Shipping Gazette Jun 10

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Shipping Gazette

Latest maritime and legal news from Panama and around the world

Panama, June 2010 Volume 2, Number 03

In this issue:

  1. Welcome
  2. Tax Changes in Panama
  3. Panama at Sea-Japan 2010
  4. Panama Marine Circulars – Know your circulars – This month MM Circulars numbers 210, 211 and 206.
  5. Details of new technical office opening in Tokyo
  6. Curious artefacts unearthed at the Panama Canal expansion building site
  7. Descendant of Admiral Christopher Columbus visits Panama
  8. What’s new in Panama shipping scenes
  9. Panama Canal Update
  10. IMO Update


Welcome to our June 2010 edition of Shipping Gazette brought to you by the Maritime Department of a lawyer firm.

The month of June saw the opening of POSIDONIA 2010, and a strong delegation from Panama was present at the exhibition headed by the President of Panama Mr. Ricardo Martinelly. Mr. Martinelly’s visit to Posidonia was to strengthen the ties both countries have, and more over, to assure that both the international and Greek shipping communities of Panama compromise to ensure that during these moments of financial difficulty, Panama will support and offer special treatment to the shipping industry. During his visit in Athens the President met with high rank officials and with the international shipping community. You will see a full report on POSIDONIA and the presidential visit in our next special post-posidonia issue in July.

Our aim is to help you in your business, in your relationship with the Panamanian fiscal and legal system and to serve you as a bridge between your ship concerns and the Panamanian Registry.

We hope that you will find our articles to be of interest and please feel free to share this newsletter with colleagues or anyone you believe would be interested in receiving it.

Tax Changes in Panama

Several services provided by companies in Panama will now be subject to taxes (value-added service), as included in a new tax reform package approved late last year.

As a result, all legal services performed in Panama and provided to our clients abroad will incur a 5% valued added tax (ITBMS). However, we are expecting shortly a further increase of ITBM from 5% to 7% already approved by the National Assembly. This increase is the first one during a twenty-five year period.

Some of the categories that will be taxed – and that might impact on the services your receive from Panamanian companies include the incorporation of companies and any other changes to the company structure and bylaws (change of board of directors, issuance of a Power of Attorney, shipping work, etc.), as well as the payment to registered agents and offices, among others.

The new 7% ITBM will be charged as of 1 July 2010.

Panama at Sea Japan 2010

Sea Japan closed on a high note after quite an exceptional success. The event, celebrated during April 2010, was highlighted by Panama´s Pavilion at the exhibition and the participation of top executives from the largest Open Registry in the world.

The exhibition, which had expanded in size by 5% over the 2008 edition, saw strong visitor traffic on all three days and the mood among exhibitors was extremely positive. The visitors were mainly top executives from Japanese shipyards and ship owners. The exhibition and conference was supported by the Ministry of Land, Infrastructure, Transport and Tourism, The Japanese Shipowners’ Association, Japan Federation of Coastal Shipping Associations, The Shipbuilders’ Association of Japan, The Cooperative Association of Japan Shipbuilders, Japan Ship Exporters’ Association, Japan Marine Equipment Association and JETRO

The Panamanian Delegation was headed by Mr. Roberto Linares, Administrator of the Panama Maritime Authority; Engineer Alfonso Castillero, Director General de Merchant Marine, and H.E. Jorge Kosmas, Ambassador of Panama to Japan, and other senior officers from the registry.

The Panama stand at the exhibition was visited by many participants and it was deemed absolutely successful. Many national and international friends, clients and overseas colleagues had the opportunity to visit the stand and hear the latest news on the Registry. The event was a good opportunity for H.E. Roberto Linares, the Maritime Administrator and the Panamanian delegation to meet, have direct contact and information exchanges with the senior representatives of the industry in Japan and renew the excellent working relationship that the Registry and the country have had with Japan over many years.


[foto inserted]

Panama Marine Circulars Update

Recently the Panama Maritime Authority has revised and published new circulars on line;

You can download all the Merchant Marine circulars from the webpage of SEGUMAR of the Panama Maritime Authority

  Merchant Marine
Circular No 210
  Further to Regulation 1005/200 of the European Commission and the Model Scheme on Port State Measures to Combat Illegal, Unreported and Unregulated (IUU) Fishing. Merchant Marine Circulars/210.pdf
  Merchant Marine
Circular No 211
  A new Technical office of the registry has been opened in Tokyo, Japan.

The contact details are:

Person in charge: Eng. Silvina Uribe

Phone: (813) 03 3499 3661

Fax: (813) 03 3499 3666

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

Address: No.38 Kowa Bldg-Rm 805

4-12-24, Nishi-Azabu,

Minato-ku, Tokyo 106-0031 Merchant Marine Circulars/211.pdf
  Merchant Marine
Circular No 206
  Recognition of Company Security Officers (CSO)

Due to the fact that several companies have changed and they have not informed the current CSO assigned to it ships, the Panama Administration recalls the instructions and procedures for the CSO’s recognition applications to be submitted to the Maritime Ships Security Department.

Be aware of the current contact points of the Company Security Officer (CSO) whose acknowledge shall be according to the Section 13.1 Part A and the guidance recommended given in the Section 13.1 Part B of the ISPS Code.

THE DEADLINE FOR COMPLIANCE WAS 31 May 2010 Merchant Marine Circulars/206.pdf

If you wish to receive more information on this topic, or if you need help submitting the Company Security Officer Declaration before the deadline, as established in Merchant Marine Circular 206, please contact our office

Source: Panama Maritime Authority – Segumar – Merchant Marine Circulars –

Curious artefacts unearthed at the Panama Canal expansion site

Dealing with a project costing in excess of US $5 billion brings all sorts of challenges, as well as discoveries.

So far, there have been strange findings that will engross the Panama Canal Museum. Working pieces that contributed to the building of the canal over a century ago, have now been unearthed, causing a great deal of surprise as well as creating high expectations regarding what is going to be found next.

In fact, findings so far include railroad wheels and a dredge bucket, dating back to the early 20th century. All these items have been found during dredging operations taking place every day at the Panama Canal expansion sites. However, while these discoveries are very special mementos of the canal history, they can also stop dredging work and even damage the equipment.

But for every problem, there is always a solution and officials at the Panama Canal Authority have brought in two of JW Fishers Proton 4 magnetometers. These super sensitive metal detectors can locate large iron and steel targets at a range of hundreds of meters. So, before excavating an area, a team surveys the sector with the magnetometer. If any ferrous metal objects are buried there, the Proton 4 will sound an alarm and show a change in the readout.

Tracker software allows the mag data and GPS coordinates to be displayed and stored on a laptop. On the computer screen the mag operator can see the track of the survey boat as it moves over the search area to ensure no part is missed. Once the survey is complete, the team can quickly relocate the metal targets and remove them before dredging operations begin. Armed with the new equipment, authorities are confident the project will progress according to schedule and be finished on time.


Descendant of Admiral Christopher Columbus visits Panama

Christopher Columbus XX (Cristobal Colon XX) Duke of Veragua, visited Panama recently.

It is not very often that we can report such an interesting visit to our country. Recently, Panama welcomed Christopher Columbus XX. He has enjoyed a very productive professional life, including work as a seaman, a ship officer, a pilot, a warship commandant and a member of the Spanish Navy. But, after many years of hard work, Mr. Columbus XX has finally decided for a quiet life in the insurance industry.

Mr. Columbus XX informed all those who had the opportunity to meet him that after his father died and he inherited the title, his life has changed dramatically, especially when during the celebrations of the 5th centenary of the discovery of America, he had to travel extensively.

Columbus is very fond of history. To this, he adds jokingly that it must be in his genes! He is also very much interested in technology. The duke of Veraguas also is the Marquees of Jamaica, titles that he will pass on to his eldest son when he dies.

After more than five centuries, his ancestor, the great Admiral Christopher Columbus remains a mysterious figure who has been described as one of the greatest mariners in history and a visionary genius.

(Photo courtesy of La Estrella Newspaper – 2010)

Ebrahim asvat,(left) founder and partner of Patton, Moreno and Asvat had the opportunity to meet Mr Christopher Columbus XX(right) during his recent visit to Panama.

(Photo courtesy of La Estrella Newspaper – 2010)
An oil painting of Admiral Christopher Columbus, America’s discoverer in 1492.

What’s new in Panama shipping scenes

CADE 2010 Conference

Once more and celebrating 50 years, the Annual Conference of Panamanian Executives, an event organized by the Panamanian Association of Business Executives, APEDE, took place in Panama during April 2010.

The theme this year for the conference was “Panama, defying trends”, which gave the opportunity to discuss a wide range of issues, including economic, fiscal, training and other social issues in the Latin American region. This year, however, for the first time there was a session covering maritime auxiliary services and their impact on small businesses. Experts from Spain and Mexico, as well as the President of the Panama Maritime Chamber spoke about maritime auxiliary services in Europe, in Mexico and in Panama, with particular attention to focused technical training. The conference session was chaired by our own Captain Orlando Allard , president of Maremundi Consulting, ex-Ambassador of Panama to IMO – and a member of APEDE.

The gala dinner featured the speeches of two first class guests of honor, Dr Tabaré Vázquez, the former president of Uruguay, and Mr. Ricardo Martinelli, the president of Panama, who officially opened the conference. Likewise, the conference was closed by Dr. Alejandro Toledo, the former president of Peru.

Maritime Chamber of Panama elects a new board.

On Friday 30 April, a new Board of Directors of the Maritime Chamber of Panama was elected. The new President is Mr. Julio de la Lastra, the CEO of MOL Panama. The new board, formed by 8 members, was elected to serve for one year. Among many others, they will have the task of co-organizing together with the Association of Panamanian Maritime Lawyers the next Panama Maritime Conference and Exhibition on its 10th edition, to be held in Panama during February 2011.

Panama Canal Update

The Panama Canal Authority (ACP) is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and the regulations approved by its Board of Directors. You can also follow the canal on Twitter:

Facts and Figures on the Panama Canal Expansion

  • US$150m is the amount to be awarded in small contracts by the Panama Canal Authority in different public bids required for the widening of the waterway.

  • There will be two contracts awarded this year for the dredging of the Gatun Lake which are the most important works for this period.

  • There will be also small contracts like the hiring of a mechanical dredger and four barges to support the dredging works and improve the navigation channel.

  • The bid was published on December 2nd, 2009 and on January 27th, 2010, at the deadline and close of the bids, it was declared deserted due to the high costs offered by the different bidders.

  • During 2010 in the Agenda of the Canal Authority there are plans for a lab to monitor de water quality, a reforestation project of about 200 hectares, tug hiring and the relocation of water pipes and electricity within the Pedro Miguel locks.

  • By the end of 2009, the amount of US$3,707,8m for the design and construction of the new locks were awarded to the Grupo Unidos Por el Canal (GUPC).

  • Since September 2007 to date the bids awarded for the canal expansion amount $3,975 million.

  • A further US$267,8m was awarded to the Spanish company FCC, the Mexican company ICA, and the Costa Rican MECO for the 4th phase of the dry excavation of the Pacific Access.

  • For 2011, the budget to be awarded will decrease significantly with contracts no higher that US$ 20m.

  • For 2012, the remaining awards will amount US$ 15m only.

  • According to the canal plans, the forecast for 2010 is the construction of the three levels of the locks and the pools to re-use the water.

  • For 2013 y 2014 few projects should be completed, being only pending for completion the new locks, the lifting of the Gatun Lake and the CAP-4

  • Since the work started in September 2007, there have been used 15,000 kilos of explosives

  • The two first phases have been concluded.

  • The group GUPC has employed around 700 workers in the Atlantic and Pacific side.

  • According to feasibility studies, the expansion will generate between 35,000 and 40,000 new jobs during the development of the works.

  • It is estimated that by 2025 there will be 1.5m new jobs generated by the growth of the economy in Panama due to the increase on the services, which will be benefited by the increase of traffic and cargo through the canal.


Canal Waters Time Down, General Cargo, Dry Bulk and Vehicle Carrier Transits Up

The Panama Canal Authority (ACP) released second quarter (Q2) operational metrics today for fiscal year 2010. In Q2, Canal Waters Time (CWT), the average time it takes a vessel to transit the Canal (including waiting time for passage) saw a notable decline. While total transits and net tonnage decreased nominally, there was growth in some key segments. These metrics are based on operations from January through March 2010, the second quarter of the ACP’s 2010 fiscal year, and are compared with Q2 of fiscal year 2009.

Overall CWT decreased 24.7 percent – to 19.75 hours from 26.22 hours. CWT for booked vessels, those ships holding reservations, also experienced a decrease – to 12.59 hours from 15.83 hours, or a 20.4 percent reduction.

Total Canal transits declined 1.5 percent – to 3,854 transits from 3,914. Transits of larger ships that require greater time and navigation skills to transit the Canal decreased 0.8 percent – to 1,801 transits from 1,815.

With regard to key segments, general cargo, dry bulk and vehicle carrier transits increased, while transits of containers, refrigerated cargo (reefers), tankers and passenger vessels decreased.

Panama Canal/Universal Measurement System (PC/UMS) tonnage slightly dropped 2.3 percent – to 73.99 million PC/UMS tons from 75.74 million PC/UMS tons.

Utilization of the booking system decreased 44.2 percent – to 44.4 percent utilization from 79.6 percent. Significant reductions in CWT, along with increased operational efficiency, have resulted in the booking of fewer reservations.


Panama Canal Authority Tolls will remain unchanged in 2010

The Panama Canal Authority (ACP) announces it will not adjust tolls in 2010. On April 26, 2010, the ACP Board of Directors approved a proposal to modify the Panama Canal pricing structure. The adjustments are scheduled for January 2011.

“The ACP thoroughly analyzed various alternatives and held conversations with the maritime industry for several months, to ensure that the suggested price structure safeguards the competitiveness of the waterway and facilitates the Canal´s goal of providing a valuable service to world commerce,” said ACP Administrator/ CEO Alberto Alemán Zubieta.

This proposal modifies the pricing structure for all Canal segments: container, dry bulk, liquid bulk, vehicle carriers, reefers, passenger, general cargo and others.

For the container segment, the ACP proposes a change in the way tolls are calculated, with a slight price adjustment to the capacity charge, and an additional new charge that would only apply to the number of loaded containers aboard the vessel at the time of transit.

In June 2009, the ACP provided temporary measures to help users mitigate the effects of the economic crisis. Once these measures reached their term, they were extended until April 30, 2010 at the industry’s request.

In view of the current world economic situation, the ACP has decided not to proceed with a tolls adjustment in 2010 and set January 2011 as the new date for implementing the tolls presented in this proposal.


Panama Canal Authority Awards Gatun Lake Dredging Contract to Dredging International N.V.

The Panama Canal Authority (ACP) has announced that Dredging International N.V. has been awarded the contract to dredge an area of the Panama Canal’s manmade body of water, Gatun Lake. The dredging project is another integral element of the Canal’s Expansion Program.

The primary element within the scope of work for this contract is to widen and deepen the existing navigational channel by dredging approximately 4.6 million cubic meters in the northern most reaches of the Lake. This contract is one component within the ACP’s Fresh Water Dredging and Excavation Project for the Canal Expansion, which includes the dredging and/or excavation of about 30 million cubic meters in Gatun Lake and the Gaillard Cut (the narrowest stretch of the Panama Canal).

After a thorough review of the lowest priced proposal, the ACP awarded the contract to Dredging International N.V. for $39,983,822.82. The chart below provides the names of the companies that submitted bids on June 1 with their corresponding bid prices in U.S. dollars.

  Dredging International N.V.  
  China Harbour Engineering Company (CHEC)  
  Boskalis International  
  Great Lakes Dredge & Dock  
  Van Oord  
  Jan De Nul  
  $ 39,983,822.82
  $ 67,377,423.00
  $ 85,500,207.49
  $ 72,392,354.34
  $ 97,998.256.97
  $ 57,856,939.00

The canal expansion will build a new lane of traffic along the Panama Canal through the construction of a new set of locks which will double capacity and allow more traffic and longer, wider ships.


IMO Update

A year ago, in our PMA Shipping Gazette of May 2009, we gave you advances of dates of entry-into-force and status of amendments to MARPOL and SOLAS conventions. Below is a reminder of the latest entry-into-force dates, including January 2010 and the next deadline scheduled for July 2010.

Date of entry into force Convention or Code
  1 Jan. 2010  
  October 2006 amendments to MARPOL – revised Annex III

The revised MARPOL Annex III Regulations for the prevention of pollution by harmful substances carried by sea in packaged form. The Annex has been revised to harmonize the regulations with the criteria for defining marine pollutants which have been adopted by the UN Transport of Dangerous Goods (TDG) Sub-Committee, based on the United Nations Globally Harmonized System of Classification and Labeling of Chemicals (GHS).

The Maritime Safety Committee, at its eighty-fourth session (7 to 16 May 2008), adopted the Casualty Investigation Code by resolution MSC.255(84) and a new regulation 6 in chapter XI-1 of the SOLAS Convention by resolution MSC.257(84) to make the Code mandatory. The Committee agreed that the Casualty Investigation Code should take effect on 1 January 2010, noting that the effective date should be the same as the date of entry into force of the new SOLAS regulation XI-1/6.

  1 July 2010  
  May 2006 amendments to SOLAS

Amendments to SOLAS Chapter II-2 – Fire protection

These include amendments relating to Regulation 9 – Containment of fire, so as to include a requirement for water-mist nozzles which should be tested and approved in accordance with the guidelines approved by the Organization; and in Regulation 15 – Arrangements for oil fuel, lubricating oil and other flammable oils, new text relating to the application of the regulation to ships constructed on or after 1 February 1992 and on or after 1 July 1998.

Amendments to SOLAS Chapter III – Life-saving appliances and arrangements

In Regulation 7 – Personal life-saving appliances, the amendments add a new requirement for infant lifejackets. For passenger ships on voyages of less than 24 hours, a number of infant lifejackets equal to at least 2.5% of the number of passengers on board is to be provided; and for passenger ships on voyages of 24 hours or greater, infant lifejackets are to be provided for each infant on board. A further amendment relates to the provision of lifejackets for larger passengers and states that, if the adult lifejackets provided are not designed to fit persons with a chest girth of up to 1,750 mm, a sufficient number of suitable accessories are to be available on board to allow them to be secured to such persons.

Amendments to SOLAS Chapter IV – Radio communications

The amendments relate to the provision of radio equipment, in Regulation 7, to require ships to carry an EPIRB capable of transmitting a distress alert through the polar orbiting satellite service (COSPAS-SARSAT) operating in the 406 MHz band; and, in Regulations 9 and 10, to clarify that the means of initiating ship-to-shore distress alerts may be through the Inmarsat geostationary satellite service by a ship earth station.

Amendments to SOLAS Chapter V – Safety of navigation

The amendment adds a new paragraph to Regulation 22 – Navigation bridge visibility to allow ballast water exchange at sea, provided that the master has determined that it is safe to do so and takes into consideration any increased blind sectors or reduced horizontal fields of vision resulting from the operation to ensure that a proper lookout is maintained at all times. The operation should be conducted in accordance with the ship’s ballast water management plan, taking into account the recommendations on ballast water exchange. The commencement and termination of the operation should be recorded in the ship’s record of navigational activities.

Amendments to the International Code for Fire Safety Systems (FSS Code).

The amendments replace the text of Chapter 5 Fixed gas fire-extinguishing systems with a revised text.

Amendments to the International Life-Saving Appliance Code (LSA Code) The amendments include the requirement that all life saving appliances should withstand in stowage an air temperature range of 30°C to +65°C and personal life-saving appliances should remain operational throughout an air temperature range of -15°C to +40°C. The colour of life-saving appliances is now specified to be “of international or vivid reddish orange, or a comparably highly visible colour on all parts where this will assist detection at sea”. The existing section 2.2 on General requirements for lifejackets is revised and replaced. Further amendments relate to specifications for immersion suits and anti-exposure suits.

Amendments to Guidelines for the authorization of organizations acting on behalf of the Administration (Resolution A.739(18))

The amendments to the guidelines, which are mandatory under SOLAS chapter XI-1, add a new paragraph 2-1 to require the use of only exclusive surveyors and auditors for surveys and certification, although radio surveys may be subcontracted to non-exclusive surveyors.

December 2006 amendments to SOLAS

Revised passenger ship safety standards

The package of amendments to SOLAS were the result of a comprehensive review of passenger ship safety initiated in 2000 with the aim of assessing whether the current regulations were adequate, in particular for the large passenger ships now being built.

The work in developing the new and amended regulations has based its guiding philosophy on the dual premise that the regulatory framework should place more emphasis on the prevention of a casualty from occurring in the first place and that future passenger ships should be designed for improved survivability so that, in the event of a casualty, persons can stay safely on board as the ship proceeds to port.

The amendments include new concepts such as the incorporation of criteria for the casualty threshold (the amount of damage a ship is able to withstand, according to the design basis, and still safely return to port) into SOLAS chapters II-1 and II-2. The amendments also provide regulatory flexibility so that ship designers can meet any safety challenges the future may bring. The amendments include:

  • alternative designs and arrangements;
  • safe areas and the essential systems to be maintained while a ship proceeds to port after a casualty, which will require redundancy of propulsion and other essential systems;
  • on-board safety centres, from where safety systems can be controlled, operated and monitored;
  • fixed fire detection and alarm systems, including requirements for fire detectors and manually operated call points to be capable of being remotely and individually identified;
  • fire prevention, including amendments aimed at enhancing the fire safety of atriums, the means of escape in case of fire and ventilation systems; and
  • Time for orderly evacuation and abandonment, including requirements for the essential systems that must remain operational in case anyone main vertical zone is unserviceable due to fire.

The amendments are expected to enter into force on 1 July 2010.



More work needed despite GHG progress, IMO Committee concludes

The Marine Environment Protection Committee (MEPC) of the IMO has concluded that more work needs to be done before it completes its consideration of the proposed mandatory application of technical and operational measures designed to regulate and reduce emissions of greenhouse gases (GHGs) from international shipping.

Meeting at the Organization’s London headquarters, the Committee’s 60th session agreed to establish an intercessional Working Group to build on the significant progress that had been made during the meeting on technical and operational measures to increase the energy efficiency of ships.

Draft EEDI/SEEMP Regulation

By a narrow margin, MEPC 60 agreed on a very preliminary text to mandate requirements for EEDI (Energy Efficiency Design Index) and the SEEMP (Ship Energy Efficiency Management Plan). The agreement extends only to the basic concept and structure of the draft text, as several significant issues, including minimum ship size, application date and EEDI target reduction rate in years to come.

  • EEDI is derived from emission factors associated with the fuel consumed by the main engine emissions, nominal auxiliary engine power, and auxiliary generator power, all of which are adjusted by a factor for any innovative energy efficient technologies used onboard.
  • SEEMP establishes a mechanism to implement environmental management, energy monitoring and efficiency improvement systems of the ship’s operation.

During MEPC 60, GHG discussions focused on two primary issues:

  • Market-based Measures (MBMs)
  • Energy Efficiency Design Index (EEDI) for new ships

Significant debate occurred once again and the different views of developing countries (and their insistence to fully respect the principle of Common But Differentiated Responsibilities which is aimed to help developing countries build up their capabilities and facilitate the transfer of technology) versus Kyoto Protocol Annex 1 developed countries (and their position that any statutory instrument to be developed needs to embrace the No More Favourable Treatment principle that ships should be treated equally – consistent with all other IMO Conventions) were again made apparent with respect to the direction that IMO should take with respect to GHG discussions.

The meeting was able to prepare draft text on mandatory requirements for the Energy Efficiency issues that remain to be resolved with respect to ship size (400 gt and above was tentatively proposed); the EEDI formula adjustment for ship type, application date and required EEDI reductions to meet in the future covers the eleven ship types identified. In light of the above reasons, the Committee agreed to the convening of an intercessional working group to progress the development of the draft text.

On the Ship Energy Efficiency Management Plan (SEEMP) for all ships in operation, the Committee noted in particular, that, among other things, issues concerning ship size, target dates and reduction rate in relation to the EEDI requirements all required finalization.


The Committee agreed on the basic concept that a vessel’s attained EEDI shall be equal or less (e.g. more efficient) than the required EEDI, and that the required EEDI shall be drawn up based on EEDI baselines and reduction rates yet to be agreed. The Committee noted guidelines for calculating the EEDI baselines using data from existing ships in the Lloyd’s Register Fairplay database.

The Working Group will report back to the Committee’s next session (MEPC 61), in September 2010.

Source: – – &

Market-based Measures Expert Group

A majority of the Committee (this excluded China, Saudi Arabia, India) agreed that a group of experts would be established to undertake a study of the Market-based Measures, MBM, proposed at MEPC 59 in July 2009 which was not further developed at MEPC 60. In particular, Emission Trading – Cap and Trade Proposal.

An emission cap is established for a certain period based on total emissions generated from the maritime sector. Ships would need to surrender allowances for the emissions they create and, if necessary, acquire allowances and credits from within the maritime sector or from other sectors (i.e., an open system as opposed to a closed system which would be limited to trading within the maritime sector only). The total amount of allowances issued for shipping would establish the cap. An international body, e.g., IMO, would be tasked to administer the scheme (distribute allowances, manage allowance registries for ships and monitor compliance). The cap could be periodically adjusted to suit environmental needs for the shipping sector. This proposal did not conclude on how credits would be allocated; either by free allocation (based on former emissions of individual ships) or by auctioning (participants purchase allowances based on their forecast demand during the trading period).

Bunker Use Levy Proposal

Building on the provisions of existing requirements in MARPOL Annex VI and on the existing International Oil Pollution Compensation Fund’s mechanism, this scheme is considered by some to be the simplest of the three proposals. It would require ships to purchase fuel at a registered bunker fuel supplier who would provide documentation, in the form of a bunker delivery note, that bunker fuel had been purchased and that the GHG contributions were paid.

A central administrator (through the International GHG Fund) would maintain a global registry of registered bunker fuel suppliers, GHG contributions received, and separate accounts for each ship. Ships flying the flag of a non-Party would also be required to participate in the scheme in advance of calling at a port located within the jurisdiction of a Party. The downside of this scheme is that there may not be as much impetus for ships to improve their energy efficiency performance as opposed to an emission trading scheme.

Emission Trading – with EEDI this scheme establishes mandatory efficiency standards for new and existing ships. The Energy Efficiency Design Index, EEDI, would provide a means to measure and improve on the efficiency of all ships and allow ships to trade efficiency credits to comply with the efficiency standard. Account of ship type and size would mitigate problems encountered to date where certain vessel types/classes face unique emission circumstances while also avoiding inappropriate comparisons of large transoceanic vessels with smaller coastal feeders.

Signatory States would establish specific reductions relative to the average efficiency of the world’s fleet as compared to the current average. Improved efficiency of individual ships in meeting the specific reductions would then be judged against the average efficiency for the relevant range of ship type/class and size. While this approach does not place a cap on emissions in the shipping sector, it does provide for definitive performance standards. The study would include an assessment of:

  • Environmental effectiveness of the MBMs (Market-based Measures)
  • Cost effectiveness
  • Feasibility of implementation
  • Need for technology transfer and capacity building within developing countries
  • Potential to mobilize finance to mitigate climate change.

Despite the fact that the terms of reference include consideration of the Kyoto Protocol (which includes the principle of Common But Differentiated Responsibilities), many countries still took exception to the fact that the terms of reference of this Expert Group did not explicitly include the principle of Common But Differentiated Responsibilities (i.e., Kyoto Protocol Annex 1 Developed Countries “will” transfer technology, knowhow and resources to developing countries). Developing countries and a few small island developing states agreed to the terms of reference which they considered embrace the principle of Common but Differentiated Responsibilities.

Source: &

Amendments to the MARPOL Annex I and Annex VI Convention – Two important dates

A new 200 nmi USA/Canada Emission Control Area (ECA) was adopted and is scheduled to enter into force on 1 August 2011. The 1.0% sulphur content limit on fuel oil contained in the revised MARPOL Annex VI, which is scheduled to enter into force on 1 July 2010, will apply to ships transiting this new ECA on 1 August 2012, 12 months after the entry into force of the new ECA as per MARPOL VI/14.7. However, the 1.0% sulphur content limit on fuel oil for the current two ECAs (Baltic Sea area and North Sea) becomes effective on 1 July 2010.

For all three ECAs, the sulphur content limit reduces to the lowest, 0.10%, on 1 January 2015. Also, engines installed on ships constructed on/after 1 January 2016 which operate within ECA will need to meet the cleanest NOx Code Tier III emission standard.

MARPOL Annex I was revised to add a new regulation 43 to prohibit the carriage in bulk as cargo or carriage and use as fuel of the following oils in the Antarctic Area:

  • crude oils having a density at 15°C higher than 900 kg/m3;
  • oils, other than crude oils, having a density at 15°C higher than 900 kg/m3 or a kinematic viscosity at 50°C higher than 180 mm2/s; or
  • bitumen, tar and their emulsions

A revision to the Supplement to International Air Pollution Prevention certificate was approved to clearly document which sulphur limit a ship meets. If adopted at MEPC 61 in October 2010, the revisions will enter into force in February 2012. A new MEPC Circular was also issued to allow the early documentation of these sulphur limits:

  • 4.50% (not valid on or after 1 January 2012), 3.50% (not valid on or after 1 January 2020) or 0.50% or an alternative means of compliance, when ships operate outside of an emission control area; and
  • 1.00% or 0.10%, or an alternative means of compliance, when ships operate within an emission control area

Implementation of the Ballast Water Management Convention

The MEPC addressed issues relating to the implementation of the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004 and adopted a resolution that requests Administrations to encourage the installation of ballast water management systems on new ships, in accordance with the application dates contained in the Convention.

The resolution also urges countries that have not already done so to ratify the Convention, which will enter into force twelve months after the date on which not fewer than 30 States, the combined merchant fleets of which constitute not less than 35 percent of the gross tonnage of the world’s merchant shipping, have become Parties to it. To date, it has been ratified by 22 countries representing 22.65 per cent of the gross tonnage of the world’s merchant shipping.

The Committee decided to grant “basic approval” to eight ballast water management systems that make use of active substances and “final approval” to four such systems, after consideration of the reports of the tenth, eleventh and twelfth meetings of the Joint Group of Experts on the Scientific Aspects of Marine Environment Protection (GESAMP) Ballast Water Working Group, which met in September, October and December 2009, respectively.

Recycling of ships

The Committee continued its work on developing Guidelines for safe and environmentally sound ship recycling, and commenced the development of Guidelines for the development of the Ship Recycling Plan. Guidelines for the authorization of ship recycling facilities, for ship inspection and for survey and certification will also be developed in due course. Once adopted, the guidelines will assist ship-recycling facilities and ship operators to begin introducing voluntary improvements to meet the requirements of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, which was adopted in May 2009.

The MEPC also agreed that there would be a need, in future, to develop guidance concerning the recycling of flag-less and non-Party ships by Parties to the Convention. The Committee agreed a timetable for the development of the guidelines and the intersessional correspondence group was re-established to progress the work and report to MEPC 61.

Garbage Special Areas

The MEPC agreed to establish 1 May 2011 as the date on which the discharge requirements for the Wider Caribbean Region Special Area under MARPOL Annex V Regulations for the prevention of pollution by garbage from ships will take effect.

This Special Area, which includes the Gulf of Mexico and the Caribbean Sea, was designated as a Special Area under MARPOL Annex V in July 1991. Most countries in the region have now given notice that adequate reception facilities are provided in most relevant ports, so that the Special Area status can now be made effective.

In Annex V, Special Areas, disposal of all garbage into the sea, including plastics, is prohibited. Other special areas under Annex V are: the Baltic Sea (effective since October 1989); the North Sea (February 1991); the Antarctic area (south of latitude 60 degrees south) (March 1992); the “Gulfs” area (August 2008); the Mediterranean Sea (May 2009); the Black Sea (not yet effective); and the Red Sea (not yet effective).

The MEPC is carrying out a review of MARPOL Annex V and received the interim report of an intersessional correspondence group on the subject. The final report, including proposed draft amendments to the Annex and its Guidelines, is expected to be submitted to MEPC 61.

MARPOL Annex III Revision

The MEPC approved proposed amendments to replace the text of MARPOL Annex III Regulations for the prevention of pollution by harmful substances carried by sea in packaged form, with a view to subsequent adoption by MEPC 61.

The amended text is aimed at bringing the Annex up to date with the mandatory International Maritime Dangerous Goods Code, specifying that goods should be shipped in accordance with relevant provisions.

Implementation of the OPRC Convention and OPRC-HNS Protocol

The MEPC considered the report of the tenth meeting of the OPRC HNS Technical Group, which met in the week prior to the Committee’s session, and approved for publication the following texts developed by the Technical Group: Manual on Oil Pollution, Section I – Prevention; Publication checklist for new IMO manuals, guidance documents and training materials; Guidance document on the implementation of an Incident Management System; and Guidelines for oil spill response in fast currents.

Protocol to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (HNS Convention) was adopted on 30 April 2010 by the Diplomatic Conference convened by IMO.

Protocol to bring into effect liability and compensation regime for HNS set for adoption

A Protocol to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (HNS Convention), aimed at bringing that Convention into effect, has been adopted by consensus by a Diplomatic Conference convened by IMO at its Headquarters in London.

The Protocol of 2010 to the HNS Convention addresses practical problems that have prevented many States from ratifying the original Convention, which, despite being adopted in 1996, has, to date, only 14 ratifications and is some way from meeting the conditions for its entry into force.

  • Limits of liability under the 2010 Protocol

Under the 2010 Protocol, if damage is caused by bulk HNS, compensation would first be sought from the shipowner, up to a maximum limit of 100 million Special Drawing Rights (SDR) (around US$150 million).

Where damage is caused by packaged HNS, or by both bulk HNS and packaged HNS, the maximum liability for the shipowner is 115 million SDR (US$172.5 million)

Once this limit is reached, compensation would be paid from the second tier, the HNS Fund, up to a maximum of 250 million SDR (US$375 million) (including compensation paid under the first tier). The Fund will have an Assembly, consisting of all States Parties to the Convention and Protocol, and a dedicated secretariat. The Assembly will normally meet once a year.

  • Entry into force criteria for the Protocol

The Conference agreed that the Protocol should enter into force eighteen months after the date on which the following conditions are fulfilled:

(a) at least twelve States, including four States each with not less than 2 million units of gross tonnage, have expressed their consent to be bound by it; and

(b) the Secretary-General has received information in accordance with article 20, paragraphs 4 and 6, that those persons in such States who would be liable to contribute pursuant to article 18, paragraphs 1(a) and (c), of the Convention, as amended by this Protocol, have received during the preceding calendar year a total quantity of at least 40 million tonnes of cargo contributing to the general account.

  • Resolutions adopted by the conference

The conference also adopted four resolutions:

Resolution 1: Setting up the HNS fund;

Resolution 2: Promotion of technical co-operation and assistance;

Resolution 3: Avoidance of a situation in which two conflicting treaty regimes are operational; and

Resolution 4: Implementation of the 2010 HNS Protocol

The Diplomatic Conference was held from 26 to 30 April 2010 and was attended by delegations from 79 IMO Member States, as well as by observers from one Associate Member, the United Nations Conference on Trade and Development (UNCTAD), the European Commission (EC), the International Oil Pollution Compensation Funds (IOPC), the Maritime Organization for West and Central Africa (MOWCA), the International Mobile Satellite Organization (IMSO) and 14 non-governmental organizations.


Maritime security set for boost with entry into force of 2005 Protocols on Suppression of Unlawful Acts in July 2010

Maritime security has been boosted with the latest ratification of the 2005 Protocol to the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (SUA), 1988, thereby meeting the criteria to bring it into force in 90 days time, on 28 July 2010, along with the related 2005 Protocol to the Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf, 1988.

The Republic of Nauru deposited its instrument of ratification of the 2005 Protocols on 29 April 2010, becoming the 12th country to ratify the 2005 SUA Protocol and the 10th to ratify the 2005 Fixed Platforms Protocol.

The 2005 Protocols revise the original SUA treaties of 1988 to ensure that the legal framework developed by IMO is kept up to date and provides an adequate basis for the arrest, detention and extradition of alleged terrorists acting against shipping or ports or when using ships to perpetrate acts of terrorism.

They substantially extend the list of criminal offences actionable under the 1988 treaties and include new rules on consensual boarding, which are of prime importance as they provide States with the necessary legal basis to intercept terrorist activities at sea that are planned or already in progress.

The Convention, as amended by its 2005 Protocol, enters into force ninety days (28 July 2010) after the date on which twelve States have either signed it without reservation as to ratification, acceptance or approval, or have deposited an instrument of ratification, acceptance, approval or accession with the Secretary-General. The 1988 Protocol, as amended by its 2005 Protocol, requires ratification from three States that are also party to the SUA Convention, but it cannot come into force unless the 2005 SUA Convention is itself already in force.

The SUA treaties are complementary to the International Ship and Port Facility Security (ISPS) Code, which aims at putting in place practical measures to make international shipping and port facilities safe from terrorist activity and is mandatory under the International Convention for the Safety of Life at Sea (SOLAS), 1974, as amended.

IMO SG Mitropoulos meets EC Commissioner Damanaki

Mrs. Maria Damanaki, appointed as European Commissioner for Maritime Affairs and Fisheries, since last February, visited IMO’s Headquarters on 29 April 2010, to discuss issues of mutual concern.

During discussions, Mr. Mitropoulos referred to IMO’s work on the setting of safety, security and pollution prevention standards for shipping engaged in international voyages – noting, in particular, the substantive contribution to that work by the Member States of the European Union (EU), as well as the need for international shipping to be regulated, in all technical respects, on a global basis, avoiding unilateral or regional measures that would hinder the industry’s operations and development.

He went on to summarize progress being made on several key issues, including the 1995 International Convention on Standards of Training, Certification and Watchkeeping for Fishing Vessel Personnel. In this respect, Secretary-General Mitropoulos sought Mrs. Damanaki’s good offices in urging all Members of the EU, which have not yet done so, to ratify both instruments at the earliest opportunity.

Mrs. Damanaki stated that she fully supported the objectives and work of IMO and would seek to facilitate continued improvement and implementation of the Organization’s standards, both in the EU and globally. In this respect, she outlined progress within the EC to ensure the development and competitiveness of shipping, through coordination among all sectors engaged in maritime affairs and, principally, through the EU’s Integrated Maritime Policy and its related action plan. Mrs. Damanaki also referred to particular elements of those instruments such as the need for coordinated surveillance over piracy or illegal, unreported and unregulated fishing. A further focus area was the need to raise the profile of the seafaring profession and attract new entrants to the shipping industry, as envisaged within IMO’s “Go to Sea!” campaign and this year’s theme for World Maritime Day, “2010: Year of the Seafarer”, the objectives of which are shared by the EC.

Mr. Mitropoulos and Mrs. Damanaki agreed on the need for uniform and effective compliance with existing international standards and further harmonization of standards globally. The productive meeting confirmed the desire on both sides to continue and enhance the existing co-operation between IMO and the EC so that maritime safety, security and environmental protection are well served in pursuit of common goals. They agreed to maintain an open line of communication to foster further collaboration on all issues of interest to both sides.


Global Maritime Distress and Safety System (GMDSS) Manual, 2009 Edition, CD version available from IMO

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