What the "Bleep" is MLC 2006 and Why Should I Care?

Since my last few blog posts on the MLC, I have repeatedly heard this question with increasing frequency. While mainstream clients have been increasingly asking about the Maritime Labor Convention 2006 (“MLC”), which comes into force on August 20, 2013, others question the "need to know". Ship owner clients wonder what it means for them—in a nutshell, non-compliance with the requirements of the Convention will result in port state control (PSC) detentions. Insurers ask what it means for them—it means knowing what your policy states and how the Convention is interpreted to know whether a given situation is covered under the policy. Yacht managers and operators figure it does not apply to them, so many of them simply want a letter from me to cover themselves that they are not required to be compliant. When I tell them that such a letter may not be possible in their given situation, all of a sudden, I get “what the !@#$%” is this law and why am I subject to it?

 

This blog post is to set out an FAQ of sorts to answer many of the questions I have received in the last year or so leading up to the entry into force of this Convention.

1.               What is MLC 2006 certification?

According to the International Labor Organization (“ILO”), the MLC provides comprehensive rights and protection at work for the world's more than 1.2 million seafarers.  On their website, the ILO goes on to state that Convention aims to achieve both decent work for seafarers and secure economic interests in fair competition for quality ship owners. By its origin and by its intent, the MLC is a human rights document. It prescribes a variety of seafarers’ protections in terms of work and living conditions, terms of employment, health care, social security, and related matters. All present employment contracts will become null and void on MLC implementation. They will have to be replaced by seafarers’ employment agreements, with mandatory prescribed particulars of conditions of employment. The MLC has been designed to become a global instrument known as the "fourth pillar" of the international regulatory regime for quality shipping, complementing the key Conventions of the International Maritime Organization (“IMO”). The decision by the ILO to move forward to create MLC was the result of a joint resolution in 2001 by the international seafarers’ and ship owners’  organizations, also supported by governments.  They pointed out that the shipping industry is “the world’s first genuinely global industry” which “requires an international regulatory response of an appropriate kind – global standards applicable to the entire industry”.  Thus, all sections of the MLC should be read with this background in mind--both decent working conditions for seafarers and fair competition for vessel owners.

The MLC certification process is similar to ISM and ISPS for ships, and the certificate will have 5 years validity and the process will include interim, initial and intermediate inspections. The MLC requires owners to submit a Declaration of Maritime Labor Compliance (“DMLC”) to their Flag State, which is a party to the Convention. The Flag State will then issue an MLC Certificate to ships flying their flag which should be posted on board in a conspicuous place that is accessible to seafarers. Thus, the MLC Certificate is issued by the vessel’s Flag State, following approval of certain paperwork and a physical inspection of the vessel.

2.               Do pleasure yachts fall under the certification requirement, or is this just for industry-related vessels?

The Convention applies to all commercially registered vessels, including yachts engaged in international voyages, regardless of country of registration (Flag). Cannes to Monaco can be construed as an international voyage, so exceptions would be very rare.  It is also interesting to note that in one of their circulars discussing what ships are covered under the MLC, the Marshall Islands flag states that yachts regardless of tonnage are considered ships covered by the Convention if they are “ordinarily engaged in chartering”. 

3.               Is there a vessel size below which I don’t need certification?

Those vessels over 500GT must, among other requirements, carry the MLC Certificate. For those under 500GT, it is strongly recommended that voluntary compliance with the Convention be documented by your Flag State. If you want to know why, please read my blog post on Is the Industry Asleep to the MLC on this blog. 

4.               How do I get compliant with the requirements?

The MLC Certification is based upon a regime where the Flag State Administration is either doing the certification themselves or authorizing Recognized Organizations (“RO”) to work on their behalf. Such authorization may range from full authorization (from initial DMLC submission, inspection to shipboard verification to issuance of the MLC Certificate) to part of these activities only. For some flags, a case by case authorization may be required. Many vessel owners are utilizing their Classification Society or third party vendors as the RO specializing in the MLC to get compliant. The answer to this question generally rests with the vessel’s Flag State.

5.              How do I stay compliant with the requirements?

After the initial inspection and certification, there will be interim and intermediate inspections. At some point, all vessels subject to the MLC will eventually be boarded by Port State Control (PSC) inspectors, who have the authority to detain a vessel not compliant with the requirements of the MLC. Compliance is dependent mainly on sticking to the vessel’s DMLC, the certificate and the plan for keeping the vessel MLC compliant.

6.         How long does it take to get certified?

Length of certification time will depend on the Flag State of the vessel and the lead time to seek certification. One of the main requirements of the MLC is that each crew member is to have been issued, and be in possession of, a signed Flag State approved Seafarer Employment Agreement (“SEA”). This document must contain certain provisions required under the MLC. The SEA will replace or be used in conjunction with any Crew Contracts already used by the vessel and will be examined at PSC inspections. Issuance of new SEA’s and Crew Manuals will take time. Each vessel and ownership entity may have differing levels of compensation and benefits for crew over and above those required as a minimum under MLC. Following a gap analysis and the subsequent creation of SEA’s and updated crew manuals, it may take many weeks or even months for documents to be reviewed, revised and approved by owner’s representatives and advisors. Thus, the question on the lead time is “it depends”.

7.         When will my initial certificate be issued and how frequently must it be renewed?

The MLC shall be issued to a vessel by the competent authority (Flag State), or by a RO duly authorized for this purpose.  Pursuant to the MLC, the term “competent authority” means the minister, government department or other authority having power to issue and enforce regulations, orders or other instructions having the force of law in respect of the subject matter of the provision concerned.  Practices for issuing the certificate will vary by country and may deal with more than one government department. The certificate may be issued for a period not to exceed five (5) years.  Where the competent authority of the Flag State has ascertained through inspection that a ship that flies the member state’s flag meets or continues to meet the standards of the Convention, it shall issue or renew a Certificate to that effect and maintain a publicly available record of that Certificate.  Additionally, a MLC Certificate may also be issued on an interim basis to new ships on delivery, when a ship changes flag, or when a ship owner assumes responsibility for the operation of a ship which is new to that ship owner.  It is important to note that the interim certificate may not be issued for a period exceeding six months.

8.          Is it up to me to schedule a certification meeting?

 
Each Flag State is responsible for ensuring implementation of its obligations under the Convention on ships that fly its flag.  The Flag State is responsible for creating an effective system for the inspection and certification of maritime labor conditions.  The setting up of inspections will vary from country to country.  It is important to look at your country specific authority to determine how the country will be scheduling certification inspections.

9.          Is my certification strictly based on the PSC inspection?

Each Flag State shall maintain a system of inspection of the conditions for seafarers on ships that fly its flag which shall include verification that the measures relating to working and living conditions are being followed and that the requirements of the convention are being met. The Flag State is required to appoint a sufficient number of qualified inspectors to fulfill its inspection responsibilities.  The time between inspections should not exceed three (3) years. Inspectors have the power to board a ship that flies the Flag State flag, to carry out any examination, test or inquiry which they may consider necessary in order to satisfy themselves that the standards are being strictly observed and to require that any deficiency is remedied and, where they have grounds to believe the deficiencies constitute a serious breach of the requirements of the Convention, or represent a significant danger to seafarers’ safety, health or security, the inspector will be able to prohibit a ship from leaving port until necessary actions are taken to remedy the deficiencies.

10.       What happens if I don’t pass inspection?

If the vessel does not pass inspection, the MLC Certificate shall be withdrawn by the Flag State and the inspector has the right to prohibit the vessel from leaving port.  Generally, a vessel will not pass inspection if there is evidence that the vessel concerned does not comply with the requirements of the Convention and required corrective action has not been taken.  For example, the average length of detention for a yacht is 4 days. With the implementation of MLC, I expect the number of inspections will increase and therefore the average number and length of detentions will exponentially increase. Nevertheless, the Flag State should take into account the seriousness or the frequency of the deficiencies before withdrawing the MLC Certificate.

11.       Can my inspection occur while having the owner or charter customers on board?

Any vessel can be inspected at any time, regardless of owners, guests or charterers being aboard. Detention for non-compliance could therefore prove disastrous in terms of financial and reputation losses for the vessel, her owner, charterers, captain, crew and charter agent.  There are no prohibitions in the Convention that would not allow the owner to be present for the inspections.

12.        What is the best way to insure that I’ll pass inspection as quickly as possible the first day, the first time? 

The best way to insure that your vessel will pass inspection is to strictly adhere to the guidelines laid out in the Convention.  If the vessel is treating its employees fairly and providing a safe and secure workplace, there is no reason that the vessel should fail its inspection.

13.       What format should my documentation be saved in (i.e., electronic document, hard copies, faxes, scans)?

Member states require that each vessel maintain a hard copy of the Convention onboard the vessel at all times.  Additionally, the vessel will also be required to carry and maintain the MLC Certificate in hard copy format onboard the vessel at all times.  The vessel will also be required to maintain a declaration of maritime labor compliance stating the national requirements implementing the Convention for the working and living conditions for seafarers and setting out the measures adopted by the vessel owner to ensure compliance with the requirements on the vessels concerned. 

14.       What is the best way to organize all the things the PSC inspector will require?

The competent authority designated by the Flag State is responsible for establishing procedures to enable their inspections to investigate each vessel’s compliance with the Convention.  It is advised that you look to the Flag State’s specific guidelines for how to best organize the information that may be requested by the inspectors.

15.       Should my shore-side yacht management company be involved in MLC inspection?

There is no requirement under MLC that your shore side yacht management company be onboard the vessel at the time of the inspection.  However, if you feel that the shore-side staff has a better handle on the understanding of the Convention than the Master/Captain, it may be highly beneficial to have your shore-side yacht management company involved in the inspection, especially if they were the party responsible for implementing the DLMC, MLC Certification and any subsequent deficiencies.    

16.       Do I need to refit my crew accommodation spaces to meet the MLC standards?

MLC crew accommodation standards will apply only to new vessels, the keels of which are laid after MLC implementation date.

17.       Do I now have to provide social security to my crew and handle complex taxation requirements?

The MLC does not impose a blanket requirement for social security contributions to be made by seafarers or by ship owners, and taxation is not even mentioned. However, it is in all seafarers’ interests to find out what their social security status is.

18.       Will my liability insurance for the vessel pay for any problems with inspection, detention  or other costs related to the crew resulting from the MLC?

Of course, every insurance policy is different and the first stop is to review its terms.  Nevertheless, financial security is required of vessel owners in respect of repatriation, death or long term disability of crew under the MLC. Some liability insurers have agreed to issue proof of insurance as evidence of financial security for seafarer claims under MLC. However, some insurers may not cover all aspects of crew expenses related to MLC and thus, a discussion on this topic should be had between the vessel owner and the insurer/broker.

I am sure there are many other questions various players in the industry have related to MLC. These are but just a sampling of the questions I have been asked and based on the kind of questions still being presented to me, there is still much to learn. If you are interested in learning more, consulting with me on the various aspects to establish vessel/company SEA’s/benefits compliant with Flag State requirements, conduct an overview of the requirements of MLC, understanding the processes required to achieve certification, conducting a Gap Analysis to review any existing Crew Contracts and Manuals, please feel free to contact me, Michelle Otero Valdes, Esq., Chalos & Co, P.C., 141 Almeria Avenue, Coral Gables, Florida 33134, Tel: 305 377 3700, Fax: 866 702 4577, Email: mov@chaloslaw.com.

NB. A substantially similar copy of this blog article drafted by me is being posted on Great Circle Systems, Inc. website at you http://blog.greatcirclesys.com/-0/bid/273548/mlc-2006-compliance-13-frequently-asked-questions?source=Blog_Email_[MLC%202006%20Compliance%3A]. Check it out.