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A Balance of Business and Human Relations and the Contract Between

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A Balance of Business and Human Relations and the Contract Between Neptunus, e-revue, CDMO, vol. 20, 2014/3, www.cdmo.univ-nantes.fr ! ! ! Human Sea Project www.humansea.univ-nantes.fr ! ! ! A balance of Business and Human Relations and the contract between a ship owner and the Flag State ! ! by Andria ALEXANDROU ! PhD Candidate, Queen Mary University of London ! ! ! !I. Introduction The shipping industry is one of the most powerful areas of transport which enables the carriage of goods from one country to another. Many countries base their economic grounds and accord their financial growth to this rapidly flourishing – if well functioned – industry. In this respect, globalisation is enhanced and it also plays a vital role, as the industry acts as a “facilitator1” for economic development. This is proven from the case which dates back to 1966, on April the 23rd when Fairland, “the first converted container ship, sailed from Port Elizabeth in the USA to Rotterdam, carrying with it 236 containers. This created a trend, for instance during the Vietnam War2, when the US government supplied its troops through !container shipping, which proved to be the most efficient option.” Nevertheless, it is important to state here, that there is a need for states to embrace social values and enhance the proper functioning of the shipping companies, on issues related to employment contracts. The main reason for arguing this emanates from the fact that the industry would have never functioned properly without the human presence. Machines do not constitute the source of profit but rather the crew in each company. Therefore, by keeping 1 W. R. GREGORY , B.A., Flags of Convenience: The Development of open registries in the global maritime business and implications from modern seafarers. A thesis submitted to the faculty of the School of Continuing Studies and of The Graduate School of Arts and Sciences in partial fulfilment of the requirements for the degree of Master of Arts in Liberal Studies, Georgetown University, Washington, D.C. November 1, 2012. 2 http://www.worldshipping.org/about-the-industry/history-of-containerization/industry-globalization "1 Neptunus, e-revue, CDMO, vol. 20, 2014/3, www.cdmo.univ-nantes.fr satisfied the human resources and the conditions for employees within the companies, in that way the advantages for owners are much higher, than neglecting the employees. A vital aspect within this globalised industry is to ensure that there is sufficient protection for the employees. This originates from the situation that the industry is rapidly flourishing and therefore companies instead of placing emphasis to their employees; they regulate their financial goals and in many situations, undermine their ethical responsibilities. Equity and fairness and essentially economic growth, implies a compliance system through various means such as due diligence and pro – bono work, which would strive to produce a balance of !financial growth and respect of the society. For such an international and somehow low profile industry which even though the successes it accomplishes through its various means, a disregard of business and human relations, is easy and achievable, since the industry can be well hidden on the high seas. An example of the industry’s accomplishment of low profile is well founded in arbitration, which is, an alternative way where parties can resolve their legal differences quickly without the need of attending the court. In this respect the industry can be left freely without any need for checks, therefore the need of compliance does not constitute the primary need for the businesses within the industry. This argument can be examined and supported in light of the Flag of Convenience states, which can adversely been challenged on the arguments of whether there are any regulations followed or any trade unions to impliedly pressurise businesses and !enforce compliance with human conditions. Taking into account the difficulty of accessing information from the industry which is dominated by confidentiality, this argument can contradict the developing nature of the industry, which in principle, is one of the most powerful industries in the world trade, and provides approximately “90 percent of the world’s 5.1 billion tons of international trade3,” needed for an everyday consumption. In this respect, the industry by its essential nature, places itself into the centre of global market, encompassing an irrevocable strong role to everyone, to achieve the basic human needs, i.e. their trade of goods or services. Needless to state again that the industry’s driving power is the labour which allow the industry to run effectively, therefore there is a great need for business and human relations in order to allow !the industry to function in a healthy manner. This paper emphasises at the situation where ship owners register their ships in the flag of convenient countries. The paper is a reflection of a set of proposed implied standards, in the employment contract between a ship owner and the crew, regulating the crew conditions. It is articulated in the paper that in some Flag of Convenience states, there is a need for some values within the industry that will regulate the conditions, for a balance between the two !opposing limbs; namely ship owner and the crew. ! !II. Globalisation Globalization is a frequently used term, which dates back in the 19904s and endorses the improvement of universal assimilation via the exchange of ideas, goods, services in the light of fused market design on the strength of competition and the diversification of ideas. Thus, 3 http://www.whoi.edu/mpcweb/meetings/Luce_presentations/shipping%20and%20ports.pdf 4 http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e.pdf "2 Neptunus, e-revue, CDMO, vol. 20, 2014/3, www.cdmo.univ-nantes.fr globalisation is viewed as an agent towards economic enhancement, which empowers the industry to function. Hence assisting financial integration within the international market, which discourages fears from the industry that stakeholder interests, i.e human relations will !be diminished and business ethics will be neglected. Globalisation places a huge impact on the role, rights and obligations of the employees. The employees within the industry hold an important role, due to the fact that they are the ones who coordinate the work done. Since globalisation has conquered the world market, the economic incentive h5as dominated and driven the transport industry, especially the shipping industry. A good illustrative example is the open registers, as so called by the International Transport of Worker’s Federation, Flag of Conveniences. Ship owners select to register their vessels under these registers, “without considering the ethics behind the decision6.” This impacts on the employees, namely the seafarers, since compliance with many regulations under some Flag of Convenience states is not been followed. Therefore, rather been driven by business ethics, the shareholders choose to subcontract registration which “places profit over labour relations7.” These adverse labour conditions for the crew in shipping companies are due to the fact that the flag states are either limiting, or are exempted from obeying !regulations, since some of them have no trade unions in order to enforce regulations. Therefore in these Flag of Convenience states, there is a need for some employee protection, which will essentially be reinforced if there has been a mandatory part within the contract of employment that would emphasise the business and human relations between ship owners and !the labour crew, namely the employees that will regulate their conditions. ! !III. Confrontational Labour Conditions One can fairly argue that, had the seafarers’ been not in existence, this whole industry could have never monitored and flourish. Therefore, despite the fact that the shipping industry holds the most vital link within the international trade, this success relies greatly on the work done by the seafarers as they are the ones responsible for the industry to work free from any deficiencies, rather than the shareholders (i.e. ship owners) acts. Hence, ship owners’ !economic advantages rely on the performance of their seafarers, namely their employees. ! !IV. Flag of Convenience – Absence of the “Genuine Link” Requirement A ship once it becomes under the fleet of a ship owner or once acquired by a ship management company, it needs to be flagged so as to acquire nationality and become a valuable device used for the reasons bought, frequently in order to proliferate fiscal assets of its owner and eliminate any shortages. A ship owner has a choice either to register the vessel 5 https://www.itfglobal.org/flags-convenience/sub-page.cfm 6 W. R. GREGORY, B.A., Georgetown University, Washington, D.C , Flags of Convenience: The Development of open registries in the global maritime business and implications from modern seafarers. A thesis submitted to the faculty of the School of Continuing Studies and of The Graduate School of Arts and Sciences in partial fulfilment of the requirements for the degree of Master of Arts in Liberal Studies, November 1, 2012, “61”. 7 W. R. GREGORY, op. cit. “61”. "3 Neptunus, e-revue, CDMO, vol. 20, 2014/3, www.cdmo.univ-nantes.fr into a country with which he has a “genuine connection by way of national or economic ties8” or register the ship into an open registry, where the beneficial interest is an absent !requirement, where the owner acquires numerous advantages. Per Coles & Watt, various factors are relevant for ship owner when it comes to choosing a flag for his vessel, which for most of the times it is a stand - alone company. These factors have come to equate open registers, and especially Flag of Convenient (as usually referred by the International Transport of Worker’s Federation), states as the “evils of rampant capitalism and the disregard of labour rights, safety standards and environmental protection in the pursuit of profit9.” This “wide currency and emotive force” has been created after the environmental destruction created by the oil pollution due to the sinking of the tankers Exxon Valdez, Braer, !Erika, Prestige, etc.
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