Industry adjusts to latest MLC amendment
The Isle of Man Ship Registry explains how the industry has responded to the MLC's financial security requirement…
Having entered into force on 18 January, 2017, the 2014 amendments to the Maritime Labour Convention (MLC) 2006 aim to better protect abandoned crew and provide financial security for compensation to crew and their families in cases of a crewmember’s death or long-term disability.
The amendments, which were developed by a joint working group established by the International Labour Organisation (ILO) and International Maritime Organisation (IMO) in 1998, will strengthen the MLC, 2006 by establishing mandatory requirements that owners have financial security to cover abandonment of crew, as well as death or long-term disability of crew due to occupational injury and hazard.
The idea with the new requirements, therefore, is for a financial security provider – a separate entity to the owner – to step into the breach and pay the crewmember’s repatriation costs. Discussions between leading Flag States and the major Protection and Indemnity (P&I) insurers have preceded the entry date to work out how to best go about this.
“The amendments to MLC have required Flag States to have legislation in place to ensure commercial yachts have insurance for both the abandonment of seafarers, and to strengthen the requirements for owners’ liability,” says David Morter, deputy director, Isle of Man Ship Registry. “Most Flag States have been issuing guidance to their yachts on the new requirements – the Isle of Man published a number of advisory notices in 2016 and in January 2017 amendments were made to the Isle of Man’s MLC Regulations, which included the new requirement.”
The solution, Morter explains, is for the yacht to display certificates of insurance for financial security in a conspicuous place where they can be seen by the crew. He adds that, if crewmembers do not see one, then they should enquire if the insurance is in place.
Insurance for yachts is generally carried out by P&I Clubs, and the main Clubs introduced a new product towards the end of 2016, which included the new MLC amendments. “There are other forms of insurance available that are not carried out through a P&I Club, but the yacht would have to check this meets the MLC requirements and is acceptable to the yacht’s Flag State,” continues Morter. “The Isle of Man does not permit yachts to have self-insurance because it would be very difficult to verify how self-insurance would work in practice.”
Captains and owners of commercial yachts should be aware of the changes, especially yachts over 500gt as their ISM/MLC company is required to keep their yachts aware of any new requirements. It has to be remembered that MLC applies to all commercial yachts and this includes yachts which are under 500gt. Flag States can have different requirements for under 500gt yachts especially regarding their certification, so the yacht’s captain should contact their Flag State to find out how they must comply.
“As with all new requirements, Flag State and Port State Control inspectors are very quick to update their survey checklists,” cautions Morter. “So surveyors and inspectors will be checking that the new insurance is available and displayed on the yacht during their inspections. If it is not available, this will be a very easy deficiency for a surveyor to raise.”
The point behind these changes is to require that owners put a regime in place that will kick in should an owner default on their obligations, which will be an important security net for superyacht crew. “Now the amendments are in force, if a yacht owner abandons the crew, for example if the owner has gone into insolvency, there will be insurance available to repatriate the seafarers back home,” Morter explains. “It is also possible for the seafarers to claim up to four months of outstanding wages and travel expenses.”
In addition to insurance for repatriation, the insurance requirements for owners’ liability for sickness, injury and death have also been amended. “Again, this can only be for seafarers’ benefit,” Morter concludes. “It will be reassuring for seafarers to know that this type of insurance is in place.”
A more thorough look into the superyacht industry’s to the MLC’s financial security amendment, and the impact it has had on operations, will appear in Issue 177 of The Superyacht Report. Please subscribe here.
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