Regulatory demands

There has been a rise in the regulatory burden facing all those in the marine industry. This pattern is likely to continue. Often the practical task of ensuring compliance falls on the ship agent and regulators are increasingly imposing fines on agents as well as their principals.

Under local regulations in Peru it is necessary for a ship’s master to report that the ship is entering Peruvian waters to the port captaincy office. Ship agents routinely report these regulations to the master as well as providing the contact details to which the master must report. On a number of occasions the port captaincy office’s contact details have been changed and local agents subsequently failed to provide arriving ships with the correct details. In these cases both the owners and the local agent have faced fines from the port captaincy for failure to comply with the reporting regulations. The level of fine has ranged between US$ 900 to US$ 14,000.

The most well publicised regulations relating to ship arrivals are the “24-hour” rules applicable to ships arriving in the USA. Liability for non-compliance is strict and punitive. In issue No. 14 of the Claims Review, ITIC looked at a claim arising from the failure of an agent to provide the US Bureau of Customs and Border Protection with details of a cargo of whisky. The application of these regulations continues to give rise to claims.

The most recent example led to a demand for US$ 100,000 against an agent who failed to realise that the U.S. Coast Guard's policy was not to allow consecutive ports of call to be added to an already submitted Notice of Arrival. Regulators are increasingly demanding compliance with the detailed provisions of regulations.

There are however cases when regulations do not give authorities the rights they claim.

Following damage to a quayside ladder by a visiting ship, a UK ship agent received a routine letter from the port authority holding the master and owners of the ship responsible. When the owner failed to pay the invoice, the port authority wrote to the agent insisting that they, as agents, were legally liable to pay the invoice themselves. ITIC researched the relevant Statutory Instrument to which the port authority had referred, and in co-operation with the ship agent, explained to the port authority that they had misinterpreted its provisions. As a result, the port authority re-directed their attention towards the ship owner and the ship agent was left to continue with their business.