Clyde & Co Shipping Newsletter – July 2015

Ballast Water Management Convention: The tricky waters of compliance

Beth Bradley and Chris Moxon

One of the great difficulties with worldwide regulation is ensuring consistent implementation and compliance. The IMO's Ballast Water Management (BWM) Convention ratified by more than 40 states but not yet in force, is a case in point.

In assessing whether to approve BWM systems as meeting the IMO's Ballast Water Performance Standard (the IMO Standard), flag states that have signed up to the Convention must take into account the guidelines set out by the IMO (Resolution MEPC 174(58)). Those guidelines are also intended to inform shipowners and technology manufacturers about the evaluation procedure for the equipment.

The US Coast Guard (USCG) has, however, developed its own ballast water performance standard (the USCG Standard) and guidelines for approving systems. The IMO Standard and USCG Standard are identical, but the respective guidelines are not.

As a result, shipowners and technology manufacturers should take care to ensure that both the IMO guidelines and USCG guidelines are consulted when considering developing, fitting and using BWM systems. A BWM system approved as meeting the IMO Standard may be eligible for approval as an Alternate Management System (AMS) by the USCG, entitling the ship to which it is fitted to trade in US and Canadian waters without full type approval.

That said, AMS approval only lasts five years beyond the date when the ship would otherwise be required to comply with the USCG Standard. Although the AMS regime is a useful "stop gap" measure, the lack of clarity about whether or not BWM systems approved under the IMO guidelines will ultimately obtain USCG-type approval - and even whether or not the IMO guidelines will be applied consistently in the BWM Convention's signatory states - is unwelcome.

The IMO seems alive to these issues in obtaining approvals. It initiated a study on the implementation of the IMO Standard in late March, exploring the similarities and differences in testing and certification of BWM systems worldwide.

The survey was open to technology manufacturers and shipowners (among others) until 1 June 2015. If the study assists in getting nearer to a consistent worldwide approach to testing BWM systems and applying the guidelines for approval, it will have been a success.

Once the Convention has come into force, shipowners and operators should ensure that ballast water samples taken to monitor regulatory compliance are representative of the entire discharge, and that the operation of multi-use tanks does not give rise to mixing of different water types.

Failure to keep a close eye on these matters could lead to fines and delays in ports for breach of IMO or USCG guidelines, with the risk of charterparty disputes ensuing. A ship "unduly detained or delayed" by Port State Control under the BWM Convention may, however, be entitled to compensation.

First published in The Motorship, May 2015 issue

Jurisdiction of the Admiralty Court reviewed in Harms v Harms

Marcia Perucca

The Admiralty Court ruled in a recent decision1 that a German ship management company was entitled to issue proceedings in the English Court to obtain security for its claims against the German shipping companies in a dispute subject to German arbitration.

Background

The dispute between a German ship management company and the owners of six tugs registered in Germany arose from the owners' decision to sell the vessels to one of their competitors. The management company claimed this was a breach of the partnership agreements to which it was a party, and which gave it pre-emptive rights to purchase four of the vessels. The owners, on the other hand, said they had discovered that two of the management company directors had been taking secret commissions from the builders of three of the vessels which led them to lose trust in the company and, as a result, to terminate ship management agreements that were also in place between the parties.

The claims in the English court

The ship management company issued six in rem claims against the owners in the English court. There were two separate sets of claims. The first was a claim for damages for the unlawful termination of the ship management agreements by the owners, by way of selling the vessels without notice to the management company (the ship management claims). The second was a claim for breach of the articles of association of the corporate entity of the owners, which allegedly...