UK Chamber of Shipping Understanding UK Shipping First ediion published 2017 ISBN: 978-1-85609-746-8 © UK Chamber of Shipping, 2017 Briish Library Cataloguing in Publicaion Data A catalogue record for this book is available from the Briish Library. Notice of Terms of Use All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. While the advice given in this book ‘UK Chamber of Shipping Understanding UK Shipping’ has been developed using the best information currently available, it is intended purely as guidance to be used at the user’s own risk. 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Published by Witherby Publishing Group Ltd 4 Dunlop Square, Livingston EH54 8SB, Scotland, UK +44 (0)1506 463 227 info@witherbys.com witherbys.com Printed and bound in Great Britain by Trade Colour Printing, Penrith III Foreword To an island nation such as the United Kingdom, the importance of shipping is easy to see and difficult to overstate. 95% of our visible international trade is moved by sea. We depend on shipping to bring finished goods to our shops, whilst the manufacturers of those goods need ships to take raw materials and components to their factories. Lifeline ferries bring isolated communities to the mainland and back, whilst ships carry millions of British holidaymakers to overseas destinations each year. The United Kingdom shipping industry does much more than move trade and people from one place to the next by sea. It boasts a fleet of advanced ships that support the oil, gas and renewable energy sectors, along with world-leading oceanographic and seismic research vessels, cable-layers and, increasingly, luxury superyachts. Over 85,000 merchant ships trade internationally, each following rules set at global, regional and national levels. These rules and standards cover almost every area of public policy; from environmental protection to safety, taxation to defence, customs to employment. The United Kingdom has been, and remains, a respected voice at the forefront of the development of the rules under which the industry operates. This book offers an understanding of those rules for UK shipping; how they are made, how to comply with them and how they affect the industry. It has been written by the UK Chamber of Shipping’s team of experts who, as well as having a deep understanding of the regulations, participated in the formulation of many of them. The regulatory framework is continuously evolving and this book considers the regulatory position as it currently stands in spring 2017. The UK Chamber of Shipping is pleased to present this comprehensive introduction to our vital national industry. Guy Platten Chief Executive Officer – UK Chamber of Shipping V Contents Foreword iii Chapter 1 – Introduction 1 1.1 Purpose of the Book 2 1.2 What do Shipping and the Maritime Sector do? 2 1.3 What is Meant by ‘British Shipping’? 4 1.4 Background to British Shipping 6 1.4.1 Overview 6 1.4.2 History 6 1.4.3 Tonnage tax 9 1.4.4 Competition 9 1.4.5 Industry bodies 10 1.5 Overview of Chapters 11 Chapter 2 – International Regulation 13 2.1 Introduction 14 2.2 How and why the Shipping Industry is Regulated 14 2.3 The Global Bodies 16 2.3.1 The International Maritime Organization (IMO) 17 2.3.2 The International Hydrographic Organization (IHO) 18 2.3.3 The International Association of Classification Societies (IACS) 18 2.4 Safety of Life and Protection of the Environment 19 2.4.1 International Convention for the Safety of Life at Sea (SOLAS) 19 2.4.2 International Convention for the Prevention of Pollution from Ships (MARPOL) 21 2.4.3 International Convention on Load Lines (CLL), 1966 24 2.4.4 Convention on the International Regulations for Preventing Collisions at Sea (COLREGs), 1972 24 2.4.5 International Convention for the Control and Management of Ships’ Ballast Water and Sediments (BWM Convention) 26 2.4.6 Cargo safety 27 2.5 Enforcement and the Concept of Nationality 30 2.5.1 Ship registration 30 2.5.2 The practical consequences of ship registration 30 2.5.3 Port State Control (PSC) 31 2.5.4 Classification Societies and certification 33 2.6 The Role of the European Union 34 2.6.1 The European Commission and Parliament 34 2.6.2 European Maritime Safety Agency (EMSA) 35 UK Chamber of Shipping – Understanding UK ShippingVI Chapter 3 – Regulation of UK Ships 37 3.1 Introduction 38 3.2 Flagging 38 3.2.1 The process of flagging in the UK 38 3.2.2 Factors influencing shipowners’ choice of flag 41 3.3 Statutory Liability Regimes 42 3.4 Certification in the UK 43 3.4.1 Attaining Class 43 3.4.2 Class suspension 44 3.5 Regulation and Marine Administration in the UK 45 3.5.1 UK Government 45 3.5.2 The Merchant Shipping Act 1995 45 3.5.3 The Maritime and Coastguard Agency (MCA) 46 3.5.4 UK Port State Control 47 3.5.5 Marine Accident Investigation Branch (MAIB) 49 3.5.6 Marine notices 49 3.5.7 UK Hydrographic Office (UKHO) 50 3.5.8 Crown Estate 51 3.5.9 Marine management organisation 51 Chapter 4 – Crewing and Employment 53 4.1 Introduction 54 4.2 Roles on Board, Safe Manning and the Role of the Master 55 4.3 Crew Nationality 56 4.4 Entry into Employment: the STCW Regime 56 4.5 Global Standards: Maritime Labour Convention, 2006 57 4.5.1 Background 57 4.5.2 MLC structure 58 4.5.3 The articles 59 4.5.4 The Regulations and Code 60 4.6 UK Employment Law for Seafarers 64 4.6.1 Registry of Shipping and Seamen 64 4.6.2 Work permits 64 4.6.3 Unfair dismissal and other statutory employment rights 64 4.6.4 Discipline, Code of Conduct, strikes and mutiny 64 4.7 UK Income Tax and National Insurance Regime for Seafarers 65 4.8 Health and Safety At Sea 66 VIIContents Chapter 5 – Running a Shipping Business in the UK 69 5.1 Company Law Background 70 5.2 Taxation 70 5.2.1 Corporation Tax 70 5.2.2 Tonnage tax 72 5.2.3 EU State aid framework 76 5.3 Global Business and National Law 77 5.3.1 Visas 78 5.3.2 Business ethics 78 5.3.3 Sanctions 79 5.4 Employment of Seafarers 79 Chapter 6 – The UK Shipping Market 81 6.1 The Open Coast Policy 82 6.2 The International Context 83 6.2.1 International shipping markets 83 6.2.2 Domestic trades (cabotage) 85 6.3 Work Permits for Seafarers Working in UK Trades 86 6.4 The Open Port Duty 87 Chapter 7 – Trading and Operating a Ship 89 7.1 General 90 7.1.1 Application 91 7.2 Shipboard and Company Procedures – ISM Code 93 7.2.1 Statutory requirements for operating a ship 93 7.2.2 Application 93 7.2.3 Objectives 93 7.2.4 Requirements 94 7.2.5 Documents and certificates 94 7.3 Shipboard and Port Facility Security Procedures – ISPS Code 95 7.3.1 Background 95 7.3.2 International Ship and Port Facility Security Code (ISPS Code) 95 7.3.3 Key elements of the ISPS Code 96 7.4 Carriage of Goods by Sea 96 7.4.1 The role of the Master 98 7.4.2 Ship procedures and practices 99 UK Chamber of Shipping – Understanding UK ShippingVIII Chapter 8 – Ports and their Customers 101 8.1 Introduction 102 8.2 Harbour Regulation 103 8.2.1 Harbour authorities 103 8.2.2 Port Marine Safety Code 104 8.2.3 Harbour and other directions 104 8.3 Pilotage 105 8.3.1 Responsibility for pilotage 105 8.3.2 Pilotage exemption certificates 107 8.4 Protection Against Unreasonable Charges 107 8.5 The General Lighthouse Authorities (GLAs) 107 Chapter 9 – Customs Rules 111 9.1 Customs Controls and Maritime Trade 112 9.2 Obligations on Shipping Companies as Carriers of Goods 112 9.2.1 Scope of customs controls on the movement of goods by sea 112 9.2.2 Ships arriving in the UK from outside the EU 113 9.2.3 Shipment of goods to a destination outside the EU 114 9.2.4 Sailings between the UK and other EU countries 115 9.3 Customs Control of Ships’ Stores and Equipment 117 Chapter 10 – Passenger Shipping 121 10.1 Carriage of Passengers 122 10.2 Regulated Aspects of Passenger Carriage 122 10.2.1 Consumer protection 122 10.2.2 Disabled access 124 10.2.3 Licensing and control of onboard activities 125 10.3 Border Controls 127 10.4 Taxation of Onboard Sales 128 Glossary 131 Further Reading 137 Annex 1 – Requirements of Certification 139