The ISM Code: A Practical Guide to the Legal and Insurance Implications

Phil Anderson

• Publisher: Informa Law from Routledge
• Year: 2015
• ISBN:
  9781317518310
• Edition: 3
• Topic: Derecho
• Subtopic: Derecho marítimo

The ISM Code has been mandatory for almost every commercial vessel in the world for more than a decade and nearly two decades for high risk vessels, yet there is very little case law in this area. Consequently, there remains a great deal of confusion about the potential legal and insurance implications of the Code.

This third edition represents a major re-write and addresses significant amendments that were made to the ISM Code on 1st July 2010 and 1st January 2015.

This book provides practitioners with a practical overview of, and much needed guidance on, the potential implications of failing to implement the requirements of the Code. It will be hugely valuable to DPAs, managers of ship operating companies, ship masters, maritime lawyers and insurance claims staff.

1
Introduction and underlying principles

1.1 Introduction to the third edition

This book is not, and is not intended to be, a legal text book for lawyers. The primary purpose of this book is to provide a wide range of lay individuals engaged in the shipping and marine insurance industries as well as flag Administrations, Recognised Organisations (ROs), Port State Control Inspectors (PSCIs) and others involved in International Safety Management (ISM) Code implementation or monitoring with practical guidance on the potential legal implications and consequences of ISM Code compliance. However, it is hoped that the legal professional will also derive useful insight into some of the practical application of the Code and the potential legal consequences of non-compliance. The book should also provide a useful reference to the numerous, but potentially relevant, Conventions, resolutions, rules, regulations, guidelines and other documents which may need to be considered within the context of the legal implications of compliance with the requirements of the ISM Code.

Any party involved in a dispute, claim or prosecution must obtain professional legal advice from a suitably qualified legal adviser.

Whilst the author has endeavoured to identify many of the more relevant reference documents, he does not claim that this is in any way a complete or exhaustive list. Also, whilst the author has endeavoured to ensure that the various documents referred to are the latest editions, this is not guaranteed and, in any event, new and updated editions of documents are being published on a regular basis. It is crucial, therefore, that anyone requiring up-to-date advice makes reference to original sources whenever necessary to ensure that the latest editions are being consulted. A detailed Bibliography is included towards the end of this book in which the title of each document is listed as well as the edition consulted during the author’s writing process.

1.2 Background to the ISM Code

What must be understood when considering the historical development of the ISM Code and its possible impact on the safe management of ships and the protection of the marine environment is that it does not, and never has, existed within a vacuum or in isolation. There were many other requirements and initiatives being developed simultaneously within the maritime sector alongside ISM during the relevant period.

The ISM Code exists as part of the International Convention for the Safety of Life at Sea, 1974, as amended (SOLAS), which is itself under a constant state of change and improvement. During the time of ISM Code development other International Maritime Organization (IMO) Conventions, such as the International Convention for the Prevention of Pollution from Ships, 1973, as modified by modified by the Protocol of 1978, relating thereto (MARPOL) and the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978, as amended, including the 1995 and 2010 Manila Amendments (STCW), were also the subject of major changes and improvements; although it is correct to say that the ISM Code may be thought of as an umbrella under which all the other Conventions and Rules and Regulations operate – and a practical management tool which will assist ship operators with the safe operation of their ships. There have also been other significant developments, such as the International Ship and Port Facility Security Code (ISPS Code) in 2004 and, more recently, the Maritime Labour Convention 2006 (MLC).

In addition to the developments with mandatory rules and regulations, there were also many initiatives and activities being taken by various stakeholders in the shipping industry, including charterers, marine insurers, and specifically the Protection/Protecting and Indemnity Association (P&I Clubs), as well as Port State Control (PSC), for example, all of which were encouraging the safer operation of ships and protection of the marine environment. Pressure from the oil majors led to the introduction of vetting inspections – the Oil Companies International Marine Forum (OCIMF) Ship Inspection Report Programme (SIRE) – and the introduction of the Tanker Management Self Assessment (TMSA). P&I Clubs were becoming increasingly involved in conducting their own ‘condition surveys’ and imposing restrictions on cover where deficiencies were identified – or even refusing to provide insurance cover. Clubs were actively developing loss prevention/accident prevention initiatives to assist their members with the management of their operational risks and generally to reduce accidents and claims. Industry bodies such as the International Chamber of Shipping (ICS) and the International Shipping Federation (ISF), the Baltic and International Maritime Council (BIMCO), the International Association of Independent Tanker Owners (INTERTANKO), the International Association of Dry Cargo Shipowners (INTERCARGO), the International Association of Shipmanagers (INTERMANAGER) and others were developing initiatives to encourage risk reduction and safer operation of ships. The International Association of Classification Societies (IACS) continued to develop numerous initiatives and projects – particularly on technical subjects which would assist in making ships safer. PSC was becoming increasingly more sophisticated with its inspection of foreign ships visiting its ports, identifying deficiencies and assisting with the enforcement of compliance with inter national conventions. Other governmental and inter-governmental organisations – such as the US Coast Guard and the European Union (EU) through the work at the European Maritime Safety Agency (EMSA) – were actively involved in developing a wide range of maritime safety initiatives.

The ISM Code was never seriously perceived to be a panacea which would solve all the shipping industry’s accident and claim problems. However, in conjunction with all the many other safety and risk management-related activities which were also taking place around the world, there should have been a very good chance that the ISM Code would contribute to significant progress in making ships safer and protecting the marine environment. To what extent that may have been achieved is not an easy question to answer, but will be explored and considered later in this book.

Within the context of this book, another very important issue – which must never be forgotten and which should be kept clearly in mind when reading, or otherwise referring to this book – is that the ISM Code was never intended to create new interparty liabilities. The Code was formulated with the clear purpose of improving and extending standards of maritime safety.1 Although there are some who appear to insist that, through its Safety Management System (SMS), a ship operator is required to ‘guarantee’ the safe operation of its ships and protection of the marine environment. The author does not share such idealistic and academic counsels of perfection. In his 20 or so years’ involvement with the ISM Code, the author has not yet encountered a perfect SMS; he has come across some excellent systems, many which are adequate but, sadly, some which are simply not fit for purpose.

1.2.1 Historical reasons

Most writers on the subject attribute the origins of the ISM Code to the Formal Investigation carried out by Sheen J into the capsize of the cross-channel ferry MV Herald of Free Enterprise in March 1987, when 193 passengers and crew members lost their lives.2 Whilst the author does not altogether disagree with that observation, he would suggest that that tragic incident was simply one of the better-known disasters of the late 1980s and into the 1990s which had shaken not only the shipping industry and marine insurance providers to their very foundations, but the size and extent of the problem was finally reaching the attention of the world media and pressure started to mount on politicians and national governments to act.

However, it is important to be reminded of the scathing words of Sheen J, in his report of the MV Herald of Free Enterprise Formal Investigation, on his findings with regard to the shore-based management and the way in which safety was, or rather was not, being managed, because they sum up the problem in stark and uncompromising terms:

At first sight the faults which led to this disaster were the aforesaid errors of omission on the part of the Master, the Chief Officer and the assistant bosun, and also the failure by Captain … to issue and enforce clear orders. But a full investigation into the circumstances of the disaster leads inexorably to the conclusion that the underlying or cardinal faults lay higher up in the Company. The Board of Directors did not appreciate their responsibility for the safe management of their ships. They did not apply their minds to the question: What orders should be given for the safety of our ships? The directors did not have any proper comprehension of what their duties were. There appears to have been a lack of thought about the way in which the HERALD ought to have been organised for the Dover/Zeebrugge run. All concerned in management, from the members of the Board of Directors down to the junior superintendents, were guilty of fault in that all must be regarded as sharing responsibility for the failure of management. From top to bottom the body corporate was infected with the disease of sloppiness. This became particularly apparent from the evidence of … , who was the Operations Director and … , who was Technical Director. As will become apparent from later passages in this Report, the Court was singularly unimpressed by both these gentlemen. The failure on the part of the shore management to give proper and clear directions was a contributory cause of the disaster. This is a serious finding which must be explained in some detail … 3

There is certainly evidence that the problems with regard to the failure by some ship operators to manage their ships safely pre-dated the Herald disaster. For example, in July 1986, following publication of the report into the loss of the MV Grainville, the UK Government issued M Notice 1188 (this was subsequently updated and superseded in August 1990 by M Notice 1424) entitled ‘Good Ship Management’. This commended a publication titled Code of Good Management Practice in Safe Ship Operations, which had been produced jointly by the ICS and the ISF.

A brief extract from M Notice 1188 ‘Good Ship Management’ of 1986 provides a glimpse of some ideas which were, in due course, to evolve into the ISM Code:

The efficient and safe operation of ships requires the exercise of good management both at sea and ashore … The overall responsibility of the shipping company requires the need for close involvement by management ashore. To this end it is recommended that every company operating ships should designate a person ashore with responsibility for monitoring the technical and safety aspects of the operation of its ships and for providing appropriate shore based back-up … Stress is placed upon the importance of providing the Master with clear instructions to him and his officers. The instructions should include adequate Stan...