THE ANNUAL INTERNATIONAL MARITIME INSURANCE SEMINAR
Black Sea Law Company is the organizer of the must-attended global maritime event which takes place in Odessa, Ukraine.
It is a very useful and reliable professional networking platform for Ukrainian Shipping, Financial and Trading business. IMIS is the place where you can meet necessary for you people from all over the world, but IMIS is focused on the representation of the Ukrainian business for international services: legal and insurance.
It should be noted that the Odessa region has one of the highest levels of economic development of Ukraine and the Odessa city is the “Maritime Capital” of Ukraine.
Maritime Safety is a fundamental principle in the field of the Shipping Industries. Compliance with the requirements of international maritime safety legislation is always the responsibility of the Shipowner. In turn, the control over the shipowner’s compliance with these requirements is entrusted to the Flag State. International rating of flags, to a certain extent, is […]
Maritime Safety is a fundamental principle in the field of the Shipping Industries. Compliance with the requirements of international maritime safety legislation is always the responsibility of the Shipowner. In turn, the control over the shipowner’s compliance with these requirements is entrusted to the Flag State. International rating of flags, to a certain extent, is a marker that allows navigating in the amount of information, to mark achievements, to pay attention to shortcomings. Each year, updated versions of the “White”, “Gray” and “Black” List from Paris MOU are presented to the public, reflecting the flag administrations’ longstanding work in meeting safety requirements.
The Paris Memorandum of Understanding on Port State Control is the official agreement between the 27 participating Maritime Authorities implementing a harmonized system of Port State Control. The Memorandum of Understanding consists of the main text and includes 12 annexes, in which the Maritime Authorities agree on: the relevant international conventions; their inspection commitments; the principles for the selection of ships for inspection; the inspection procedures; the exchange of information on inspections; the structure of the Paris MOU organization, the Secretariat; amendment procedures of the Memorandum itself.
The “White, Grey and Black (WGB) List” presents the full spectrum, from quality flags to flags with a poor performance that is considered high or very high risk. It is based on the total number of inspections and detentions over a 3-year rolling period for flags with at least 30 inspections in the period. The most recent List contains 41 countries in the White zone, 16 in Gray, and 13 in Black (Click here to view the list).
Unfortunately, Ukraine ended with a position on the Black List currently.
Black List is divided into 3 zones: Medium Risk, Medium to High risk and High risk. Black List signifies to itself port authorities that the vessel must be inspected with special care. Many port authorities make it clear that vessels under the “Black” flag must be the subject of the more precise inspection. Such attitude must not be considered as discrimination but more as the need to combat gross violation of safety rules. The Black List displays the flags whose fleets are most frequently and regularly found to be in breach of safety requirements. The presence of a List that determines the likelihood of a violation of requirements by the vessel allows the port authorities to rationally distribute forces and not burden ships with unnecessary inspections. At the same time, vessels on the blacklist will be under closer scrutiny, which will prevent possible violations.
Ukraine accompanied by Moldova, Belize, Palau and Tanzania, is qualified Medium to Higher Risk. According to Paris MOU the High risk of violation is possible for Togos, Albania and Comoros. The flag’s position in the Black List is due to the lack of regular inspections of the fleet by the flag administration, the lack of real control over compliance with the requirements and the presence of low requirements for the technical condition and age of the vessel.
In addition, according to the Shipping Industry Flag State Performance Table 2020/2021 by the International Chamber of Shipping, Ukraine has a negative performance. This table provides an invaluable indicator of the effectiveness of individual flag states around the world. It is an annual analysis of how countries perform tasks on a number of criteria, such as port state control (PSC), ratification of international maritime conventions and participation in IMO meetings (Click here to view the list).
Good to know that the greatest number of flags are considered to be suitable for “White” List e.g., Singapore, Korea, UK, Cyprus, China, Panama, US. It is recorded that Japan flag had 0 detentions from 2017 to 2019. Also, Bermuda (UK), Ireland, Croatia, Latvia, Estonia, Korea had only 1 detention during the same period.
Despite the fact, that the understated requirements of the flag administration allow some shipowners to save on maintaining the vessel, the consequences in the long term are dire. Confirmation is the news about the numerous deaths of ships flying the flags of Palau or Togo, due to storms. Registering a vessel under a whitelisted flag may be more onerous in the beginning, but over time, any shipowner will appreciate the freedom of movement and the positive attitude of the port authorities towards more law-abiding flags.
For example, Panama’s flag is on the “White” List, and according to the Paris MOU, out of 6,323 inspections, only 323 detentions were recorded, which is only 5% of the total. In 2009, 40% of the world fleet was registered under the flag of Panama, and as of March 2021, 8,484 vessels were registered under the flag of Panama. That is why Panama is the leader in the number of merchant ships.
This trend is due to the significant advantages of the flag of Panama:
• registration of vessels for an indefinite period (previously registration was allowed only for 2 years);
• vessel registration in other countries through the Panama consulates and registration offices, which there are more than 97 worldwide;
• vessel may be registered under the flag of Panama regardless of the registration of the Shipowner’s company;
• there are no requirements for the minimum tonnage of the vessel;
• Panama Registry is accessible and prompt in service (24/7) including online services;
• Register of Ships is public;
• Panama Registry provides favorable discounts, for example, for newly built vessels, etc.
Unfortunately, the Ukrainian flag remains at the bottom of the list. An external review ruthlessly confirms that the registry needs new insights. The main factor that will turn the game upside down may be the refusal to register an elderly fleet, built in the 80s. In addition, the abandonment of the requirement of compulsory citizenship of the owner will allow attracting foreign companies and renewing the fleet. Based on the example of many successful registries, including Panama, it is clear that the main factors of competition are rigor in meeting international requirements, regular reporting, open checks and remote paperwork.
This article is available in Ukrainian (click here).