International Safety Management Ism Code Ism Safety

International Safety Management

ISM Code

ISM safety code

Acting as a mandatory regulation, ISM Code usually lays down standards of shipowner's responsibility for safe management of ships and pollution prevention accepted internationally. The obligation of the shipment owner is to establish, maintain as well as implement a Safety Management System that is to meet the ISM Code's requirements.

The aspects of civil liability's impact is to be focused on the impact on liability of shipowner for cargo loss or damage, in addition to shipowner's legal right to limit his liability for claims. Some of the concepts such as seaworthiness, actual fault and privity, crew's negligence, the role of the designated person and recklessness with knowledge are to be considered. There has already been a change in the conditions in terms of policies that meet the requirement of the ISM Code through Hull and Machinery (H & M) underwrites and protection and Indemnity (P & I) clubs. ISM Code will test the shipowners' liability for keeping their ships in seaworthy condition and their duty of disclosure.

The ship-owners can use the ISM Code to act as a proof of best practice compliance. The assembly of the International Maritime Organization (IMO) adopted International Safety Code (ISM Code) in 1993 as a resolution A. 741(18). This is from culmination of a series of resolutions that has been adopted by IMO, and are working with accordance to guidelines on management procedures in making sure that it exist a safest environment for ships operations and maximum attainable prevention of marine pollution. Out of these disasters, people lose their lives in addition to creating a serious damage to the marine environment. The shipping industry as well suffers a serious economic loss. From the claims of P & I insurance within the period 1987 to 1990, the cost of P & I insurance, went up to an average more than 200 per cent.

The same developments took place to the Hull and Machinery claims and premium. More attention therefore has been turned to these accidents by the international organizations, government agencies, industry and the public. According to the researches that have been done by industry and government agencies in trying to find where the problem lies, reveals a common factor that the accidents are basically caused by humans failings.

Following such high profile incidents as well in response to political pressure, the ISM Code came into being. It is always a short document which has 13 articles long. It forms the first step that had been taken by IMO in minimizing human error in addition to managing deficiencies as causative factors in maritime casualties, (Ogg, T., 1996). Basing the fact that it is because of human error that largely contributes to marine accidents and most of them have been traced to management, the ISM Code works more particularly in improving the software of shipping, (Mandaraka-Sheppard, A., 1996).

The impact of the ISM Code on shipowner's civil liability

The impact on shipowner's liability for loss of or damage to cargoes

Carrier's liability based on the cargo will be determined as per The Hague or Hague-Visby Rules. Even though the International Safety Management Code is not involved directly to the issues of carriage of goods by sea, it will still have effect on the manner in which carriers' liability will be assessed in case of loss of or damage to cargo, (Lord Donaldson of Lymington, 1998).

The Hague and Hague-Visby Rules

The Hague-Visby Rules defines that the carrier is the party who enters into a contract of carriage with the shipper and owner or the charterer is included. However in several instances, the carrier for the purposes of the Hague-Visby Rules becomes the shipowning company, though it can happens that the carrier becomes a demise charterer or time charterer. This applies to the "company" though the carrier does not include the manager.

The impact of the ISM Code

ISM Code's impact on the shipowner's liability based on the Hague-Visby Rules lies within the effect of the Code over the interplay between the overriding obligation as stated in article III (I) and the crew negligence which is exception in Article IV (2).

Due diligence

The main purpose of the carrier who is the charterer or the shipowner based on the Hague-Visby Rules becomes to carry out due diligence in making sure that the ship is of sea worthy and is properly equipped, manned as well as supplied the ship. As it is defined, due diligence to be a genuine, competent and reasonable effort of the shipowner in fulfilling the obligation of providing a seaworthy vessel, the comment of Scrutton regarding Charter parties and Bills of lading (19th Edition is that the required due diligence is due diligence within the work by the carrier, everyone, be it agents or servants or independent contracts that are employed in making sure that the ship is always seaworthy, therefore the carrier will never run away from the burden to provide that due diligence since it has been exercised by proof that he will use persons who will be competent in performing their given task of making sure that the ship is seaworthy.

As another approach of its definition states, that it tend not to be just a sincere or a praiseworthy, though not successful effort, but such an intelligent as well as efficient attempt as shall make it so ( seaworthy) as far as it can be served by diligence. Therefore to only say that I did my best do not seems to be enough and the action of the carrier in exercising due diligence must be judged against highest level of standards. Such standards will only be altered with the alteration of the technology, knowledge, and ways of operation as well as other factors. ISM Code introduction sets a new standards for due diligence where the safety management system of the shipowner is tested. Generally there are two stages in which the shipowner's due diligence will be judged. For example the content of SMS will be evaluated first in verifying if the system could ensure safety and marine environment protection. Secondly there will be judging of SMS application: failing to implement the Code or any other requirement failure which can be used as evidence when claimant claims for failure of due diligence of the shipowner.

Seaworthiness and proper manning

A vessel is said to be seaworthy when fulfils the degree of fitness which an ordinary, careful as well as prudent owner would wants his vessel to have before starting the voyage, considering every probable circumstances of it. The responsibility of the shipowner is to make sure his vessel is fit in terms of design, structure, condition and equipment in order for him to encounter the ordinary perils of the voyage in addition to having competent master and efficient crew that fulfills the need of the Hague-Visby Rules. When questioning seaworthiness of ship based on whether the carrier failed to take care of the goods, then at first the objective standard of seaworthiness can be tested against requirements of the Code and Chapter IX of SOLAS. In case satisfactory SMS existed while the shipowner or the operator failed to implement it properly, the ship will be taken as unseaworthy since there was no properly implementation of either "in breach of Article III-1 or in breach Article III-2."

The work of maintenance has to be organized and done with control, forethought and records. Under the ISM Code a planned preventative maintenance system is accepted. In case there has never been a proper consideration of what might take place, it will be categorized under unseaworthiness. Again in case the planned maintenance system is just for the ship to pass the assessment but the implementation has never been done properly, then the ship might as well be regarded as unseaworthy.

Generally, it had been taken that in proper manning the ship meant that the crew had to be properly certified, however, the properly manned ship has been summarized in Scrutton on Charterparties and Bill of Lading with the introduction of the ISM Code, that this is not enough the shipowner to make sure that every member of the ship's crew has to be competent to take responsibility of their duties and the entire crew has to work as a team; where competence is to be trained every crew member in the provisions of the SMS of the company as well as his familiarization with the instructions, that has to be provided before sailing by the company to every member of the crew, (Gold, E.,1996). If members of the crew follow the procedure for a given emergency but their efforts fail, then it might be considered that the company did not establish the right procedure for a given emergency, while if the members of the crew fails to follow the procedures that have been established by a company causing loss or damages on the cargo, the carrier might be liable since it did not train the members as per SMS or failure to motivate the crew as per the policy.

Exemption from liability by crew negligence

Based on the Hague-Visby Rules, there is possibility of the shipowner exempting himself from liability for damage or loss which has been caused by neglect, act, or default of the mariner, master or the servants of the carrier in the management or navigation of the ship. In case of a loss that tend to be as a result of negligence by the crew and a prove can be given by the ship owner that his crew member were properly certified, they were competent and the owner of the ship exercised reasonable care in the selection of the crew members, but under ISM Code it could not be easy for the shipowner to defend himself under "crew negligence." Here the ISM Code is to lower the proportion of cases where crew negligence is to be regarded as the sole cause of a loss. While under the Hague-Visby Rules the shipowner is obligated to exercise due diligence in making sure that the ship is properly manned, seaworthy, equipped and supplied; the ISM Code acting as a new safety management standards is to explains proper manning in ensuring there is well manned of the ship with qualified, certified and medically fit seafarers.

Question of evidence

Another impact of ISM Code tend to be that it make it easy for the claimant to get enough documented evidences that establishes if or not the owner could be in breach of his duty of care. As per the Hague-Visby Rules, any other person be it the carrier claiming exemption has to prove due diligence in case of damage or loss that has been caused by unseaworthiness. The requirement of the ISM Code is for the shipowner to produce several written materials like reports, procedures and documents within the SMS. Out of such materials, the claimant could be in a position to find out which systems were in place and whether they were properly operated. On different occasion, when the asked SMS documents are not provided, this could prejudice the shipowner. Maybe the SMS document could act as evidence against the shipowner.

The impact on limitation of shipowner's liability

There are two major principles that are accepted in terms of legal limitation of the liability of the shipowner for loss or damage. The first one is the legal limit of liability that varies with the size of the ship. The second one is that the shipowner will never be entitled in case the loss or damage was due to his personal fault or neglect, (Pamborides, GP., 1996).

Actual fault or privity

Based on the 1957 convention, the shipowner might lose the right to limitation on failing to give prove that he was not the cause of the relevant damage through his actual fault or privity. In this case there is likelihood of ISM Code having a great direct effect. At first it will be of importance to verify the organization that the actual fault or privity is to be regarded the shipowner's. Whoever his fault or privity is to be considered the shipowner has to be individual who represent the directing minds and will of the company. Actual fault of a shipowner is seldom in question due to the physical separation between ship and shore. On the other hand in case the fault that has caused the accident is traced back to managerial shortcoming in the manning, maintenance, supplying or training of the vessel, definitely the claimant will be helped by the ISM Code. Acting as a mandatory law, the ISM Code lays down the requirements for maintenance and establishing a SMS in the organization. Therefore any defect within the SMS could be enough to establish the actual fault on the part of the shipowner.

Failing to implement the SMS may result to the allegation that the senior management of the company is a fault. The claimant will be enabled by the ISM Code to acquire good disclosure of the company's SMS that was to be expressly established to protect the shipowner from the failures. For example, privacy can take a form where an individual who is in the high position in an organization had knowledge about the risk but did not do whatever was necessary to stop the risk. Privity is extended from the actual knowledge in catching individuals who turn a blind eye to the circumstance. ISM Code (article 9) will therefore make sure that all non-conformities, hazardous and accidents situation is reported to the company.

Recklessness with knowledge

Based on the LLMC 1976, an individual who is liable is to lose his right to limit liability after it if a prove shows that the cause of the loss was due to personal act or omission that took place with intension of causing such a loss,( Macdonald, C., 1998) . According to the LLMC 1976 Convention, there is a different standard of challenge to the right of limitation of the person liable. It seems to be narrower as compared to the "actual fault or privity" which has been described within the 1957 Convention. Some researches describe the LLMC 1976 Convention to be more favorable to shipowners.

Shipowner finds himself limit liability more easily as compared to previously. All the recklessness, the burden of proof as well as the knowledge has been shifted to the claimants. Therefore, there will be very little significant effects on the right of a shipowner to limit based on the LLMC 1976 Convention. On the other hand what is required for reporting defects that is affecting the safety of the ship from the top most chain of command within a company is likely to raise the risk to the shipowner's right of limitation. ISM Code (article 4) requirement is to establish a link between the safety operation of every ship and the highest management level in the operating company or shipowning.

The status of the designated persons

Based on the article 4 of the ISM Code, any individual ashore is to be designated to have direct access to the highest level of management in ensuring safe operation of every ship and to act as a link between those on board and the company. The responsibilities as well as authorities of designated individuals are to monitor the safety and pollution prevention aspects of the operation of every ship.

Though some argue otherwise, the structure and provisions of the ISM Code do not seem to suggest that the designated individuals should be given access to highest level of management; therefore it is assumed that the designated persons should not be a senior manager himself. Within ISM Code it is specified that the knowledge of designated persons is to be deemed to be in the possession of top management, as well as to the information which the designated persons was to pass properly onto the top management, (Sahatjian, LC., 1998). . Therefore the knowledge of designated person will not have to constitute the knowledge of the shipowner. Whatever omission or action should not necessarily be that of the legal persona of the company, only if the constitution of that company states so.

Shipping industry has its risks. The shipowners could find themselves suffering a loss or damage to their ships as well as becoming liable to pay damages to other ships or to owners of the cargo in addition to have to be answerable for the damage to the marine environment. They might as well be liable to the personal injury or loss of life of passengers or crew members who are onboard. There it is necessary to insure against such perils of the marine. ISM Code has set international standards in making sure there is safety at sea, human injuries or loss of life prevention as well as avoiding damage that is caused to the environment especially the marine environment and to property.

Change of policy

Adjustments have been made by the International Group of P & I Club, Hull and Machinery underwriters' cargo insurer in the conditions of the policies in meeting the introduction of the ISM Code. Some of the provisions within the P & I Clubs rules are that the vessel entered is to comply with the statutory requirements, (Levy, H., 1996). Since ISM Code and its implementation into the national laws of relevant flag states come into force, compliance with the ISM Code has been put to be a must requirement. This has been applied to the Clubs as a policy where they do not allow entry of a vessel that does not comply with the relevant requirements of ISM Code.

Acting as a liability insurance, P & I insurance offer insurance cover to the assured members to cover for omissions and errors that have been made by the employees that a member can be proven liable, and this has never changed even after introduction of ISM Code. But on the other hand as per the rules of Skuld a member is capable of loosing the cover from the club in case a non-conformity was reported to him and he did little in rectifying it, unless he is capable of proving that a loss, liability, cost, expense could have taken place in the event, (Levy, H.,1998). On the other hand, London market's Joint Hull Committee (JHC) as well came with a set of guidelines on ways of dealing with the claims. Operators or shipowners are to show the DOC, the SMC and the statement by the designated person showing that all relevant ISM Code procedures have been complied with prior to hull underwriters begins to consider the claim.

Unseaworthiness

This includes poorly manned or managed ship or human failure. The insurance will never cover loss or liability that has been intentionally caused or through reckless act by the assured. These issues have been directly affected by the ISM Code. Acting as a safety standard, ISM Code is to be used as a yardstick that ascertains if the ship is unseaworthy. Failure to comply with ISM Code as well as the assured's own SMS will be definitely proven unseaworthiness, (Mills, P., 1997). In another way it determines if the assured is privy to the unseaworthiness. The requirement of ISM Code is to establish a chain of command that leads to the highest level of management as it fix every individual in the chain with a degree of responsibility for safety matters. Within the chain, designated person becomes very important. He has the duty of supervision and monitoring. His is obligated to have idea of the operation, the actual condition as well as the management of the ship. Acting as a receiver of the entire reports, the designated person is to report non-conformities to the company as required by the ISM Code. In case designated person becomes non-conformity then the company is assumed to be privy to these.