Merchant Shipping (Maritime Labour Convention) (Amendment) Bill – Speech by Dennis Tan

(Delivered in Parliament on 10 November 2016)


Madam, I declare my interest as a shipping lawyer.

This Bill wishes to introduce the amendments by the International Labour Organization to the Maritime Labour Convention of 2006.

Amongst other things, the proposed amendments will require shipowners to obtain financial security to cover up to four months of unpaid wages for their crew, repatriation costs; and and other expenses required of an abandoned crew, such as food, clothing, accommodation, drinking water, essential fuel for survival on board the ship, necessary medical care and any other reasonable costs or charges.

The amendments also introduce new mandatory requirements to ensure that seafarers who suffer death or long-term disability due to an occupational injury, illness or hazard are compensated fairly and without delay.

The financial security required will be provided by marine insurance companies like Protection & Indemnity clubs (otherwise known as P&I Clubs).

Under this Convention, from 18 January 2017, all ships which are subject to this Convention will be required to carry and display onboard two (2) certificates confirming that financial security is in place for (1) the repatriation cost and outstanding wages and (2) contractual payments for compensation for death or long term disability. I shall refer to these certificates as MLC certificates for the remaining part of my speech.

Madam, the plight of seafarers who were abandoned by shipowners who have suffered from financial difficulties or denied their wages by their employers is something I am familiar with. I started work as a lawyer doing crew wage claim work for abandoned crew onboard commercial ships in those exact circumstances which have given rise to the amendment to the Maritime Labour Convention and indeed this enabling Bill.

In the second half of the 1990s, many shipping companies from the former Soviet Union countries faced bankruptcy. With the end of Cold War and the breakup of USSR, many of these shipping companies have struggled to survive. Their crew even had to arrest their own ships to sue for their own unpaid wages. Some of the crew were even emotionally reluctant to sue their companies as they had been sailing with their former state enterprises since the period of communist rule. Sometimes these unpaid wages ran into months and even longer.

These days we still see owners failing to pay crew wages when they run into financial problems, especially with the shipping industry being in doldrums in the last few years. When companies collapsed, they can leave crew stranded onboard with wages unpaid, and sometimes even without funding for repatriation or in some situations, even without provisions, as fleet management take time to work out solutions for the crew as well as with creditors.  Some of us here may have read news of crew stranded onboard many ships all over the world which are owned by the Korean conglomerate, Hanjin. It may take quite a few months to settle these problems.  I understand that a local company has a similar experience recently, albeit on much smaller scale.

Typically, when a shipowner starts to owe its crew their wages, the crew may still continue to work on the vessel for a little while. The crew will often be alerted to take action when they know that the shipowner has other creditors (as for example when the ship receives a claim from trade creditors) or when their family is in hardship after not receiving their wages for some months.

There are practical reasons why crew may not take action for some time. It may not be convenient for the crew given the way ship operations are run. Vessels have tight turn-around time and may not have much time in port. Crew may need to man the vessel even when the ship is in port. In some situation, the master may not grant permission for crew to go ashore. Sometimes the owners or their agents may not allow the crew to go ashore and the agents’ co-operation is required as they need to get the paperwork from local port authorities and also arrange for harbour launches to go to the anchorages to pick the crew which can be costly to the crew.

Although in most jurisdictions, crew has a right to commence legal proceedings for unpaid wages and under the Admiralty laws of many countries, crew wages have higher priority than most other type of claims, in practice, crew may be reluctant to commence proceedings as they have to engage their lawyers and fund their own litigation.

Even if the crew manages to find a lawyer to file their crew wage claims, there may be competing claims in the same proceedings where a ship is arrested by creditors. Crew wage claims may be only one of the competing claims among different creditors. If shipowners give up their ships, refuse to pay crew wages and let the ships be sold via a judicial sale, all creditors will compete for a share of the sale proceeds. As crew wage claim take higher priority than other claims, unpaid wages can often affect the claims of other creditors.

However, that does not mean that crew will have it easy and their wages can always be recovered. Sometimes, the crew wage contractual documentation may be far from ideal. For example, crew may be promised additional wages or overtime payment but unfortunately for the crew, the documentation from the shipowners supporting such payment may be less than perfect. It is not uncommon these days to see competing claimants trying to overcome the higher priority which crew wages enjoyed over other claimants, by challenging such payments, often using intimidating and even lengthy court applications which come with the implied threat of legal costs which may effectively pressure crew to settle for a smaller sum than as claimed.

Madam, with this Convention, the provision of the financial security from insurance companies for unpaid crew wage claims and death/disability claims as well as repatriation costs and provisions, will provide some welcome assurances to crew. Coincidentally, it may also be welcomed by other trade creditors as the crew wage claims may not eat into the judicial sale proceeds of abandoned ships which are arrested.

Madam, with this Convention, I understand that shipowners have to display their MLC certificates for the required financial security onboard the vessel and the crew can contact the insurers directly. This seems rather convenient but in practice, this will only work if the owners will allow the crew unrestricted access to the insurers, whether by phone, email or shore visits to offices of insurers.

Madam, it is not uncommon to see owners disputing liability to crew for wages on the ground that their crew is employed by the ship managers or by manning agents directly. Sometimes the owners did not pay the ship managers or manning agents for the crew’s wages and as a result, the latter may delay or fail to pay the crew. I am glad that under this Convention, even if contract is entered between the crew and manning agents and not with the owners; the crew can now look to the financial security under this Convention.

Much as this Convention is a good and big step in the right direction and will bring comfort and assurance to many seafarers, I can see still some practical limitations which I hope this government and the world maritime community can continue to make efforts towards.

One, the financial security is to secure for up to four (4) months’ wages. If the outstanding wages exceed four months, the crew may still need to instruct their own lawyers to effect recovery of the unsecured amount. Hence this Convention does not fully assist the crew with unpaid wages of more than 4 months.

There are a small number of shipowners whose crew may not be paid wages on a regular basis. They may for example be paid their full wages at the end of the contract term which can be a few years. Meantime, they may be given say a small allowance. They may use such allowances to buy daily necessities. Often, when some crew try to stop work and return home (often due to unhappiness with poor working conditions), the owners may threaten not to pay their salaries in full. The crew’s only option would be to leave the vessel and instruct lawyers to file a claim in court. But the crew may not have the funds to do so. Some of the crew may even have entered into one sided contracts with manning agents. Included in this category are some fishing fleets which I understand, come in to Singapore port for various reasons. These are not Singapore registered vessels. They are foreign owned and have foreign crew. For the crew on these ships, sadly, this Convention may be academic to them and will not really improve their lot.

Madam, I understand that for the purpose of the financial security required by this Convention to secure the various crew related claims, the IG group of the world’s Protection & Indemnity Clubs, who are the top tier group of Protection & Indemnity Clubs, are going to provide automatic additional cover, presumably with additional premium, and they will provide cover to ships regardless of whether they belong to a flag state who is a signatory state to this Convention. This is great news as it would ensure the crew of more ships can enjoy the security intended under this Convention. However, as regards crew who are serving onboard the ships who are not entered with these P&I Clubs or onboard many more smaller home trade vessels who are not as well-regulated for various reasons, whether crew can enjoy protection under this Convention will depend on whether their ship has the requisite insurance coverage.  We should not assume that this is a given in all cases.

Madam, under this Convention, seafarers have to be serving on board at the time of claim.  The crew can only make any claim on the MLC certificates if they are still serving on board. It brings the possibility of owners repatriating seafarers by giving false assurance that outstanding wages or claims will be paid after repatriation but once repatriated, the financial security may no longer assist the seafarers and the seafarers will still have to engage lawyers to pursue their claims.

Madam, I understand that all states which are party to this Convention are required to implement the requirements of this Convention in a way which ensures that ships flying the flag of a state which has not ratified this Convention do not receive more favourable treatment (Article V.7).  I also understand that all states who are party to this Convention are also obliged to have effective port state control to ensure that ships entering its ports meet the requirements of this Convention.

Madam, not all port or flag states may be signatories of this Convention. Some ships which come into Singapore port may come from flag states who are not signatories. To ensure consistent protection of crew under these provisions, port states like Singapore who are signatory to this Convention must carry out consistent enforcement when vessels enter port. Singapore is a major maritime hub. We have one of the world’s busiest ports and we have one of the largest ship registries in the world. We have to do our part, both as a port state as well as a flag state to ensure that shipowners comply with the IMO conventions or regulations and to make this Convention and this bill work.

In this connection, may I ask the Minister how will MPA ensure that all ships entering Singapore, especially those which are not registered with the Singapore registry, have their MLC certificates in place?

Madam, this Convention is certainly a good and big step in the right direction insofar as it provides more protection and assurance in respect of repatriation costs, unpaid wages, compensation for death or long term disability. However, I feel that there is still more that we can do to improve on the certainty of seafarers being paid their fair wages and being paid in a timely manner. Madam, I am in support of the bill.