EU requests for insurance proof ignored by over a fifth of ships
- Over 20% of the ships approached by Baltic states and the UK last year failed to provide any information when asked
- European Commission remains silent on what action will be taken against ships failing to comply
- Head of Oil Pollution Compensation Funds seriously concerned about the ongoing risks involving an uninsured or unsafe vessel
The EU has made it a mandatory requirement for ships passing through European waters to provide proof of insurance, but nobody is clear what happens if the one in five ships refusing to engage do not comply
WHEN Baltic coastal states and the UK government started requesting vessels passing through their waters provide insurance information late last year, amid growing safety concerns over dark fleet* transits, over 20% of the ships contacted by authorities refused.
The “alarming” failure of these ships to provide any information is “a cause for grave concern”, according to the European governments that have, as of last week, moved from a voluntary request to provide certification to a mandatory requirement for all ships.
It remains unclear, however, what the EU states intend to do if that 20% continue to refuse to offer up documentation.
The European Commission announced last week that all vessels, including those merely passing through EU waters without entering an EU port, were now required to provide insurance information.
The move was made via an amendment to an existing EU Vessel Monitoring Directive and the commission simultaneously submitted a proposal to the International Maritime Organization, seeking a minor amendment to several existing Mandatory Ship Reporting Systems in and around the European coastal states.
That IMO submission, co-signed by tanker owner body Intertanko, noted that over a six-month period last year 413 requests to ships involving some 33 flag states were made, but 90 vessels did not provide requested insurance information.
Similarly in the English Channel, the UK government was unable to get a fifth of ships requested to hand over insurance documentation.
No details were released regarding the identity of the vessels refusing to hand over proof of insurance.
While the move to make such requests a mandatory part of vessel report requirements has been touted by the commission as “a targeted measure with potentially great impact”, the commission has so far declined to elaborate on what measures it would take against ships failing to comply.
In its current form, Mandatory Ship Reporting is intended for the ship to report only its name and IMO number. If a ship fails to report, the coastal state can make a complaint to the flag State, but beyond that there few options left open to coastal states beyond naval interdiction.
EU states appear to be observing the letter of the UN Convention of the Law of the Sea and all governments have, so far, been careful to avoid commenting explicitly on what they consider to be acceptable insurance and what action would be taken if a ship did not provide it.
The commission has not responded to Lloyd’s List’s requests for clarification on the issue.
Meanwhile, the 121 member state governments signed up to the International Oil Pollution Compensation Funds are also struggling to move beyond a repeated call to flag states and shipowners to comply with their obligations.
Deep concerns regarding inadequately maintained or insured vessels threatening an environmental disaster once again topped the agenda at the IPOC Fund’s April meeting in London, but beyond making calls to states to raise awareness and share intelligence, there are limited options left open to them.
IOPC Funds director Gaute Sivertsen told member states that he “remains seriously concerned about the ongoing risks involving an uninsured or unsafe vessel and the oil pollution damage that may result from an oil pollution incident”.
Sivertsen has repeatedly warned that the rise of inadequate insurance for tankers involved in sanctioned trades has left the IOPC Funds to become the de facto underwriter of the dark fleet.
Citing a study conducted by the KSE Institute in February, the IOPC Funds secretariat warned its member states that P&I insurance details could not be found for 36.5% of the global tanker fleet. While that study concedes that many of those missing insurance details may stem from owners taking advantage of local insurance coverage for which information is not publicly available, the secretariat remains deeply concerned.
Russia has confirmed to the IOPC Funds full validity of insurance or other financial securities “in respect of liability, including ‘blue cards’ issued by Russian insurance companies in compliance with the requirements of international conventions”.
The IOPC fund, however, points out that even where information can be found regarding a Russian insurance company that insures a vessel, some of these insurers are under sanctions in various jurisdictions, such as the EU and the UK, and it is unknown whether anyone in these jurisdictions would be able to accept a payment from such an insurer.
This reflects the problems already highlighted as possibly being faced by the 1992 Fund in making payments to victims of oil pollution incidents involving sanctioned oil or vessels.
The IOPC Funds secretariat “encouraged” member states to adhere to their obligations under Article VII of the 1992 Civil Liability Convention, which requires states to verify both the insurer and the insurance certificates. That includes a statement certifying “that there is in force insurance or other financial security satisfying the requirements of the financial security article of the relevant convention”.
The advice stops short of offering any guidance on what a member state can do in the event that such details are not forthcoming.
* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.
