Newsletter of DGS Marine Group Edition 22 Autumn 2016 BREXIT - COST OF RESCUE MARITIME CYBER OUR PEOPLE: IN MEMORIAM: IMPLICATIONS FOR ATTACKS BY CAMILLA RYE DAVID G. SKINNER THE SHIPPING MS KATE B. BELMONT INDUSTRY 1. BREXIT - IMPLICATIONS FOR THE SHIPPING INDUSTRY Currently the European Union is made up of 28 member states which leaving the EU, British shipping companies will still be required to operate include some of the worlds largest container and passenger ports such as within international regulatory framework when calling at EU ports and Antwerp,Hamburg, Rotterdam and Pireaus. It also includes four of the five territorial waters. Following Brexit the UK should still have access to the largest shipping companies in the world. single market and transport legislation. However, the level of access would depend on the type of exit scenario and agreements between the UK and On 23rd June 2016, the British public voted for the exit of the UK from the the EU. European Union after being a member for almost 43 years (Brexit). During these 43 years, EU provisions and policies have been included into UK law, Another potential impact for Britain will be regarding VAT on goods. VAT which affected a wide number of commercial issues including environmen- raises a fifth of the UK’s tax revenue, so it is most unlikely that it would be tal regulations, international trade sanctions, competition law, removed. It may be that the UK would remain part of a customs union and trade,employment, tax, immigration and infrastructure projects. During the the European case law will continue to be persuasive. process of leaving the EU the British government will be likely to review all EU-derived laws in the approximate two years leading up to the official exit The ability of UK shipping companies to trade within Europe date. 1 The Brexit vote came at a time when the shipping market, particularly in It has been stated that when Article 50 of the Lisbon Treaty is certain sectors like bulk freight, were already in poor condition. The factors invoked(which allows any member state to leave the European Union), Mrs which have contributed to dry bulk freight rates heading towards all-time Teresa May (the new British Prime Minister replacing David Cameron after lows in the first quarter of 2016, reflects long term issues which would have he stepped down following the referendum), has stated that she will not continued regardless of the referendum result. These factors include over- start the process before the end of 2016. This could take a minimum of two supply of ships and the effect on global trade of the rebalancing of the years. Chinese economy following the boom of the last decade. How does this affect the UK? Sea trade in and out of the UK accounts for only a very small part of global shipping activity and therefore an isolated post-Brexit slowdown in the UK As a member of the EU, Britain is party to and must comply with the economy may be unlikely to impact dramatically on global freight volumes. sanctions regime imposed by the EU. Those sanctions are currently against Euronav’s Chief Executive was quoted in Lloyd’s List as saying(on a states such as North Korea, Russia, Belarus, Syria and Yemen. As widely conference call for analysts): “It should be largely speaking something of a publicized, the sanctions against Iran are currently changing. The future is non-event in terms of impact on global trade for crude oil.” For companies uncertain if the UK would implement similar legislation or perhaps even with income denominated in US Dollars, which will be the case for many harsher sanctions. Regardless of whether it will impose any replacement international shipping companies, it could be temporarily beneficial, partic- sanctions regime, the UK would not be ‘sanctions free’ as it would have ularly if costs are in euros and sterling. been party to and so must comply with the sanctions imposed by the United Nations against several regimes. Whilst there seems generally to be agreement that the Brexit will not hugely impact on world trade, the consequences could be amplified when com- 2 The UK is one of the top 10 ship owning nations according to UNCTAD with bined with other matters currently playing themselves out on the world around 3% of the worlds tonnage. The shipping industry contributes around stage. Tradewinds reported that Wells Fargo analyst Michael Webber, who 12 billion euros per year to the UK economy. Approximately 240,000 people covers shipping stocks for the bank, said that the combination of the rise of are employed in this sector and an estimated three million jobs in the UK Donald Trump as the Republican nominee to the White House, the Brexit are linked to trade with the rest of the EU. vote, uncertainty around Italy's banks and the coup attempt in Turkey could create "meaningful tail risk" for crude demand expectations in the second Over half of the UK imports are from the EU (53%) and almost half of the half of the year. It is likely to impact on demand for tanker shipping services UK’s exports are to the rest of the EU (45%).BREXIT should not affect the and therefore freight rates. rights of british shipping companies to carry goods to or from EU ports. Moving forward it is important to note that many shipping contracts (for Being a member of the EU had benefits where British companies had example voyage and time charters) provide for trading to certain countries access to what is know as ‘the single European market’, meaning that or geographical regions. Should Brexit occur, there may be uncertainty as goods can be transported without taxes or duties payable upon moving to whether a contract signed pre-Brexit (which contains such a clause) across internal EU borders. It is important to note that despite the UK which refers to the EU will continue to include the UK. Existing contracts are \\DGSSERVER\RedirectedFolders\Kelly\My Documents\Compass\My Pictures\Stock Image Library\00434.jpg drafted in a way that presumes the existence of an EU containing the UK, References or makes a reference to the EU without specifically defining what that is, such contracts may give rise to disputes as to the meaning or ambit of the contract. Therefore, care will need to be taken in the event that an existing 1. http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on- contract is renewed, as the court would likely apply the definition of EU as at the time the (renewed) contract is entered into, which might be different European-union-and-comments/title-6-final-provisions/137-article- from the original or intended definition. The impact of Brexit on any related 50.html contracts will need to be assessed, including those intended to be on ‘back to back’ terms, in which relevant clauses may not be similarly defined. 2. http://unctad.org/en/PublicationsLibrary/rmt2015_en.pdf Summary Operating within the European market may become increasingly complex and as a consequence could become more expensive for UK operators as well as EU based operators working within the UK market. Rather than the current harmonised EU system, companies may be subject to have to comply with separate EU and UK laws regarding trade. Since it appears the British government did not do any emergency planning ahead of the referendum, at this point all predictions are purely speculation and we will have to wait to see what the future negotiations will bring. Written by Kaylie Gardner, Deputy Risk Management / Loss Pre- vention Manager & Leanne Skinner, Claims Assistant 2. COST OF RESCUE \\DGSSERVER\RedirectedFolders\Kelly\My Documents\Compass\My Pictures\Stock Image Library\00090.jpg Source:http://http://www.aljazeera.com/news/2016/05/refugee-boat-carrying-capsizes-libya-coast-160526045202245.html How Rescuing Persons in Distress at Sea Affects Merchant Vessels Ships are bound by a beautiful maritime tradition, moral duty as well as legal obligations to assist any person in distress at sea. At any cost. That being said, the current situation puts considerable strain and pressure History of migration on seafarers, as well as additional costs to shipowners. While the reasons for migration could be attributed to many factor such In May 2014, a Norwegian Cruise Lines operated passenger ship, as changing climates and lack of food supply, reasons that refugees move Norwegian Spirit, while sailing from Naples, Italy to Mykonos, Greece, in modern times are varied. Inclusive factors forrefugees fleeing to was asked by the Italian Coast Guard to rescue a refugee boat in Ionian another country are attempts at seeking refuge from war, political Sea. After the rescue, the Master together with the ship’s crew took efforts oppression or religious persecution. in taking good care of the refugees. A pregnant refugee needed immediate medical attention from the ship’s crew. A number of tedious The definition of refugee was adopted in the 1951 United Nations process and formalities had to be complied with before the ship was Convention Relating to the Status of Refugees. It was a response to the allowed to resume its voyage. However, due to delay, the ship cancelled large number of people fleeing from Eastern Europe. In history refugees its call to Mykonos and proceeded to Piraeus, Greece instead. often had to overcome oceans on their journey. Until the 1970s, rescue at sea was not a major issue in refugee protection because the total In another incident, on April 12, 2015 while a 61,000 GT tanker, M/T number was manageable.