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Ioannis M. Pavlakis Silina Pavlakis - Moschou Vienna PEOPIL Annual Conference 11 - 13 September 2014 Pavlakis Moschos & Associates Law Offices Piraeus - Greece Slide 2 The Key Players in the Shipping Industry The Worlds First Genuinely Global Industry Beneficial Owner Registered Owner Flag-state of the ship The Manager and Operator of a ship or of the fleet The Classification Societies The insurers, including third party civil liability insurers Maritime Authorities of states of registration of vessel & Port Authorities of states where the vessel sails Multi-national crews Slide 3 Sea Service and the Inherent Dangers [1] Sea service is hazardous and seafarers are exposed to conditions and dangers that result to damage to their health, minor or serious injuries, even death. Perils of the sea and related risks: Heavy weather (storms, waves, winds etc.) Collisions Sinking Capsizing Piracy (lately) Slide 4 Sea Service and the Inherent Dangers [2] A ship is a floating factory with complex and dangerous machinery in a limited space: Fires Explosions Smoke and noxious fumes Handling of heavy machinery and cargo Adverse working conditions due to extreme climate and weather conditions of heat, ice, humidity, etc. Slide 5 Sea Service and the Inherent Dangers [3] Limited or no access to medical and hygiene facilities Limited space, forced cohabitation and work with colleagues from different nationalities, languages, cultures, characters, under the absolute authority of the master/officers, with no access to shore for months No leaves, long absence from family and residence, but also restricted and difficult contact with home and beloved persons Slide 6 Seafarers Accidents Cost to the Shipping Industry Shipping safety has greatly improved during the last decades. However, seafaring remains one of the most dangerous professions, and both the fatality and serious personal injury rate is much higher (some ten times higher or more) than the fatality and serious personal injury rate in the general workforce. UK P&I Club has stated that the shipping industry is paying out more than $300 million a year to meet seafarers claims for injury, illness or death. Personal Injury claims represent the second most expensive class of claims paid by P&I clubs. Slide 7 Main Causes of Seafarers Personal Injury Claims [1] Slips & Falls Falling Objects Strains Burns, Fire and Explosion Injuries Machinery and Equipment Injuries Enclosed Spaces, toxic gases Mental harm, suicides (psychological disturbances, depression, illusions) Slide 8 Main Causes of Seafarers Personal Injury Claims [2] Violence between crew members Work related illnesses (heart attack, heat-stroke or frostbite, malaria, mesothelioma and asbestosis, chemical poisoning, cancer, etc.) Aggravation of illnesses due to lack of proper and timely treatment Slide 9 UK P&I Club - 1995 Slide 10 Need for Harmonization of Maritime Standards [1] In view of the multiple laws, countries, authorities and entities that have a word in the operation of shipping enterprises, it became very early necessary for the international shipping community to issue and enforce rules and regulations which will apply internationally, irrespectively of flag, nationality, shipowner etc. Slide 11 Need for Harmonization of Maritime Standards [2] Slide 12 Need for Harmonization of Maritime Standards [3] The International Maritime Organization (IMO), the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships, in its almost 60 years of history has adopted numerous safety regulations of major importance, such as: Slide 13 Need for Harmonization of Maritime Standards [4] SOLAS: International Convention for the Safety of Life at Sea, 1974, as amended *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013 Slide 14 Need for Harmonization of Maritime Standards [6] MARPOL: International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013 Slide 15 Need for Harmonization of Maritime Standards [7] STCW: International Convention on Standards of Training, Certification and Watchkeeping for Seafarers as amended, including the 1995 and 2010 Manila Amendments *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013 Slide 16 Need for Harmonization of Maritime Standards [8] COLREG: Convention on the International Regulations for Preventing Collisions at Sea, 1972 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013 Slide 17 Need for Harmonization of Maritime Standards [9] LLC: International Convention on Load Lines, 1966 *Source: IHS-Fairplay - World Fleet Statistics 31 December 2013 Slide 18 Need for Harmonization of Maritime Standards [10] IMDG Code: International Maritime Dangerous Goods Code (Amendments to SOLAS chapter VII (Carriage of Dangerous Goods) adopted in May 2002 made the IMDG Code mandatory from 1 January 2004) Many other Slide 19 Need for Harmonization of Maritime Standards [11] The International Labor Organization (ILO), which in 1946 became the first specialized agency of the newly formed at the time United Nations, has over the years adopted numerous legislative instruments that promote social justice, human and labour rights, and advance the creation of decent and safe working conditions for workers of all industries, including the maritime sector. ILO Conventions on seafarers working conditions include: Slide 20 Need for Harmonization of Maritime Standards [12] Minimum Age (Sea) Convention, 1920 Officers' Competency Certificates Convention, 1936 Hours of Work and Manning (Sea) Convention, 1936 Minimum Age (Sea) Convention (Revised), 1936 Wages, Hours of Work and Manning (Sea) Convention, 1946 Seafarers' Annual Leave with Pay Convention, 1976 Slide 21 Need for Harmonization of Maritime Standards [13] Merchant Shipping (Minimum Standards) Convention, 1976 (and 1996 protocol) Repatriation of Seafarers Convention (Revised), 1987 Labour Inspection (Seafarers) Convention, 1996 Recruitment and Placement of Seafarers Convention, 1996 Seafarers' Hours of Work and the Manning of Ships Convention, 1996 Slide 22 Need for Harmonization of Maritime Standards [14] THE IMO and ILO Conventions are international legal instruments, and as such are: binding only for countries that have ratified them, and not directly applicable, but rely and require implementation by member states into their domestic law. Upon implementation, they form mandatory rules and regulations superseding Seafarers' individual employment contracts providing otherwise. Slide 23 Maritime Labour Convention (MLC), 2006 Slide 24 ILO MARITIME LABOUR CONVENTION 2006 Adopted by government, employer and workers representatives at the 94th Maritime Session of the ILO held in Geneva, Switzerland, on 23 February 2006. The very large number of existing ILO maritime Conventions, many of which were overlapping, conflicting or outdated, made it difficult for governments to ratify and to enforce all of the existing international labour standards. Development of an instrument which brings together into a consolidated text as much of the existing body of ILO instruments as it proves possible to achieve. Slide 25 Consolidation of 36 Conventions Since 1920 the ILO has adopted some 40 maritime labour Conventions and 29 maritime labour Recommendations covering a wide variety of issues, including recruitment and placement, minimum age, hours of work, safety, health and welfare, labour inspection and social security. The Convention consolidates, revises and modernizes in a single legal instrument 36 out of the 40 ILO maritime labour Conventions and one Protocol. Slide 26 Phasing Out of Existing Conventions The Conventions and the Protocol that are consolidated will be gradually phased out as countries that have ratified those Conventions ratify the MLC, 2006. Countries that ratify the MLC, 2006, will no longer be bound by the existing Conventions when the MLC, 2006, comes into force for them. Countries that do not ratify the MLC, 2006, will remain bound by the existing Conventions they have ratified, but those Conventions will be closed to further ratification. Slide 27 Fourth Pillar of International Maritime Law International Regulatory Regime for Quality Shipping SOLASSTWCMARPOLMLC International Convention for the Safety of Life at Sea, 1974 (as amended) International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 (as amended) International Convention for the Prevention of Pollution from Ships, 1973 (as amended by Protocol of 1978) Maritime Labour Convention, 2006 Slide 28 Entry into Force The MLC 2006, entered into force on 20 August 2013, 12 months after the date on which there were registered ratifications by at least 30 Members of the ILO with a total share in the world gross tonnage of ships of at least 33 per cent (requirement set by Article VIII, paragraph 3 of MLC 2006). For countries ratifying the Convention after 20 August 2012 the Convention enters into force 12 months after the date that the countrys ratification is registered (Article VIII, paragraph 4, MLC 2006). Slide 29 MLC 2006 Ratification Status (Sept. 2014) Ratified & in Force Ratified but not in Force yet Ratifications by 64 Countries representing more than 80% of world GT of ships In Force in 48 Countries Slide 30 Structure of the Convention MLC 2006 Articles - Legal & Procedural Matters - General statements of principle, obligations & rights - Definitions Regulations - Core rights & general principles on specific matters - Basic obligations of member states The Code - Details for the interpretation of the Convention Part A Mandatory Standards Part B Non Mandatory Guidelines To be given due consideration in implementing the Convention Slide 31 The Five Titles of the Convention Minimum Standards & Enforcement [1] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement MLC 2006 Slide 32 The Five Titles of the Convention Minimum Standards & Enforcement [2] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Minimum Age Medical Certification Training & Qualification Recruitment & Placement Slide 33 MLC 2006 The Five Titles of the Convention Minimum Standards & Enforcement [3] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Written Employment Agreements Payment of Wages Hours of Work & Rest Annual Paid Leave Compensation arising from ships loss or foundering Slide 34 MLC 2006 The Five Titles of the Convention Minimum Standards & Enforcement [4] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Individual Sleeping Rooms Design, Ventilation, Lighting, Heating etc. of Private & Common Areas Sanitary Accommodation Recreational Facilities, Mail and Ship Visit Arrangements Food and Catering Slide 35 MLC 2006 The Five Titles of the Convention Minimum Standards & Enforcement [5] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Medical Care Onboard & Ashore Sickness and Injury Costs Born by Shipowners Health & Safety Protection & Accident Prevention Access to Shore-based Welfare Facilities Social Security Slide 36 MLC 2006 The Five Titles of the Convention Minimum Standards & Enforcement [6] 1. Qualification & Certification Requirements 2. Conditions of Employment 3. Accommodation, Recreation Facilities, Food & Catering 4. Health Protection, Medical Care, Welfare, Social Security 5. Compliance & Enforcement Flag-State Responsibilities Port-State Responsibilities Labour Supplying Responsibilities Slide 37 Multi-level System of Enforcement & Compliance [0] Slide 38 Multi-level System of Enforcement & Compliance [1] Slide 39 Maritime Labour Certificate (MLC Certificate) [1] Issued by the competent authority of ships Flag-State or by a recognized organization duly authorized by the Flag-State for this purpose Slide 40 Maritime Labour Certificate (MLC Certificate) [2] Issuance after inspection & certification of 14 areas in the working and living conditions of seafarers as complying with MLC 2006. Valid for a period that shall not exceed 5 years. Valid only if accompanied by a Declaration of Maritime Labour Compliance (DMLC) Slide 41 Maritime Labour Certificate (MLC Certificate) [3] Intermediary inspections by Flag- State at intervals that shall not exceed 3 years. Slide 42 Declaration of Maritime Labour Compliance (DMLC) [1] PART I Completed by the competent authority of ships Flag-State or by a recognized organization duly authorized by the Flag-State for this purpose Reference to the relevant details of the national requirements implementing the MLC Slide 43 Declaration of Maritime Labour Compliance (DMLC) [2] Slide 44 Declaration of Maritime Labour Compliance (DMLC) [3] Slide 45 Declaration of Maritime Labour Compliance (DMLC) [4] Slide 46 Declaration of Maritime Labour Compliance (DMLC) [5] Slide 47 Declaration of Maritime Labour Compliance (DMLC) [6] Slide 48 Declaration of Maritime Labour Compliance (DMLC) [7] PART I I Completed by the shipowner Shipowner identifies measures adopted to ensure ongoing compliance with the national requirements between inspections, as well as the measures proposed to ensure that there is continuous improvement Slide 49 Declaration of Maritime Labour Compliance (DMLC) [8] Slide 50 Declaration of Maritime Labour Compliance (DMLC) [9] PART I I Certified and endorsed by the competent authority or recognized organization of Part I Slide 51 Multi-level System of Enforcement & Compliance [2] Slide 52 Multi-level System of Enforcement & Compliance [3] Slide 53 Multi-level System of Enforcement & Compliance [4] Slide 54 Multi-level System of Enforcement & Compliance [0] Slide 55 EU and the MLC 2006 [1] The EU does not (and cannot) participate as a full member of the ILO and has no right to become a contracting party to any of the ILO Conventions. The ILO constitution is only open for states. To overcome this difficulty EU initially issued Council Decision 2007/431/EC, by which it authorized (effectively obliged) EU member-states to ratify the MLC 2006 (those parts falling under Community competence) and provided that member-states should make efforts to take the necessary steps preferably before 31/12/2010. Slide 56 EU and the MLC 2006 [2] Subsequently, most of the provisions of MLC 2006 were transposed into EU law by means of numerous Directives: Council Directive 2009/13/EC implemented the social partners agreement on the MLC 2006 (reached in May 2008 between the European Community Shipowners Association (ECSA) and the European Transport Workers Federation (ETF), following consultations that were already initiated between the social partners in September 2006 in light of the MLC 2006), and amended the existing EU legislation on seafarers working conditions (Directive 1999/63/EC) by effectively reproducing the wording of the standards and regulations of Titles 1 to 4 of the MLC 2006. Slide 57 EU and the MLC 2006 [3] Directive 2009/16/EC (recast directive) reformed the EU's Port State Control scheme and made specific but mere reference to the MLC 2006 (Preamble, para. 5 and Annex IV). Was in 2013 amended by Directive 2013/38/EU amended Directive 2009/16/EC so that in the list of documents and certificates to be presented at port-state control inspections are included the MLC 2006 Maritime Labour Certificate and the Declaration of Maritime Labour Compliance. The scope of Port-State Control inspections was extended to cover all MLC 2006 requirements. Slide 58 EU and the MLC 2006 [4] Directive 2013/54/EU concerning certain flag state responsibilities for compliance with and enforcement of the MLC 2006, obliges member-states to provide for effective and appropriate enforcement and monitoring mechanisms ensuring compliance of the ships flying their flags with the provisions of MLC 2006 and Council Directive 2009/13/EC. Deals with the credentials and powers of the personnel in charge of compliance monitoring as well as the on board complaint procedures, the handling of complaints and the corrective measures in the terms of the MLC 2006. The Directive does not impose an obligation on member- states to issue the MLC Certificate and the DMLC. Slide 59 EU and the MLC 2006 [5] Directive 2009/20/EC (part of the so-called Third Maritime Safety Package comprising two Regulations and six Directives) provides that as of 01/01/2012 the shipowners of all ships of 300 gross tonnage or more, irrespective of type, must have P&I or other type of insurance in place that covers maritime claims subject to limitation under the 1976 Convention on Limitation of Liability for Maritime Claims, adopted by the International Maritime Organization (IMO), as amended by the 1996 Protocol. Slide 60 EU and the MLC 2006 [6] This obligation (compulsory P&I insurance) applies to ships: (a) flying the flag of the EU member-states (including member states of the European Economic Area - EEA); (b) irrespective of flag they are flying, calling at the ports of the EU/EEA member -states; and (c) irrespective of flag they are flying, operating within the territorial waters of the EU/EEA member-states, if in conformity with international law. As of the same date (01/01/2012), EU/ EEA member-states are obliged to carry out inspections of ships calling at their ports or operating within their territorial waters for this purpose. Slide 61 MLCs Input to Seafarers Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [1] ICONS (International Commission on Shipping) reported a few years ago that: For thousands of todays international seafarers life at sea is modern slavery and their workplace is a slave ship. There was an absolute necessity for the introduction of a new, widely accepted and broadly enforced convention on seafarers rights and working conditions. ICONS (International Commission on Shipping) reported a few years ago that: For thousands of todays international seafarers life at sea is modern slavery and their workplace is a slave ship. There was an absolute necessity for the introduction of a new, widely accepted and broadly enforced convention on seafarers rights and working conditions. Slide 62 MLCs Input to Seafarers Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [2] Codification and unification of numerous conventions and regulations in a single coherent legal instrument Codification Revision, modernization and update of seafarers working conditions legal framework Revision & Update Outdated and low ratification status maritime legal instrument came together in one coherent piece of legislation likely to achieve near universal ratification WideRatification Slide 63 MLCs Input to Seafarers Safety & Shipping Industry - Consolidation, Update & Globalization of Standards [3] Protection by indirect application to all ships and all persons working at sea (now estimated at over 1,5 million persons) - No more favourable clause (Article V, para. 7, MLC 2006) Indirect Application Expansion of application to all types of ships, including (for the first time) pleasure ships and yachts Expansion of Protection Establishment of almost universal rules and global minimum standards for the protection of seafarers safety, health and rights, irrespectively of ships flags and seafarers nationality Universal Bill of Rights Slide 64 Conversion of Codes of Practice into Enforceable Law [1] Codes of Practice, such as the as the ILO Codes of Practice: Accident Prevention on board Ship at Sea and in Port, 1996 & Ambient Factors in the Workplace, 2001 which provide for numerous safety regulations that up to date had been used for purposes of general guidance, and were not treated by courts as safety regulations per se, become enforceable law Slide 65 Conversion of Codes of Practice into Enforceable Law [2] Practical importance in numerous jurisdictions (e.g. Greece): Full compensation (pecuniary & moral damages) to seafarers in case of sea accident is awarded only when a specific enacted safety regulation has been violated (mere violation of the general "duty of care" entitles them to restricted non- fault compensation) The legislative approval of the ILO Codes of Practice (which were not treated by Courts as safety regulations) in the course of ratification of MLC, shall enable seafarers to claim for full compensation on the basis of breach of the respective codes of practice. Slide 66 More Responsible Parties for Seafarers Safety & for their Claims Shipowner (Broader Concept) Flag-State Inspectors Flag- State per se Flag- States Competent Authorities & Recognized Organizations Direct action against shipowner as defined by MLC Relief from burden of proving beneficial ownership Enables or makes easier to secure jurisdiction in the Courts of shipowners country of actual business. Compensation shall be payable in accordance with national laws and regulations for any loss or damage suffered as a result of the wrongful exercise of the inspectors powers. (Standard 5.1.4.) In all cases, the Member shall remain fully responsible for the inspection and certification of the working and living conditions of the seafarers concerned on ships that fly its flag. (Regulation 5.1.1.3) Possible additional defendants in case the conditions onboard the ship do not comply with the MLC Certificate & DMLC (i.e. the Convention standards) issued by them. Slide 67 Broadening the Definition of a Shipowner MLC Definition of Shipowner the owner of the ship or another organization or person, such as the manager, agent or bareboat charterer, who has assumed the responsibility for the operation of the ship from the owner and who, on assuming such responsibility, has agreed to take over the duties and responsibilities imposed on shipowners in accordance with this Convention, regardless of whether any other organization or persons fulfill certain of the duties or responsibilities on behalf of the shipowner Irrespective of the particular commercial or other arrangements regarding a ships operations and the identity of the actual owner of the ship, there must be a single entity, the shipowner, that is responsible for seafarers living and working conditions. Slide 68 1 st Amendment to the MLC [1] Abandoned Seafarers & Security for Contractual Claims Less than 8 months from the date the MLC 2006 came into force, government, employer and worker delegates, at the 103rd annual meeting of the ILO, overwhelmingly voted (April 11, 2014) in favour of approving amendments to the MLC 2006, in order to: (a) better protect abandoned seafarers, and (b) provide financial security for compensation to seafarers and their families in cases of a seafarers death or long-term disability. Slide 69 1 st Amendment to the MLC [2] Repatriation & Financial Assistance to Abandoned Seafarers Obligation for an expeditious and effective financial security system to assist seafarers in the event of their abandonment, aiming at providing direct access, sufficient coverage and expedited financial assistance in terms of access to adequate food, accommodation, drinking water supplies, essential fuel for survival onboard the ship, necessary medical care, payment of outstanding wages and other entitlements due from the shipowner, and for coverage of repatriation costs Obligation for a financial security certificate or other documentary evidence for this purpose onboard all vessels Slide 70 1 st Amendment to the MLC [3] Financial Security for Seafarers Contractual Claims Obligation for a system of financial security to assure compensation of seafarers for contractual claims, i.e. any claim which relates to death or long-term disability of seafarers due to an occupational injury, illness or hazard as set out in national law, the seafarers employment agreement or collective agreement Obligation for a financial security certificate or other documentary evidence for this purpose onboard all vessels Slide 71 1 st Amendment to the MLC [4] Entry into Force Unless there is significant disagreement when they are circulated to governments that have ratified the MLC 2006, these new requirements will enter into force by early 2017 The amendments to the Convention (when and to the extent that they will come into force) will for the first time: make compulsory the insurance coverage for seafarers claims in cases of abandonment (as a general rule no such insurance is provided until today even on a voluntary basis) as well as for seafarers contractual compensation claims (customarily provided by P&I Clubs), and give seafarers the right to direct access against the financial security provider. NOTE: The amendments are notified to Members whose ratification of the MLC, 2006, was registered prior to the date of the Conferences approval. These Members have a period of two years from that notification (unless the Conference decides upon a different period) to express a formal disagreement to the amendments. The amendments enter into force six months after the end of that period unless more than 40 per cent of ratifying Members, representing not less than 40 per cent of world gross tonnage, have formally expressed their disagreement with the amendments. A ratifying Member that expresses its formal disagreement within the prescribed period will not be bound by the amendments. After entry into force of the amendments, the Convention may only be ratified in its amended form. Slide 72 1 st Amendment to the MLC [5] Direct Action against the Insurer (?) [1] The Basic Principle: Pay to be Paid Rule P&I Clubs insurance cover has been traditionally indemnity insurance the assured shipowner or ship manager must first pay and discharge his liability towards the third party in order to trigger the P&Is Club duty to indemnify him Exceptions Introduced for tortuous liability: International Convention on Civil Liability for Oil Pollution Damage, 1969, International Convention on Liability & Compensation for Damage in Connection with the Carriage of Hazardous & Noxious Substances by Sea, 1996, International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 the Nairobi International Convention on the Removal of Wrecks, Slide 73 1 st Amendment to the MLC [6] Direct Action against the Insurer (?) [2] Currently no provision at international level for a direct action against P&I Clubs or other insurers for seafarers contractual compensation claims or claims related to their abandonment Exceptional available option in some jurisdictions: subrogation claim Slide 74 1 st Amendment to the MLC [7] Direct Action against the Insurer (?) [3] The amendments to the MLC provide that: (a) the financial security system for abandoned seafarers shall provide to seafarers direct access to sufficient coverage and expedited financial assistance, (b) the financial security system for contractual claims must ensure that the claim for contractual compensation may be brought directly by the seafarer concerned, or their next of kin, or a representative of the seafarer or designated beneficiary. Slide 75 1 st Amendment to the MLC [8] Direct Action against the Insurer (?) [4] P&I Clubs are rather skeptical of such changes The UK P&I Club in a Legal Briefing dated November 2010 on the MLC 2006 stated: P&I Club cover will respond to the majority of the requirements [of the MLC 2006] but has significant gaps and will not cover, for instance, repatriation after insolvency and claims for unpaid wages, nor will it respond directly to seafarers' claims for compensation as opposed to indemnifying the owner. Most P&I Clubs up-to-date contend that the MLC and its amendments do not and should not give seafarers a direct action against the insurance providers and object to the establishment of such a right Slide 76 1 st Amendment to the MLC [9] Direct Action against the Insurer (?) [5] Main Objections of P&I Clubs Public protection of a claimant is required in tortuous liability; not in contractual relations, as parties negotiate rights and obligations and enter agreements willinglyPublic protection of a claimant is required in tortuous liability; not in contractual relations, as parties negotiate rights and obligations and enter agreements willingly 1 A right to proceed directly against the insurer, deprives the latter of his defenses under insurance contract (pay to be paid, willful misconduct of shipowner etc.)A right to proceed directly against the insurer, deprives the latter of his defenses under insurance contract (pay to be paid, willful misconduct of shipowner etc.) 2 P&I insurance would cease to be indemnity insurance (makes good loss of insured) and would become liability insurance (makes good damage sustained by claimant).P&I insurance would cease to be indemnity insurance (makes good loss of insured) and would become liability insurance (makes good damage sustained by claimant). 3 True for cargo claims but not for crew members who in most cases are not in a position to negotiate the terms of their employment Other pieces of legislation (e.g. IMO Civil Liability Conventions CLCs) provide that insurers can avail themselves of the defense of willful misconduct of the shipowner as a defense in a direct action. P&I Clubs can quickly amend and adapt their contracts, policies and products to address such changes Slide 77