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The Maritime Labour Convention 2006: The clock is ticking

Business

After some delay, the International Labour Organisation (“ILO”) recently announced that the Maritime Labour Convention (“MLC”) should come into force in the early part of 2013. For the MLC to come into force 30 members of the ILO must ratify it. To date, eight members have yet to ratify it in the next three to six months in order to meet the new ILO timing. Although, the European Union recommended to its member states to ratify the convention by the end of 2010, one of its key member, the United Kingdom, and by extension its overseas territories, have not yet joined the club of the MLC.

The UK and its overseas territories have on their maritime registry the majority of the world’s superyacht fleet and are therefore a regulatory reference in the industry. Notwithstanding the current status of the UK, these registries are preparing for the MLC changes, which make us all wonder when the UK will actually ratify it.

The MLC sets out minimum standards of seafarers’ working and living conditions onboard vessels. Member states adopting the convention will incorporate it into their national laws. If the MLC standards are mandatory and leaves no flexibility for some, such as seafarers’ minimum hours of rest or minimum entitlement to leave, the convention does allow each state room for interpretation of certain recommendations such as the applicability of the convention to certain vessels.

Let us remind ourselves that the MLC will apply to all ships, whether publicly or privately owned and ordinarily engaged in commercial activities. It provides that “in the event of doubt as to whether this Convention applies to a ship or particular category of ships, the question shall be determined by the competent authority in each member state after consultation with the shipowners’ and seafarer’ organisations (...)”.

Such room for interpretation has led the Marshall Islands, an ILO member, to take a view on what constitutes a vessel engaged in commercial activities since the MLC does not provide such definition. The Marshall Islands, taking into account the specific needs of the yachting industry, considered that yachts which chartered 183 days or less per calendar year were not engaged in commercial activities and therefore fell outside the scope of the MLC. This position has yet to be confirmed but is an important one when considering the substantial additional costs superyachts owners will face when complying with the MLC. However, to date it is unclear whether any other white listed flag state will follow the Marshall Islands.

By the time the MLC comes into force, yacht owners falling within its scope will have to ensure full compliance. What does it mean concretely for existing commercially operated superyachts?

1. Superyacht crew’s conditions of employment
The MLC clearly sets out the rights and obligations of crew engaged onboard superyachts. As a result a thorough review of the crew’s employment agreements should be undertaken with the assistance of yacht lawyers and managers. This review will ensure that standards are met and yacht owners are protected. Indeed, the MLC may give rise to more complicated employers/employees relationship and open the gates to litigious situations.

2. Superyacht crew’s working conditions
The MLC imposes minimum standards with regard to health protection, medical care, welfare and social security protection. This will require the yacht owner to review not only its crew medical cover but also its employment structure to ensure that it is adequate, compliant with the minimum requirements so as to be protected. Service suppliers’ contracts and crew management contracts should also be carefully reviewed to ensure that all the necessary requirements are incorporated.

3. Superyacht crew’s working environment
The MLC provides that ships constructed after it is in force are to provide and maintain appropriate accommodations and recreational facilities for seafarers working and/or living on board. However, any yacht under construction which have their keel laid or are at a similar construction stage prior to the convention coming into force will fall outside of the MLC’s requirement. As a result, owners/purchasers contemplating ordering a new yacht should start the building process in the near future in order to avoid the restrictive MLC requirements contained in its title 3 which targets future build only. Whether you contract with a shipyard before or after the MLC comes into force, your shipbuilding contract will have to be carefully drafted to include or exclude these changes.

It is important for yacht owners as well as their managers to be fully aware of the certification process in order to complete the MLC compliance procedure.

In view of the above, when considering the measures and review process to be untaken in order to be MLC compliant, the singular position taken by the Marshall Islands may seem a very attractive one to superyachts owners. Indeed, since most of the superyachts do not charter more than 183 days per calendar year, they would as a result fall into the category of vessels not targeted by the MLC.

In view of the lack of guidance and clarity around the applicability of the MLC in the yachting industry, there is no doubt that the best position a yacht owner can be in is full compliance, regardless of the amount of chartering its superyacht is engaged in. However, we will have to wait and see the outcome of the first inspections to understand how the MLC is practically enforced.

In any event, yacht owners should take measures to minimise the risks of difficult inspections and detentions. The frequency of yacht inspections will take place according to the level of risk a yacht bears. This level of risk will be assessed based on a number of criterias such as the flag state chosen (it is important to note that yachts flying the flag of a state which has not ratified the MLC, once in force, is very likely to be inspected), the yacht manager chosen etc... It is therefore more important now than ever that yachts owners and prospective yachts owners undertake a health check of their current/future ownership and operational structure so as to avoid recurrent and costly inspections, potential detention, loss of business and damage to the yacht’s reputation.

About Anouch Sedef
Anouch is a partner at R&R Avocats, a law firm based in Geneva. She joined R&R after spending several years in an award winning city law firm in London. Anouch specialises in the superyachts industry where she advises yacht owners and their representatives together with professionals such as designers, brokers, suppliers, naval architects, project managers and yacht managers. Anouch handles all superyacht matters including new build, sale and purchase, crew matters, registration, matters relating to the operations of the superyacht, disputes and resolution.

R&R Avocats
Anouch Sedef
[email protected]
www.rrlegal.ch

By Anouch Sedef

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