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Friday 30 January 2015

Moore Stephens says shipping must monitor developments in wake of Greek government change

International accountant and shipping adviser Moore Stephens says it is too soon to say whether the Syriza party’s victory in the country’s elections could, as some fear, have a damaging effect on the country’s shipping industry. Rather, it says, Greek shipping interests will need to monitor how the change of government might affect them on both a business and personal level before reviewing any long-term plans.

Moore Stephens London partner Michael Kotsapas, a shipping specialist who has been advising Greek families for over fifteen years, says, “Any change of government, in any part of the world, is likely to have implications for the national shipping industry. This is particularly true of Greece, where shipping is a significant contributor to the country’s overall GDP and a major source of employment.”

Last year, the ruling government introduced a number of changes to Greece’s tax laws, including some specific to the shipping industry, such as repealing the law imposing mandatory triple tonnage tax on Greek-flag ships and foreign-flag vessels managed out of Greece, replacing it with the voluntary contribution of double tonnage tax payments for the next four years. Another measure with a potential impact on the shipping community included the introduction, for the first time in Greece, of Controlled Foreign Companies Rules covering the concept of effective management and criteria for determining same.

Michael Kotsapas concludes, “Before the election, the anti-austerity Syriza party called for a new agreement which would involve the shipping community making a greater contribution to the national economy than it already does. It remains to be seen whether that will be the case. Shipping is a key industry in Greece, and it would be surprising and disappointing if the new government’s policy, when announced, did not reflect that. In the meantime, the shipping community will be watching developments with keen interest.”

In 1963, Moore Stephens became the first international accounting firm to set up an office in Greece. It has enjoyed strong links with the Greek shipping community for more than seventy years, advising three generations of Greek shipping families and businesses.

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 667 offices of independent member firms in 105 countries, employing 27,081 people and generating revenues in 2013 of $2.7 billion.

www.moorestephens.co.uk



For more information:
Michael Kotsapas
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
michael.kotsapas@moorestephens.com

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Is mutualising shipowner insolvency the answer to crew abandonment?

Thomas Brown, managing director of specialist insurance intermediary, Seacurus, poses the question in today's TradeWinds newspaper of whether mutualising shipowner insolvency is the answer to crew abandonment

Amendments to the Maritime Labour Convention 2006 designed to protect abandoned seafarers are due to enter force in early 2017. Some insurance intermediaries and commentators are predicting that the International Group of P&I Clubs could, and perhaps should, provide the necessary cover to enable shipowners to meet their enhanced MLC obligations. But, contrary to the impression circulating in some parts of the market, this is anything but a done deal. Mutualising the risk of financial insolvency is just one option to set alongside other initiatives from the commercial insurance market.

This would not be the first time, for example, that the IG has declined to intervene in contentious coverage issues, leaving owners instead to find a solution in the non-mutual market. Examples of recent abstentions include additional cover for piracy risks and OPA - Certificates of Financial Guarantee.

In the case of piracy, it was not deemed to be in the interests of public policy for the clubs to become involved in this ‘modern-day’ insurance requirement, whilst numerous arguments have also been raised against clubs becoming involved in underwriting any form of financial guarantee. In February this year, marine insurance broker Marsh reacted to the proposal by the Standard P&I Club to offer OPA COFRs directly to its members by arguing that the legal defences relied on by owners and their clubs could become blurred if the insurer covering the underlying risk was also the insurer providing the financial guarantee. Marsh questioned how certain the Standard Club could be that the distinction between itself as a COFR guarantor and its conventional role as a P&I insurer would be upheld in a contested court hearing.

It has long been the overarching view of the clubs that they should not offer financial guarantee insurance to their members. This is exemplified by one IG club which in 2001 issued a circular in connection with the International Guidelines to Flag States on Seafarer Abandonment, which had just been adopted. The circular provided the following advice to members; “Unfortunately the guidelines produced are not only of doubtful utility, they are also of doubtful practicality. The IG clubs have indicated that they would be unable to issue notifications to individual seafarers. In addition, they have pointed out that claims for liabilities to seafarers are always subject to club rules and terms of entry (including deductibles) and that payment could not therefore be guaranteed to individual seafarers. This means that IG clubs will not be able to issue the certificates envisaged in the guidelines.”

The circular refers to the very same guidelines that have now been included almost verbatim into the Maritime Labour Convention and will come into force in early 2017.

So, aside from the mandatory nature of the forthcoming amendments, it is hard to see what has changed since 2001 which would now negate this particular club’s former position on this matter of regulatory compliance. Why would the clubs abandon their position of not wanting to write COFR business, to now begin writing financial guarantee insurance in respect of abandonment risks as required under MLC 2006? Surely the same rationale should be applied to the latter type of risk as is applied to other categories of financial guarantee business? Surely the clubs face an insurmountable conflict of interest when balancing the interests of seafarers with those of their members?


Unlike the OPA COFR, is it a question of the perceived loss costs and realistic disaster scenarios (RDS) being manageable from the club’s perspective? Most recently, in December this year, Marsh reportedly advocated that the clubs should pool liability for owner insolvency, warning that, “The payment of four months’ wages to seafarers on even a 30-vessel fleet would exceed the $9m risk that individual clubs currently retain”. If this is proven to be an accurate loss cost, then what cost would the clubs have to assign to their RDS calculations - all this coming at a time when clubs have the pressure of Solvency II to concern themselves with.

It follows that, if the clubs are to intervene in the case of seafarer abandonment, they must be willing to use the mutual funds of their solvent members to enable them to act as financial guarantors to cover the debts of their insolvent members. Moreover, as a matter of insurance law and MLC regulatory requirement, as it is the seafarers who have the ‘insurable interest’, mutual cover in respect of seafarer abandonment would involve the clubs granting their members’ employees (the seafarers) direct access to the club’s financial security. Direct access for seafarers would present an interesting claims management challenge for the clubs.

By mutualising the risk of financial insolvency, the industry risks tilting the playing field against well-founded, financially solvent shipowners who, at significant financial cost, employ best practice throughout their operations. Why should such operators assume liability for the debts of less-well-found competitors? And why should such a ‘ticket to trade’ be demoted to just another ‘club benefit’?

Moreover, can seafarers who are utterly abandoned and in need of immediate relief truly rely on their employers’ insurance clubs to overcome the obvious conflicts of interest involved in the mutual underwriting of such risks?

There is comparatively little time to reconcile these major issues and to deliver on the true intent of MLC to create a ‘seafarer’s bill of rights’. To provide a quick fix and engineer further regulatory mediocrity should not be an option.

The question is whether or not to mutualise financial insolvency. The answer is as yet unknown, and we should not presuppose an outcome which has yet to be decided. The real question that merits further discussion and clarity is whether mutualisation of this risk is in the best interests of either shipowners or the seafarers they employ? Until we have clarity on this question from the IG, it will always present a barrier to new product innovation.


www.seacurus.com

email: tbrown@seacurus.com



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Thursday 29 January 2015

Liberian Registry launches green ship initiative


The Liberian Registry says it is determined to ensure that the Liberian-flag fleet remains a leader in environmental compliance. Scott Bergeron, CEO of the Liberian International Ship & Corporate Registry (LISCR), the US-based manager of the registry, says, “The Liberian Registry is an environmentally aware and responsible maritime administration. We have launched a new initiative to help shipowners improve their green credentials and meet other corporate social responsibilities. Our aim is to ensure that Liberia remains the greenest fleet afloat.

“The Liberian administration welcomes any new technology and ship designs which improve operational efficiency and lower ship emissions to the atmosphere, including greenhouse gases. ”

As part of its ongoing commitment to environmental excellence, the Liberian Registry recently entered into a partnership with US-based consultancy EfficientShip Finance (ESF) to launch an innovative environmental initiative designed to reduce global carbon emissions, enhance fleet efficiency and competitiveness, and promote a greener Liberian fleet. The Liberian Registry is also offering special tonnage tax discounts for ships participating in this green initiative. Each ship in the programme will be entitled to a 50 per cent annual tonnage tax discount in the first year, and up to a 25 per cent discount in both the second and third years.

ESF’s partnership with LISCR offers a complete turnkey energy-saving solution for ships on a global basis with an add-on specifically crafted for Emissions Control Areas (ECAs). ESF will provide the financial capital needed for each project, and assume responsibility for technology performance and fuel volatility risk, along with the technical supervision and monitoring to perform retrofits. Owners and operators remit to ESF a proportion of the amount they save on fuel costs, or which they receive in the form of additional negotiated hire. The retrofit projects require no upfront capital by owners and, since the payments are always a share of the savings, there is an ongoing net benefit to customers.

Christian Mollitor, LISCR vice-president and project manager of the green initiative, says, “This represents a great opportunity for owners with ships delivered prior to the eco-boom to have their ships retrofitted with proven fuel-saving technologies. This is yet another example of Liberia’s innovative approach to help its shipowners to keep their lead in an increasingly competitive environment.”

The ESF global programme includes an optimal mix of fuel efficiency retrofit solutions for each target vessel, based on its trading pattern, age, size, speed, and consumption. The technologies used represent the most widely accepted and tested solutions in the market including, among others, wake-improving ducts, rudder bulbs and fins, protracted tip propellers, engine improvements, smooth coatings, and performance and trim optimising software.

For ships trading within ECA zones, the programme may include the installation of exhaust scrubber systems or the conversion of engines to LNG dual-fuel, to comply with emissions requirements which came into effect on 1 January, 2015.

Christian Mollitor says, “We are delighted to have concluded this agreement with ESF. It should help owners and operators reduce fuel costs while creating the potential to increase hire or charter rates or achieve better pool points, and increase asset values in the secondhand market.

“It should also produce improved utilisation rates and marketability, and reduce port costs, freeing up funds for core business investments, including new ship acquisitions, or just facilitating the preservation of cash reserves to make it through a tough market.”

Oliver Petrakakos, COO of ESF, says “The Liberian Registry is the perfect partner for the implementation of this fuel-saving model, given its continuous emphasis on managing a high-quality fleet. ESF is committed to helping LISCR’s fleet continue to be green pioneers, while increasing the market competitiveness and strength of its owners.”

The Liberian Registry is one of the world’s largest and most active shipping registers, and has long been considered the world’s most technologically advanced maritime administration. It has a long-established track record of combining the highest standards of safety for vessels and crews with the highest levels of responsive service to owners.

www.liscr.com
www.efficientshipfinance.com

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Wednesday 21 January 2015

Moore Stephens says offshore maritime sector could be hit by new UK tax charge

International accountant and shipping adviser Moore Stephens says companies in the offshore maritime sector could be among those hit by a 25 percent Diverted Profits Tax (DPT) charge under draft UK legislation scheduled to enter force in April 2015.

Under the draft legislation published by the UK government in December 2014, the new DPT could potentially apply to many UK companies transacting with overseas connected parties. Moore Stephens tax partner Sue Bill says, “The legislation as currently drafted is very wide-ranging and can apply wherever a UK company has entered into arrangements with connected parties involving enterprises or transactions with ‘insufficient economic substance’. For example, this could apply where a UK company leases equipment from an overseas-connected company located in a low-tax jurisdiction, where the lessor’s staff do not carry on any significant activities and where it is reasonable to assume that the transaction or transactions were defined to secure a reduction in the UK company’s corporation tax liability.

“Companies caught by the rules will be subject to a 25 percent tax charge. This will not usually apply to tonnage tax companies, because any transactions with related parties are unlikely to reduce the company’s tax liability as this is based on the net tonnage of vessels owned or chartered in to the company. However, the new rules could potentially affect many other companies, including those operating in the offshore sector.

“Her Majesty’s Revenue & Customs has said that further consideration needs to be given in certain circumstances to the interaction of these new rules with the cap on bareboat charter payments made to an associate by a company working on the UK Continental Shelf (UKCS). It is therefore not yet clear whether these rules will be modified for companies working on the UKCS.”

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 667 offices of independent member firms in 105 countries, employing 27,081 people and generating revenues in 2013 of $2.7 billion. www.moorestephens.co.uk


For more information:
Sue Bill
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
sue.bill@moorestephens.com

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EMTI welcomes new US C1/D visa initiative for Ethiopian seafarers

The Ethiopian Maritime Training Institute (EMTI) has welcomed an initiative by the United States that will provide Ethiopian seafarers with a new class of C1/D visas. The new C1/D visas issued to Ethiopian crewmembers will now be valid for two years.

Effective January 2015, the US extended the term period of C1/D visas for Ethiopian nationals, primarily for the purpose of facilitating transit to and from the US by the crews of merchant ships. During a recent visit to EMTI in Bahir Dar, the US Ambassador to Ethiopia, Patricia M Haslach, said, “The US has an old and cherished maritime heritage, and we are pleased and excited to help foster a maritime tradition in Ethiopia as well.” She added that Ethiopia has a growing number of good English speakers with solid technical skills who can ‘export’ their talents overseas.

The demand for Ethiopian seafarers has grown rapidly in recent years. As the exclusive marine officer training academy in Ethiopia, EMTI has graduated over 800 cadets to date. The academy is a partnership between Bahir Dar University and the US-based investment firm, YCF Group.

EMTI is one of the largest maritime training institutes in the world. It currently graduates approximately 500 cadets per year, and plans soon to expand its training programme to include over 1,000 seafarers annually, ranging from ratings to engine and deck officers. After completing a rigorous training programme at the maritime academy, EMTI cadets begin their careers as junior crew members with leading shipping companies on a global basis.

Pini Shwartz, CEO of EMTI, says, “The establishment of the C1/D visa scheme in Ethiopia is a great testament to the growing demand and success of Ethiopian seafarers. It reflects the US government’s understanding that Ethiopians will continue to grow as an integral element in the shipping industry. More and more Ethiopian seafarers are sailing to and from US ports, and the US government recognises that it must help trading companies with the logistical requirements of their crewing.”

Further information regarding the new C1/D visa scheme can be found on the United States Department of State website: http://ethiopia.usembassy.gov/pr_043.html

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Tuesday 20 January 2015

Bureau Veritas Marine appoints new marketing director

Leading international classification society Bureau Veritas has appointed Paillette Palaiologou as Marine Marketing & Sales Director within the Marine & Offshore Operating Group. She is tasked with defining and leading Bureau Veritas’ business development strategy and priorities in the maritime market.

Paillette Palaiologou says, “In tight markets each client needs specific support and services. The strength of Bureau Veritas is the wide portfolio of experience we can bring to tailoring and delivering what shipowners and shipyards need. I am proud to have been given the chance to extend my marketing and sales activity to our global Marine operations.”

Philippe Donche-Gay, Executive Vice President, Marine & Offshore Operating Group, says, “Paillette Palaiologou has a strong technical knowledge and a deep understanding of the needs of shipowners and shipyards. She will bring a great deal of energy to this position and will be key to the continued success of our classification society.”

Paillette Palaiologou is a Naval Architect and holds a Master of Science in Marine Engineering from the University of Newcastle upon Tyne.  She started her professional career in Oceanbulk Maritime S.A, as Technical Superintendent and then Head of Hull & Classification Department. In July 2005, she joined Bureau Veritas as a Marine Surveyor. She has subsequently been promoted first to Senior Surveyor then Marketing & Business Development Manager for the Hellenic and Black Sea region.

For a photo of Paillette Palaiologou
click on http://bit.ly/1jw4QLQ or e mail john@merlinco.com

Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has 61,000 employees in around 1,330 offices and laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.

www.bureauveritas.com for corporate information                              www.veristar.com  for marine information

For more information:


Philippe Boisson
Bureau Veritas
+33 (0)1 55 24 71 98

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Thursday 15 January 2015

Liberia is a party to the Nairobi Wreck Removal Convention

LIBERIA acceded to the Nairobi International Wreck Convention on the Removal of Wrecks, 2007, on 8 January 2015. It is thus far the largest flag state party to the convention.

The Nairobi Convention covers shipwrecks that could have a potential adverse effect on the safety of lives and property at sea, as well as the marine environment. When it enters into force on 14 April, 2015, it will fill a gap in the existing international legal framework by providing the first set of uniform international rules aimed at ensuring the prompt and effective removal of wrecks.

Liberia has agreed to extend the scope of the convention to its territory, including its territorial sea.

The Liberian Registry is prepared to start issuing wreck removal convention certificates to ensure that its flagged vessels have evidence of compliance prior to the convention’s entry into force. It is also prepared to issue certificates for shipowners with vessels registered in states that are not yet a party to the convention.

David Pascoe, Head of Maritime Operations & Standards for the Liberian International Ship & Corporate Registry (LISCR), the US-based manager of the registry, says, “The Nairobi Convention is designed to create consistency in the treatment of wrecks, and to provide claimants with a guarantee of unequivocal access to shipowners’ financial security for their liability thereto. Liberia’s ratification of the convention continues its long and proud tradition of supporting international legislation designed to maintain and improve the safety and effectiveness of the shipping industry and protection of the marine environment.”

The Liberian Registry is one of the world’s largest and most active shipping registers, and has long been considered the world’s most technologically advanced maritime administration. It has a long-established track record of combining the highest standards of safety for vessels and crews with the highest levels of responsive service to owners.

www.liscr.com

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Monday 12 January 2015

Bureau Veritas appoints new offshore lead

Leading international classification society Bureau Veritas has appointed Matthieu de Tugny as Senior Vice President in charge of Offshore activities within the Marine & Offshore Operating Group. He is tasked with driving forward Bureau Veritas Group initiatives in the oil and gas offshore market and enhancing Bureau Veritas’ technical leadership and recognition in this market.

Matthieu de Tugny says, “I am proud to take over the leadership of a team of real experts with deep knowledge of the offshore energy field. At a time of falling and volatile oil prices we can bring added value to the sector, with expertise to get the best out of existing assets.”

Philippe Donche-Gay, Executive Vice President, Marine & Offshore Operating Group, says, “Bureau Veritas is very firmly one of the top classification societies in the world active in oil & gas offshore energy, with leadership positions in floating production platforms and offshore support vessels. Under the leadership of Mathieu de Tugny, we will keep on providing a very wide range of services which help ensure that offshore energy players operate both safely and cost-effectively.”

Matthieu de Tugny graduated from the Ecole Nationale de la Marine Marchande, France and from the Ecole Supérieure d'Electricité, France as an engineer. He started his career at Bureau Veritas in 1994 in the Electricity and Automation Section. After experience in Korea, he was appointed, in 2000, as Containership and Bulk Carrier Manager. In 2002, he became Chief Executive for Marine France. In 2007, he was appointed Marine Chief Executive for the United States and Canada. Since 2012, Matthieu de Tugny has been Vice President, South Asia Zone for the Marine & Offshore Division.

For a photo of Matthieu de Tugny click on http://bit.ly/1jw4QLQ or e mail chris@merlinco.com

Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has 61,000 employees in around 1,330 offices and laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.

www.bureauveritas.com for corporate information

www.veristar.com for marine information


For more information:

Philippe Boisson
Bureau Veritas
+33 (0)1 55 24 71 98
philippe.boisson@bureauveritas.com

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Monday 5 January 2015

Moore Stephens says shipping must adopt can-do attitude in 2015

International accountant and shipping adviser Moore Stephens says shipping needs to adopt a can-do attitude in order to successfully meet the challenges which are likely to come its way in 2015.

Moore Stephens shipping partner Richard Greiner says, “Shipping confidence started 2014 on a six-year high and ended it on a two-year low. It is difficult to predict with any certainty what the next 12 months will bring, beyond further uncertainty. To paraphrase an old adage, shipping goes into 2015 needing to accept the things it cannot change, to change the things it can change, and to make sure it understands the difference between the two.

“Top of the list of things which shipping cannot change is the relentless march of regulation. In 2015 this will assume still more onerous proportions with the inception of new regulations governing Emissions Control Areas, and a further step towards ratification of the BWT Convention.

“Overtonnaging, meanwhile, is top of the list of things which shipping can change. Accelerated scrapping is needed, together with an acknowledgement that there are already too many ships on the market and that, absent some form of rationalisation, freight rates will not pay the bills.

“One area where shipping can demonstrate that it knows the difference between what it can and cannot change is in its attitude to private equity. Does private equity not know what the rest of us know, or does it know something the rest of us do not? Rather than bemoaning the short-term commitment of private equity, shipping should be looking to tick the boxes which attract such investors.”

“Operating costs will go up in 2015, along with the cost of regulation, while it would be no surprise if oil prices were to go up faster than freight rates over the course of the year. Environmentalists will be happier with shipping. There will be increased interest in risk management, without which there will be still more newbuilding disputes of the type currently sitting on the desks of arbitrators, and more companies following the unhappy route into bankruptcy taken at the end of last year by OW Bunker.”

Greiner concludes, “Shipping embarks on a new year with confidence in a fragile state. The industry is volatile, and will be looking for improved political stability and a stronger global economy. But it should not underestimate its proven ability to endure throughout crises. The biggest danger may lie not in setting the targets too high and falling short, but in setting the targets too low and achieving them.”

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 667 offices of independent member firms in 105 countries, employing 27,081 people and generating revenues in 2013 of $2.7 billion. www.moorestephens.co.uk


For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com

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