Safeguarding tomorrow today

The Board received regular reports throughout the year on industry issues that are relevant to maritime liability, many of which have an International Group (IG) dimension.

The Managers monitor the issues, provide website information to Members, and play an energetic role in the work of the IG, chairing a number of influential subcommittees and serving on many others.

The UK Club is a strong advocate for benefits of mutuality, at a time when competitor shave experimented with offering other insurance structures for P&I.

The ability of ship owners, through the IG, to speak with a united voice on liability matters, and to be heard in IMO and other international organisations where maritime laws are framed or discussed, should not be under-valued.

Nothing illustrates this so well as the response to industry issues. Through their Clubs,ship owners are mutual insurers as well as insureds, and can decide for themselves on how to react when new convention liabilities arise.

Maritime Labour Convention
Last year’s Review noted the entry into force in August 2013 of the Maritime Labour Convention (MLC), consolidating more than 60 ILO standards into a single instrument;the Club provided practical help with these issues and brought in a Rule amendment to allow certificates of entry to be used as evidence of financial security.

During 2014, the Directors considered a report on enhanced financial security provisions, which would cover up to 4 months’ unpaid wages, to be included in amendments to the MLC that are expected to take effect by January 2017. While this is not a traditional P&I risk, and involves managing potential moral hazards, the Board decided that it wished the Club to be in a position to provide the certification. Work will continue during 2015 to make the necessary preparations. Unlike the position under other maritime liability conventions, where financial security is evidenced by a certificate issued by the Flag State in return for a blue card issued by the insurer, it is envisaged that the certificate evidencing financial responsibility under the MLC will be issued directly by the insurer.

Sanctions

The Board received regular reports on sanctions, including the relief programme in respect of US and EU sanctions on Iran, agreed under the Iran Joint Plan of Action on 24th November 2013 and extended in November 2014 to 30th June 2015.No substantive changes were made to the program, and it remained the case that Owners who wished to trade within the scope of the relief provisions ran the risk that the Club could be prevented from paying claims relating to the relief period once the period had ended if the sanctions were then restored in full.

The Club continues to provide website advice on the risks presented by sanctions.Following incidents involving other clubs, Members were cautioned specifically about STS operations in the Persian Gulf designed to disguise the origin of Iranian oil exported, in breach of sanctions, to countries other than those (India, China, Japan,South Korea, Taiwan and Turkey) which benefit from a waiver under the US National Defence Authorisation Act (NDAA).

New EU and US Sanctions against Russia have also been announced, but seemed to have relatively limited effect in the maritime sphere, being targeted against individuals and entities with specific links to the Russian president.

Nairobi Wreck Removal Convention

The end of the year saw much activity to prepare for the issue of blue cards relating to the Nairobi Wreck Removal Convention, which will enter into force in State Parties on14th April 2015.

The Convention provides a strict liability, compensation and compulsory insurance regime for States affected by a maritime casualty. It makes the registered owner of a ship liable for locating, marking and removing a wreck in the exclusive economic zone (EEZ) of a State Party. A State Party can extend the scope of the Convention to their territorial sea, but in States which do not exercise this option, the Convention will apply only in the EEZ.

Owners of ships of 300 gross tons or more, registered in a State Party or entering or leaving a port in the territory of a State Party, need insurance cover arrangements which meet the requirements of the Convention and a certificate from a State Party attesting that such insurance is in force. For States Parties that do not extend the Convention to the territorial waters, they will not be able to avail themselves of the right of direct action conferred under the Convention to “wreck” incidents that occur in their territorial sea.

Notwithstanding that Clubs in the International Group do not usually provide shipowners with primary P&I war risks cover, it has been agreed to pool all liabilities incurred under certificates issued, including otherwise excluded liabilities, up to, but not exceeding, the amount of the liability so certified. Policy defences and exclusions will continue to apply in the usual way in respect of liabilities arising otherwise than under Certificates.

It remains to be seen how widely ratified the Convention will become. As of April2015, the States Parties were Bulgaria, Congo, Denmark, Germany, India, Iran, Liberia,Malaysia, Marshall Islands, Morocco, Nigeria, Palau, and United Kingdom.

Piracy

While there were no successful piracy attacks recorded in the Indian Ocean or Gulf of Aden in 2014, piracy off West Africa continued to present a serious problem to owners trading to the Gulf of Guinea, especially off the coast of Nigeria.

Piracy off West Africa typically consists of armed robbery, cargo theft (by hijacking and transferring cargo to smaller vessels), and kidnapping crew for ransom. Attacks are often violent and the potential for P&I losses is greater than under the Somali piracy business model.

Some owners sought to address the problem in 2014 by use of armed guards sourced from local military forces, or in some instances by unarmed personnel of private maritime security companies (PMSCs) providing additional skills on board.There was accordingly a demand from Members to contract with PMSCs on the GUARDCON form with logical amendments to reflect these circumstances - and agreement was reached between BIMCO and the IG for the Clubs to make available an amended “GUARDCON West Africa”. However, by the end of the year, such arrangements were the subject of controversy in Nigeria, with vessels detained by the Nigerian Maritime Safety Agency on grounds that use of guards on ships other than approved Nigerian Navy patrol vessels was not permitted.

New ‘Guidelines for Protection against Piracy in the Gulf of Guinea Region’ were developed by the shipping Round Table in a joint industry initiative, to supplement the guidance previously issued in relation to Somalian piracy under BMP4. The Guidelines were endorsed by the Club and publicised on the website.The Directors received a report on a new, Ghana based, Maritime Trade Information Sharing Centre for the Gulf of Guinea (MTISC-GoG), intended to be a focal point for information on countering piracy and maritime crime in the region. The aim of MTISC-GoG is to maintain an overall picture of maritime activity and threats off West Africa, based on vessel reports. While it has no ability to direct deployment of military vessels to assist ships, it is intended to be linked with national maritime operations centres, to help in co-ordinating with any available military assistance. As 2015 got under way, all the indications were that piracy in West Africa will remain a very active issue in the foreseeable future.

Pre 2015 Financial Statements

Past editions of the Club's financial reports are here.


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