Call to create supranational body to handle abandoned ships

Having been a seafarer, a shipmanager and later a ship repossession superintendent few people are better placed to add to our crew abandonment debate than Douglas J Lindsay who gives readers some ideas for solving this stain on our industry.

There is nothing new about seafarers being abandoned in far distant corners of the world. It appears to have been a feature of Roman times, and through the centuries seamen have found themselves on their own, often because their ship had been wrecked. In a slower, simpler world they would have found local succour then work on another ship. From the advent of the telegraph to the present world of instant communication this casual acceptance of circumstance has slowly tightened up to a world where the seafarer has become part of a complex web of electronic communication which is at odds with ever greater isolation onboard their ship. The recent upsurge of interest in this very old problem is an indicator of the power of modern communication and a more interlinked world but legal provisions have not kept pace.

Having been a seaman, a shipmanager and later a ship repossession superintendent, I have experienced abandonment problems at first hand, and come to a few conclusions about them. In most ports of the world there will be a ship tucked in a corner, abandoned by owners and all official interest in it – or the unfortunates left stranded onboard it. There is currently some enthusiasm for a supranational body of some sort, perhaps modelled on MARPOL or the likes, which would be able to take over the payment and repatriation of abandoned crews. This is a very worthy concept but it is looking at the problem from the wrong end of the telescope. For one, it is a statist solution to an open market problem. And secondly, it lifts the pressure from the shipowner to accept his responsibilities. If, once the market turns sour, an owner can simply walk away from his asset and know that a third party will pick up the bill for crew matters, the incentive to do so is enormously increased. The moral hazard is largely removed from him, especially if there is also a large mortgage on the ship.

Any workable solution to this old problem has to have practical economic sense to it. Doubtless there are rogue owners who see economic advantage in deliberately abandoning the ship once it is no longer putting enough money in their pocket. But they are rare. Far more commonly, abandoning an asset and by derivation the workers on it is an act of desperation rather than of calculated economic malice. Once the cash runs out, the bank refuses any more credit and the ship loses its ability to generate earnings, where does the owner go? Threatening him with sanctions achieves nothing. Even if he feels a responsibility for the crew he is in no position to do anything about them and sanctions, real or threatened, become meaningless.

At this point the owner/operator becomes helpless, and the only source of potential funds lies in the residual value of the abandoned ship. But how to realise it? The crew may have first claim on any funds realised but to turn the asset’s value into ready cash can be a slow, uncertain and tortuous process which can take a long time to benefit the abandoned crew, if it ever does. The mortgage holder is right behind the crew and will be determined to recover as much as possible of the funds still owed to it. At one time the banks tended to see their own interest lying in paying off the crew then buying in the vessel at admiralty marshal’s auction but that seems to have lost its attraction and in any case there are many parts of the world where this is not a practical process. One of the primary inefficiencies of the existing system is the way the jurisdiction the ship is abandoned in is probably a chance matter related to its trading pattern and with a mobile asset like a ship it can end up anywhere. To find a solution it is necessary to remove the payment of the crew from the restraints of the port and country their ship ends up in.

If an arm’s-length body is to take on responsibility for rescuing abandoned crews, it also has to have direct and immediate access to the only reliable source of funds, the value of the ship. The traditional route of arresting the ship, putting it through an admiralty court auction and the proceeds being parcelled out by the court, is slow when speed is needed. Although there are a few jurisdictions in the world which can act swiftly, most don’t and it is no coincidence that abandoned seafarers tend to be found in the ports of the of the world with slow – and often corrupt – judicial systems.

Something quicker and more certain is needed – perhaps an extrajudicial international body with legal authority to take title to abandoned ships regardless of arguments about ownership and who else has rights in the vessel. After initial pump-priming funding, such a body could look to the sale of the ships it takes over to keep its coffers topped up, without having to grind through the admiralty court system. This body would need to have most of the powers of an admiralty court but not be tied to any one legal system or place. The obvious body to stand behind it would be the United Nations, perhaps as an offshoot of the IMO but charged with executive authority to make things happen swiftly and efficiently. It would work in co-operation with mortgage holders and – as far as necessary – local authorities around the world. Other holders of maritime liens could then take their place in the queue.

Four things are needed to make this work:

One, a good worldwide intelligence system.

Two, a supranational body with a structure in place to take prompt legal possession of the ship, sell it and distribute the proceeds according to an agreed set of priorities and rules.

Three, a welfare arm to look after crews until they are paid off and repatriated.

Four, a care and security set-up to look after ships after they have been seized and the crews sent home. This would secure the asset until it is resold into trade – or scrapped.