Maritime Law-Carnival Corp "Shakes it Up"

November 06, 2013

Carnival Corp. is shaking up its management team in an effort to rebuild its business after a deadly accident and several other mishaps drove passengers away. Effective December 1, 2013, Howard Frank will be stepping down from his current roles as vice chairman and chief operating officer at Carnival Corp. to take on the role of special advisor to the CEO and chairman, while continuing to represent the industry in his leadership role as chairman of CLIA. Alan Buckelew, president and CEO of Princess Cruises, will take over as chief operations officer of Carnival Corp. & PLC on December 1st.

This follows Carnival's decision in June to name a new CEO. Board member Arnold Donald took over as head of the company, replacing Micky Arison, who had been CEO since 1979 and is the son of one of the company's co-founders.

Today, Carnival's 10 brands annually welcome over 10 million guests on more than 100 ships supported by over 90,000 employees generating more than $15 billion in revenue with a market capitalization of $27 billion.

On Monday, Carnival also named a new CEO for its Holland America unit and a new president of Princess Cruises. Stein Kruse, president and CEO of Holland America Line, will become CEO of Holland America Group. Jan Swartz, the company's executive vice president of sales, marketing and customer service, was promoted to president of Princess Cruises. The newly created Holland America Group operates 41 cruise ships with over 36,000 employees worldwide who annually deliver 25 million passenger cruise days. 

It is reported in both the Maritime Executive and the Daily Business Review that the Miami-based company is making the leadership moves after struggling with weaker revenue since the February breakdown of the Carnival Triumph, which stranded passengers for five days in the Gulf of Mexico. That was followed by two other instances of ships having to be towed back to port. Dozens of future sailings were canceled as the company repaired those vessels.

Carnival also ultimately owned the Costa Concordia, a cruise ship that hit the shore of an Italian island in 2012, capsizing and killing 32 people.

If you are interested in contacting me, you may do so by emailing me atmov@chaloslaw.com.

Maritime Law--MLC Detentions Continue: Are You Ready?

October 28, 2013

As I have been blogging for the last year, the Maritime Labor Convention ("MLC") came into force internationally on August 20, 2013. Within two weeks, the first vessels were detained for non-compliance.

On September 3rd during a port state inspection of the Liberia-flagged offshore supply vessel ATLANTIC CARRIER, the Danish Maritime Authority observed that the crew had employment contracts that were not MLC compliant. The vessel was detained for 24 hours while the issues were corrected and she was then permitted to leave port and continue her operations in the North Sea.

ATLANTIC CARRIER: picture provided courtesy of Maritime Executive magazine

Around the same time period, LIA M was detained in Canada. The crew complaints included unpaid wages; a collective bargaining agreement that failed to list the vessel's name, a date or a wage scale; crew with no money, no shampoo, toothpaste or other items; a crew member who had twice been refused access to a doctor; and crew members having been forced to sign blank employment contracts.

However, the requirement that each crew member has a valid employment contract is only one aspect of seafarers' rights under the MLC. Shipowners are also required to implement measures relating to seafarer wages and hours of work, accommodation, food and catering, health protection, medical care, welfare and social security protection. In addition, a shipowner has to ensure that the ship carries an on-board complaints procedure. This must enable seafarers to raise issues about MLC compliance without retaliation. If the seafarer's complaint is not satisfactorily dealt with, he may bring it to the attention of the next port state control inspector, who in turn has the power to detain the ship.

About a month later, the Panamanian-flagged bulk carrier KOUYOU was detained in the port of Quebec, Canada, after maritime labor officials determined that crew were owed more than $51,000 in back pay. This was the third detention in Canada of a vessel under the MLC. This discovery was reported by the Maritime Executive to have been made by an inspector with the International Transport Workers Federation (ITF) and Unifor union. What was more surprising is that it was discovered that the involved crew had paid a total of $6,600 in fees to obtain their jobs. Recruitment or placement fees paid to manning agents are illegal under the MLC.

Although August 20th was the landmark date on which the MLC entered into force internationally, there is an important point to note. Ratifying states have 12 months from the date of ratification to enact the MLC into their domestic law and commence enforcement via flag and port state control. Therefore in principle, one would expect to see a phased introduction of the MLC by different flag states around the world over the coming months. Thus, shipowners whose vessels fly the flag of a state that has recently ratified might be tempted to think that they have time before their vessels need to be MLC compliant.

However, the "no more favorable treatment" provisions of the MLC I have been stressing again and again need to be remembered. In effect, these provisions require ports of states where the MLC has already entered into force to inspect all vessels for compliance, regardless of the flag they fly. This means that shipowners' interests may be best served if they take steps to ensure their vessels are MLC compliant now.

If you are interested in contacting me, you may do so by writing to me at mov@chaloslaw.com.

Maritime Law-Chasing Whistleblower Bounties

October 22, 2013

In August, I spoke to the North American Maritime Ministries Association on the topic of Legal Issues Affecting Seafarers and Ship Operators in Whistleblower Scenarios. You can read more about NAMMA here => NAMMA. Since this presentation, I have been asked to opine on other sorts of whistleblower scenarios. I recently noted that the Securities and Exchange Commission has just obtained a record $14 million whistleblower bounty for an in-house counsel whistleblower against his own company, which certainly may have some in-house counsel wondering if they should squeal on their clients. 

The Corporate Counsel magazine on October 14th cites a growing number of in-house counsel and compliance officers filing whistleblower-related claims against their own companies. I find this a disturbing trend, as these cases present a host of issues not present in an ordinary whistleblower claim, such as the plaintiff’s use of privileged communications, attorney work product, and confidential client information. In my view, an in-house counsel claim leaves a company particularly vulnerable. However, it would appear that states are starting to enact ethics opinions directly addressing the growing concern. 

Corporate Counsel reports that the New York County Lawyers’ Association issued an ethics opinion stating that New York in-house or outside corporate counsel cannot ethically collect whistleblower bounties for providing confidential information about their clients to the SEC. In addition, a U.S. Supreme Court case earlier this year made it harder to prove that an employee was retaliated against for whistleblowing. The ruling required a stronger showing of causation from the plaintiff.

However, I could not find any such ethics  opinions issued here in Florida. If you know of one, please let me know where I can find it. 

Given the current status of whistleblower law, there may appear to be a narrowing trend in the U.S. for whistleblower plaintiffs. However elsewhere, the whistleblowing concept is gaining broader ground. The Financial Times has reported that the United Kingdom, which enacted a new whistleblower law this year, is now considering whether to begin paying U.S.-style whistleblower bounties.

So for those of you overseas, you will need to watch what we do over here!

If you are interested in receiving a copy of my Powerpoint presentation to NAMMA (as it addresses some of these concepts) or are interested in contacting me, you may do by writing to me at mov@chaloslaw.com.

Maritime Law-What you need to know about the MLC

October 14, 2013

Given my work on the subject, the Professional Mariner magazine had me guest blog an article on the Maritime Labor Convention ("MLC"). It was incidentally posted on August 20, 2013, the implementation date for the MLC. You can find the complete article here => Professional Mariner Magazine.

I continue to be barraged by questions related to applicability of the MLC in given scenarios. The answer is simple, the MLC will apply to ships of all tonnages, whether publicly or privately owned, which are “ordinarily engaged in commercial activities.” The MLC does not provide a definition for what constitutes this quoted language and there has been some debate in yachting circles as to whether yachts are included. Some flag states have been publishing their narrow interpretation of this language as a way to encourage these vessel owners to change flags. However, this interpretation is not an answer to the “no more favorable treatment” clause which is a principle of the MLC.

So in other words, when port states which have ratified the MLC verify foreign ships’ compliance with the MLC in their ports, the intended system of port state enforcement will allow those ships carrying the MLC Certificate issued by its flag state to avoid inspection, whereas those that do not will be subject to inspection, resulting in possible delays. If the flag state of the vessel is one which has issued a narrow interpretation of the "ordinarily engaged in commercial activities" language, this may cause detention issues. I am not saying that it will. What I am saying is that given the policy of the MLC of “no more favorable treatment” to ensure that ship owners are not able to evade minimum obligations to their seafarers by failing to implement MLC under a non-ratifying flag state, if port state control believe that the vessel is ordinarily engaged in commercial activities, it will be in violation of MLC.

If you are interested in contacting me, please feel free to do so at mov@chaloslaw.com.