Nordisk Skibsrederforening

THE MLC 2006 – A challenge for the Offshore sector

The Maritime Labour Convention (MLC 2006) was adopted by the International Labour Organisation (ILO) in February 2006. The convention is a comprehensive document that consolidates and replaces more than 60 existing maritime labour instruments. It is referred to as the “Fourth Pillar” of the International Regulatory Regime for Quality Shipping, which otherwise consists of the International Convention for the Safety of Life at Sea (SOLAS), the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW), and the International Convention for the Prevention of Pollution from Ships, 1973 and Protocol of 1978 (MARPOL).

The convention requires ships of 500 gt or more engaged in international shipping to have a Maritime Labour Certificate and a Declaration of Maritime Labour Compliance (DMLC). The convention also applies to smaller ships, but only with respect to inspections, not certification.

In order for the convention to come into force, it had to be ratified by at least 30 countries representing at least 33% of global tonnage. This requirement was met in August 2012 when the Philippines became the 30th country to ratify the convention. At the time of writing 32 countries have ratified, representing significantly more than the required 33% of global tonnage. Norway ratified the convention in 2009, and amendments to existing Norwegian legislation in order to comply with the convention had already been enacted in 2008, but will not come into force until the convention does so. This will happen on 20 August 2013.

The MLC 2006 covers a wide range of issues relating to seafarers’ welfare and their working environment. Its provisions are designed to ensure safe working conditions, fair terms of employment, medical care, hours of rest, proper living conditions, recreational facilities, food and catering etc.

The scope of this article does not allow for any comprehensive review of the MLC 2006. Instead we will touch upon a few potential challenges for offshore vessels. The convention will be implemented in the national legislation of the ratifying flag States, which will issue the Maritime Labour Certificates and, together with the owner, the DMLC. This certification will have to be revalidated every five years. In addition there will be mid-term assessments of onboard compliance. Port State Control (PSC) inspections will also be crucial for the enforcement of the convention. Under the convention, the starting point is that PSC inspectors will have to accept Maritime Labour Certificates issued by a flag State as prima facie evidence of the vessel’s compliance with the MLC 2006. If the inspectors have reason to believe otherwise, however, or have received a specific complaint, more detailed inspections may be carried out. This may in turn result in detention and/or fines.

From a charterparty perspective, compliance with flag State requirements based on MLC 2006 will typically be the owner’s responsibility and as such no different from compliance with other flag State requirements. However, many offshore vessels, such as offshore construction support vessels (OCSVs), have a number of persons on board in addition to the owner’s marine crew during operation. These persons are typically employed by charterers or their clients and have no contractual relationship with the owner. The MLC 2006 sets forth a wide definition of “seafarer”, which would be likely to include several categories of such additional personnel. This is a potential challenge for owners, given their responsibilities for compliance with the MLC 2006. For example, the convention obliges the owner to have employment agreements with all “seafarers” on board the vessel and also makes the owner responsible in the event of seafarers’ sickness, injury or death etc. The shipowner may also be liable financially for non-compliance revealed by PSC inspections.

Is it possible to pass on such responsibilities and/or their financial consequences down the contractual chain? As an example, while operational an OCSV may have around 20 marine crew and perhaps 50 or more “project” personnel on board. In our view, responsibility for compliance (or at least the associated financial burden) with respect to the project crew should be passed on to the charterers and/or their clients. We look forward to assisting our members in achieving this aim.

Other potential challenges may arise in relation to ship management contracts, crew management etc. The crew may be employed by the manager on behalf of the owners, or in some cases by the manager himself. A manager who is responsible for the operation of the ship (i.e., a technical manager) is likely to be considered the “shipowner” under the MLC 2006. A manager who is only providing crew, however, will not be the “shipowner” for the purposes of the convention, although he may be the employer of the crew. Depending on the circumstances, specific clauses to address these challenges may be required in ship management agreements and crewing agreements.

With less than a year to go until the MLC 2006 comes into force, BIMCO has responded to approaches from several of its members and has established a working group to investigate the need for additional clauses for Supplytime 2005, Shipman 2009 and Crewman A and B (both 2009). Since all these documents have been revised relatively recently, the intention at this stage is merely to propose additional clauses for use with the documents, not a wholesale revision. The working group, on which Nordisk is represented, is aiming to finalise the draft clauses in time for adoption by BIMCO’s documentary committee by late spring 2013.

At this stage it is too early to say whether the implementation of the MLC 2006 will create significant challenges. The outcome will depend partly on how the convention is implemented by the various flag States as well as on how it is enforced in practice through PSC inspections etc. We will follow developments closely, watching in particular for any need to adjust charterparties and other contracts used in the offshore sector.