News - Malta Maritime Law Association

Maritime Labour Convention amendments incorporated into Maltese law

January 23, 2021 Leave a Comment

Amendments to the Maritime Labour Convention (MLC) 2006 recently came into force after having been adopted in 2018. Malta, as a signatory to the MLC, implemented the changes into domestic law on 18 December 2020, with said changes having effect as of 26 December 2020. As one of the largest ship registries in the world, these changes will have a significant impact on the world’s shipping workforce.

Maltese law

The MLC was transposed into Maltese national law and introduced as the Merchant Shipping (Maritime Labour Convention) Rules, Subsidiary Legislation 234.51.

Under Maltese law, all employment relationships are governed by the Employment and Industrial Relations Act (EIRA), Chapter 452 of the Laws of Malta, and its subsidiary legislation. Although the rights and obligations of all employees are defined in the EIRA, it is the EIRA itself which states that some provisions within it do not apply to seamen.(1) It is thus understood that when referring to seafarers and their rights or obligations, the Merchant Shipping Act (MSA), Chapter 234 of the Laws of Malta, and its subsidiary legislation should be applied first as the lex specialis, followed by the EIRA should the MSA be silent on specific matters.

MLC and its amendments

The new amendments transposed into Maltese law can be divided into two parts introduced in the form of standards:

the first refers directly to seafarers’ employment agreements; and
the second refers to wages.

That said, a third amendment introduced in the form of a guideline within the MLC, which refers to specific entitlements, was not incorporated into the Merchant Shipping (Maritime Labour Convention) Rules. As a common denominator, these amendments deal directly with the threat of piracy and armed robbery, which has been on the rise in recent years.

Prior to these amendments, there was no definition of ‘piracy’ or ‘armed robbery against ships’ within the rules or the MSA. The only definition of ‘piracy’ within Maltese law was found within the Criminal Code(2) and was introduced in 2009. This definition is almost identical to that given in the United Nations Convention of the Law of the Sea 1982.

These terms have now been introduced directly into the Merchant Shipping (Maritime Labour Convention) Rules under Article 2(1). Specifically, ‘armed robbery against ships’ has been defined as:

any illegal act of violence or detention or any act of depredation, or threat thereof, other than an act of piracy, committed for private ends and directed against a ship or against persons or property on board such a ship, within a State’s internal waters, archipelagic waters and territorial sea, or any act of inciting or of intentionally facilitating an act.

On the other hand, ‘piracy’ has been given “the meaning assigned to it by the United Nations Convention on the Law of the Sea, 1982”.

Seafarers’ employment agreements Under Maltese law, seafarer’s employment agreements are regulated by Part III of the Merchant Shipping (Maritime Labour Convention) Rules – specifically, Articles 20 to 28. The amendments to the MLC state:

that a seafarer’s employment agreement shall continue to have effect while a seafarer is held captive on or off the ship as a result of acts of piracy or armed robbery against ships, regardless of whether the date fixed for its expiry has passed or either party has given notice to suspend or terminate it.(3)

This has been incorporated verbatim into the rules as Article 28A.

There are no similar provisions to the abovementioned one in the EIRA or its subsidiary legislation.

Wages Part III of the Merchant Shipping (Maritime Labour Convention) Rules also regulates wages and when and how these should be paid to seafarers (Articles 49 to 67). Article 67A has been introduced and states as follows:

Where a seafarer is held captive on or off the ship as a result of acts of piracy or armed robbery against ships, wages and other entitlements under the seafarers’ employment agreement or relevant collective bargaining agreement, including the remittance of any allotments as provided in rule 64 (1), shall continue to be paid during the entire period of captivity and until the seafarer is released and duly repatriated or, where the seafarer dies while in captivity, until the date of death.(4)

The introduction of this obligation for employers codifies rights for seafarers which were not previously clear under Maltese law, thus strengthening the already privileged position of seafarers’ wages by extending the obligation to these situations out of their control.

Notably, under the EIRA, any illegal deductions to an employee’s wages constitutes an offence on the part of the employer. The introduction of this amendment therefore clarifies any doubt which may have been present in situations where a seafarer could not have performed their duty due to piracy or armed robbery. It also enforces the understanding that a situation such as this could never be considered as being a form of abandonment of work.

Entitlement Curiously, the third and final amendment, which found its way into the MLC in the form of a guideline, relates to entitlements and was not incorporated into the Merchant Shipping (Maritime Labour Convention) Rules. The guideline states as follows:

The entitlement to repatriation may lapse if the seafarers concerned do not claim it within a reasonable period of time to be defined by national laws or regulations or collective agreements, except where they are held captive on or off the ship as a result of acts of piracy or armed robbery against ships.(5)

Notably, while Part A of the MLC contains standards which are mandatory to all signatories of the MLC, Part B contains guidelines, such as the aforementioned one, which are non-mandatory. This begs the question as to whether the Maltese courts will take this guideline into consideration when contemplating prescriptive periods or the quantification of damages in situations regarding the repatriation of seafarers. However, this would be unlikely, and perhaps the only relevant time periods would be the general prescriptive periods under Maltese law. Where prescription is concerned, from a Maltese law perspective, the general rules would apply – namely:

a two-year prescriptive period for actions in tort; and
a five-year prescriptive period for any contractual claims.

Comment

It is refreshing to see that such protection will now be given to seafarers including those employed on Maltese-flagged vessels – especially those who regularly traverse areas which may be considered high-risk zones.

Over the coming months, it will be interesting to see how these new provisions will be interpreted by the Maltese courts and tribunals and also whether these could lead to the consideration of similar rules or laws to be implemented in instances of agreements with crew engaged on ships which do not fall within the scope of the Merchant Shipping (Maritime Labour Convention) Rules (eg, fishing vessels, small ships, yachts in non-commercial use and warships or naval auxiliaries), or more widely, in other employment agreements in other industries where similar risks could exist.

By Michael Paul Agius, Fenech & Fenech Advocates

Source: Lexology

Endnotes

(1) Article 39 of the EIRA states as follows:

The provisions of article 36 shall not apply in respect of seamen employed on ships under the provisions of the Merchant Shipping Act; and in the event of any conflict between any of the provisions of the said Act and any of the provisions of this Act, the former shall apply.

(2) Criminal Code, Chapter 9 of the Laws of Malta.

(3) Standard A2.1 – Text of the amendments adopted on 27 April 2018, third meeting of the Special Tripartite Committee established by the governing body in accordance with Article XIII of the Maritime Labour Convention 2006, as amended (MLC 2006).

(4) Standard A2.2 – Text of the amendments adopted on 27 April 2018, third meeting of the Special Tripartite Committee established by the governing body in accordance with Article XIII of the Maritime Labour Convention 2006, as amended (MLC 2006).

(5) Standard B2.5.1 – Text of the amendments adopted on 27 April 2018, third meeting of the Special Tripartite Committee established by the governing body in accordance with Article XIII of the Maritime Labour Convention 2006, as amended (MLC 2006).

A critical benefit of the Maltese Maritime Flag: Court-approved private sales

January 22, 2021 Leave a Comment

The continued success of the Maltese Maritime Flag can be greatly attributed to the protection given to financiers and creditors of vessels registered under the Maltese Flag.

A ‘judicial sale’, as defined by Lief Bleyen, is the “sale of a ship by a competent authority by way of public auction or private treaty…by which Clean Title to the Ship is acquired by the Purchaser and the proceeds of sale are made available to the creditors.” Act XIV of 2006 amended Article 358 of the Code of Organisation and Civil Procedure (‘COCP’), introducing a novel procedure of Court-approved private sales for aircraft and vessels in addition to the traditional judicial sale by auction. Therefore, under Maltese law, there are two types of judicial sales:

1. Traditional judicial sale by auction; and

2. Court-approved private sales.

In a judicial sale by auction, the vessel is sold to the highest bidder in Court, with no reserved price mechanism in the case of vessels exceeding 10 metres in length. This creates a certain ambiguity surrounding the creditors, as they would not be aware whether the sum agreed to by a buyer as the highest bidder in Court would cover, or even come close to what such creditor or creditors, are owed. This type of judicial sale of a vessel is a rather risky one, as it may eventually lead to a situation where a creditor/s remains unpaid once the vessel is sold.

Prior to the introduction of Court-approved private sales in 2006, creditors had the option of negotiating private sales. However, such sales were largely disregarded by buyers since the imperative “executive title” would not be guaranteed. This inevitably led to a situation where the buyer would not purchase an aircraft or vessel free and unencumbered from any liabilities connected to the vessel. This highlights the importance of the amendment to the COCP which brought about an overhaul of the already-existing private sale.

In Court-approved private sales, commonly referred to as ‘hybrid sales’, the mortgagee agrees on a price with the buyer, obtains valuations of the vessel through physical inspections, and if the sale price exceeds the highest valuation, the mortgagee will apply to the Court for the sale to be approved. In this type of sale, the creditors will then seek settlement from the sale price. Court-approved private sales amalgamate the advantageous characteristics of a private sale, i.e. the possibility of negotiating the price, as well as providing the prospective purchaser with an executive title; a modification which seeks to bridge the gap between both types of sales. This introduction is a powerful tool for creditors and financiers where, in the event of default, the vessel can be arrested and sold in a judicial sale without the need of commencing an action on the merits.

Despite being introduced around 15 years ago, the first time that this amendment was used was in the ‘Thor Spirit’ case in 2011. The entire procedure was concluded in around two weeks, proving to be expeditious and highly cost-efficient.

Since the ‘Thor Spirit’ case, the Maltese Courts have continued to approve private sales of vessels in numerous judgments. Examples of such cases include the 2013 Blankenese case and the 2014 MV Ladybug case. Further cases such as the HHL Rio de Janeiro case decided in 2019, also dealt with Court-approved private sales. In the latter case, the sale was finalised within 20 days, once again highlighting the transparent and efficient nature of Court-approved private sales.

The role of the Court in this type of sale is not one which is solely limited to rubber-stamping but pursues a somewhat proactive role, ensuring that the application of this procedure is carried out in a consistent manner, in line with the appropriate administration of justice, as well as the bona fide principle being respected by all affected parties.

THE CMI BEIJING DRAFT

Despite there not being international consensus regarding the judicial sale of vessels, it appears that the Comité Maritime International (‘CMI’) is definitely paving the way for results. The CMI is recognised as the oldest organisation worldwide which is exclusively concerned with the unification of Maritime law and related commercial practices. Back in 2008, the Executive Council of the CMI launched an International Working Group on the Judicial Sale of Ships, with the aim of studying the challenges associated with the failure of the recognition of such judicial sales. Eventually, in 2012 the CMI issued the Beijing draft, which was subsequently approved in 2014.

The Beijing Draft deals solely with the recognition of judicial sales, providing that notices must be given to persons indicated in the clause (including owners, mortgagees, holders of registered titles and lien holders) within 30 days prior to the judicial sale. The Draft reaffirmed that ships must be sold free and unencumbered, where the purchaser shall acquire clean title over the vessel. It also provides for the issuance of a Certificate by the authority ordering the sale, certifying that the vessel is free and unencumbered, and that all rights previously existing against the ship are extinguished.

In 2017, the CMI submitted its proposal to the United Nations Commission on International Trade Law (‘UNCITRAL’). Following this, a joint Colloquium was held in February 2018 in Malta between the CMI, the Malta Maritime Law Association and the Maltese Government. Various attendees, including ship owners, ship repairers, banks, and financiers encouraged the creation of an international instrument which would finally regulate this area to improve the organisation, stability and certainty of international trade.

The UNCITRAL Working Group V1 met in December 2020 to discuss the Beijing Draft. The final result remains an international Convention where the free and unencumbered title in a vessel purchased in a judicial sale is recognised by State parties, guaranteeing that such vessel fetches the maximum price in a judicial sale for the benefit of the creditors, guaranteeing at the same time, the peaceful possession and use of the newly purchased vessel by the bona fide purchaser.

By Katrina Abela, Aleandro Mifsud and Nina Fauser, GVZH Advocates

Source: Lexology

Judicial Sale of Ships at UNCITRAL

January 5, 2021 Leave a Comment

UNICITRAL Working Group V1 met virtually in Vienna between the 14th and the 18th of December to deliberate the 2nd Draft of the International instrument on the effect of Judicial Sale of Ships – the Beijing Draft. Ann Fenech, president of the MMLA and vice president of the Comite Maritime International is the CMI co-ordinator for this project being considered by Working Group V1.

Great progress was achieved thanks to the combined effort and hard work of the Chair Prof. Beata Czerwenka, the Secretariat led by Dr. Jose Angelo Estrella Faria and a great number of State and NGO delegations. The deliverable remains an international Convention by virtue of which the free and unencumbered title in a vessel purchased in a judicial sale is recognised by State parties to guarantee that a vessel fetches the maximum price in a judicial sale for the benefit of the creditors guaranteeing at the same time the peaceful possession and use of the newly purchased vessel by the bona fide purchaser.

by Dr Ann Fenech, Fenech & Fenech Advocates

Source: Lexology

Commercial Yacht Code 2020

December 1, 2020 Leave a Comment

We are pleased to announce that the Merchant Shipping Directorate within the Authority of Transport in Malta has rolled out its 4th edition of the Malta Commercial Yacht Code 2020 (Code) which updates and replaces the Commercial Yacht Code 2015 (CYC 2015).

The substantial increase in the number of superyachts which the Malta flag has continued to lure to its Register has seen the Merchant Shipping Directorate being sensitive to the fast-changing technological developments which this particular industry attracts. Drawing on its own experience of an already well established yachting industry and heeding the technical and commercial advice of yacht builders, repair yards, Classification Societies and industry stakeholders at large, the Merchant Shipping Directorate has come up with an improved Code that mirrors the yachting industry’s realities and ensures a greener and safer commercial yacht fleet for the Malta flag.

The Code comes into effect as of the 1st January 2021 however for existing yachts certificated in accordance with the CYC 2015, compliance with the new Code shall be by not later than the yacht’s first periodical survey carried out after the 1st June 2021.

The amendments and additions introduced by the Code are several and varied and largely seek to enhance the safety aspects of commercial yachting as well as to cater for the particular technological market demands of the industry – all this in conformity with safety and international regulations and standards.

The revisions, all of which are conveniently listed in Annex 1 of the Code, provide, inter alia, for improvements on the safety of passengers at sea, the well-being of the seafarers engaged onboard, the enhancement of the structural aspects of yachts, the provision for innovative designs and requirements covering electrically powered and/or hybrid engines and plants. The Code further provides for the improvement of the protection of the marine environment by introducing the requirements of the Ballast Water Management Convention and furthermore dedicates a section of the Code to the design, construction and safety of Helicopter Landing Areas.

More specifically, amendments made relate to the following sections:

• Definitions (Section 2), • Application and Interpretation (Section 3), • Structural Strength and Watertight Integrity (Section 4), • Rigging on Sailing Yachts (Section 5) • Machinery (Section 6), • Electrical Installation (Section 7), • Intact and Damage Stability (Section 8), • Life Saving Appliances (Section 10), • Fire protection (Section 11), • Equipment (Section 12), • Maritime Labour Convention 2006 (Section 13), • Protection of Personnel (Section 14), • Navigation and Communication (Section 15), • Marine Pollution Prevention section (Section 16), • Manning and Crew Certification (Section 17), • Medical Stores (Section 19), • Survey and Certification (Section 20), • Tenders and Ancillary Craft (Section 22), • Static Chartering (Section 23), • Helicopter Landing Areas (Section 24).

By Rowena Grima and Stephanie Farrugia, 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

Member of the Comité Maritime International

Maritime Labour Convention amendments incorporated into Maltese law

A critical benefit of the Maltese Maritime Flag: Court-approved private sales

Judicial Sale of Ships at UNCITRAL

Commercial Yacht Code 2020

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

Contact Us

Join Us

International Events