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Ship owner clueless due to choice of flag

nederlandse-vlag-5-want

By: Cherry Almeida

Anyone who gets on board a ship is left at the mercy of the gods. Or so can it feel. But seafarers not only have to deal with the weather circumstances and the long time at sea. No. Also legally there is much more to it than one might at first think.

The Maritime Labour Convention was signed in 2006. After ratification by thirty countries it entered into force in 2013. A welcome development, as in a sense it provides the seafarer better protection and the sea employer more clarity. The member countries are obliged to implement in their national law the main guidelines or so-called Regulations as detailed in part A of the Convention. The treaty creates frameworks for the relationship between the sea employer and the seafarer. What are the obligations of shipping companies, ship owners and other employers in shipping? What happens in case of illness, accident or death? Note that under the treaty an employee is already a seafarer if there is an agreement to provide services on board a vessel. Whether sailing will actually take place, is irrelevant.

In the Netherlands, the mandatory guidelines of the treaty have been neatly implemented into the Dutch Civil Code in the so-called law on sea-employment. Quite clear one might think … But nothing could be further from the truth. … Under Dutch law the relevant code applies only to ships sailing under the Dutch flag. But exactly that flag is so interesting! If you employ a Dutch seafarer, Dutch law can apply because the seafarer has the Dutch nationality, but the law on sea-employment might not if the ship sails under a foreign flag. And so suddenly as an employer you (also) have to deal with the laws of Panama, Barbados, Jamaica or name some other (tax) paradise.

On the other hand you may have had good grounds to stay away from Dutch legislation. However the choice for the Dutch flag can pull you right back into the Dutch legislation. To make it even more complicated, the employer and the seafarer can mutually still choose a different law in the contractual negotiations. And so you suddenly find yourself dealing with three different laws! All of which cannot simply be ignored. It is therefore not surprising that everyone, shipping companies, ship owners and other employers in the maritime industry as well as the seafarer are sailing clueless. It is necessary for all parties that they know where they stand, especially when it comes to insurance.

Insurers can insure a ship owners’ liability for death or injury to a certain amount, but whether that is sufficient will depend on the applicable law and which one is that …? Advice is the motto. Not afterwards, but already at the time that the choice for a flag has to be made.

For each flag / party to the Maritime Labour Convention, the interpretations of the Convention can vary significantly. Already because the treaty provides mostly recommendations and not all mandatory rules. Top this to the possibility of different laws being applicable to the contract and you see that we are discussing a complex subject. All the more reason for you as an employer to ask yourself three times how your business is organized. Three times a charm remains!

Are you a ship owner, sea employer or seafarer and interested to learn more on sea-employment and the legal implications of a chosen flag? Please contact Alius Law