Australia - Arbitration Update - Observations On Key Trends In International Arbitration - Trade & Transport Alert Quite The "Oar-Deal": AMSA Issues Fifth Ban Order In 15 Months.

21 October, 2015

WHAT YOU NEED TO KNOW

On 21 September 2015, the Australian Maritime Safety Authority banned the Noah Satu from entering or using any Australian ports, the fifth such ban since August 2014.
A vessel will usually be banned where it has a poor port state control record or where an operator's other vessel standards are so poor as to cast significant doubts on the standards of each vessel in its fleet.

WHAT YOU NEED TO DO

Vessel operators should be mindful of their obligations to comply with all Australian and international standards, including those related to vessel safety, pollution and seafarer employment.
Operators of vessels that have been repeatedly detained should pay special attention to these obligations to reduce the risk that any of its vessels (however compliant) will also be banned from Australian ports.

Background

On 21 September 2015, the Australian Maritime Safety Authority (AMSA) announced that it had banned the Indonesian-flagged cargo ship Noah Satu from entering or using any Australian port for three months. This step was taken after four detentions identified serious and repetitive failings in the vessel's operations and maintenance to ensure compliance with the Safety of Life at Sea Convention (also known as SOLAS) and the International Convention for the Prevention of Pollution from Ships (also known as MARPOL).

This announcement marks the fifth time since August 2014 that AMSA has banned a foreign-flagged ship from an Australian port and reflects a shift towards a tougher approach to vessels that are repeatedly in breach of port state control requirements. We have set out the details of each banned vessel in Appendix A to this alert below.

Issues attracting AMSA's attention

AMSA has a broad power under the Navigation Act 2012 (Cth) (Navigation Act) to issue a direction to the master or owner of a vessel that the vessel not enter or use any port, or a specified port (or ports), in Australia or the Australian exclusive economic zone (Direction). Importantly, this power is not expressly limited by the Navigation Act and, accordingly, there

are a wide variety of situations that may justify AMSA issuing a Direction.

In this regard, AMSA does not appear to have focussed on any one particular issue or class of issues with each of the five vessels it has banned since August 2014 before issuing a Direction to each vessel. Instead, AMSA appears to have taken a broad view of the conduct that justifies issuing a Direction, including:

inadequate seafarer living and working conditions and the improper payment of wages;
inadequate vessel maintenance and a history of machine and equipment malfunctions and breakdowns; and
the use of inadequate charts and publications and the absence of effective passage planning.

Significantly however, each of the five vessels also had a history of repeated detentions (for matters including those listed above) before a Direction was issued.

When will AMSA issue a Direction to a vessel?

Given AMSA's increasingly tough approach to vessels that breach port state control requirements, the most pressing consideration for vessel owners, operators and charterers are the circumstances in which AMSA will issue a Direction to a vessel.

Although, as a policy document, it does not carry the force of law, Marine Notice 03/2015 (issued by AMSA) sets out the general considerations applicable to its decision to issue a Direction to a vessel.

Poor port state control record

Firstly, AMSA will consider issuing a Direction:

where a vessel has been detained and released with conditions to carry out corrective action and it returns to Australia without having done so, or where a vessel has been detained three times in the previous two years and has not been previously the subject of a Direction – for three months;
where a vessel has been previously the subject of a Direction and is detained within two years of the expiry of the ban period under that Direction – for 12 months; and
where a vessel has previously been the subject of two Directions and is detained within two years of the expiry of the period under the second Direction – for 24 months.

Importantly, AMSA will only consider issuing a Direction to a vessel in these circumstances while it remains with the same operator. Accordingly, an operator of a vessel will not usually need to be concerned with any Directions issued to the vessel whilst it was under the control of a previous operator.

Poor operator record

However, AMSA will also consider issuing a Direction where:

a significant breach of Australian legislation has occurred;
AMSA considers that the operator's safety management system poses a significant risk to the welfare of seafarers, their safety or Australia's marine environment; or
the standards of some vessels managed by an operator are so poor as to cast significant doubts on the standards of the other vessels managed by the same company (in which case, AMSA may consider also issuing Directions to the operator's other vessels).

Penalties for breaching a Direction

A breach of a Direction is both an offence and a civil penalty under the Navigation Act and attracts significant penalties of up to:

for offences – imprisonment for up to 10 years or a fine of up to $108,000 for individuals or $540,000 for bodies corporate; and
for civil penalties – a fine of up to $1.08 million for individuals or $5.4 million for bodies corporate.

It is also highly likely that any vessel subject to a Direction would be further detained if it entered an Australian port during the duration of the Direction.

Next steps

Vessel operators should be mindful of their obligations to comply with all Australian and international standards, including those related to vessel safety, pollution and seafarer employment.

Operators of vessels that have been repeatedly detained should pay special attention to these obligations to reduce the risk that any of its vessels (however compliant) will also be issued a Direction.

Appendix A: Foreign-flagged ships banned from Australian ports by AMSA

Date of ban	Name of vessel	IMO Number	Type of vessel	Flag State	Operator	Length of ban	Reason for ban
27/08/14	Vega Auriga	9347786	Container ship	Liberia	Not disclosed	3 months	 Inadequate seafarer living and working conditions and the improper payment of wages; and  Inadequate vessel maintenance.
18/11/15	Territory Trader	8812899	Container ship	Indonesia	PT Meratus Line	3 months	 History of repeated detentions; and  History of machinery and equipment malfunctions and breakdowns.
06/01/15	MV Meratus Sangatta	9116797	Multi- purpose ship	Indonesia	PT Meratus Line	3 months	 Inadequate seafarer living conditions; and  Expired Seafarer Employment Agreement.
31/01/15	Red Rover	9481673	Container ship	Indonesia	PT Meratus Line	12 months	 Failings in vessel's safety management system including lack of effective passage planning and failure to use appropriate charts and publications.
16/09/15	Noah Satu	9313620	Cargo ship	Indonesia	PT Adnyana	3 months	 History of repeated detentions; and  Failings in vessel's safety management system including inappropriate passage planning, use of incorrect navigational charts, expired or unmaintained safety equipment, failure to undertake required drills, unapproved machinery configurations, inadequate seafarer living conditions, and failure to comply with mandatory recording and reporting requirements.