EUROPEAN COMMISSION Brussels, 29.3.2016 COM(2016) 167 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the application of Directive 2009/20/EC on the insurance of shipowners for maritime claims



1.INTRODUCTION Directive 2009/20/EC of the European Parliament and of the Council on the insurance of shipowners for maritime claims (hereinafter referred to as 'the Directive') entered into force on 29 May 2009. The Directive aims to encourage responsible behaviour by all economic operators, to improve the quality of merchant shipping and ensure safety at sea. This report aims to inform the European Parliament and the Council on the application of the Directive, in accordance with Article 8 thereof. The report relies on the outcome of a survey undertaken by the European Maritime Safety Agency (EMSA) at the request of the European Commission on the application of the Directive, as well as on information and data retrieved from the inspection database (commonly known as 'THETIS') established in accordance with Article 24 of Directive 2009/16/EC on port State control as amended. The Commission has received no complaints on the Directive since its application date (i.e. 1 January 2012). 2.BACKGROUND The Directive makes compulsory in the EU the requirement for shipowners to have adequate insurance covering their ships, as endorsed in Resolution A.898(21) of the International Maritime Organization (IMO), combined with the principle of limitation of liability in accordance with the 1996 Protocol to the 1976 Convention on Limitation of Liability for Maritime Claims (hereinafter referred to as 'LLMC 1996'). It stipulates that all ships flying a flag of a Member State as well as any ship flying a flag of a third country entering to EU ports (or – in some cases – operating in the territorial waters of a Member State) shall be covered by insurance for the amount equal to the relevant maximum amount for liability laid down in the LLMC 1996 provisions. LLMC 1996 establishes the right of shipowners (including charterers, managers, and operators) and salvors to limit their liability for a variety of maritime claims related to the operation of a ship. The calculation of limits under the Convention is based on the tonnage of the ship in question. LLMC 1996 has increased the liability limits compared to its predecessor (LLMC 1976). These limits were further raised by the IMO in 2012, and have entered into force on 8 June 2015. For the purposes of the Directive, there is no definition of the term 'ship' as such. The Directive applies to ships of at least 300 gross tons, and it excludes "warships, auxiliary warships or other State owned or operated ships used for non-commercial public services". That said, the definition of a 'shipowner' is clearly limited to seagoing ships, and it includes, other than the registered owner, any person responsible for the operation of ship. Thus, the Directive applies to seagoing ships only. It is worth noting that this is also the case with LLMC1996, which does not include a definition of a 'ship', and it is through the definition of 'shipowner' that its application is equally limited to seagoing ships. The Directive was modelled on LLMC 1996, and the negotiating history of the Directive attests to the wish of the co-legislator not to add to or amend the definitions of the Convention. 3.TRANSPOSITION BY MEMBER STATES The deadline for transposition of the Directive into national law was the 1st of January 2012. All Member States have notified to the Commission their national implementation measures for the Directive. No amendments have been communicated since 2012 to the national transposing legislation in Member States. 4.APPLICATION OF THE DIRECTIVE This section of the Report examines the application of the Directive following the sequence of its provisions. As Article 1 points out, the Directive governs "certain aspects of" the obligation of shipowners to have insurance for maritime claims. The Directive is complementary to the international instruments regulating civil liability of shipowners for specific types of damages, as well as to EU and national rules concerning criminal and administrative liability of shipowners. 4.1 Scope and Definitions (Articles 2 and 3) Article 2 defines the scope of the Directive based on the size (i.e. tonnage) and the type of ships (i.e. excluding warships and State-owned vessels used for non-commercial public service). The application of these provisions does not pose any difficulties for Member States. The relationship of the obligations under the Directive with the obligations under the international conventions on liability and compensation, including mandatory insurance, that are listed in the Annex of the Directive is also laid down in Article 2(3) thereof. The Directive specifically states that it is "without prejudice to" these international conventions. Hence, the obligation of insurance established under the Directive applies in addition – not in contradiction – to the obligation to have adequate insurance or other financial security under these conventions, in the Member States where these conventions apply. Member States’ approaches vary in this regard. This is due to two factors. Firstly, Member States have not yet ratified all international conventions listed in the Annex to the Directive. Moreover, Member States have chosen different means of transposing Article 2(3) into their national legislation. Namely, only a few Member States have chosen to refer to these international conventions and their relationship with the Directive; while other Member States do not explicitly refer to the Annex of the Directive in their national transposition measures. Be that as it may, the international conventions and the Directive are not contradictory but complementary instruments, and the instruments mentioned in the Annex constitute lex specialis on the specific types of damages they encompass arising from different shipping activities, i.e. oil carriage by sea in tankers, carriage of hazardous and noxious substances (HNS) by sea, bunker oil pollution, removal of wrecks. In 2008 Member States had undertaken a strict commitment to ratify all Conventions listed in the Annex, and the Commission will continue to urge Member States to make progress in this regard. As outlined in Section 2 above, the Directive does not contain a definition of the term 'ship' as such. However, in the light of Articles 2(2) and 3(a) its scope is limited to seagoing ships and it specifically excludes warships or other State owned or operated ships used for non-commercial public service. Moreover, its applicability to different types of ships is also linked to the scope of flag State and port State control, which are the two enforcement mechanisms of the Directive. As long as a ship is eligible for a Port State Control Inspection in accordance with Directive 2009/16/EC, it can be expected that an inspection may take place to confirm applicability and conformity with the provisions of the Directive. Article 3 of the Directive contains a definition of 'shipowner' that is in line with LLMC 1996. The latter instrument is also identified clearly in the definitions section of the Directive as the consolidated text of the 1976 LLMC Convention as amended by the 1996 Protocol. Finally, the notion of 'insurance' is defined in a non-exhaustive manner, copying verbatim the definition of insurance contained in IMO Resolution A.898(21). That is making reference to the "indemnity insurance of the type currently provided by members of the International Group of P&I Clubs" as an example of relevant cover. 4.2 The obligation to have insurance (Article 4)

Article 4 of the Directive establishes the obligation to have adequate insurance for shipowners: (a) whose ship is flying the flag of a Member State; (b) whose ship is entering a port under the jurisdiction of a Member State; and (c) whose ship is operating in the territorial waters of a Member State, provided that the relevant Member State has chosen to include this traffic into the scope of the Directive and without prejudice to the rules of international law on innocent passage. The Directive also stipulates that the insurance shall cover claims falling under the scope of LLMC 1996 as claims subject to limitation. The amount of the insurance per ship and per incident must be equal to the relevant maximum amount for limitation of liability under LLMC 1996. Member States in their capacity as flag States and as port States must require shipowners to comply with the relevant obligation under the Directive. All Member States have designated national competent authorities for the implementation of the obligations under Article 4 of the Directive. However, with regard to the flag State implementation, only a few Member States reported that verification of the validity of the relevant insurance certificate would take place, in particular to check and verify compliance regarding the liability cover. Similarly, with regard to port State control, not all Member States have given effective indication of how the adequacy of the insurance certificate, held by foreign flag ships when entering their ports, is verified. Only a limited number of Member States have reported to the Commission that verification of the validity of the insurance certificate takes place during port State control inspections, in particular as regards the liability cover. With regard to the possibility to require insurance for ships operating in Member States’ territorial waters, several Member States have reported that they have transposed this requirement in their national legislation. However, the Commission has not obtained sufficient information to ascertain how this requirement is applied by Member States. 4.3 Inspections and compliance through port State control (Article 5) Article 5 of the Directive stipulates that ships entering a Member State's ports and flying the flag of another State are required to have insurance covering maritime claims in accordance with Article 4 of the Directive. Member States fulfil their obligations as port States under the Directive through Port State Control inspections, conducted within the framework of Directive 2009/16/EC. While vessels subject to Port state control are not targeted for inspection on the basis of their insurance status, any inspection of a ship by a port State, in accordance with Directive 2009/16/EC, has to include a verification that an insurance certificate, in compliance with Article 6 of the Directive, is carried on board. The verification of the insurance certificate is part of a Port State Control inspection in accordance with Annex IV, point 41 of Directive 2009/16/EC. No Port State Control inspection can be recorded in THETIS, unless verification of the presence of an insurance certificate is reported accordingly. A specialised module has been created in THETIS ('THETIS-I') for recording deficiencies in Member States under the Directive, which has been operational as of 1 July 2013. Although not every vessel is inspected on each visit the systematic coverage of inspections offered by the EU Port State Control regime means that every individual vessel calling in EU ports is inspected, on average, every 11 months. In addition, several Member States have reported that they require ships entering their ports for pre-entry notification of insurance, using mainly the Union Maritime Information and Exchange System (SafeSeaNet, (SSN)). Pre-entry notification requirements are useful for targeting ships for inspection and contribute to the more effective and rational implementation of the Directive. It is worth noting that, pursuant to Article 16(1)(d) of Directive 2002/59/EC, ships which have failed to notify, or do not have, insurance certificates or financial guarantees pursuant to Union legislation and international rules, should be communicated to the coastal stations concerned in other Member States located along the planned route of the ship. The Commission strongly supports this practice, which also serves the objectives of this Directive, as pointed out in the impact assessment supporting the Commission's proposal for a Directive on the civil liability and financial guarantees of shipowners, which led to the adoption of the Directive. Moreover, pre-entry notification of insurance, combined with the potential for simplification of reporting that SSN offers, can prove an effective means to address uncertainties concerning liability of the shipowner and availability of compensation when a ship is in need of assistance within or in proximity to EU waters. Using SSN to obtain and share information on the insurance cover of ships entering EU ports can be particularly helpful to national competent authorities examining the possibility of the accommodation of a ship in need of assistance in seeking a place of refuge. In case of non-compliance with the Directive by a ship entering a Member State's port and flying a different State's flag, namely the lack of adequate insurance cover, detention of the ship is possible in accordance with Directive 2009/16/EC. Furthermore, Article 5(2) of the Directive provides an additional tool to those foreseen in Directive 2009/16/EC. That tool, whose application is left to the discretion of Member States, foresees the expulsion of non-compliant ships from the port of a Member State with parallel notification to the Commission, other Member States and the flag State concerned, which has as a result the refusal of entry to ports of other Member States for the ship concerned. Notification takes place via SSN, using an 'incident report' template developed for that purpose. The majority of Member States have transposed this possibility for expulsion; though the expulsion of ships remains a very rare case in the EU. 4.4 Certification of insurance (Article 6) Article 6 of the Directive establishes the minimum requirements that must be fulfilled to attest to the existence of adequate insurance on board the ship, in accordance with Article 4. The examination of the minimum formal contents of a certificate, as prescribed in Article 6 of the Directive, is the main focus during verification of insurance. Control of the authenticity of the certificate and examination of the liability limits pursuant to LLMC 1996 are less common among Member States. A limited number of Member States appear to have national guidelines in place regarding verification of insurance. A relevant issue, where Member States' approaches differ, is the acceptance in practice – mainly during port State control – of insurance certificates in electronic format. It is important to note that the insurance sector has embraced the use – almost exclusively – of electronic certificates (e.g. P&I Certificate of Entry); and the IMO has approved 'Guidelines for the Use of Electronic Certificates' in shipping, which can be pertinent to insurance verification as well. Electronic versions of certificates have specific characteristics, and there are procedures in place to allow their authentication and subsequent verification. In order to ensure that the use of electronic certificates for the purposes of this Directive is accepted and applicable in all Member States, further consideration of this issue should be envisaged. 4.5 Penalties for non-compliance of own ships (Article 7) For the purposes of flag State implementation of the requirements under Article 4 of the Directive, Article 7 prescribes the establishment of a system of penalties for cases of breaches of national provisions enacted in this field. National penalties established under this provision must be effective, proportionate and dissuasive. Based on the examination of the national transposition measures communicated to the Commission and the replies by Member States to EMSA's survey, the interpretation of this requirement under the Directive varies among Member States, notably with regard to the corresponding amounts of the financial penalties. No cases of imposition of penalties for non-compliance with the Directive by ships flagged in a Member State, under this provision, have been reported.