Maritime Labour Convention 2006: Are you a “shipowner” under your charterparty?

The ILO's Maritime Labour Convention 2006
The ILO’s Maritime Labour Convention 2006

Nick Wilcox, Senior Associate and Albert Levy, Partner, both of Ince & Co LLP, Partner, debate the vagaries and confusion surrounding one aspect of the Maritime Labour Convention.

The Maritime Labour Convention 2006 (MLC) has been in force internationally since August 2013 and, in that time, it has become clear that it has received widespread ratification, that enforcement is a reality, and that ships run the risk of detention if they are not compliant. However, there has also been a good deal of confusion over the question of “who is the ‘shipowner’?” under the MLC. The answer to the question is important, since it is that person who has the principal burden of ensuring MLC compliance.

In the Maritime Labour Convention, the “shipowner” is defined to mean the owner of the ship or another organisation or person who has assumed responsibility for the operation of the ship from the owner and who in doing so has agreed to take over the duties and responsibilities imposed on shipowners under the MLC. This is the case even if another organisation carries out some of the duties of “shipowner” on its behalf. Therefore, the owner and the “shipowner” may well be different persons or organisations. Note that “shipowner” does not necessarily mean the owner of the ship in the proprietary sense.

Readers could easily be forgiven for being confused by the terminology. Lewis Carroll put it well in Through the Looking Glass: “When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean – neither more nor less.’ Are you a “shipowner” under your charterparty? ‘The question is,’ said Alice, ‘whether you can make words mean so many things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master – that’s all.”

So it is with the Maritime Labour Convention, the word “shipowner” has a particular, not the common, meaning of the one responsible for compliance with the MLC. The MLC definition gives as an example the bareboat charterer as one type of person who may assume the mantle of “shipowner” from the owner. This accords with the charterer’s significant responsibilities under bareboat charterparty agreements whereby typically the charterer provides the crew and operates the vessel. By way of illustration, Barecon 2001 imposes extensive responsibilities on the bareboat charterer for the ship’s operation and her navigation, maintenance, repair and manning. By contrast, the charterer under a time or voyage charterparty agreement would not owe the same duties and responsibilities and thus day-to-day is unlikely to be the “shipowner”. Rather, responsibilities for the ship’s operation are likely to reside with the owner who on that basis will be the “shipowner”.

A point of interest is that in English law, as is explained in Marine Guidance Note 471(M) issued by the Maritime & Coastguard Agency (MCA), the definition of “shipowner” is slightly different for the purposes of the domestic legislation enacting the MLC. The example of “agent” has been omitted from the definition of “shipowner”. The MCA explains that this is because of the specific meaning that the word carries in the English legal sense. In short, an agent acts on behalf of, and binds, its principal. If the “agent” in the definition of “shipowner” was the agent in this sense, it is difficult to see how it could accept personal liability for the “shipowner’s” responsibilities. As “shipowner”, the owner of a ship on time charter has prima facie responsibility for ensuring the MLC compliance of all seafarers’ employment on board the ship. For example, the requirement that every seafarer has a seafarer employment contract containing certain minimum terms. Under the Maritime Labour Convention, this is the case even if some of the seafarers on board are legally employed by a different organisation such as the charterer (e.g. in respect of a supercargo). This raises a potential difficulty for the owner: how can he be expected to ensure that the charterer’s employment of seafarers on board is MLC compliant? Furthermore, how can the owner avoid a scenario where the charterer asserts that the ship is off hire on the basis that she has been detained for Maritime Labour Convention non-compliance, for which default the owner as “shipowner” is prima facie responsible, but where non-compliance is in reality the charterer’s fault?

An answer is to draft the charterparty so that responsibilities for Maritime Labour Convention compliance do not reside solely with the owner as “shipowner” but are apportioned between the owner and the charterer in order that liabilities attach where the responsibilities truly lie. For example, the charterparty could provide that it is the charterer’s duty to ensure that its employment of seafarers on board is Maritime Labour Convention compliant. This could be reinforced with an indemnity in favour of the owner in case there do prove to be Maritime Labour Convention deficiencies. However, if “knock for knock” arrangements are desired in respect of other aspects of the charterparty, care would be needed in the drafting so that these are not prejudiced by the inclusion of the indemnity. Additional charterparty clauses could also provide for whether the ship will be considered to be off hire in circumstances where she is delayed in port for Maritime Labour Convention deficiencies that are in reality attributable to charterer’s non-compliance.

For further information regarding the drafting or amendment of charterparties to apportion liability for Maritime Labour Convention compliance or in respect of the MLC generally, please contact the authors directly.

Nick Wilcox and Albert Levy
Ince & Co LLP
Telephone: +44 (0) 20 7481 0010

 

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