CARCO to Frescati’s contractual claim pursuant to a limited settlement agreement.
 
Following a 41-day bench trial, the District Court for the Eastern District of Pennsylvania held that CARCO was not liable for the accident under any of these theories. In regard to the contractual safe berth warranty, the Court determined that Frescati (and the Government as a subrogee) could not recover on their contractual claims. First, Frescati was not a party to the agreement that contained the warranty between CARCO and Star Tankers, and was not an intended beneficiary of that agreement. Furthermore, even if Frescati could claim the protection of the warranty, it was only a promise by CARCO to exercise due diligence and not an unconditional guarantee; moreover, sufficient diligence existed here. In any event, the warranty was excused because CARCO specified the port ahead of the ATHOS I’s arrival, placing the burden on the ATHOS I’s captain to accept it as safe or reject it under what is called the “named port exception.”

The Third Circuit Court of Appeals disagreed with all three of these rulings. First, the appellate court held that the ATHOS I—and by extension, its owner, Frescati—was an implied beneficiary of CARCO’s safe berth warranty. The Court concluded that the safe berth warranty is an express assurance of safety, and that the named port exception to that warranty does not apply to hazards that are unknown to the parties and not reasonably foreseeable. The Court added that it could not be sure that this warranty was actually breached, as the District Court made no finding as to the ATHOS I’s actual draft nor the amount of clearance actually provided.

Second, the appellate court found that if on remand the District Court rules in favor of Frescati on its contractual warranty claim, its negligence claim becomes unnecessary. It reasoned that if this issue is reached, they do not agree with the District Court’s conclusion that CARCO cannot be liable in negligence because the anchor lay outside the approach to CARCO’s terminal—the area in which CARCO had a duty to exercise reasonable care in proving a safe approach. As such, the District Court would need to resolve the appropriate standard of care required, whether CARCO breached that standard, and if so, whether any such breach caused the accident. 

Conversely, the appellate court found no error with the Court’s holding that CARCO’s alleged misrepresentation as to the depth of its berth was geographically (and hence factually) irrelevant to the ultimate accident. In addition, the appellate court concluded that the Government had waived reliance on a partial settlement agreement with CARCO that, the Government contended, precluded CARCO from making certain equitable defenses to the Government’s subrogation claims. In this context, the Court affirmed in part, and vacate and remand in part for additional fact finding on the contractual (and possibly negligence) claims.

A copy of this decision can be found here => http://www.americanmaritimecases.com/assets/Third-Circuit/ATHOS.pdf. If you are unable to open this link and wish a copy of this decision or if you wish to reach me, you may do so by email atmov@chaloslaw.com.

What the "Bleep" is MLC 2006 and Why Should I Care?

April 29, 2013

Since my last few blog posts on the MLC, I have repeatedly heard this question with increasing frequency. While mainstream clients have been increasingly asking about the Maritime Labor Convention 2006 (“MLC”), which comes into force on August 20, 2013, others question the "need to know". Ship owner clients wonder what it means for them—in a nutshell, non-compliance with the requirements of the Convention will result in port state control (PSC) detentions. Insurers ask what it means for them—it means knowing what your policy states and how the Convention is interpreted to know whether a given situation is covered under the policy. Yacht managers and operators figure it does not apply to them, so many of them simply want a letter from me to cover themselves that they are not required to be compliant. When I tell them that such a letter may not be possible in their given situation, all of a sudden, I get “what the !@#$%” is this law and why am I subject to it?

This blog post is to set out an FAQ of sorts to answer many of the questions I have received in the last year or so leading up to the entry into force of this Convention.

1.  What is MLC 2006 certification?

According to the International Labor Organization (“ILO”), the MLC provides comprehensive rights and protection at work for the world's more than 1.2 million seafarers.  On their website, the ILO goes on to state that Convention aims to achieve both decent work for seafarers and secure economic interests in fair competition for quality ship owners. By its origin and by its intent, the MLC is a human rights document. It prescribes a variety of seafarers’ protections in terms of work and living conditions, terms of employment, health care, social security, and related matters. All present employment contracts will become null and void on MLC implementation. They will have to be replaced by seafarers’ employment agreements, with mandatory prescribed particulars of conditions of employment. The MLC has been designed to become a global instrument known as the "fourth pillar" of the international regulatory regime for quality shipping, complementing the key Conventions of the International Maritime Organization (“IMO”). The decision by the ILO to move forward to create MLC was the result of a joint resolution in 2001 by the international seafarers’ and ship owners’  organizations, also supported by governments.  They pointed out that the shipping industry is “the world’s first genuinely global industry” which “requires an international regulatory response of an appropriate kind – global standards applicable to the entire industry”.  Thus, all sections of the MLC should be read with this background in mind--both decent working conditions for seafarers and fair competition for vessel owners.

The MLC certification process is similar to ISM and ISPS for ships, and the certificate will have 5 years validity and the process will include interim, initial and intermediate inspections. The MLC requires owners to submit a Declaration of Maritime Labor Compliance (“DMLC”) to their Flag State, which is a party to the Convention. The Flag State will then issue an MLC Certificate to ships flying their flag which should be posted on board in a conspicuous place that is accessible to seafarers. Thus, the MLC Certificate is issued by the vessel’s Flag State, following approval of certain paperwork and a physical inspection of the vessel.

2.  Do pleasure yachts fall under the certification requirement, or is this just for industry-related vessels?

The Convention applies to all commercially registered vessels, including yachts engaged in international voyages, regardless of country of registration (Flag). Cannes to Monaco can be construed as an international voyage, so exceptions would be very rare.  It is also interesting to note that in one of their circulars discussing what ships are covered under the MLC, the Marshall Islands flag states that yachts regardless of tonnage are considered ships covered by the Convention if they are “ordinarily engaged in chartering”. 

3.  Is there a vessel size below which I don’t need certification?

Those vessels over 500GT must, among other requirements, carry the MLC Certificate. For those under 500GT, it is strongly recommended that voluntary compliance with the Convention be documented by your Flag State. If you want to know why, please read my blog post on Is the Industry Asleep to the MLC on this blog. 

4.  How do I get compliant with the requirements?

The MLC Certification is based upon a regime where the Flag State Administration is either doing the certification themselves or authorizing Recognized Organizations (“RO”) to work on their behalf. Such authorization may range from full authorization (from initial DMLC submission, inspection to shipboard verification to issuance of the MLC Certificate) to part of these activities only. For some flags, a case by case authorization may be required. Many vessel owners are utilizing their Classification Society or third party vendors as the RO specializing in the MLC to get compliant. The answer to this question generally rests with the vessel’s Flag State.

5.  How do I stay compliant with the requirements?

After the initial inspection and certification, there will be interim and intermediate inspections. At some point, all vessels subject to the MLC will eventually be boarded by Port State Control (PSC) inspectors, who have the authority to detain a vessel not compliant with the requirements of the MLC. Compliance is dependent mainly on sticking to the vessel’s DMLC, the certificate and the plan for keeping the vessel MLC compliant.

6.  How long does it take to get certified?

Length of certification time will depend on the Flag State of the vessel and the lead time to seek certification. One of the main requirements of the MLC is that each crew member is to have been issued, and be in possession of, a signed Flag State approved Seafarer Employment Agreement (“SEA”). This document must contain certain provisions required under the MLC. The SEA will replace or be used in conjunction with any Crew Contracts already used by the vessel and will be examined at PSC inspections. Issuance of new SEA’s and Crew Manuals will take time. Each vessel and ownership entity may have differing levels of compensation and benefits for crew over and above those required as a minimum under MLC. Following a gap analysis and the subsequent creation of SEA’s and updated crew manuals, it may take many weeks or even months for documents to be reviewed, revised and approved by owner’s representatives and advisors. Thus, the question on the lead time is “it depends”. 

7.  When will my initial certificate be issued and how frequently must it be renewed?

The MLC shall be issued to a vessel by the competent authority (Flag State), or by a RO duly authorized for this purpose.  Pursuant to the MLC, the term “competent authority” means the minister, government department or other authority having power to issue and enforce regulations, orders or other instructions having the force of law in respect of the subject matter of the provision concerned.  Practices for issuing the certificate will vary by country and may deal with more than one government department. The certificate may be issued for a period not to exceed five (5) years.  Where the competent authority of the Flag State has ascertained through inspection that a ship that flies the member state’s flag meets or continues to meet the standards of the Convention, it shall issue or renew a Certificate to that effect and maintain a publicly available record of that Certificate.  Additionally, a MLC Certificate may also be issued on an interim basis to new ships on delivery, when a ship changes flag, or when a ship owner assumes responsibility for the operation of a ship which is new to that ship owner.  It is important to note that the interim certificate may not be issued for a period exceeding six months.

8.          Is it up to me to schedule a certification meeting?

Each Flag State is responsible for ensuring implementation of its obligations under the Convention on ships that fly its flag.  The Flag State is responsible for creating an effective system for the inspection and certification of maritime labor conditions.  The setting up of inspections will vary from country to country.  It is important to look at your country specific authority to determine how the country will be scheduling certification inspections.

9. Is my certification strictly based on the PSC inspection?

Each Flag State shall maintain a system of inspection of the conditions for seafarers on ships that fly its flag which shall include verification that the measures relating to working and living conditions are being followed and that the requirements of the convention are being met. The Flag State is required to appoint a sufficient number of qualified inspectors to fulfill its inspection responsibilities.  The time between inspections should not exceed three (3) years. Inspectors have the power to board a ship that flies the Flag State flag, to carry out any examination, test or inquiry which they may consider necessary in order to satisfy themselves that the standards are being strictly observed and to require that any deficiency is remedied and, where they have grounds to believe the deficiencies constitute a serious breach of the requirements of the Convention, or represent a significant danger to seafarers’ safety, health or security, the inspector will be able to prohibit a ship from leaving port until necessary actions are taken to remedy the deficiencies.

10. What happens if I don’t pass inspection?

If the vessel does not pass inspection, the MLC Certificate shall be withdrawn by the Flag State and the inspector has the right to prohibit the vessel from leaving port.  Generally, a vessel will not pass inspection if there is evidence that the vessel concerned does not comply with the requirements of the Convention and required corrective action has not been taken.  For example, the average length of detention for a yacht is 4 days. With the implementation of MLC, I expect the number of inspections will increase and therefore the average number and length of detentions will exponentially increase. Nevertheless, the Flag State should take into account the seriousness or the frequency of the deficiencies before withdrawing the MLC Certificate.

11. Can my inspection occur while having the owner or charter customers on board?

Any vessel can be inspected at any time, regardless of owners, guests or charterers being aboard. Detention for non-compliance could therefore prove disastrous in terms of financial and reputation losses for the vessel, her owner, charterers, captain, crew and charter agent.  There are no prohibitions in the Convention that would not allow the owner to be present for the inspections.

12. What is the best way to insure that I’ll pass inspection as quickly as possible the first day, the first time? 

The best way to insure that your vessel will pass inspection is to strictly adhere to the guidelines laid out in the Convention.  If the vessel is treating its employees fairly and providing a safe and secure workplace, there is no reason that the vessel should fail its inspection.

13. What format should my documentation be saved in (i.e., electronic document, hard copies, faxes, scans)?

Member states require that each vessel maintain a hard copy of the Convention onboard the vessel at all times.  Additionally, the vessel will also be required to carry and maintain the MLC Certificate in hard copy format onboard the vessel at all times.  The vessel will also be required to maintain a declaration of maritime labor compliance stating the national requirements implementing the Convention for the working and living conditions for seafarers and setting out the measures adopted by the vessel owner to ensure compliance with the requirements on the vessels concerned. 

14. What is the best way to organize all the things the PSC inspector will require?

The competent authority designated by the Flag State is responsible for establishing procedures to enable their inspections to investigate each vessel’s compliance with the Convention.  It is advised that you look to the Flag State’s specific guidelines for how to best organize the information that may be requested by the inspectors.

15. Should my shore-side yacht management company be involved in MLC inspection?

There is no requirement under MLC that your shore side yacht management company be onboard the vessel at the time of the inspection.  However, if you feel that the shore-side staff has a better handle on the understanding of the Convention than the Master/Captain, it may be highly beneficial to have your shore-side yacht management company involved in the inspection, especially if they were the party responsible for implementing the DLMC, MLC Certification and any subsequent deficiencies.    

16. Do I need to refit my crew accommodation spaces to meet the MLC standards?

MLC crew accommodation standards will apply only to new vessels, the keels of which are laid after MLC implementation date. 

17. Do I now have to provide social security to my crew and handle complex taxation requirements?

The MLC does not impose a blanket requirement for social security contributions to be made by seafarers or by ship owners, and taxation is not even mentioned. However, it is in all seafarers’ interests to find out what their social security status is.

18.       Will my liability insurance for the vessel pay for any problems with inspection, detention  or other costs related to the crew resulting from the MLC?

Of course, every insurance policy is different and the first stop is to review its terms.  Nevertheless, financial security is required of vessel owners in respect of repatriation, death or long term disability of crew under the MLC. Some liability insurers have agreed to issue proof of insurance as evidence of financial security for seafarer claims under MLC. However, some insurers may not cover all aspects of crew expenses related to MLC and thus, a discussion on this topic should be had between the vessel owner and the insurer/broker.

I am sure there are many other questions various players in the industry have related to MLC. These are but just a sampling of the questions I have been asked and based on the kind of questions still being presented to me, there is still much to learn. If you are interested in learning more, consulting with me on the various aspects to establish vessel/company SEA’s/benefits compliant with Flag State requirements, conduct an overview of the requirements of MLC, understanding the processes required to achieve certification, conducting a Gap Analysis to review any existing Crew Contracts and Manuals, please feel free to contact me, Michelle Otero Valdes, Esq., Chalos & Co, P.C., 141 Almeria Avenue, Coral Gables, Florida 33134, Tel: 305 377 3700, Fax: 866 702 4577, Email: mov@chaloslaw.com. 

NB. A substantially similar copy of this blog article drafted by me is being posted on Great Circle Systems, Inc. website at youhttp://blog.greatcirclesys.com/-0/bid/273548/mlc-2006-compliance-13-frequently-asked-questions?source=Blog_Email_[MLC%202006%20Compliance%3A]. Check it out.