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The Maritime Labour Convention 2006 – the good, the bad and the ugly

Business

Much has been written about the Maritime Labour Convention (“MLC”) for the past year when the Yachting industry started to raise concerns about the impact of the convention on yachting. The Convention is due to come into force in the coming year or so and yacht owners are extremely concerned that this will restrain their yachting experience. Unfortunately, as it stands the yachting industry will suffer some impact from the convention.

The Good – A convention making history
Considered as the Convention “making labour history”, the MLC, also called the “fourth pillar” of the international regulator for quality shipping, thus complementing the other key conventions such as SOLAS, STCW and MARPOL, has developed through an unprecedented five year process of intensive consultation. Its implementation is intended to be global and all the necessary mechanisms have been put in place to ensure that, to the greatest extent possible, the Convention requirements are respected, even on the ships that fly the flag of countries that do not ratify the Convention.

Although the MLC provides comprehensive rights and protection at work for more than 1.2 million seafarers, the Convention also aims to secure economic interests in fair competition for quality shipowners. Indeed, an estimated 90% of world trade is carried on ships and seafarers are in this sense essential to international trade and the international economic and trade system.

The MLC also directly affects the yachting industry which represents an insignificant percentage of the maritime world in terms of trade and which, up until now, benefited from an exclusive and flexible regulatory system. Once in force the Convention requirements will be mandatory and enforced through flag state certification/control and port state inspection. It is therefore very important for yacht owners and yacht managers to seek early advice to ensure full compliance when the MLC is in force.

The MLC applies to all vessels which are ordinarily engaged in commercial trade activities. This will therefore include pleasure yachts engaged in a commercial chartering activity. However, it will not apply to pleasure yachts used solely for private purposes.

Crew: Minimum requirements
The convention provides for the seafarer’s employment and social rights which include the minimum requirements for seafarers to work on a ship, the conditions of employment, minimum requirements for accommodation and crew facilities and health protection, medical care, welfare and social security protection.

Most of the minimum requirements provided by the convention are, in practice, already applied by yacht owners who accept that quality and loyal crew should be taken care of. However the main changes to note are the following:
1. Annual Leave allowance: minimum of 2.5 days annual leave per month served;
2. Complaints Procedure: an onboard complaints procedure needs to be clearly set out. Some guidelines are provided but more will be published in due course;
3. “Seafarer Employment Agreements” will replace Crew Agreements;
4. Wages must be paid monthly and a nominated account must be provided to each seafarer of wages and deductions;
5. Health and Safety including risk evaluation becomes essential and the requirement that all vessels with 5 or more seafarers must have a safety committee is introduced;
6. Social Security: sickness benefit and injury benefit to seafarers are to be formally provided and backed up by a financial guarantee.

The Bad – Obligations and restrictions on the owner
The most significant changes relate to the accommodation and recreational facilities of the crew, which will affect yacht owners/purchasers when considering building their own yacht. The Convention provides that the ships constructed after the Convention is in force are to provide and maintain appropriate accommodations and recreational facilities for seafarers working or living on board (or both).

By way of example, the Convention provides that when sleeping accommodation on board is required, individual sleeping rooms shall be provided and separate sleeping rooms shall be provided for women and men. The minimum inside dimensions of a berth shall be at least 198 cm by 80 cm. For a single berth seafarer’s sleeping room, the floor shall not be less than 4.5 sqm in ships of less than 3000 gross tonnage and 5.5 sqm between 3,000 and 10,000 gross tonnage. Each sleeping room shall be provided with a table or desk, a clothes locker of ample space and a drawer or equivalent space for not less than 56 litres. The Convention also provides for directions with regard to the design and construction, ventilation, heating, lighting of the sleeping rooms, mess rooms, sanitary accommodation, hospital accommodation etc. On ships other than passenger ships the floor area of mess rooms for seafarers should not be less than 1.5 sqm per person.

These requirements will have a significant impact on the design and construction of yachts. If superyachts over 3,000 gross tonnes may afford the space to comply with these requirements those under 3,000 gross tonnes may face difficulties. Indeed, in some instances the owner may have to sacrifice his own space and rooms together with his guests’ in order to ensure that the design of the yacht complies with the MLC. The number of limited guests on board for charter has always been an issue for owners and charterers, if the space was to be limited too, one could question the future of charter activities for new build superyachts.

However, in order to establish who will be affected by these new requirements, we need to answer the following question: what defines a constructed yacht? The MLC provides that a constructed ship is considered constructed from the date when the ship’s keel is laid or when it is at a similar stage of construction. Thus any yacht in construction which complies with this stage of the build prior to the Convention coming into force would be “grandfathered” in as much as escaping its new space requirements.

Certification and Survey
Once the MLC is implemented, superyachts will have to be issued with a Maritime Labour Certificate (valid for 5 years). This will be issued upon inspection by the Flag State surveyors or class and upon confirmation that the yacht complies with the MLC.

The superyacht owner will also have to fill a Declaration of Maritime Labour Compliance Part II which will identify the measures adopted to ensure ongoing compliance. The procedures and policies in the DMLC Part II will be the areas that will be inspected by the surveyors during the initial inspection. This means that the yacht will need to be able to demonstrate how these procedures and policies are used onboard to implement the MLC.

This will have to be carefully prepared by the yacht manager as it will involve ensuring that all the necessary procedures are in place. No doubt this will be considered as an additional burden on yacht owners who will have to go through the additional expense and time to have all these requirements complied with. The ILO and IMO have issued substantial guidelines regarding the enforcement mechanisms in place which will take place mainly through Flag and port state control. Although, a period of adaption will be required once the Convention is in force, superyacht owners can expect enhanced controls by the Flag states and the post states at least in the early stages of the Convention.

It is of course possible to apply for a Maritime Labour Certificate now although it is not strictly required at the present.

The Ugly - The future of the yacht building market
All ships constructed before the Convention remain bound to comply with the requirements relating to ship construction and equipment set out in the Accommodation of Crews Convention (Revised) 1949 and the Supplementary Provisions in 1970. However, they will not be bound by the design restrictions imposed by the MLC.

At a time when European shipyards face difficult challenges, whether caused by the Turkish and Chinese competition or by the recession which affected the yacht building market, these new build restrictions come as a further hindrance to the development of the superyacht building market.

The shipyards may however, see an old market re-emerging, the one of refit and conversion. Indeed yacht owners and designers may decide to be creative and use already constructed superyachts to convert or refit them without having to comply with the MLC building requirements.

Alternatively shipyards may see in the MLC a promotional opportunity to sign new build contracts starting before the MLC comes into force to ensure that they escape the future mandatory requirements. Yachts builders have to bear in mind that the Flag states will be clarifying and guiding the yachting industry when the MLC comes into force as there remain areas of confusion. However, when the time comes yacht builders will have to come up with creative ideas to keep their customer happy and not lose a share of this market which has been increasing so fast for the past 10 years.

About the author
Anouch Sedef is a Senior Associate in the highly regarded Bargate Murray Superyacht Group and specialises in superyacht work including large building projects & agreements, sale & purchase, Charter, Repair & Refit agreement.

Bargate Murray
Anouch Sedef
+44 (0) 20 73751393
[email protected]
www.bargatemurray.com

By Anouch Sedef

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