Upload
others
View
7
Download
0
Embed Size (px)
Citation preview
DNV GL © 2018 SAFER, SMARTER, GREENERDNV GL © 2018
The Role of Classification Societies
1
Gesa Heinacher-Lindemann, LL.M.
Senior Vice President
12 August 2019
DNV GL © 2018
Agenda
1. History and Development of Classification Societies
2. Shipping and Shipbuilding Markets
3. Introduction to DNV GL
4. Scope of Maritime Services
5. Contractual Relationships
6. Liability of Ship Owners and other maritime partners
7. Liability of Classification Societies
8. Preceding Cases: Erika & Prestige
2
DNV GL © 2018
1. History and Development of Classification Societies
▪ In 1696, Edward Lloyd began publishing a
weekly shipping newsletter from his coffeehouse
in London, which evolved into a centre of marine
insurance.
▪ In 1734 “Lloyd’s List” was founded, giving
details of vessel movements, marine casualties,
and other information of interest to the merchant
shipping community.
▪ In 1760 the set up of the Society for the
Registry of Shipping by customers of Edward
Lloyd’s Coffee House marked the beginning of
classification, as it aimed at giving merchants
and underwriters recorded information on the
quality of their vessels.
3
DNV GL © 2018
▪ Insurers, Brokers and Cargo Owners decided to develop a system that regulates
the essential inspections of ships and their components and formed in 1760 a
1. History and Development of Classification Societies
▪ Committee for this purpose which was in 1834
reconstituted as a self standing “classification
society” (Lloyd´s Register)
▪ In 1834 this registry was reconstituted as a
self-standing 'classification society' (Lloyd’s
Register)
▪ Publication of construction rules for seagoing
steel ships in 1855
▪ Foundation of DNV in 1864
▪ Foundation of GL in 1867
4
The original facade from Lloyd’s Coffee House
DNV GL © 2018
1. History and Development of Classification Societies
As basic Principles for the Classification of
vessels it became clear that an organization for
inspecting vessels needs:
▪ To act neutrally and impartially
▪ To act independently
– own rules
– own register
– own exclusive surveyors
▪ And is operating also in the public interest
These are until today the prerequisites for
a classification society.
5
DNV GL © 2018
1. History and Development of Classification Societies
6
Classification is important for:
▪ Ship owners and charterers
▪ Shipyards
▪ Ship suppliers
▪ Banks
▪ Maritime insurance companies
▪ National maritime safety authorities
DNV GL © 2018
1. History and Development of Classification Societies
Since then many international and local societies have been established. The major
ones decided, that a common organization for cooperation would be of benefit for
them. The International Association of Classification Societies (IACS)
▪ Was founded in Hamburg on 11 September 1968
▪ As of today: 12 members
▪ Goals:
− prevention of pollution of the marine environment
− communications and co-operation with international and national
maritime organisations
− cooperation with marine industries
− development of minimum standards
IACS Members classify more than 90% of the world's cargo carrying tonnage
7
DNV GL © 2018
1. History and Development of Classification Societies
IACS Members Year of Foundation
LR Lloyd’s Register of Shipping 1760
BV Bureau Veritas 1828
RINA Registro Italiano Navale 1861
ABS American Bureau of Shipping 1862
DNV GL DNV GL 1864
NK Nippon Kaiji Kyokai 1899
RS Russian Maritime Register of Shipping
1913
CCS China Classification Society 1956
KR Korean Register of Shipping 1960
IRS Indian Register of Shipping 1975
PRS Polish Register of Shipping 1936
CRS Croatian Register of Shipping 1949
8
DNV GL © 2018
1. History and Development of Classification Societies
9
Source: IHS Fairplay, 01 August 2019
Worldwide Fleet in Service of selected IACS members [in million GT]
267250
218 215
110
60
11 70
50
100
150
200
250
300
LRDNV GL
BVNK ABS CCS KR RINA RS BKI
95
37
mGT
DNV GL © 2018
▪ Paris MOU ranking 2016-2018 for the ROs with “HIGH” performance level
10
1. History and Development of Classification Societies
Source: parismou.org Recognized Organization performance table, effective from 1 July 2019
DNV GL © 2018
2. Shipping and Shipbuilding Markets
11
World Fleet in Service per main shiptype [in million GT]
Source: IHS Fairplay, 01 August 2019
461
352
243
58 51 43 35 20
0
100
200
300
400
500
Container Pass./FerryTankerBulker
83
Gas MPV Ro-Ro Misc. OSV
mGT
DNV GL © 2018
2. Shipping and Shipbuilding Markets
12
Source: IHS Fairplay, 01 August 2019
mGT = million gross tons
World Fleet by ship owning nation [in
mGT]
2018 Shipbuilding output by building
nation [in mGT]
214
189
176
64
64
63
63
58
48
42
41
Korea (South)
Germany
Greece
China
Japan
USA
Singapore
Hong Kong
Bermuda
Norway
UK
22,8
14,5
14,3
2,0
0,5
0,5
0,5
0,4
0,3
0,3
0,2
France
Italy
China
Korea (South)
Japan
Vietnam
Philippines
Germany
Taiwan
USA
Brazil
DNV GL © 2018
2. Shipping and Shipbuilding Markets
Growth of Global Container Trade [in million TEU]
DNV GL Maritime Trend Report 08/2019
100
0
50
150
200
250
300
20152011 2013 2017 201920072005 2009
+4%
+3%
+4%Transpacific (FE-US) North-South
Far East-Europe Other
Other East-West
DNV GL © 201814
3. Introduction to DNV GL
DNV GL © 201815
3. Introduction to DNV GL – Business Areas
MaritimeThe world’s leading ship and offshore classification society and maritime advisory
Oil & GasA leading technical advisor to the global oil and gas industry
Digital SolutionsDigital solutions for managing risk, improving
safety and performance
across industries, incl.
maritime, oil and gas,
energy and healthcare.
EnergyAn energy powerhouse, supporting customers across the energy value chain
Business AssuranceOne of the world’s leading certification bodies
*) 2,020m EUR /2,299m US$
DNV GL © 201816
3. Introduction to DNV GL´s main services to the maritime industry
DNV GL © 201817
▪ Setting own technical
requirements (classification rules)
▪ Verifying compliance with
technical requirements (approval
of specifications and drawings,
surveys and testing)
▪ Documenting compliance with
technical requirements (survey
reports, classification certificates,
test reports)
4. Scope of Maritime Services - three elements
Ship classification services are related to three elements applicable to both
newbuilding projects and in-service vessels:
DNV GL © 2018
4. Scope of maritime Service – Rules structure
▪ A rule structure which is easy to grasp
▪ Supports clear definition of responsibilities both internally and externally
18
Pt. Part Name
Pt.1 General Regulations
Pt.2 Materials and Welding
Pt.3 Hull
Pt.4 Systems and Components
Pt.5 Ship Types
Pt.6 Additional Class Notations
Pt.7 Fleet in Service
DNV GL © 2018
4. Scope od maritime Services – Rules setting
▪ As main character of Class, “1A1” is used for ships built to DNV GL rules
▪ A typical Class notation is made up of
– Construction symbol: ✠
– Main character of Class: 1A1
– Ship type notation
– Additional Class notations
– Service areas
19
DNV GL © 201820
Recognized Organizations
•Issue certificates
Member States
•Ratify the international conventions and possibly add some additional requirements
International Maritime
Organization
•Decides on international conventions
Audit performance of RO
(e.g. by EMSA)
Authorises RO
4. Scope of Maritime Services – Statutory Duties
Statutory Duties
DNV GL © 201821
4. Scope of Maritime Services Statutory Duties
– More than 120 flag states have authorized DNV
GL to perform statutory duties
– Safety: SOLAS (Safety of Life at Sea), LoadLine
Conventions
– Environmental Protection: MARPOL (Marine
Pollution Act)
– Security: International Ship and Port Facility
Security Code (ISPS Code)
– Safety at Work: International Labour
Organization (ILO) Conventions, national
regulations
DNV GL © 201822
4. Scope of Maritime Services – Statutory Duties
CLASS
SAFCON… ships are to be designed,
constructed and maintained in compliance with the structural, mechanical and electrical requirements of a recognised classification society ...
Class entirely embraces the
“Ship Safety Construction Certificate (SAFCON)”
Classification and Statutory Services
DNV GL © 201823
4. Scope of Maritime Services – Statutory Duties
Statutory Services
Ship Register
▪ Name of ship and owner
▪ Call sign, IMO number, class society number, flag etc.
▪ Class, date of construction, tonnage, equipment,
cargo
▪ DNV Exchange (legacy DNV) and Fleet Online (legacy
GL): class society database on survey status for
owners (from 4/2016: My DNV GL)
▪ Equasis: EU Database accessible to the public
Data available to Administration, clients, Port State Officers,
EU Commission
DNV GL © 201824
4. Scope of Maritime Services for classification and statutory duties
Life Cycle
Condition and operational inspections are required throughout the whole life-cycle of a ship
Fleet in Service:
▪ Periodic Surveys
− annually
− intermediate
− renewal
▪ Damage and Repair Surveys
▪ Extraordinary Surveys
Supplier:
▪ Drawing approval of components
▪ Type certification of systems
▪ Production monitoring
New building:
▪ Drawing Approval
▪ Construction Supervision
0 15105 2520 Years
Del
iver
yMC
bild
DNV GL © 201825
4. Scope of Maritime Services – for classification and statutory duties
Life Cycle - Newbuilding
DNV GL © 201826
4. Scope of Maritime Services – for classification and statutory duties
Life Cycle - Newbuilding
▪ Drawing approval
▪ Technical supervision at construction site
▪ Verify relevant tests and trials (sea trial)
▪ Leading to the first Classification Certificate/ statutory
certification
Rule making body observes the implementation of Rules and safeguards their interpretation
Flag State Rules are applicable
DNV GL © 201827
4. Scope of Maritime Services – Life Cycle Supplier
Marine Systems & Components
Even before the construction of a vessel starts, the
needed systems, components & materials have to
comply with the class society’s-building standards
Propulsion and Auxiliary Systems
▪ Certification and classification of propulsion and
auxiliary systems as well as components
Electrical systems and automation
▪ Certification and classification of electronic drive,
automation, navigation and communication
systems
Product Certification
▪ Certification & classification of materials,
components, welding technology, corrosion
protection, pressure vessel, steam boilers,
underwater technology and containers
DNV GL © 201828
4. Scope of Maritime Services - Life Cycle Supplier
Marine Systems & Components
▪ Type Approval
▪ Random Inspections
▪ Final Inspections
▪ Certification of the Manufacturing
Technologies
− Process Certification
− Product Certification
Approving the equipment with a clear understanding of the overall system vessel
Sample:
Productcertificate1
3 4
3 4
2Documents check
Typeapproval
Intermediateinspection
Final inspection
Processapproval
Alternative ProductCertification
C
DNV GL © 201829
4. Scope of Maritime Services – Fleet in Service
Newbuilding
Survey
no
yes
1st Year 5th Year2nd Year 4th Year3rd Year
max. allowed time windows
- month --3 +3
Inter-
mediate
Survey carried
out on 2nd
Anniversary
Date?
Annual
Survey
Intermediate
Survey
Issuing of
Class CertificateAnnual
Survey
Intermediate
Survey
Annual
Survey
-3 +3 -3 +3 -3 +3 -3-6 +6
Annual
Survey
Class RenewalSurvey
Endorsementof existingCertificate
Fleet in Service
DNV GL © 201830
4. Scope of Maritime Services – Fleet in Service
▪ A vessel’s class might be limited by technical findings:
– Memorandum to Surveyor
– Memorandum to Owner
– Condition of Class
– Condition for Administration
In severe cases class might be suspended or withdrawn!
DNV GL © 201831
4. Scope of Maritime Services – Fleet in Service
▪ A 100% of a VLCC would require
– A Climb of 11 km high
– A survey of 330.000 m2
– Checking of 1250 km of welding
– Length of longitude support beams
82 km
– Inner bottom area 11 000 m2
In a dark and
sometimes
dirty environment
DNV GL © 2018
4. Scope of Maritime Services – Fleet in Service
32
DNV GL © 2018
4. Scope of Maritime Services – Fleet in Service
33
Selective surveys
“Risk Based Inspection” with focus on ”Critical Areas”
DNV GL © 2018
Coffee break
34
DNV GL © 201835
Ship-ownerBuilding Contract
Shipyard
ClassificationSociety
Ord
er fo
r C
lass
ifica
tion
Dra
win
g
App
rova
l
Survey ofNewbuildingConstruction
Material and
Industry
Test Certificates
Testing of Materials and Components
Supply of approved Components
Orders
Certificateof Class
NationalStatutory
Certificates
State Authorities
Classification Agreement for ship in service
Components
Supplying
5. Contractual relationships
DNV GL © 2018
5. Contractual relationships
▪ Agreements with Flag State Authorities
▪ 1995 IMO Model Agreement, Resolution A 739 (18)
▪ Liability refers to General Terms and Conditions or an amount stipulated in the
agreement whatever is the higher
▪ EU Regulation 391/2009 imposes minimum liability figures
▪ Today this European standard is applied in most Flag State Agreements
– € 2 Mio. for damage to property
– € 4 Mio. for personal injury / death
36
DNV GL © 2018
5. Contractual relationships
▪ With all 3 business sectors: Contracts of Services
▪ In Germany: § 631 BGB (German Civil Code)
– Performance of Classification Services, e.g. Survey or Approval
– Plus issuance of a corresponding Certificate, Report, Approval etc.
– A Certificate stating compliance with GL Rules is not owed!
▪ Types of Agreements:
– Signed Quotations
– Individual Contracts
– Frame Work Agreements
37
DNV GL © 2018
6. Liability of Ship-owners and other Maritime Partners
▪ Liability of ship-owners, charters etc. is limited according to
international Conventions such as
– Convention on Limitation of Liability for Maritime Claims (’76) (LLMC)
– International Convention for Civil Liability of Oil Pollution Damage (‘69/’92)
(CLC)
– According to Art. III CLC next to ship-owners liability is excluded for
– Charterers, managers, operators
– Any person taking preventive initiatives
– Pilots or other persons who perform services for the ship
38
DNV GL © 2018
6. Liability of Ship-owners and other Maritime Partners
▪ No direct reference to classification societies and therefore the
statutory protection of classification societies is not guaranteed
▪ Ongoing discussion whether class societies are protected like
– the Flag State Authorities itself (limited liability of public authorities, public
immunities)
▪ Unclear judgments in the Erika and Prestige cases
▪ Limitation of liability only possible by agreement with our
contractual partners
39
DNV GL © 2018
7. Liability of Classification Societies
Court cases
▪ Liability claims against classification societies are increasing since the mid ’90.
▪ DNV GL has been involved as defendant in several court cases since 1995, but
until today succeeded in all proceedings.
▪ Most Claims are Third Party Claims!
40
DNV GL © 2018
7. Liability of Classification Societies
Newbuilding Classification
▪ Third Party Claim usually by
the Buyer of a new build vessel
▪ Sometimes “Forth” Party Claim with
regard to the material and component
certification
41
YARD
New
build
ing
Cla
ssifa
ctio
n
dam
ages
cau
sed
durin
g bu
ildin
g pe
riod
CLASSIFICATION SOCIETY
OWNERBuilding
Contract
Third Party
Claim
DNV GL © 2018
7. Liability of Classification Societies
▪ Fleet in Service
▪ Third Party Claim usually by a Buyer of
a second hand vessel
42
SELLER
CLASSIFICATION SOCIETY
Per
iod
ical
S
urv
eys
BUYERSale & Purchase
Contract
Third Party Claim
DNV GL © 2018
7. Liability of Classification Societies
▪ Other possible third party claims:
– Insurer assigned rights of the Owner
as basis for claim
– Charterer, Cargo Interests, Banks,
etc. as third party: Contract to the
protective benefit of third parties or
tort of negligence
43
YARD
CLASSIFICATION SOCIETY
OWNER
Charterer
Buyer
Cargo Interests
Crew Members
Banks
Insurer
All contractual stipulations between Class Society and Client are applicable to the third Party!
Contributory negligence is to be observed!
DNV GL © 2018
7. Liability of classification societies
▪ Coastal states
▪ In case of environmental damage to
coastal States:
– Strict liability in tort
– Applicable legislation often unclear
▪ Risks are only limited by:
– Responsibility of several parties
– Inclusion of classification societies
under statutory conventions of CLC (still
disputed)
44
YARD
CLASSIFICTION SOCIETY
OWNER
Coastal State
DNV GL © 2018
7. Liability of classification societies
Contract to the Protective Benefit of Third Parties
(German law concept deriving from § 328 German Civil Code)
– Proximity of Performance: close relationship of Third Party and Obligee
– Justifiable Interest: Third Party is affected by the neglect of duty and has a
legitimate interest in the contractual protection
– Foreseeableness: both prerequisites must have been cognizable for the Obligor
– The Third Party must merit protection: lack of equivalent claim
45
DNV GL © 2018
7. Liability of Classification Societies
▪ The Nicholas H case (1995)
▪ A claim was brought by cargo owners against NK for cargo loss (US$ 6 Mio.)
▪ Cargo Claimants alleged that the vessel was approved notwithstanding the fact
that she had cracks in her hull
▪ The House of Lords ruled in favour of NK, because
– Ship-owner is primarily responsible for vessel‘s seaworthiness
– No contract between cargo owners and classification society
– A duty of care towards cargo owners would be unfair, unjust and unreasonable
46
DNV GL © 2018
8. Proceeding cases: Erika and Prestige
Liability Claims against Classification Societies are constantly increasing since the
mid 1990.
Fortunately, DNV GL has not been faced with claims threatening our existence,
however this threat is immanent:
RINA in the “Erika” case
or
ABS in the “Prestige” case
47
DNV GL © 2018
8. Proceeding cases: Erika
Erika – the facts:
▪ On December 12, 1999, the tanker
Erika broke in half and sank 60
kilometers south of Penmarc’h Point in
Brittany. All 26 crew members were
rescued. The tanker was carrying
heavy fuel oil destined for Italy’s
national electric utility ENEL for use in
power generation.
▪ The tanker sank due to severe
corrosion of the vessel’s internal
structures, which were thus unable to
withstand the weather conditions. One
cause of the casualty may be found in
repairs carried at the ballast tanks less
than two years before the accident.
• These repairs were surveyed and
approved by Rina.
• 02/’07 legal proceeding started in
Paris. 70 claimants seeking
compensation from the owner, ship
manager, captain, charterer, the
classification society and other
parties.
48
DNV GL © 2018
8. Proceedings cases: Erika
DNV GL © 2018
8. Proceedings cases: Erika
50
DNV GL © 2018
8. Proceeding cases: Erika
▪ Erika – 1. Instance Judgement (01/’08)
• Criminal Court of Paris condemned the world's fourth largest oil major Total to the maximum fine of 375,000,- € claiming "ecological prejudice" caused by the sinking of the Erika.
• The Italian Classification Society RINA, which judges blamed for issuing the relevant certificates to the ship without undertaking the necessary checks "under the pressure of commercial constraints", was also fined the maximum amount for a company, 375,000,- €.
• Erika's Italian owner and its Italian manager were also found guilty and fined to the maximum for private persons of 75,000,- € each.
• The different parties were also told to pay out €192 million in damages to some one hundred plaintiffs in the case, including the French state, the regions, environmental protection groups such as Greenpeace, fishermen and hotel owners – but the court did not apportion the damages to the respective parties.
▪ ‚51
DNV GL © 2018
8. Proceeding cases: Erika
▪ Erika – 2. Instance Judgement (03/’10)
• The second instance upheld all fines. In addition Owner, Manager and RINA have also been found jointly and severally liable to pay the rest of € 194 Mio in civil damages.
• With regard to the protection of Art. III (4) CLC RINA was held to be a service provider for the Flag State, but not for the vessel.
• It was additionally decided that Rina waived it’s right to rely on the Flag States Immunity by defending themselves and not bringing up this argument.
• Total SA was exempted from liability as a subsidiary of and not Total SA itself was the Charterer of the Erika.
• The oil major had already paid € 171.5 Mio by way of an amicable settlement with the claimants. The remaining damages to be borne by the 3 convicted parties amount to € 32.5 Mio.
• Rina, the owner and manager appealed at the Court of Cassation de Paris
52
DNV GL © 2018
8. Proceeding cases: Erika
▪ Erika – 3. Instance Judgement (09/’12)
The 2nd instance judgement was partly amended in 2012 and is now final and
binding:
• With regard to Rina the court left open the question of sovereign immunity.
• The court of cassation revoked the 2nd instance decision concerning Art. IX(1)
CLC, by clarifying that classification societies do benefit from the channeling of
liability, but decided that Rina acted recklessly and can therefore not benefit
from the liability exception.
• With regard to Total SA the court de cassation was of the opinion that Total SA
was indeed a charterer (and thus benefitting from CLC), but also acted
recklessly when chartering the Erika.
• Finally all four parties were convicted to criminal charges and to mutually bear
the remaining financial damages.
53
DNV GL © 2018
8. Proceeding cases: Prestige
54
DNV GL © 2018
8. Proceeding cases: Prestige
Prestige - the facts:
November 13, 2002:
▪ the single-hulled oil tanker “Prestige“, sent a
distress call offshore in the region of Cape Finisterre
(Galicia, Spain), carrying 77,000 tons of heavy fuel
oil
▪ the engine was damaged and the ship went out of
control and drifted according to the weather
conditions
▪ emergency towing system of the ship did not work
and the different attempts failed
▪ access to ports in Spain and Portugal was denied –
she had to be towed out on sea where she broke
into on November 19th 2002.
▪ before the accident in May 2002, extensive repairs
have been carried out and surveyed by ABS.
▪ Proceedings against ABS were held in New York
where Spain claimed approximately US$ 1 bn.
55
DNV GL © 2018
8. Proceeding cases: Prestige
▪ Prestige – 1. Instance Judgment (01/08)
▪ ABS asserted that New York is not the competent forum as ABS falls within the ambit
of the CLC as being a person performing services for the ship according to Art. III CLC
and thus can only be sued in a CLC contracting state). The USA have not ratified the
CLC.
– The judge followed ABS’s arguments and dismissed the claim.
– The appellate court reversed the matter to the lower district court:
– The fact that the USA have not ratified the CLC does not necessarily prevent
jurisdiction
– However, the principle of forum non-convenience or international comity may
substantiate the lack of jurisdiction
▪ A conflict-of-law analysis is to be conducted accordingly
▪ Spain’s contributory negligence is to be considered
56
DNV GL © 2018
8. Proceeding cases: Prestige
▪ Prestige – 2. Instance Judgment (08/12)
▪ In the second instance judge Laura Swain accepted jurisdiction but dismissed the
claim on the merits, mainly based on the following:
– The great disparity between the fees charged by ABS and the claimed damage
is a strong evidence that such result was not intended and this also applies to
Spain as a third party.
– Classification Societies do not provide a global guarantee of a vessel’s
seaworthiness, but determine whether the ship conforms to the society’s own
rules at a certain point in time.
– The ship owner is responsible for and in control of the ship and has a non-
delegable duty to furnish a seaworthy vessel.
– Choice of law: Application of the Lauritzen factors decided for US Maritime Law.
▪ The Judgment is now final and binding, however the IOPC Fund is now suing ABS
for recourse in France.
57
DNV GL © 2018
8. Proceeding cases: Prestige
The Bordeaux Proceedings:
▪ Defense of ABS: doctrine of jurisdictional immunity of states
Private vs Public role of classification societies overlap:
– Public: ABS acted under orders or on behalf of the flag state
– Public: issuing certificates in the name of the flag state which is in the
interest of a public service and could only be done if classification of a
Recognized Organization is maintained (private)
▪ ABS is entitled to sovereign immunity of states according to the first instance
judgement
58
DNV GL © 2018
8. Lessons learned?
▪ MT “ERIKA” and MT “PRESTIGE” are
well known examples
▪ The public lost confidence in Shipping
and in the Politicians
▪ Still a binding concept for a port of
refuge is not in place
▪ Hundreds of kilometers of nice beaches
have been contaminated for years
▪ Millions of animals had to die a
distressful death
▪ Local economy suffered heavily
59
DNV GL © 2018
Summary
▪ Classification plays an important role in ship safety and environmental protection
▪ Today liability is a constantly growing issue for classification societies
▪ Classification societies shall benefit like all maritime partners from statutory
limitations of liability
▪ Clarification of the role of classification societies in the maritime industries
60
DNV GL © 2018
SAFER, SMARTER, GREENER
www.dnvgl.com
Thank you for your attention!
61
Gesa Heinacher-Lindemann
[email protected]: +49 40 36149 217
Brooktorkai 1820457 Hamburg
Veritasveien 1 Høvik / Norway