legal issues conference review


Legal issues in need of careful attention


OSV operators must be prepared for increasing legal obligations as well as awareness of existing risks


O


perators of OSVs need to be aware of a variety of legal issues affecting all aspects of their activities. They


also need to consider the impact of new legislation – in particular, the Maritime Labour Convention (MLC) 2006, which will have profound implications for OSVs when it comes into force.


OSV owners and operators should not


overlook the basics, such as ensuring they understand the terms of charter parties to minimise potential


risks and exposure, Ian


Perrott, chief executive officer of ER Offshore in Hamburg told the conference. He warned that modern charter parties are complex documents and parties should not make assumptions about what they contain. This is increasingly important as the values of vessels and contracts are rising while the operating environment is becoming more complex. New environmental and safety legislation, and the upcoming MLC, impose new contractual obligations.


Owners need to check what the charter party contains and not assume that because it is a standard form it is identical to previous versions. In seeking to minimise risk, parties need to pay attention to potential financial risks relating to charter hire, legal risks, insurance risks, contractual risks and operational risks. “Never sign a charter party until and unless you are sure you can live with all its terms and conditions, and never forget that it is not an absolute obligation to conclude a fixture if it would involve an unacceptable risk to your company,” Mr Perrott warned.


Illustrating his presentation on insurance cover and risk management, Kevin Campbell, senior risk management executive at Norwegian protection and indemnity club Skuld Offshore, outlined a case study of the Maersk Gryphon A. In February last year, the floating production, storage and offloading (FPSO) vessel was being held in position by a tug in the North Sea. As the wind and sea increased, the Gryphon A lost its thrusters and mains power, was pushed 180m out of position and was rolling heavily. Non-


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essential crew were airlifted off. Eventually, the tug regained control and although the FPSO was moved back into position, it suffered extensive damage to risers and riser bases causing significant damage to flow lines. As a result, the Gryphon A had to be taken out of service to a yard for repairs and is only expected back in service later this year. The insurance cost was over US$800 million and the lost production valued at over US$1 billion. Initial investigation findings revealed that although the immediate cause was the bad weather, standing orders had not been followed, there was an inadequate


response to the


changing circumstances, a lack of experience and training, and no full understanding of the winch tension set-up and its


interface with


the dynamic positioning system. These factors contributed to the time it took to regain control and the extent of the damage.


Mr Campbell said that this incident highlighted some of the key lessons on proactive risk management to identify where risks are located and the extent of those risks, to plan and execute mitigation and monitor results. “Proactive risk management is an integral part of good business,” he concluded. “The key to risk management is understanding. Once achieved, this leads to informed decision making and allows an effective response.”


New regulatory developments are having a major impact on the design of OSVs. Lucas Zaat, design and proposal manager at Damen Shipyards, gave a shipbuilder’s perspective on these challenges. As he explained, there are whole rafts of regulations covering OSVs, including statutory safety rules and class notations to new environmental rules such as those on air emissions, ballast water treatment, wastewater treatment and anti-fouling. In some


of these examples it is still not clear how OSVs will be affected.


He highlighted some relevant changes such


as the new draft code IMO A673 (16) covering the handling of limited amounts of hazardous and noxious liquids, where the previous limit of 800m3 has been redefined. Damen and other leading shipyards are seeking to develop innovative solutions


to


these challenges. Damen has what it calls its ‘Green Market Approach’ that aims to bring together solutions that are environmentally friendly, operationally efficient and economically viable.


The MLC 2006 is another major issue that


is looming for shipyards such as Damen. The convention is expected to come into force some time in 2013, once sufficient ratifications have been secured. This will affect the crew accommodation, for example, including the number of cabins required on board, floor space, lighting and other living and working conditions. In a separate presentation, Emily Comyn, technical adviser at IMCA, identified some of the key issues in MLC 2006 that will affect OSVs. It applies to all ships of 500 gt and above with vessels requiring an accredited Maritime Labour Certificate and Declaration of Maritime Labour Compliance, all subject to Port State Control inspection. As well as living and working conditions, the MLC also covers qualifications, employment agreements, hours of rest, food, medical care and recreational facilities. Crucially for the offshore sector, the definition of seafarers to which these rules apply is broad and includes many people that would not previously have been classed as seafarers in a traditional sense. Seafarer is defined as “any person who is employed or engaged or works in any capacity on board” and therefore takes in various types of contractors who are not part of the vessel’s normal operational crew. This also includes personnel who are employed by third parties.


Ian Perrott: charter parties are complex documents needing careful examination


This raises a wide array of issues that OSV operators must address and which could have substantial implications and lead to significant changes, such as employment practices, medical and social security provision and single-berth cabins. It is not yet clear what exemptions might be granted for the offshore sector, but owners need to be pro-active in resolving these issues with flag state administrations, charterers and other parties. OSJ


Annual Offshore Support Journal Conference and Awards 2012 I 9


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