Eamon Moloney, Head of Admiralty Law, Eversheds LLP
introduction
The International Ship and Port Facility Security Code (ISPS Code) came into effect on 1 July 2004. According to the IMO, a bare 53% majority of ships and port facilities were compliant on that day - at least on paper. By September 2004, the IMO's statistics showed a 90% compliance level. In the meantime, the threat of international terrorism is still real, perhaps even worse than before. While the focus has been on Iraq, further afield, the picture is less clear. In spite of some dreadful atrocities, mainly against soft targets, the world's security services have had notable successes in capturing or containing major terrorists. This seems to indicate that international terrorism is being pinned down, with terrorists having to operate in small cells and against local targets.
For the shipping industry, this is a reassuring message. Ships have always been unlikely targets. With a few notable exceptions, they are out of the public eye, always on the move and only calling at isolated and / or relatively secure sites. Which is why many thought that the ISPS Code was a hasty and ill-considered overreaction to an exaggerated threat. So how does it look now?
the ISPS Code in practice
The ISPS Code has been seen as part of a wider response to new threats against the established order - money laundering, tax evasion, drug trafficking, sanctions busting, illegal immigration, for example. Terrorism is yet another of these threats but it is the yoke by which the Code is placed around our necks.
International Conventions are not known for their user-friendly language and the clear expression of ideas. What the Code says and what the Code means are two separate things and this is not the only problem. The ISPS Code is to be implemented in accordance with national law but it has less to do with shipping, port operations or international trade and more to do with State security, which is a concept that does not recognise any of the normal rules governing maritime or commercial activities.
As expected, the ISPS Code has not been implemented uniformly around the world. The United Kingdom was one of the first nations to ratify the Convention but the Code itself has never been scrutinised or debated by Parliament. The Code has force of law in the UK via a European Union Regulation and in a form that is wider and more onerous than the original Convention. For example, the 'recommended' security measures in Part B of the Code are all mandatory within the European Union and there is an additional level of EU scrutiny and inspection over and above that of the nation state.
the effect upon ships and crews
One look at the detail of the Code shows what excessive expectations have been made of ships' officers and crew - additional guards, security checks, patrols, vetting of stores, cargoes and visitors, escorting of people and goods and patrols of jetties and anchorages - all of which have to be recorded, implemented and verified. All this additional work is mandatory but at the same time the Code is laced with platitudes to the effect that due regard must be had for STCW and that the IMO needs to pay more attention to crew manning and workloads. The Code also expresses the hope that it will not interfere with crews' human rights to leisure and access to shore leave and facilities. However, the way in which the Code is being operated in many countries has had just the opposite effect.
information gathering
A less obvious aspect of the ISPS Code is the new information-gathering powers which it gives to flag and port states. The major powers know where cargoes come from and they generally know where they end up. What they would also be interested to know is who owns, trades and carries those cargoes and the ISPS Code will help them to find out. This gathering of information on every cargo carried and traded around the world may be ostensibly for the protection of ships and ports from terrorism but it may also be used in respect of:-
" taxation and excise " money laundering " drug trafficking " illegal immigration " sanctions and sanction busting " environmental issues
Ships and ports are now an integral part of a major information-gathering operation which is quite legal because it is related to state security. It is unlikely that the United Nations would mandate similar powers to promote free trade, to protect the environment or to ensure safety at sea.
safety -v- security
This highlights another dichotomy within the ISPS Code - the division between safety and security, neither of which are defined. Seafarers are in as much danger from an untested gangway, an inoperable fire detection system or an incompetent watchkeeper as from a bomb or a terrorist. However, the ISPS Code has not been properly integrated with the rules that govern safety. The ISPS Code tells ship masters that if they must choose between safety and security, then they must opt for safety. The problem is that security advice can often be given by very persuasive people.
the unsafe port - ISPS style
The ISPS Code will have a major effect on the legal relations between all port users, especially between ship owners and charterers.
The security level of a port is set by government and the legal definition of a 'safe port' is wide enough to include political and security considerations as well as the condition of the berths, dredging and competent pilots. A port at Security Level 3 (with a probable or imminent risk of a security incident) is, by definition, 'unsafe'. At this level, security forces will take over the port and it will be closed. Security Level 2 means a heightened risk of a security incident. Here, checks will be more intense, delays will occur and anchorages will be closed. Cargoes may arrive late, passengers may be kept waiting, raising the likelihood of significant disruption.
In the case of 'arrived ships', at the higher security levels, ports may keep ships off the berth until the latest possible moment, offering plenty of scope for delay, worry and expense and playing havoc with the concept of an 'arrived ship'. Certainly, the loss and expense caused by the Code will fall ultimately upon the consumer but there will also be a raft of arguments between owners and charterers as to who pays for the security measures required by the Code, especially where there is a change of security level within the life of a charter.
the BIMCO ISPS clauses
These problems can be addressed, to a degree, in pre-fixture negotiations. BIMCO have drafted three possible charterparty clauses: one for time charters, one for voyage charters and a 'Security Clause' for calls to the USA. Both the Time and the Voyage clauses expressly require Owners and Charterers to comply with the Code (obvious, perhaps, but useful to have recorded in a binding contract) while Owners are to provide an International Ship Security Certificate and contact details of of the Company Security Officer.:
(a) (i) From the date of coming into force of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (ISPS Code) in relation to the Vessel, the Owners shall procure that both the Vessel and "the Company" (as defined by the ISPS Code) shall comply with the requirements of the ISPS Code relating to the Vessel and "the Company". Upon request the Owners shall provide a copy of the relevant International Ship Security Certificate (or the Interim International Ship Security Certificate) to the Charterers. The Owners shall provide the Charterers with the full style contact details of the Company Security Officer (CSO).
(ii) Except as otherwise provided in this Charter Party, loss, damage, expense or delay, excluding consequential loss, caused by failure on the part of the Owners or "the Company" to comply with the requirements of the ISPS Code or this Clause shall be for the Owners' account.
Whereas Charterers' primary obligation is to provide full contact details to the Owners:
(Voyage)
(b) (i) The Charterers shall provide the CSO and the Ship Security Officer (SSO)/Master with their full style contact details and any other information the Owners require to comply with the ISPS Code.
(ii) Except as otherwise provided in this Charter Party, loss, damage, expense, excluding consequential loss, caused by failure on the part of the Charterers to comply with this Clause shall be for the Charterers' account and any delay caused by such failure shall be compensated at the demurrage rate.
(Time)
(b) (i) The Charterers shall provide the CSO and the Ship Security Officer (SSO)/Master with their full style contact details and, where sub-letting is permitted under the terms of this Charter Party, shall ensure that the contact details of all sub-charterers are likewise provided to the CSO and the SSO/Master. Furthermore, the Charterers shall ensure that all sub-charter parties they enter into during the period of this Charter Party contain the following provision:
"The Charterers shall provide the Owners with their full style contact details and, where sub-letting is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners".
(ii) Except as otherwise provided in this Charter Party, loss, damage, expense or delay, excluding consequential loss, caused by failure on the part of the Charterers to comply with this Clause shall be for the Charterers' account.
The main provision is that any loss, damage, expense or delay arising out of either party's failure to comply shall be for that party's account. It is therefore important that a pre-fixture check is made as to whether the ship and the voyage-ports are all at the same ISPS Security level. If there is a discrepancy, then there will be additional costs.
The Voyage Clause explicitly allocates the risk and expense of security measures imposed by port facilities, in accordance with the ISPS Code, to the Charterer: (Voyage) (c) Provided that the delay is not caused by the Owners' failure to comply with their obligations under the ISPS Code, the following shall apply:
(i) Notwithstanding anything to the contrary provided in this Charter Party, the Vessel shall be entitled to tender Notice of Readiness even if not cleared due to applicable security regulations or measures imposed by a port facility or any relevant authority under the ISPS Code.
(ii) Any delay resulting from measures imposed by a port facility or by any relevant authority under the ISPS Code shall count as laytime or time on demurrage if the Vessel is on laytime or demurrage. If the delay occurs before laytime has started or after laytime or time on demurrage has ceased to count, it shall be compensated by the Charterers at the demurrage rate.
Finally, both Voyage and Time Clauses provide that Owners are accountable for all measures taken to comply with the Ship Security Plan and that Charterers are responsible for all costs and expenses arising out of security measures imposed by the port facility or other relevant authority, in accordance with the ISPS Code:
(d) Notwithstanding anything to the contrary provided in this Charter Party, (all delay - Time Clause), any additional costs or expenses whatsoever solely arising out of or related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be for the Charterers' account, unless such costs or expenses result solely from the Owners' negligence. All measures required by the Owners to comply with the Ship Security Plan shall be for the Owners' account.
(e) If either party makes any payment which is for the other party's account according to this Clause, the other party shall indemnify the paying party.
Although BIMCO claims this to be a "balanced solution", it is undeniably onerous for Charterers, especially as the clause does not address the vessel's trading history. This means that so long as Owners are ISPS-certified, then even if the vessel has called at an unlisted or insecure port during its last ten voyages, the risk of delay or detention or expense during the contracted voyage will rest with the Charterer.
In view of industry concerns over the attitude of the US authorities to the ISPS Code, BIMCO has also drafted its US Security Clauses for Time and Voyage Charters, which provide:-:
If the Vessel calls in the United States, including any U.S. territory, the following provisions shall apply with respect to any applicable security regulations or measures:
Reporting The Vessel or its agents shall report and send all notices as required to obtain entry and exit clearances from the relevant U.S. authorities. Any delay caused by the failure to so report shall be for the Owners' account, unless such failure to report is caused by or attributable to the Charterers or their representatives or agents including but not limited to the shipper and/or receiver of the cargo.
Clearances Unless caused by the Owners' negligence, any delay suffered or time lost in obtaining the entry and exit clearances from the relevant U.S. authorities shall count as laytime or time on demurrage. Expenses Any expenses or additional fees relating to the cargo, even if levied against the Vessel, that arise out of security measures imposed at the loading and/or discharging port and/or any other port to which the Charterers order the Vessel, shall be for the Charterers' account.
Notice of Readiness Notwithstanding anything to the contrary contained in this Charter Party the Vessel shall be entitled to tender Notice of Readiness whether cleared for entry or not by any relevant U.S. authority.
Notwithstanding anything else contained in this Charter Party all costs or expenses arising out of or related to security regulations or measures required by any U.S. authority including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be for the Charterers' account, unless such costs or expenses result solely from the Owners' negligence.
Again, the final provision clearly allocates the risk and expense of security measures imposed by port facilities, in accordance with the ISPS Code, to the Charterer.
the code in operation
In preparation for this article, three shipowners were contacted, who together operate over a hundred ships, from ULCCs to mini-bulkers, under a wide range of flags. They agreed that :-
" Thorough preparation had paid off handsomely. For all three fleets, the Code had been introduced on time and under budget; " The Code had made calls to the USA easier. The US authorities were now better co-ordinated and are applying security measures in a more systematic and reasonable manner; " The Code had made calls to Northern Europe more difficult. The biggest problem was a lack of awareness and co-operation over the Code by the non-security authorities, particularly Customs & Excise; " The ships had willingly embraced the Code. The next stage would be the development and testing of office procedures.
But their concerns struck a familiar note:-
" The Code had adversely affected crew shore leave; " There was a need for more co-ordination between ports and shore authorities - some of whom were applying the Code unevenly. Examples were (1) treating the coastal leg of a four-port voyage as a domestic not an international voyage - even though the ship arrived from or departed to a foreign country on each call (2) port authorities requesting security information over VHF (3) notification of changes to security levels only being given in the local language.
One common issue appeared significant. Every time one of their ships had to change its Security Level to match the port facility, it was because of a domestic problem in the port state, not a security issue e.g. drug smuggling or other criminal activity. This indicated that the Code might be used (or abused) far more in the future for local issues than for international terrorism.