COVID-19 Archives

Go jab or go home: vaccinations on board?

November 30, 2021 Leave a Comment

The International Maritime Organisation (IMO) and several industry stakeholders have been backing the initiative for seafarers to receive the covid-19 vaccination since mid-2020 when rumours of clinical trials for a potential vaccine were close to completion. Indeed, the IMO have been advocating for seafarers to be considered as frontliners and key workers for approximately the past year. The acceptance of this status by several flag states, and the World Health Organization naming seafarers as one of the groups to be prioritised for covid-19 vaccination in instances of limited supplies, may be considered by many in the maritime sector as victories in the fight towards reaching some semblance of normality, akin to that which existed pre-covid-19.

With vaccines now becoming more accessible, and with an increase in the number of persons eligible to receive vaccinations worldwide, the inoculation of crew has become a topical subject. How should, or better, how can a ship owner or employer operating a Malta-flagged vessel react to a seafarer who refuses to receive their covid-19 vaccine? The issue of forced vaccination is a complex discussion.

Applicable Maltese law

There is currently no definitive guidance on forced vaccinations. Understandably, there is no local legislation which shipowners can rely upon to obligate a seafarer to be vaccinated against covid-19. Likewise, there is nothing in the law on whether said vaccination or lack thereof can be a condition of employment, or termination if a seafarer refuses, without just cause, to be vaccinated.

At the outset, it is important to note that the government has not mandated the covid-19 vaccine for its residents or citizens. Moreover, until Spring 2021, the government had publicly reiterated that it would not impose inoculation upon Maltese residents or citizens. Nevertheless, in July 2021, the prime minister stated that employers should try to convince workers to get vaccinated.

Both the IMO and International Labour Organisation have issued several circulars and information notes guiding shipowners in the right direction when it comes to key topics which have become synonymous with shipping and the pandemic, such as:

repatriation of seafarers;
the extension of crew contracts;
quarantine;
access to medical care; and
eventual, vaccination against covid-19.

In relation to vaccination, both organisations promote and encourage shipowners to vaccinate their crew members. However, they fall short of explaining what an owner should do, or how an affected party should react, in a scenario where a seafarer expressly refuses or is unable to be vaccinated (eg, for medical reasons).

The Maritime Labour Convention (MLC) was transposed into Maltese municipal law through the Merchant Shipping (Maritime Labour Convention) Rules, Subsidiary Legislation 234.51 (the Rules) in 2013. Title 4 of the MLC deals specifically with the health protection and medical care of seafarers on board ships and on shore, and it states in regulation 4.1(1) the following:

Each Member shall ensure that all seafarers on ships that fly its flag are covered by adequate measures for the protection of their health and that they have access to prompt and adequate medical care whilst working on board.

However, this provision does not explicitly include obligations relating to vaccinations or immunisations.

In the context of the present discussion, regulation 4.1(1) needs to be analysed in terms of two opposing groups: in relation to seafarers who do not wish to take the vaccine and crew members who have taken the vaccine.

When considering the latter category of seafarers, as an employer, the shipowner is obligated to safeguard their crew’s health and safety. Therefore, it may be argued that allowing an unvaccinated seafarer to mingle freely with the rest of their cohort is potentially unsafe, since the repercussions may be harmful to those seafarers who have been vaccinated.

Conversely, it may be argued that the shipowner has the obligation to protect each seafarer on board. So, could one argue that the employer or shipowner would need to at least discuss the potential of vaccination with that seafarer, while trying to understand why the seafarer has chosen not to get vaccinated (if the opportunity has indeed arisen)? It would appear that a shipowner does not have a right to impose inoculation; however, the spirit of the law would suggest that they have an obligation to encourage and promote said vaccination.

Article 114 of the Rules imposes an obligation upon the shipowner to carry out an assessment of all the occupational health and safety hazards which may be present on board the ship. Naturally, this assessment varies depending on the type of vessel – the evaluation on board a passenger cruise liner will differ from that of a tanker barge.

It can be argued that unvaccinated crew members could create, increase or form an integral part of an onboard hazard. Each situation would need to be reviewed on a case-by-case basis as not all seafarers can be put into the same category. Therefore, there is the question of what a shipowner or employer would have to do if said assessment concluded that unvaccinated employees are considered to be a health and safety risk for all on board the ship.

The law is silent in this regard. Under Maltese law, employers or in this case the shipowners, owe a duty of care to the seafarers employed on board their vessels. This duty of care goes hand in hand with the prime minister’s sentiment as said duty would allow employers to encourage seafarers to receive their vaccination. This, the employing shipowner could argue, would not only protect the unvaccinated employee, but also the vaccinated crew.

Due to the health and safety obligations, it is important that shipowners and crew ensure that proper covid-19 protocols and measures are implemented and enforced upon vessels. Where necessary, and up to the extent that it would be possible on board a vessel, shipowners may also choose to limit the interaction of groups of employees with others, to stop or slow down any potential spread of the virus.

It is important to remember that data protection and General Data Protection Regulation (GDPR) considerations must be examined by the shipowner. This is because data concerning the health of an individual – in this scenario, the seafarer – would be considered to be a special category of data. This type of data would be subject to additional protection under the GDPR.

Comment

Maltese law is silent on how a shipowner can deal with seafarers who refuse to get vaccinated against covid-19 or any other disease. It is important for shipowners to make their individual assessment of the applicable laws, not just Maltese law, but also the laws of the territories in or from which vessels must travel.

It is the shipowner or employer’s obligation to safeguard the health and safety of all seafarers on board their vessels, both under the MLC and as part of their duty of care towards their seafarers.

It will be interesting to see how the industry will evolve in the coming months when more and more people will have access to the covid-19 vaccine, as employers may try to insert new “vaccine friendly” clauses to regulate their vessel’s crew contingent. That being said, should such a clause be challenged before the Maltese courts, especially if not drafted correctly, there is no clear-cut manner in which the courts would interpret its validity or enforceability.

The processing of information related to seafarers being vaccinated or otherwise would be considered as health data under the GDPR. Keeping logs of said data and the processing of the same would create further obligations on the employer or shipowner.

by Michael Paul Agius at Fenech & Fenech Advocates

Source: Lexology

The enforcement of the EU Ship Recycling Regulation with regards to the Inventory of Hazardous Materials in light of COVID-19 Restrictions

November 25, 2020 Leave a Comment

One of the principle purposes of the European Union Regulation 1257/2013 on ship recycling (the “Regulation”) which came into force in December 2019, is to ensure that hazardous waste from resulting from ship recycling is subject to environmentally sound management.

The Regulation obliges all new ships^[1] to carry on board an inventory of hazardous materials, which shall identify at least the hazardous materials contained in the structure or equipment of the ship, their location and approximate quantities (the “IHM”). All existing EU flagged ships and non-EU flagged ships calling to an EU port or anchorage will be required to carry the IHM together with a certificate of compliance on-board as of the 31 December 2020.^[2] In terms of Article 8(4) of the Regulation, an initial survey is to be carried out on all existing ships by the 31^st December 2020 in order to certify that said ships are complying with this obligation.

A number of stakeholders in the shipping industry have advised the European Commission that the lockdown measures and the widespread travel restrictions imposed in various EU Member States in order to curb the spread of COVID-19 have prevented ship owners (or their registered agents) from producing their IHM and have also created major difficulties for flag state surveyors to conduct inspections in order to verify and certify IHMs held on-board. It is being estimated a substantial number of ships will not be compliant with the IHM obligations and would not have the necessary certificates in place by the 31^st December 2020.

In response to this, the European Commission has issued a set of guidelines to EU Port State Authorities in order to ensure a harmonised approach during ship inspections as from the 1^st January 2021^[3](the “Commission Guidelines”).

General Guiding Principles

Primarily, the Commission Guidelines first refer to a set of guidance notes published by the European Maritime Safety Agency on inspections carried out by EU port states to enforce provisions of the Regulation^[4] (the “EMSA Guidance”). Specifically within the context of enforcement actions to be take in the event of ship-recycling related non-compliances, the EMSA Guidance provides that an inspector should be satisfied that any ship recycling-related non-compliances confirmed or revealed by the inspection are, or will be, rectified in accordance with the Regulation. The EMSA Guidance furthermore emphasises that an inspector should use professional judgement in order to decide the appropriate action(s) to be taken for any identified ship recycling-related non-compliance. The Commission Guidelines encourage EU Port State inspectors to take heed of the general guiding principles provided in the EMSA Guidance in view of any identified non-compliances with respect to the IHM obligations which may result from the COVID-19 crisis.

Specific guidance in relation to COVID-19

The Commission Guidelines identify two specific COVID-19 related scenarios which EU Port State authorities are likely to come across when enforcing the Regulation which may require a certain harmonised approach.

Vessels without a valid IHM and/or accompanying certificate due to COVID-19

In this case it is incumbent on the ship owner and/or master of the ship to prove that all possible measures were taken to prepare the IHM and obtain the required certification.^[5] Such proof would include providing a service contract for the survey of the vessel to take place. It is then up to the inspector to determine whether the justification provided by the ship is acceptable on a case-by-case basis depending on the circumstances of the ship.

Where the inspector is of the view that the evidence provided is sufficient, the ship has four months, from the date of inspection, to ensure that the IHM and/or accompanying certificate are duly completed. In this case, the inspector will issue a warning to the vessel and register it in the ship recycling module known as THETIS-EU. If the plan set out is further impacted due to continuing travel or access restrictions due to the pandemic, it is the responsibility of the master and or ship owner to prove that it was not feasible to meet the initial targets set out. The inspector will then determine whether the explanation provided is enough to merit a re-evaluation of the initial plan.

In the case of the Ready for Recycling Certificate, the inspector will issue a warning to the ship owner and/or master to obtain the certificate before entering the ship recycling facility. Since this certificate is only valid for 3 months, it should be completed at the earliest prior to the ship undertaking its last voyage to the yard. This warning should also be registered in the THETIS-EU.

Vessels with a semi-completed IHM with an associated approved Inventory Certificate or Ready for Recycling Certificate or the Statement of Compliance that does not contain on-board sampling

In this particular scenario, the ship would have an IHM and relevant certificate which was prepared remotely without on-board sampling due to restrictions on conducting on-board inspections during the pandemic.

In principle where a certificate is based on an IHM without on board sampling, this should not be accepted as it would not be deemed to be complete. However, in view of the difficulty of inspectors to go on-board ships and conduct the inspections themselves, remote surveying could be accepted if it is shown that the flag state is in agreement. The ship will need to document plans and arrangements for when it will be possible for on-board inspections to take place. Again, it is for the inspector to determine whether the proof provided by the ship owner and/or master is sufficient.

The Commission Guidelines provide that the harmonised approach is to be applied for an initial period of 6 months from the 31 December 2020 up to the 30 June 2021.

Steps Taken by the Malta Flag

On the 27 October 2020, by means of Merchant Shipping Notice 163, the Malta Flag Administration formally notified ship-owners, ship operators, managers, masters, and owners’ representatives and recognised organisations of Maltese flagged vessels of the said Guidelines. In its notice, the Malta Flag Administration, while referring to the IHM obligation, which comes into force on the 31 December 2020, explained to operators of Malta-flagged vessels that the Guidelines provide guidance in the light of the disruptions that may have been caused by COVID-19, for a harmonised approach towards enforcement by the EU port States authorities during ship inspections carried out as from the said deadline.

The Flag Administration, while recalling the EMSA Guidance, highlighted that this reference document also provides both technical information and procedural guidance contributing to the harmonised implementation and enforcement of the provisions of the Regulation and the Port State control Directive.^[6]

The Maltese shipping community was also reminded of Merchant Shipping Notices No.147 and 153 concerning the implementation of the Regulation.

The attention and cooperation of all parties concerned was encouraged in order to ensure the uninterrupted operations of Maltese ships.

By Jotham Scerri Diacono and Saman Bugeja, Ganado Advocates

Source: Lexology

Refinancing Malta-flagged cruise liners

November 5, 2020 Leave a Comment

At the start of 2020, the new decade was forecast to herald a boom for the global cruise liner industry. However, COVID-19 lockdown measures imposed across the globe have significantly disrupted cruise ship operations and the financing arrangements between financiers and cruise liner companies, as borrowers, under traditional facility agreements.

COVID-19’s impact on shipping industry

The ongoing COVID-19 pandemic has had a major effect on global shipping, affecting all sectors – from passenger ships to container ships and oil tankers. Unlike general commercial shipping activities which have continued to function at reduced levels, cruise line operators were faced with an unprecedented total shutdown of operations almost overnight. In addition to the loss of income-generating capacity, operators have been confronted with the additional burden of liability claims for the return of deposits for cancelled holidays.

The industry reacted to this extraordinary situation by seeking ways to weather the storm until operations could return to normal in order to avoid defaults under loan facilities and deferred or even cancelled orders in the case of new-build vessels. In either case, this would have been detrimental to the parties concerned and the economies of many cruise shipbuilding nations (eg, Germany, Italy, France, Norway and Finland).

Actions taken to mitigate losses

Anxious to avoid such a situation and maintain the good standing of cruise liner companies during the suspension of operations, financiers have been quick to offer debt restructuring solutions to borrowers to fill the liquidity void. At the local level, the most common refinancing exercise involving Malta-flagged vessels is the renegotiation of debt holidays. By virtue of such debt holidays or debt repayment extensions, cruise liner companies have been granted the opportunity to defer payment obligations, thereby giving them the means to better manage their cash flow during periods of no or limited revenue without giving rise to debt forgiveness.

As they operate in the most heavily affected sector of the shipping industry, cruise line operators were among the first to look towards negotiating such payment holidays. As such, these have been consistently negotiated since March 2020 as the deliveries of 2020 new-build vessels have been rolled out. However, these payment holidays are not available across the board as certain facility agreements include as an event of default instances where the borrower commences negotiations with one or more of its creditors with a view to rescheduling its indebtedness. This is frequently the case where cross-guarantees are in place or a company has multiple facilities.

With respect to borrowers which do not have such restrictions in their facility agreements, Malta-flagged vessels have witnessed increased activity in this area as debt holidays have given rise to refinancing scenarios that require the execution of fresh security over the secured vessels. While debt holidays may vary in the way in which they are provided, a common example has been the provision of additional finance from the same lender to repay the borrower’s commitments up to a period of one year, with the corresponding obligation of the borrower to repay a premium over and above the outstanding loan. This scenario would necessitate the registration of an amendment mortgage or second priority mortgages to secure the new amounts advanced or obligations that are being created.

With the cut-off period for moratoriums approaching, there is growing concern within the cruise liner industry about the ramifications of a continued depressed environment in the fourth quarter of 2020. Major cruise liners operating in the United States have agreed to continue the suspension of their cruise operations until at least 31 October 2020. Meanwhile, Malta cruise liner companies have resumed limited operations in a concerted attempt to restart economic motors. However, the safety measures imposed and lack of consumer trust with respect to safety have led cruise ships to operate at a lower capacity than needed to stem the continued haemorrhaging. The international climate has led stakeholders to suggest that cruise liner companies will almost certainly require extended debt holidays come Spring 2021 and that such extended debt holidays may even be voluntarily offered by financiers.

The extension of payment holidays will likely depend on several factors, including longstanding relationships between financiers and cruise liner companies and their proven reliability in times of crisis – which may be ascertained from the borrower’s proactive approach during the current and previous downturns. As with most industries, COVID-19’s continued impact on the cruise liner industry in the fourth quarter of 2020 will be fluid.

Comment

As a natural reaction to the debilitating effects of the pandemic, the new-build cruise liner market for deliveries post-2022 has all but ceased. Yet, the shipping industry is clearly better positioned to withstand the current market slowdown than it was during previous market meltdowns. Financiers are motivated to help the industry through the financial consequences of travel restrictions and health issues and there is reason to believe that the availability of deferred payment obligations until Spring 2021 will be extended further. These extensions will almost certainly be essential to carry the industry through what is forecast to be another difficult year and will go a long way in instilling renewed optimism in an industry facing its most severe downturn in history.

by Peter Grima, Fenech & Fenech Advocates

Source: Lexology

Digitalisation and automation in transport: a necessity unfolding into new opportunities

August 3, 2020 Leave a Comment

In a world where human interaction and socialisation constituted the epicentre of our day-to-day lives, few could have predicted the day when human connections and globalisation could end up posing the largest risk to our own health and well-being.

The purpose of this paper is to analyse those areas of digitalisation, which have allowed shipping and aviation to innovate and succeed over the last few decades. This will enable us to better define the direction in which such sectors should be heading in the coming years, taking into due consideration the latest hazards posed by the pandemic.

Although shipping and aviation share the same goals (transport of persons and goods), they are based on different models.

i) Aviation is a predominantly passenger-oriented industry, while shipping is primarily focused on the carriage of goods. Although during the last few months airlines have shifted their operations onto cargo, this was limited to a few aircraft per company and to the carriage of medical equipment and supplies. Such conversion was dictated by necessity, rather than by a particular business target. On the contrary, although cruise liners had to interrupt their passenger transportation activities, the shipping bulk cargo segment proceeded at a normal pace.

ii) In the aviation industry, demand is generally stable and based on seasonal travel and macro-events (ie sporting events such as the Olympic Games and World Expos). On the other hand, shipping is largely dependent on economic and geopolitical variables, or fluctuations on the prices of commodities.

iii) Efficiency and environmental goals were introduced and pursued in the aviation agenda much earlier than in the shipping sector.

iv) Public opinion tends to perceive the economic impact of shipping in a different manner to aviation, with the consequent effect that relevant authorities tend to distinguish and prioritise their objectives in the two respective sectors accordingly. In practical terms, the fact that shipping is not under the constant spotlight brings with it a more lax approach in terms of adoption of new objectives and policies.

While for the majority of businesses Covid-19 represented a major showstopper, many have also considered the pandemic as an eye-opener as to the untapped potential offered by particular business segments, such as door-to-door food deliveries. In aviation, some of those involved in the aircraft business also opted to explore new opportunities by channelling their business, with some adjustments and notwithstanding the multiple obstacles, into the cargo segment. Only time will tell whether these attempts might represent a new stable stream of revenue for airlines. In the meantime, recent estimates indicate that airlines will still be forced to ground parts of their fleet during the coming years and therefore the possibility of such aircraft being relocated to the cargo segment is not unrealistic.^[1] Aircraft manufacturer Airbus recently launched its ‘e-delivery process’, a system that ensures ‘continuation of Airbus’ delivery stream, while integrating the required health and safety requirements during the ongoing Covid-19 pandemic’.^[2] Airbus disrupted its ordinary aircraft delivery procedures through an electronic Transfer-of-Title based on the ‘e-SalesContracts’ platform that enables the parties involved to complete the transaction entirely through digital means and in paperless format, without the need for any individuals to be physically present.^[3]

Another area where technology has, out of necessity, required resilience from its operators, is that of data collection in the context of the Carbon Offsetting and Reduction Scheme for International Aviation (‘CORSIA’). CORSIA requires airlines to:

(i) monitor emissions on all international routes; and

(ii) offset emissions by purchasing emission units.

The aim is to halt net carbon emission growth at 2020 levels.^[4]

CORSIA has opened up the market for emission tracking tools, which track CO² consumption, as well as encourage efficiencies. Although Covid-19 might impact the definition of the baseline mechanism, digital solutions will play a key role in ensuring that information is accurately collected in a timely and efficient manner.

Disruptive events like the 9/11 terrorist attacks, the terrorist attacks in Europe and the 2008 Crisis, have all shaped the world we are living in and so will Covid-19. Survival is certainly in the hands of those who are ready to adapt and therefore innovate to new realities. Client expectations have changed considerably during the course of the last few years and notwithstanding recent events, these remain of fundamental guidance. Something that the pandemic brought to the surface, with the inevitable delays in services, is how the ‘insta-generation’ significantly impacted changes to client expectations in recent years. Goods are expected to be delivered within a couple of days, no matter which part of the world they come from. Final destination flights should not include more than one stop, no matter if the point of departure is located in a remote region of the world. This has obviously increased pressure among producers, shippers and passenger transport operators. Although we do not know if such client expectations will be realistically satisfied in the near future, the recent events have clearly highlighted the importance of technology and digitalisation in the sustainability of the demand/supply mechanism.

Aviation and shipping embraced technology at a different pace and extent, starting off in entirely different decades. Aviation companies are highly dependent on the human capital workforce (crew members and large maintenance teams) and oil price fluctuations. Technology was a means to streamline and render more efficient aspects concerning aircraft maintenance, passenger reservations, boarding procedures, claim handling and customer care protection, as well as the tracking of goods carried on a particular aircraft. While in aviation, innovation was led mainly by customer-oriented necessities and was introduced gradually throughout the last two decades, hand-in-hand with software development, often interacting with airport infrastructures; shipping converted its approach towards technology only during the last few years, with serious inconsistencies and deficiencies among the various port hubs across the world. Although distributed ledger technology could have rendered the shipping industry paperless years back, the transitioning phase started only in the last few weeks due to the medical emergency led by Covid-19, which prompted shipping and customs operators to do away with unnecessary paperwork.

Cyberattacks on worldwide major transport and logistics operators a couple of years ago led to a standstill of operations, shutting of IT systems across multiple sites and stranding of ships all over the world, with serious revenue impacts, brought under the spotlight the necessity of having sound cyber-attack mechanisms, aimed at reducing external attacks. This prompted IMO to amend the International Safety Management Code, in order to cater for such events and also for operators to understand the need to consistently invest in digitalisation and not to carelessly outsource this to third parties.

Another sector within the aviation sphere that has encountered a rapid spike over the past decade, is related to the use of drones, which have become operational on a vast scale and widely within the European Union territory. Predictions show that the European drone sector will eventually employ more than 100,000 people and have an economic impact exceeding €10bn yearly over the next two decades.^[5]

The versatility of drones within the military sector is recognised, however the uses of drones during the Covid-19 pandemic has been novel, and in some cases, crucial to continued operation with companies like Zipline offering the delivery of vital medical supplies via drones for remote areas since 2014.^[6] Throughout the Covid-19 pandemic, Zipline has upped its efforts. The use of drone operations minimises human contact by firstly removing the human element from the delivery service and secondly by assisting people to stay safely indoors and allowing the supplies to reach them. The use of technology in support of drones is a truly remarkable progress that has been leveraged by a number of similar drone companies and has borne fruit at a time when the world needed it most.

The potential of technology in this age is vast, from robotic process automation to data analytics. Driverless means of transport are now being used among various sectors of European public transportation and private transportation by car. Even shipping is not immune to such novelties with different grades of automation, which go from semi to complete automated vessels. Furthermore, the benefits arising out of technology and digitalisation are not limited to ship operators and airlines themselves but also extend respectively to ports, airports and subsidiary service providers, such as air traffic control, ship and port operators.

However, while automation could represent an opportunity to increase cost efficiencies, reduce costs on workforce and enhance opportunities for companies involved in the IT and cybersecurity arena, it also comes with multiple challenges. While start-ups with sufficient will and capital to invest might make the most of the competitive advantage offered by the newest technologies, older companies might see this as an unnecessary burden. Automation requires individuals having a strong IT and technical background, as well as substantial adaptation planning from an internal organisational point of view, which not every shipping company may wish to pursue. This is somewhat similar to what was required by the banking sector in embracing the Fintech revolution.

Conclusion

In light of the above observations, it is evident that the world of technology and transport must work in tandem, in order to facilitate and help one another. The cooperation of these industries could result in significant benefits for all involved. Although innovation most certainly comes at an initial cost, it is vital that the transport industry remains progressive, modern and current. Development and innovation has most often been a matter of necessity and urgency. Success, in particular during such hard times, lies in the ability to predict, intercept and safely anticipate – where possible – such necessities. It is our opinion that the digital world provides and will keep on providing the perfect platform for an improved service. Harmony between technology and transport has the potential for unlocking great opportunities and we look forward to this future with great enthusiasm.

by Stephan Piazza and Francesca Ferrando, KPMG Malta

This article first appeared on the website of the Maritime and Transport Law Committee of the Legal Practice Division of the International Bar Association, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.

[1] Centre for aviation, ‘Lufthansa Europe’s first fleet cut; will go deeper, others to follow’ (CAPA – Centre for Aviation, 10 April 2020) https://centreforaviation.com/analysis/reports/lufthansa-europes-first-fleet-cut-will-go-deeper-others-to-follow-520959 [Accessed 22 May 2020].

[2] Martin Fendt, ‘New aircraft “e-Delivery” process assures health & safety for customers and Airbus employees, and enables business continuity’ (Airbus, 21 April 2020) www.airbus.com/newsroom/press-releases/en/2020/04/quick-news–april-2020.html [Accessed 15 May 2020].

[3] Ibid.

[4] ICAO, ‘2 What is CORSIA and how does it work? ‘ (ICAO Environment, n/a) www.icao.int/environmental-protection/Pages/A39_CORSIA_FAQ2.aspxaccessed 22 May 2020

[5] European Commission – Internal Market, Industry, Entrepreneurship and SMEs. (2018). Unmanned aircrafts – Internal Market, Industry, Entrepreneurship and SMEs – European Commission.

Available at: http://ec.europa.eu/growth/sectors/aeronautics/rpas_en [Accessed 15 May 2020].

[6] Zipline, ‘Zipline’s COVID-19 Response’ (Fly Zipline, n/a) https://flyzipline.com/covid-19 [Accessed 18 May 2020].

Dispute resolution regulations for bunkering operations

July 1, 2020 Leave a Comment

Introduction

Transport Malta’s Ports and Yachting Directorate recently issued Port Notice Number 07/20 entitled “Dispute Resolution and Procedures in Connection with Bunkering Operations” to remind recipients about the Dispute Resolution (Procedures) Regulation under Subsidiary Legislation 545.30 of the Laws of Malta.

The port notice highlighted that authorised providers and customers can make complaints to the regulator to settle any disputes between them.

In accordance with the port notice, the regulation applies to bunkering operations where a dispute has arisen between the bunkering fuel operator and provider and the receiving vessel. The procedure provides for an alternative dispute resolution (ADR) mechanism that aims to be swift, economical, transparent and simple.

Much of the port notice’s attraction lies in the fact that disputes between authorised providers must be settled within four months, while disputes between an authorised provider and a consumer must be settled within 90 days, with extensions allowed only in exceptional circumstances.

Complaints and supporting documentation may be filed with the regulator online and, subject to certain conditions, the regulator’s decisions are binding on the parties to the dispute with administrative fines imposed for non-compliance. However, this procedure is entirely voluntary and does not affect the parties’ rights to proceed to arbitration or court should they prefer.

Dispute Resolution (Procedures) Regulation

The relevant parties under the Dispute Resolution (Procedures) Regulation are as follows.

Authorised providers
The regulation is not limited to bunkering operations and defines an ‘authorised provider’ as any natural or legal person, whether privately or publicly owned, which is authorised to operate, provide or carry out any activity or operation or provide any service relating to energy and water services.

Consumer
A ‘consumer’ means any person who uses or requests a service or product, the provision of which is regulated by the act, for purposes outside of their trade, business, craft or profession. This definition raises the question as to who can qualify as a consumer; however, the port notice explains that it applies to “bunker operations where a dispute arises between the bunkering fuel operator and provider and the receiving vessel”.

Regulator
The regulator, established under the Regulator for Energy and Water Services Act, is composed of a chair and no fewer than four and no more than six members. Members are appointed by the minister for five or seven-year terms and may be reappointed only once.

Proceedings before regulator
The Dispute Resolution (Procedures) Regulation provides for two scenarios: dispute resolution where the parties are both authorised providers and dispute resolution where the parties are an authorised provider and a customer. The regulation seeks to provide authorised providers and consumers with an ADR mechanism that aims to be simple and transparent, offering binding decisions in a swift and economical manner.

Where a dispute arises between authorised providers, the regulator must initiate an investigation into the dispute as soon as possible and seek to resolve the dispute within four months from the date on which it was notified. This timeframe may be extended by a further two months where additional information is sought and the parties agree to such an extension.

Under the regulation, the regulator has the power to initiate an investigation on its own initiative. However, the regulator’s jurisdiction is not automatic and they may refuse to initiate an investigation where they are satisfied that other means of resolving the dispute in a timely manner are available to the parties.

The regulator may also refuse to initiate an investigation where the dispute is already subject to legal proceedings. Where a decision has been taken to refuse to initiate an investigation, the regulator must inform the parties as soon as possible. However, where the dispute has not been resolved or the party seeking redress has not initiated legal proceedings within four months from such a decision, the regulator may, at the request of a party, initiate an investigation.

Subject to possible appeal, the regulator’s decision will be binding on the parties and failure to abide by the decision will be considered an infringement of the regulation, subject to an administrative fine.

Under the regulation, the regulator will also have jurisdiction in cases where a consumer alleges that an authorised provider has infringed the Regulator for Energy and Water Services Act or subsidiary legislation made thereunder. When referring a dispute, a consumer must show on a prima facie basis that it has been affected by an act or omission of the authorised provider. In resolving the dispute, the regulator may, among other directives, order the authorised provider to effect reimbursement of payments received or to make compensation payments. Such payments may include the whole or part of the costs relating to the engagement of a lawyer or technical adviser engaged in submitting the dispute. Should a party fail to abide by an order given, the regulator may impose an administrative fine of not more than €600 for each day of non-compliance.

Notably, the regulator is not a compulsory dispute settlement mechanism for disputes arising between authorised providers and consumers. In fact, the regulation makes clear that “the provisions of this Regulation shall be without prejudice to the right of a consumer to have recourse to any other body in resolving any such dispute”.

As many other ADR mechanisms, the regulator aims to be expeditious in its investigations, with the regulation setting out a 90-day period within which disputes must be resolved. This timeframe may be extended only in exceptional circumstances. The regulator aims to increase efficiency by allowing complaints and supporting documentation to be submitted online. Official communication may also be made electronically or if applicable, by post.

When faced with a consumer complaint against an authorised provider, the regulator may refuse to deal with complaint in the following circumstances:

Where the consumer did not first attempt to contact the authorised provider in order to discuss their complaint and seek to resolve the matter with the authorised provider directly.
Where the dispute is frivolous or vexatious.
Where the dispute is or has been considered by another dispute resolution entity or a court.
Where the consumer did not submit the complaint to the regulator within one year from the date on which the consumer submitted the complaint to the authorised provider.
Where dealing with the dispute would seriously impair the regulator’s effective operation.
Where the consumer did not submit the complaint to the regulator within two years from the date on which the facts constituting the substance of the complaint first arose.

According to the regulation, decisions are binding on the parties to the dispute. However, where the dispute is between an authorised provider and a consumer, it is only binding on the consumer if they have been informed of the binding nature in advance and have specifically accepted this.

Although decisions are binding, they are not final and decisions taken by the regulator are subject to appeal before the Administrative Review Tribunal within 20 days of the decision. Appeals may be filed on the following grounds:

a material error as to the facts has been made;
there was a material procedural error;
an error of law has been made; or
there was some material illegality, including unreasonableness or lack of proportionality.

Comment

The Dispute Resolution (Procedures) Regulation aims to provide for an ADR mechanism that seeks to increase consumer protection in a timely and cost-effective manner. In times where courts have been forced to close due to COVID-19 containment measures and where there may be significant backlogs as they slowly open up again, authorised providers or consumers looking to settle disputes quickly may consider this mechanism as a valid alternative. Nonetheless, it is advised that disputes involving complex legal issues, including bunkering operations, should continue to be referred before a court so that the parties can make full use of all of the legal mechanisms available therein.

by Dr Martina Farrugia, Fenech & Fenech Advocates

Source: ILO

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