The ISPS Code and Intermediaries

On 1 July 2004 the International Ship and Port Facility (ISPS) Code came into force. Although, as predicted, ships have been subjected to delays, detentions, inspections and increased costs, there has not, as was feared, been a widespread disruption to world shipping. Although intermediaries, such as ship agents and ship brokers, have no direct involvement in the implementation of the Code, they do have an important role to play.

SHIP AGENTS

Ship agents are the link between the ship and the port facility. When a ship calls at a port facility for the first time since the implementation of the ISPS Code, the Master has no way of knowing what pre arrival security information is required, when he needs to send it and to whom it should be sent. Unfortunately, there does not appear to be a harmonisation of pre arrival security information and requirements vary from port to port and country to country so it is not possible for the ship to have a pro forma document which can simply be forwarded to the port agent or to the designated authority at every port called at. It is understood that the IMO intends to introduce a standard Ship Pre-arrival Security Information Form, which is currently in draft, which should eventually simplify the provision of information for all concerned. In the meantime, most port facilities have their own electronic “form” to be filled in by the ship, which contains fields for all the required information.

At the current time, therefore, the master relies on the port agent to notify (a) the pre arrival security information required by the port, (b) where the information needs to be sent (eg. via the agent or direct to the terminal/port authority, customs, coast guard, etc) and (c) the time scale in which it needs to be provided (in some countries it is 24 hours before arrival of the ship at the port, in others it is 96 hours). Failure by the ship to provide this information within the time period allowed can result in fines, detention of the ship and even refusal by the port facility to allow the ship in at all.

ITIC has seen several claims against port agents for failing to ensure that the message to the master setting out the port’s requirements got through to him, or failing to pass on the information to the relevant authority. In one case, an agent sent a telex to the master setting out the requirements of the port, but the master allegedly never received the telex. The ship was kept outside the port until the 96 hour notice period had expired. In another case, a bulk carrier was delayed for three days. The port agent had passed on the information to the coast guard, but mistakenly used an old e-mail address, even though he had been notified of the new e-mail. The old e-mail address was no longer functioning, but unfortunately there was no “message failure” report. In a buoyant market, the charterer’s claim for lost hire was US$55,000 per day (US$165,000).

In some jurisdictions, legislation or port statutes have been passed which make the agent jointly and severally liable for fines resulting from breaches of regulations relating to the ISPS Code. In a circular issued by the Maritime and Port Authority of Singapore, it is stated that “the owner, agent and master of a ship which does not comply with the requirements of the …. ISPS Code…. shall be guilty of an offence.. which is punishable upon conviction with a fine not exceeding $10,000”. The Maritime Transportation Security Act (MTSA) 2002 (the American equivalent of the ISPS Code) provides that “the owner, agent, master, operator or person in charge of a vessel … is responsible for compliance”. This allows the US Coast Guard to fine the local agent when a ship fails to send the electronic Notice of Arrival (e-NOA) with full and correct details of crew, passengers and cargo to the National Vessel Movement Center (NVMC) 96 hours prior to the arrival of the ship at a US port. One claim involved a fine of US$32,500 imposed on a US ship agent because the master of a ship, having provided the e-NOA to the NVMC for the call of his ship at one US port, failed to send an e-NOA to the NVMC for the call at a second US port. The ship had already sailed when the fine was imposed, and the fine was therefore issued in the name of the ship agent. The owner is refusing to deal with the fine on the agent as he alleges that the agent was at fault in failing to instruct the master to send a second e-NOA in respect of the call at the second port.

Although most legislation provides that the ship should lodge the information directly, in most countries it is too soon for there to be a “custom of the trade” with regard to whether the ship or the local agent should electronically register the pre-arrival security information with the designated authority. In some countries the ship is instructed by the port agent to send information electronically direct to the designated authority. One reason for this is that, if the information is sent via the agent, there could be delays in passing on information received by the agent outside working hours, and if the information is received, for example, by telex rather than an e-mail in the required format and has to be transcribed, errors could result. In addition, if the information is incorrect or incomplete (or even if the information is in a format which the designated authority cannot open) the agent could be exposed unnecessarily to claims from the ship for delays. However, in many ports/terminals all information is transmitted via the agent, who then passes it onto the designated authority. The agent sometimes charges an extra fee for this. In such cases, the agent must make it clear that he does not accept responsibility for the accuracy or completeness of the information provided by the ship. The agent’s job is to provide the ship with details of the information required by the port facility, and to pass on the information provided by the ship to the designated authority. It is not the agent’s job to check the information for accuracy and completeness.

We have had a number of enquiries from ship agent Members in the United States in relation to the implementation of the e-NOA/D from 6 June 2005. We have drafted the following disclaimer wording which we would recommend is sent to principals by the ship agent when asked to perform the filing on their behalf.:-

(Agent) will exercise reasonable skill and care to file the data correctly and within the prescribed filing deadlines. However, it must be noted that (Agent) cannot accept any responsibility or liability for the correctness and accuracy of the information provided by the vessel owner/master/crew /operator. The same is true if the data is not received in a timely manner from the vessel owner/master/crew/operator, resulting from technical problems or human error beyond our control. (Agent) can provide the filing process as a data exchange service only. Any liabilities, whether or not (Agent) was or is claimed to have been negligent or at fault in any way resulting from the filing, rests with the vessel owner/master/operator/crew. Based on the above, vessel owner/operator/master/crew requesting (Agent) to provide this filing do so at their own risk and shall protect, defend, indemnify and hold (Agent) harmless from and against any and all claims arising as a result.

It is the duty of any agent to perform his duties with the degree of skill and care that someone in the same 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 principals to transfer liability contractually to their agents for delays, costs, and losses suffered by the principals due to failures by parties other than the agent in the implementation of the ISPS Code. We suggest that the agent rejects any demand from a principal that he sign an agency agreement containing such a provision.

CHARTERING BROKERS

Both time charters and voyage charters entered into after 1st July, 2004 will contain clauses which address the ISPS Code. The Baltic and International Maritime Council (BIMCO) has published ISPS clauses 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 “US Security Clause for Voyage Chartering” 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 at:- www.bimco.bk. Intertanko has also produced a clause for time charters, and the Club has also been informed that some major charterers such as Cargill and ExxonMobil, are formulating their own clauses. In such cases it is important that the broker brings their usage to the attention of his principal(s).