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Important laws for shipping industry
The most important sector for law of shipping industry is the Marine Insurance Law. International Safety Management (ISM) Code is the dominating part of it. In this article I'll try to outline the basics of ISM Code in three parts.
The International Safety Management Code started acting as law on 1st July of 1998 as this was first incorporated as part of the International Convention for the Safety of Life at Sea (SOLAS Convention) 1974. It was incorporated in SOLAS Convention 1974 as Chapter IX. This Code has impact on various sectors of the shipping law, but mainly it is marine insurance law whereon it has the most substantial impact. In this area it provides two sets of principles, which are as follows:
* It established a set of standards for the operation of ships and for their safe management.
* It also ensures that a designated person (DP) is appointed by the company, as it is stated in clause 4 of the ISM Code.
Clause 1.2.2 states:
“1. provide for safe practices in ship operation and a safe working environment;
2. establish safeguards against all identified risks; and
3. continuously improve safety management skills of personnel ashore and aboard ships, including preparing for emergencies related both to safety and environmental protection.”
However, all the requirements of the Code are written in the form of general principles and guidelines.
The ISM Code affects the ship-owner in two different ways. One of them relates to the safety Management System (SMS) as this requires the ship-owner to make sure that they follow a minimum standard for operating the ship and for its management. Moreover, adoption of the Code on the safe management and its operation must be reviewed by the ship-owners themselves. This is required by clause 1.4 of the ISM Code which deals with the functional requirements for a safety management system.
There are two kinds of policy available under the marine insurance. One of them is 'time policy' and other one is 'voyage policy'. Under the voyage policy, the insurer only needs to show that the ship was unseaworthy at the commencement of the voyage. On the other hand in time policy the insurer has to show three different things.
SMC (Safe Management Certificate) and the DOC (Document of Compliance)
However it is just not enough to have a safety management system or SMS, it also has to be certified. This can be done by the flag state or any authority with the power to certify this kind of management system. This certification authority can be termed as a society to consider and reconsider the present safety management system and develop it where possible. When the audit is ok or successful then the ship-owner company will be issued a certificate which is known as DOC or Document of Compliance. This certificate remains valid for 5 years unless any other audit or inspection reveals some kind of substantial nonconformity. So this is a very chronological approach or system as the ship-owner company will be issued a 'Safety Management Certificate (SMC)' for successful and satisfactory completion of safety management audit.
The designated person (DP)
The 'designated person' means anyone who can establish a link between the top management ashore and the company.
It is very necessary to appoint a person as a designated person under Article 4 of the ISM Code to ensure smooth operation of the ship and for its safety management, as Article 4 of the ISM Code describes:
“The responsibility and authority of the designated person or persons should include monitoring the safety and pollution-prevention aspects of the operation of each ship and ensuring that adequate resources and shore-based support are applied, as required”
This is an area of law which needs to be more explored and revisited by the academics and practitioners of this country. As the shipping Industry is booming in our country, this can be the stepping stone to a more modern Legal System.
The writer is a Barrister at Law (Lincoln's Inn), LLM in International Commercial Law (Northumbria University,UK) and a Trainee at A Hossain and Associates.