ISPS Code - Impact of the ISPS code on members of ITIC

All companies involved in shipping will be aware that on 1st July 2004 the International Ship and Port Security Code has been implemented. At this stage no-one can be sure exactly what effect this will have but it is clear that there is a very real danger of losses (detention of ships, fines, etc.) caused by non compliance (whether deliberate or unintentional). For further information on the ISPS Code visit the publications section on ITIC's website : www.itic-insure.com.

The purpose of this circular is to consider what effect the ISPS Code may have on ITIC Members.

Impact of the ISPS Code on Members of ITIC

Although every cog in the mighty wheel that is world shipping will be affected by the ISPS Code, we feel that, of the ITIC Members, port agents, chartering brokers, technical managers and commercial managers will have the most active roles to perform.

Port Agents

Although the functions and duties of port agents are not specifically referred to in the ISPS Code, and port agents are not directly involved in its implementation, they are an important link between the ship and the port facility.

The areas that will involve port agents are the following:

• obtaining, maintaining, and disseminating up to date information on the security levels of ships due to call under their agency and the port facilities in the agent's area that those ships will call at. The agent should at all times be aware not only of the current security level of the port facilities in which he operates, but also of all the ships for which he is the agent. He should also maintain, as good practice, a handbook containing the identity of all port facility security officers (PFSOs), together with telephone numbers (landline and mobile), fax numbers and email addresses;
• prior to the ship's arrival the agent will need to:

1. provide to the ship contact details of the PFSO and to the port facility details of the ship security officer (SSO); 
2. inform the ship of the pre-arrival security information required by the port facility (eg. previous ten ports called at and their security levels) and the time period in which it has to be provided; 
3. pass on the pre-arrival security information to the port facility, coastguard, customs, etc. (as appropriate in the agent's port) within the time allowed; 
4. obtain from the ship full details of cargo, dangerous cargo, crew and other persons on board. Usually the port facility will provide a form to be filled out by the ship. The agent should instruct the ship to send the information electronically if possible as it takes time to re-type information received by fax, faxes are only available during working hours, and transcribing information can result in errors;

• liaising between the ship and the port facility. It is obviously important that all communications received by the port agent are passed on accurately and without delay. Where made by telephone, a written note should be made recording the salient information and it would be good practice to keep a separate notebook specifically for this purpose;
• liaising between the ship and the local authorities (coastguard, customs authorities, port, etc.). In some jurisdictions legislation has been passed which makes the agent jointly and severally liable for fines resulting from breaches of regulations relating to the ISPS Code. Even before the implementation of the Code agents in the USA have been fined as a result of a failure by the ship to send the Notice of Arrival to the US Coast Guard with details of crew, passengers and cargo within the time period allowed;
• maintaining confidentiality of such security information as is provided to the agent;
• ensuring that all agency personnel and all visitors (eg. surveyors) are in possession of a valid photo ID issued by the appropriate authority recognised by the port facility. The implementation of the ISPS Code will severely restrict the physical access of individuals to areas within port facilities and ships within the port, especially when security levels are increased to levels 2 and 3;
• assisting the ship if there is a Declaration of Security (DOS) - the port agent may need to operate as the communication channel between the SSO and the PFSO;
• the port agent may also need to communicate with the Designated Authority of a Contracting Government, particularly in connection with information required by the latter in determining whether a ship has fulfilled all the required conditions of entry into a specific port. Practical security related information contained in the Code includes:

  1. Location of the ship at the time the report is made
  2. Expected time of arrival of the ship in port
  3. Crew list
  4. General description of cargo aboard the ship
  5. Passenger list

Although there is no legal requirement under the ISPS Code for anyone other than the ship, the Company and the Port Facility to appoint a security officer, it is good practice for one or two agency personnel to be given overall responsibility for ISPS Code matters to ensure that there is an adequate understanding of the requirements, that specific instructions from customers are properly handled and to interact with the Port Security Officers in order to be on top of security issues. This person or persons should also attend meetings on ISPS matters organized by the port facilities.

Ship Managers

The ISPS Code states that any shipping company operating ships to which the Code applies must appoint a Company Security Officer (CSO) for the company. The CSO is responsible for ensuring that the ship's security assessment is carried out and the ship's security plan is prepared. Ship management companies involved in technical or commercial ship management will be very well aware of the requirements of the ISPS Code, and will have been preparing for 1st July 2004 since the beginning of 2003.

The duties and responsibilities of the CSO are set out in paragraph 11 of Part A of the Code and include but are not limited to:

1. advising the level of threats likely to be encountered by the ship;
2. ensuring that ship security assessments are carried out;
3. ensuring the development, submission for approval and implementation of the ship security plan;
4. arranging for internal audits;
5. enhancing security awareness and vigilance;
6. ensuring adequate training for personnel responsible for the security of the ship;
7. ensuring effective communication between the ship security officers and relevant port facility security officers.

Chartering Brokers and Commercial Managers

Both time charters and voyage charters entered into after 1st July, 2004 will contain clauses which deal with the ISPS Code. The Baltic and International Maritime Council (BIMCO) has published an ISPS clause for both voyage and time charter parties, which in essence provide that all delays, costs or expenses which result from the ship not being ISPS compliant will be for the owners' account. Delays, costs or expenses which result from the port facility not being ISPS compliant will be for charterers' account, unless caused by the owners' negligence. There is also a separate security clause for voyage charters involving calls at ports in the United States. It is strongly recommended that brokers familiarise themselves with these clauses which can be found on BIMCO's website. Intertanko has also produced a clause for time charters, and the Club has also been informed that some parties are formulating their own clauses. In such cases it is important that the broker brings their usage to the attention of his principal(s).

Commercial Managers

A commercial manager who has authority to fix, will have to keep a record of the ports to which the ship has traded. The ship has to maintain on board a list of its last ten calls at port facilities, whether the port facilities were ISPS compliant, and at what level. It will become somewhat of a juggling act to ensure that the ports at which the ship calls have security levels which are compatible with the ports that it is expected to call at. In addition, it is a requirement of the Code that there are details on board the ship not only of the charterer for the current voyage, but also the time charterer, and any sub voyage charterers in the chain leading to the current voyage charterer.

This is not to say that the commercial manager is responsible to the ship owner if the ship has problems at any particular port, but an extra degree of care will have to be used to obtain the owner's authority to call at non-compliant ports, or to notify the owner of the potential problems in calling at compliant ports when a non-compliant port has been called at within the previous ten port calls.

Conclusion

It is the duty of any agent (whether a ship manager, ship agent or ship broker) to perform with the degree of skill and care that someone in their position should possess. If they fail in this duty then they would be responsible for any loss caused. However, ITIC has already seen attempts by customers to transfer liability contractually to their agents for losses due to delays, etc. caused by failures of other parties in the implementation of the ISPS Code. The agent has no such liability. We suggest that the agent faced with a demand from a principal that he sign a contract containing such a provision first applies to the Club for advice.

At this stage it is impossible to know how the ISPS Code will affect those involved, and if it proves necessary we will address the actual problems (hopefully few), once things become more clear, by means of a further circular.