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MLC amendments require financing for crew repatriation

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As regular readers know, the Maritime Labour Convention (MLC) has been a topic frequently discussed in this monthly column. In the past 10 years, it has been a major regulatory instrument affecting nearly every vessel on the water.

After 12 years of development and nearly eight years of waiting for approval, the MLC finally entered into force on Aug. 20, 2013. It sets out seafarers’ rights to decent conditions of work, on a wide range of subjects, and is intended to be globally applicable, easily understandable, readily updatable, and uniformly enforced. It has been designed to become an international instrument known as the “fourth pillar” of the regulatory regime for quality shipping, complementing the key Conventions of the International Maritime Organization (IMO) such as the International Convention for the Safety of Life at Sea, 1974 as amended (SOLAS), the International Convention on Standards of Training, Certification and Watchkeeping, 1978 as amended (STCW) and the International Convention for the Prevention of Pollution from Ships, 73/78 (MARPOL).

In April 2014, the agency responsible for implementation of the Convention, the International Labour Organization (ILO), agreed to several amendments of the MLC. These amendments were to implement the principles agreed back in 2009 by the joint IMO/ILO financial security working group. These amendments will enter into force on Jan. 18.

One of the key amendments to take effect in January will deal with financial responsibility for the protection of crew. Ships and yachts that are subject to the MLC will be required to display certificates issued by an insurer or other financial security provider. The displayed certificate will confirm that insurance or other financial security is in place for the cost and expense of crew repatriation. It will also financially guarantee up to four months contractually entitled arrears of wages and entitlements following abandonment.

A separate and additional certificate will be also required for liabilities arising from contractual claims of seafarer personal injury, disability or death.

In order to assist owners in complying with these additional financial security requirements, all of the major shipping P&I Clubs plus several major underwriters currently propose to provide the necessary MLC documents described above. These same entities plan to indemnify seafarers directly should the requisite MLC event occur.

However, a further stipulation is proposed for an insurer’s indemnity from members in respect to entitlements following abandonment. These new MLC liabilities are expected to be excluded from existing pooling arrangements, as applicable.

The major P&I Clubs have agreed to participate in a separate group reinsurance arrangement, which will address aggregation of risk in the event that a club becomes liable for a member’s financial default resulting in seafarer abandonment. Placing this reinsurance is currently a work in progress, but discussions with the reinsurance market have been positive.

On the issue of certificate format, P&I Clubs and insurers are communicating with a number of Flag Administrations. This is being done to establish a common approach amongst the existing 76 Member States that have already ratified the Convention.

As MLC is applicable to all yachts engaged in trade, it is imperative that owners establish contact with their insurance companies as soon as possible. As of the January date, it will be mandatory to display proof of this coverage.

Capt. Jake DesVergers is chief surveyor for International Yacht Bureau (IYB). Contact him through www.yachtbureau.org.

 

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