Departamento de Derecho Común, University of Santiago de Compostela, Santiago de Compostela, Spain
KeywordsCorporate governanceCrew of convenienceFlag of convenienceManning agenciesMaritime employmentMaritime Labour Convention, 2006Minimum standardsPiercing the corporate veilWork in Fishing Convention, 2007
The provision of labour at sea is deemed to be ‘special’ in most domestic laws due to the specific features of the environment in which it takes place. Working at sea usually involves prolonged absences from one’s own home, turning vessels—normally sailing away from sovereign lands and, therefore, jurisdictions—into places for both work and leisure. Against this background, specific working and living conditions are required on board, while many of the requisite training and professional qualifications are not shared with other professions.
The employment relationship is special from the private international law perspective as well because one of its basic assumptions—its provision in an area of sovereignty—usually fails: a vessel may sail through different areas, some subject to one single jurisdiction, some not. This shortcoming has traditionally been overcome by resorting to public international law, which places the responsibility for all matters relating to labour relations at sea in the hands of the flag state. As explained in the following section, this was normally justified on the ground of the close relationship between the vessel and the state whose flag it was flying since the shipowner and crew were usually nationals of and residents in the flag state, which was usually the country where the vessel was built.
However, global socio-economic trends have seriously weakened the links between any one state and the ships flying its flag. In general, international conventions submit all matters related to a ship to the jurisdiction of the flag state, including living and working conditions on board. The latter did not pose problems in a context where crew members were recruited in the flag state, but the current state of affairs makes this assumption debatable, and the third and four sections of this chapter will address the processes leading to the internationalisation of maritime employment. This is mainly caused by the freedom in ship registration granted by some states, with the consequence that neither shipowners nor crew members have to be nationals of the vessel’s flag state, nor do they need to be domiciled in or operate the ship from there. Such states have been named ‘flags of convenience’, as the shipowners benefit from low taxes and labour costs as well as a more relaxed approach to technical inspections.
In an attempt to stop the flight of their shipping and fishing fleets to flags of convenience, traditional maritime nations established second and international registries that also grant tax benefits and allow crew members to be hired in countries other than the flag state. The outcome is thus the internationalisation of crews, and a new issue has arisen, that of crews of convenience. The globalisation process has also been driven by the freedoms of establishment and the provision of services, which facilitate new ways of business cooperation and make it difficult to identify the shipowner and employer of a multinational crew.1 From the private international law perspective, all these factors reveal the minor role nowadays played by the flag state as the key connection in determining the law applicable to an employment relationship in the shipping and fishing industries.2 Nevertheless, the same factors make it very difficult to determine a closer law to maritime employment than the flag jurisdiction, for which reason its empowerment is sought at international level.
Flags and crews of convenience are manifestations of aggressive international competition, eager to reduce the costs of maritime ventures and able to operate without legal constraints, given the lack of a single state’s power to level the playing field. The point is that unfair competition threatens maritime safety in general and worsens the living and working conditions of seafarers and fishermen. The drift towards deregulation as encouraged by flags of convenience has therefore been constrained precisely because of its high costs, such as those arising from maritime accidents. Efforts have meanwhile been made to improve labour standards, an area in which the work of the International Maritime Organization (IMO) and the International Labour Organization (ILO) has been particularly salient, as they have become the forum in which a level playing field in terms of competition is being fought for.
The ILO in particular has produced numerous international conventions that have become the core of international labour law. The last section of this chapter is devoted to these institutions’ work, and in particular to an examination of the Maritime Labour Convention 2006 (MLC, 2006) and the Work in Fishing Convention 2007 (WFC 2007). Both are key conventions as they codify the great majority of previous legal instruments in these matters while reinforcing compliance with minimum labour standards, mainly by placing clear-cut responsibilities on flag states and also on port states and labour-supplying countries. It should be noted that their scope of application is not restricted to the ratifying states since ships flying third state flags are also under the obligation to meet the standards established by the conventions: in other words, the role of port state control is reinforced in both conventions, in particular MLC, 2006, and all ships arriving at the port of a contracting state must comply with the conventions’ minimum labour standards, subject to immobilisation.
In fact, the introduction of minimum labour standards has succeeded in levelling the playing field to a certain degree and in stopping the race to the bottom between competing labour laws in terms of worker protection. In this regard, worker protection could now be said to be at a point somewhere between the very high and the very low labour standards found in different countries.3 For the purposes of this study, the ILO Conventions reveal a change of perspective; international fora no longer seem to require a genuine link between a flag state and a ship flying its flag to ensure that there is a socio-economic link between them to justify the flag state’s legal intervention in the vessels’ affairs but look for ways to make the flag state fulfil its international obligations effectively. With this goal in mind, essential labour standards are being harmonised, and their implementation is entrusted to the flag state, given that this is now the only state with jurisdiction on board according to public international law. However, in cases where flag states do not fulfil their obligations, port states have to take the lead in ensuring that shipowners comply with minimum standards. Indeed, port state monitoring reveals that there is a crisis in terms of the flag being the factor that shows the closest jurisdiction in labour and employment matters. Nevertheless, both MLC, 2006, and WFC 2007 make it clear that the flag state bears the main international responsibility in these matters, and the ground is prepared for rebuilding the flag jurisdiction as the best law to rule on employment matters.
2.2 The Principle of Freedom of the Seas, a Ship’s Nationality and the Law Governing Labour and Employment Matters on Board
The principle of freedom of the seas is more than just a metaphor to describe the fact that the seas are theoretically an open space without a set of established rules, which are now under the umbrella of various international conventions. The earliest attempts to tame the seas include state appropriation of vessels registered in or otherwise connected with their own territory, meaning that a vessel had taken on the state’s nationality and the obligation to fly its flag. In fact, the introduction of this international obligation runs parallel to the consolidation of the principle of freedom of the seas and oceans in public international law, as this goes hand in hand with international rules that guarantee free circulation and the maintaining of public order at sea—whether it involves decisions about certain events, such as births, deaths or crimes; regulating matters pertaining to the ship itself; or determining behaviour and responsibilities arising from the very fact of being at sea, particularly vis-à-vis third parties. The flag state, therefore, has certain rights over ‘its’ vessels in relation to other states—both on the high seas and in its territorial or inland waters—but it also has certain duties, and it is the combination of these rights and duties that make up the concept of nationality.4
According to Article 91(1) of the United Nations Convention on the Law of the Sea (UNCLOS) issued at Montego Bay on 10 December 1982, ‘every State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship’. Articles 94 and 217 of UNCLOS describe in detail the different duties that fall within the sphere of state control with respect to ships flying its flag. Prior to this Convention, Articles 5 and 16 of the Geneva Convention on the High Seas of 29 April 1958 already conferred jurisdiction over matters on board to the flag state.5
The nature of the relationship between a state and a vessel over which it has jurisdiction has been widely discussed since the ship is just a movable asset. The initial approach was that the vessel was subject to national sovereignty because it was part of the territory of the state to which it belonged.6 This fiction soon became inconsistent in the face of the principle of freedom of the seas, which establishes that it is not necessary to obtain permission to fly over a ship or sail under it, for example, whereas such permission is necessary when dealing with state territory.7 The subsequent approach to justifying flag jurisdiction mirrored the relationship between a state and its nationals, highlighting the idea that the same bond is applicable to the relationship between a state and a vessel flying its flag. However, citizens and ships have different rights and duties as holders of a nationality, and so this explanation of flag jurisdiction also became useless and further arguments were put forward to support national sovereignty on vessels. The first of these took into account a shipowner’s nationality and looked at its correlation with the nationality of the vessel itself. This correlation is rare nowadays, given that the success of open registries specifically relies on the relaxing of the requirement for shipowners to be nationals of the states their vessel are registered with; therefore, state sovereignty over shipowners cannot be extended to their ships.8 The second argument departed from the English practice of conferring the status of a legal person on a ship.9 However, this treatment was only granted for the purpose of taking legal action against the ship, i.e., placing the vessel in the position of a defendant, or rather deeming it an object that might be subject to attachment, so the fiction was only useful to sustain admiralty jurisdiction in rem.
All in all, the conclusion to be drawn is that a ship’s nationality is a sui generis construction.10 While the inappropriateness of the term nationality to describe the link between flag state and ship has already been remarked on, it is also acknowledged that the term has played the key role of supporting the connection between a ship and a particular state.11 In any event, this bond between a state and a vessel flying its flag—supported by international conventions as well as international customary law—remains as a counterbalance to the principle of freedom of the seas.12
The fact that jurisdiction over a ship is ‘allocated’ to a specific state justifies the application of the state’s own national laws to the vessel, as well as the fact that jurisdiction over matters related to it be granted to the master and officers of the vessel as legitimate representatives of the power on board.13 Prior to the proliferation of open registries, such power could only be exercised by flag state nationals, which is to say that the captain and the officers had to be holders of the nationality in question.14 In fact, this rule is only meaningful in the framework of the current structure of international labour markets, whereas in a less globalised world crew members typically shared their vessel’s nationality, which in turn was also the shipowner’s nationality as a rule. This situation is only currently maintained in closed registries, which still require strong connections between vessel and flag state, sometimes including the requirement for the ship to be built on the flag state’s own shores.15
In contrast, a ship without a flag is a pirate ship and is not subject to any law or jurisdiction. By the same token, any vessel can only fly one flag,16 and the respective state takes responsibility for its actions. Against this background, flag states’ interest in knowing which ships are flying their flags—for which registration is generally mandatory—becomes obvious. For similar reasons, flag states also have an interest in specifying seafarers’ and fishermen’s training and professional qualifications and overseeing crew members’ employment contracts. In addition to determining working and living conditions on board a ship, the flag state intervenes very early on in sailors’ training activities for military purposes. This practice shows that it is the law of the flag that holds sway on board, including in aspects such as living and working conditions,17 except for in specific events with implications going beyond the ship itself, occurring in waters subject to the jurisdiction of a coastal state or involving more than one ship.18
The fact that a ship is subject to the jurisdiction of the flag state determines not only which law governs on board but also the need to accept international responsibilities regarding the ship, meaning that it has to comply with both international and national laws as passed by the state in question, while the vessel benefits from the state’s protection, including on issues such as repatriation of the crew irrespective of their nationality.19
The principle of freedom of the seas is not an absolute but a relative principle: states have specific rights and duties in relation to specific areas. According to Article 2 of UNCLOS, coastal state territory includes territorial waters within what is known as the contiguous zone. State sovereignty here is limited, however, since it can only be exercised in accordance with public international law provisions, which impose the right of innocent passage, for example.20 In this regard, the coastal state is not allowed to use the fact that a ship is sailing through its territorial waters to exercise civil jurisdiction over the people on board and the ship itself by adopting precautionary or arrest measures, ‘save only in respect of obligations or liabilities assumed or incurred by the ship itself in the course or for the purpose of its voyage through the waters of the coastal State’.21
Public international law allocates other areas beyond the coastline to coastal states: the exclusive economic zone and the continental shelf. In both areas, sovereignty is much more limited than in the territorial sea. Within the exclusive economic zone, jurisdiction is limited to the construction and use of artificial islands and other facilities and structures, marine scientific research, the protection and preservation of the marine environment and other rights and duties provided for in Article 56 of UNCLOS. State sovereignty over the continental shelf is used only for the purposes of exploring and exploiting natural resources in accordance with Article 77 of UNCLOS. Coastal states’ jurisdiction specifically covers offshore oil rigs as well as other facilities for the exploiting of mineral resources. The exploiting of fish stocks is more complex due to sustainability issues and is subject to fishing quotas. With regard to the ship’s internal affairs, however, the flag jurisdiction is applicable in accordance with Article 94 of UNCLOS.
2.3 The Internationalisation of Maritime Employment: Developments in Ship Registration Systems
2.3.1 The Fight Against the Flight of Shipping and Fishing Fleets to Flags of Convenience
After the decolonisation period and the Second World War,22 it became clear that the fragile consensus prevailing on the conditions required to fly a state’s flag had been breached.23 The main requirement was that the vessel and owner had the same nationality, which, as previously mentioned, was typically shared with the crew. Nevertheless, this coincidence disappeared with these historical events, as they encouraged the opening of registries in developing countries. These states viewed ship registration as a business opportunity, and this was the beginning of the boom of flags of convenience. The new system provided shipowners not only with fiscal and social advantages but also with further incentives stemming from the lack of control over registered vessels in terms of compliance with technical and labour standards. It is worth noting that flags of convenience may also threaten transparency with regard to ships’ operators; indeed, some open registries ensure shipowner anonymity as a further advantage of registering in their countries.24
The heyday of the use of flags of convenience encouraged the flight of merchant and fishing fleets from traditional maritime countries to other more tolerant nations. This had immediate consequences on crews, not just because such countries enjoyed far more flexible social and labour standards but also because jobs were moving there as well. Given the adverse effects of forum shopping on living and working conditions on board, trade unions25 and major international organisations began to try to pierce the veil and bring the flags of convenience system to an end26 by demanding a genuine link between a ship’s flag and its owner’s nationality. This campaign reached a deadlock, however, as public international law allowed every country to determine the conditions required for a ship to acquire the country’s nationality. The only way this freedom could be restricted would be through an international convention, and for this reason discussions on the topic shifted to the diplomatic arena.
The ‘genuine link’ concept was first formulated in Article 5 of the 1958 Geneva Convention of the High Seas. This provision, however, only served to strengthen the flag of convenience system since it implied that nations were free to grant their flags to any vessel willing to register in their territory.27 Subsequent attempts to identify a genuine link between flag states and vessels have not had significant results,28 a noteworthy example being the United Nations Convention on Conditions for Registration of Ships adopted on 6 February 1986,29 which has never in fact come into effect. This Convention defined the concept of ‘genuine link’ in terms of two fundamental pillars: the presence of a competent and appropriate national maritime administration with authority to monitor the ship’s safety and the implementing of international rules and standards on board, on one hand,30 and, on the other, the development of economic links with the state, in particular national participation in ownership of the vessel, the composition of crews and management of the companies owning the vessels,31 as well as ensuring the easy identification of owners and operators of vessels,32 in order to claim liability if necessary. However, these links were labelled inaccurate, as each state could interpret them differently.33 In fact, the best way to monitor the veracity of ‘genuine links’ would have been to introduce a sanctions regime resembling the one posited during the negotiation of the 1958 Convention. At the time, non-recognition of the nationality granted to a vessel was proposed should close links be lacking; as this proposal was ultimately not included in the Convention, each nation is free to grant its flag to a ship under whichever conditions it deems appropriate.34
In addition to this, developments in company law have contributed to problems in reaching an agreement on what a genuine link is. Nowadays, freedom of establishment allows dissociation between company and shareholder nationality; accordingly, a shipping or fishing company can be set up in the country where the ship is registered, but not the beneficial ownership. The proliferation of corporate groups further complicates the situation.
Against this background, the problem of how to establish a genuine link between a state and the ships flying its flag is still being discussed in international fora. Particularly salient are the numerous UN General Assembly resolutions inviting IMO and other relevant UN agencies to rethink the issue of how to make flag states take up their responsibility with respect to vessels—including fishing vessels—registered in their territory.35 In fact, the IMO has consistently explored the role of the ‘genuine link’ in national practice as well as the consequences that states not meeting their international obligations should bring.36 In this regard, the focus of international concern has now shifted from finding a conventional definition of what a genuine link is to ensuring that flag states effectively exercise the jurisdiction conventionally vested upon them over ships flying their flag. This change of approach has been confirmed by international efforts aimed at providing real content to flag state jurisdiction by issuing international conventions complementing UNCLOS and establishing specific obligations to be complied with by flag states. In this regard, the ITF classification of flags of convenience seems to have become obsolete, and hence the organisation has announced changes in its strategy.37
Finally, it must be mentioned that the above discussion does not question a ship’s flag as the connecting factor when it comes to governing the ship’s affairs,38 as international practice has not provided for alternatives to flag state jurisdiction. Within the framework of EU law, it is worth commenting on the CJEU’s decision of 24 November 1992 involving a fishing ship owned by a Danish company with a Danish crew but flying a Panamanian flag that was chosen to circumvent restrictive fishing measures adopted by the then European Community. The Court in Luxembourg claimed that there was no reason to refuse to recognise the nationality of a ship granted by a state in the exercise of powers conferred on it by public international law.39 This argument is consistent with its ruling on British laws that required any shipowner registering a fishing vessel in the United Kingdom to hold British nationality; although the CJ answers in accordance with the Community prohibition on discrimination on grounds of nationality, it also concedes that ‘as Community law stands at present, it is for the Member states to determine, in accordance with the general rules of international law, the conditions which must be fulfilled in order for a vessel to be registered in their registers and granted the right to fly their flag (…)’.40
2.3.2 Capitulation: International Registries and Second Registries
These hurdles to establishing a genuine link between states and ships flying their flag, along with forum shopping in maritime law, have led to many countries opening second registries and international registries as a way to curb the decline of their merchant and fishing fleets in an environment of steady migration towards flags of convenience.41 This is the case with Spain, which has a second registry in the Canary Islands;42 Portugal, which has a registry in Madeira;43 and Denmark,44 Luxembourg,45 Norway and Germany with their respective international registries,46 an example that has also been followed by France.47 Even the European Union itself considered the possibility of including a second Community registry—EUROS48—but the proposal has not come to fruition.
Registering ships in these entities provides fiscal benefits, as well as social advantages, since the registries enjoy a special status affecting employees’ working conditions, differentiating between workers who are resident or domiciled in the country where the register is held and those whose residence or nationality is elsewhere.49 This distinction opens the door to the possibility of applying different laws to workers aboard, in particular in terms of salaries, to such an extent that crews working on the same vessel may receive different salaries for the same work.50 This is not new, and the ITF has defined the practice as ‘crews of convenience’.51 Manning agencies, strategically located in countries with low wages, have encouraged the growth in the number of crews of convenience, thus decisively contributing to the internationalisation of maritime employment.
The establishment of these registries and the legal differences between workers aboard that they allow have been constitutionally challenged, although unsuccessfully. Both the German Bundesverfassungsgericht 52 and the French Conseil Constitutionel 53 concluded that both international registries were compatible with their respective constitutions. The French Constitutional Court was specifically questioned about the breaching of the ‘equal work for equal pay’ principle, as emphasised in French law—just as it is in the laws of many other countries setting up second registries—inasmuch as seafarers not domiciled in France may not be covered by the flag state’s labour legislation and thus be submitted to working conditions, including wages, that differ from those applicable to seafarers domiciled in France. The Court justified the distinction introduced by the French law establishing an international registry on the ground that a vessel was not part of the territory of the state that lends it nationality. As Recital 33 of the French ruling states, ‘qu’il résulte des règles actuelles du droit de la mer qu’un navire battant pavillon français ne peut être regardé comme constituant une portion du territoire français: que, dès lors, les navigants résidant hors de France qui sont employés à bord d’un navire immatriculé au registre international français ne peuvent se prévaloir de toutes les règles liées à l’application territoriale du droit français’.54 This decision has been understood to weaken the idea of the flag as a crucial factor in determining which law is applicable to individual employment contracts.55 However, the Court simply emphasises a differential factor affecting workers—the fact that they come from different countries—to justify the exception to the principle of equality at work, at least with regard to salaries. The law that should govern employment matters is a different issue, in which the flag may still play a role, and is determined in any event by Article 8 of Rome I Regulation in the European area of justice.
The German international register was also questioned before to the CJEU, not because of infringing the principle of ‘equal work for equal pay’ for EU and non-EU workers but because the tax regime and social security benefits available to ships registered there may well be deemed as some kind of state aid.56 The ruling was in Germany’s favour since, according to the Court, the rule granting these benefits is part of Germany’s private international law and not an instance of state aid. Nevertheless, immediately afterwards the EU adopted the ‘Community Guidelines on State aid to maritime transport’,57 amended by Commission Communication C(2004) 43,58 supporting shipping companies’ exemption from taxation and social security contributions in order to increase their ability to compete internationally.
These guidelines have achieved a relative degree of success in curbing the flight towards flags of convenience by extending flat rate tonnage taxation systems (tonnage tax) and other tax benefits, such as reduced social security contributions and a reduced income tax rate for EU seafarers employed on board ships registered in a member state. These benefits are not limited to member states’ national registries since international, second and open registries can equally enjoy these benefits.59 It is, however, imperative to prove that there is a link with an EU flag by providing ‘details of vessels owned and operated under Community registers, Community nationals employed on ships and in land-based activities and investments in fixed assets’,60 in addition to the prerequisite that companies entitled to this benefit must pay corporate tax in an EU member state. Companies interested in benefitting from this kind of aid have to demonstrate that they comply with international and EU safety standards as well as with rules regulating working conditions on board. The benefits are not confined to shipping companies and may include applications from businesses providing different types of services to shipowners, including crew recruitment and placement services as well as training and management.61 Despite the fact that seafarers’ wages and social protection on board have become more flexible, this helps maintain minimum labour standards and avoids a race to the bottom in this area.
2.4 The Internationalisation of Maritime Employment: Parties to the Maritime Employment Relationship
This section deals primarily with the parties to the employment contract but also pays attention to the impact of business cooperation on the employment relationship. As previously noted, the immediate consequence of the internationalisation of maritime employment has been the estrangement of the parties to an employment contract from the flag state, as crew members and the shipowner may well come from different countries and their nationalities may not match the vessel’s flag. Business cooperation plays a major role in the multinational origins of employers and employees in the shipping and fishing sectors, unfortunately leading to situations where it is sometimes difficult to identify the employers and where they are located.
In addition to the concepts of maritime employee and employer, the section also covers the role of manning agencies in providing seafarer recruitment and placement services to maritime employers. A manning agency may also be part of a corporate group and carry out its management tasks on behalf of other companies in the same group. Indeed, corporate groups are very common in the fishing and shipping sectors, where specific kinds of business cooperation have developed. The point is that the close financial links between companies belonging to the same group often make it unclear who the real employer is. Business cooperation in the shipping and fishing sectors is therefore tackled in this section, as well as legal solutions to the problem of identifying the employer. The first involves piercing the corporate veil, while the second is a more proactive approach as it aims to enhance best management practices by promoting corporate social responsibility.
Besides employment matters, other potential respondents vis-à-vis seafarers or fishermen may need to be identified. Significant examples are claims for damage to persons or property arising from collisions between ships or claims arising from damage suffered in ports. In all these cases, it may be necessary to find out who the owner of the other ship is—which is similar to the problems that seafarers may face in identifying their employer, in particular in cases of corporations—or the person among port workers and port authorities who is responsible for the accident.62 As these claims are not included within the concept of labour and employment relations, the parties to these relationships are not covered in this section.
2.4.2 Maritime Employees
International labour law does not provide for an autonomous definition of ‘seafarer’, as can be seen from Article 1(2) of Convention No. 145 on Continuity of Employment (Seafarers), 1976: ‘persons defined as such by national law or practice or by collective agreement who are normally employed as crew members on board a sea-going ship (…)’. MLC, 2006, and WFC 2007 have gone a step further and removed references to national law from their respective definitions of maritime employees. Article II(1)(f) of MLC, 2006, defines seafarers as ‘any person who is employed or engaged or works in any capacity on board a ship to which this Convention applies’, while Article 1(e) of WFC 2007 identifies fishermen as ‘every person employed or engaged in any capacity or carrying out an occupation on board any fishing vessel, including persons working on board who are paid on the basis of a share of the catch but excluding pilots, naval personnel, other persons in the permanent service of a government, shore-based persons carrying out work aboard a fishing vessel and fisheries observers’.
It should be noted that these definitions do not take into account the kinds of tasks performed on board, and by this means interpretive problems in relation to staff on board performing services other than those related to navigation or fishing, such as waiters, cashiers or scientific personnel, are now solved. All workers on board are currently covered by the provisions of these conventions, and the scope of application of MLC, 2006, is particularly broad since it covers both the transport of goods and passengers.63 Differences in workers’ duties on board are thus irrelevant for the purposes of this book.64
Where ships’ captains are concerned, the fact that their position is one of command casts doubt on whether or not there is indeed a genuine employment relationship between captain and shipowner.65 Captains exercise disciplinary power on board while simultaneously performing managerial tasks on behalf of shipowners as well as acting as their sales representatives. They are also legally vested with special powers, some of which are administrative in nature—including nautical management of the vessel as well as maintaining safety measures on board and at sea—while others are civilian—such as occasionally carrying out the functions of a civil registry constituting civil status,66 which was why only flag state nationals could hold this post.
Nevertheless, the privilege of nationality has to be understood today in the framework of the EU’s prohibiting discrimination on grounds of nationality.67 The CJEU has ruled on this matter, indicating that the prohibition is applicable to both the merchant and fishing sectors.68 Although both captain and first officer are vested with public powers on board,69 including safety and disciplinary issues and measures in the fight against pollution,70 these are in fact residual, and it is therefore not possible to justify an exception to the prohibition of discrimination on grounds of nationality, as also applies to some other public sector jobs.71 In this context, and as long as they do not hold any other position in the shipping company, such as principal partner or owner of the ship on which they also operate as captain,72 captains and officers have to be considered to be employees because they take orders from the owner and do not bear any business risk. This conclusion can also be drawn from the complete definitions reported in both MLC, 2006,73 and WFC 2007, where it is clearly indicated that the position held by workers on board is not relevant; what matters is the fact that they are subordinates.
2.4.3 Maritime Employers
The ILO Conventions do not provide a definition of who may be deemed a maritime employer, perhaps because these Conventions are directed not at private actors but at nations. ILO Convention No. 145 commented on above does mention employers, but only collaterally in Article 3, when it deals with ‘contracts or agreements providing for continuous or regular employment with a shipping undertaking or an association of shipowners’. Accordingly, shaping the concept of maritime employer is left to national law—not an easy task, as this is an especially complex definition due to the profound transformations undergone by shipping and fishing companies.74 Indeed, one of the key issues regarding worker protection is identifying the employer, i.e., the person accountable to national laws in employment matters.75
Employers can be defined as the party to a contract who contracts the provision of employment services under certain conditions, either with a for-profit or a non-profit intent. Shipowners fit this definition,76 which can be completed by reference to the place where the services are provided: a vessel or a fleet—as employees may be attached to more than one ship if the employer owns more than one vessel—operating under the employer’s organisation and instructions.
It is therefore important to emphasise that ownership on the one hand and the operating of a ship or fleet on the other are currently seen as separate concepts, and it is the operating of the fleet or vessel that matters when it comes to identifying employers,77 as acknowledged by MLC, 2006, and WFC 2007. Both conventions take a functional approach when defining the employer, pointing to the identification of the person responsible for the obligations imposed and understanding that the employer is ‘the owner of the ship [or fishing vessel] or any other organization or person, such as the manager, agent or bareboat charterer, who has assumed the responsibility for the operation of the vessel from the owner and who, on assuming such responsibility, has agreed to take over the duties and responsibilities imposed on shipowners [fishing vessel owners] in accordance with the Convention, regardless of whether any other organization or person fulfils certain of the duties or responsibilities on behalf of the shipowner [fishing vessel owner]’.78
These definitions confirm the dissociation between owner and employer, as they specifically refer to different means of operating a ship. To take the most common as an example, leasing a vessel involves the leasers agreeing with the leasees to make a ship available for operating on the latter’s behalf and at their own risk. The ship may or may not be equipped and ready for sailing, but the leaser passes nautical, technical and commercial management of the vessel to the leasee. The charterer thereby becomes the sole owner of the shipping or fishing business, is in charge of operational developments and becomes, in turn, an employer.
Under one form, bareboat charter registration, in addition to accepting a ship’s nautical and commercial management, the charterer can also choose its nationality via a temporary change of flag. As long as a ship is under contract, it cannot sail under the owner’s flag, and this nationality is held in abeyance. The charterer also of course assumes the right to appoint master and crew throughout the contract.79
For its part, time charter is a type of contract via which the shipowner gives the charterer the use of a fully equipped freighter for a fixed period of time in exchange for a lease or freight and for commercial purposes. This per-time contract—different from a per-voyage contract—involves the shipowner remaining in control of the vessel’s technical and nautical management and brings about a kind of shared control over the captain and crew members: while the shipowner is responsible for nautical matters, the charterer is in charge of the ship’s commercial exploitation by, for example, giving indications to the master about ports of destination. The duality would only disappear if the contract included a clause for the transfer of the ship’s ownership, as both sides of ship management—nautical and commercial—would have been transferred.
188.8.131.52 Business Cooperation and the Issue of Identifying the Employer
Ship management companies provide shipowners with services relating to vessels’ technical and commercial management. Manning agencies or seafarers and fishermen recruitment and placement services are types of ship management companies specialising in crew management and thus deal with the selection, recruitment and hiring of crews.80 The role of manning agents may in fact go beyond these services, and they may continue to manage crews after recruitment, for example, by dealing with visas and journeys, organising crew changeovers, organising and paying salaries and social security contributions, dealing with crew members’ complaints and even negotiating working conditions with the ITF. They are so important for both the merchant and fishing sectors that the ILO has targeted the issue and ruled on seafarers’ and fishermen’s recruitment and placement services, which are now defined as ‘any person, company, institution, agency or other organization, in the public or private sector, which is engaged in recruiting seafarers [fishers] on behalf of, or placing seafarers [fishers] with, shipowners [fishing vessel owners]’.81
Manning agency operations actually involve three types of contract that have to be clearly distinguished from one another, as each is subject to its own law,82 despite the fact that they are usually intermingled: the first contract is between manning agency and shipowner and deals with placing the order to hire seafarers or fishermen, the second contract is the collocation or placement agreement between worker and manning agency and the third is the employment contract between shipowner and seafarer or fisherman, resulting from the manning agency’s role as intermediary. These intertwined relationships make identifying employers cumbersome and also generate conflicts of interest, since the agencies represent both the seafarers or fishermen seeking employment and the employers for whom they recruit and train crews, which includes checking their qualifications. In this regard, both MLC, 2006, and WFC 2007 make it clear that a ship or fishing vessel’s operator or owner is ultimately responsible for the employment relationship and therefore ‘seafarers working on ships that fly its flag shall have a seafarers’ employment agreement signed by both the seafarer and the shipowner or a representative of the shipowner (or, where they are not employees, evidence of contractual or similar arrangements) providing them with decent working and living conditions on board the ship as required by this Convention’.83
Due to the technical problems resulting from the type of relationship established between ship management agencies and shipowners, the 1988 Baltic and International Maritime Conference produced and adopted the Shipman Agreement, which outlines the activities of ship management agencies as agents operating on the owner’s behalf in the management of a vessel or fleet. Among their tasks is crew management, which in turn includes crew recruitment, training and command. The Shipman Agreement is a policy—available to the contracting parties—whose validity has to pass through the sieve of the relevant national law. It covers all forms of maritime management, including crew, nautical and commercial management. However, since the most common among these was crew management, the BIMCO also drafted a specific ad hoc policy: the Crewman Agreement.
The Crewman Agreement was adopted at the 1994 Baltic International Maritime Conference and focuses on crew recruitment and supply, requiring the ship management agency to ensure that seafarers have had a medical check-up, are duly qualified to perform the tasks commissioned to them and keep their professional qualifications up to date throughout their employment contract. There are currently two types of Crewman Agreement, one of which, Crewman B, deserves a specific mention as it expressly lays down that crew managers act in their own name,84 which means that they, and not the shipowners, are the actual employers. Crewman A, however, specifies that crew managers act as agents for and on behalf of the owners, as established by the Shipman Agreement.
The use of one of these policies provides valuable information about who the employer is. However, it is not always easy to find out whether the employer is the shipowner or the manning agency on the basis of the contract’s terms and conditions. This may lead to conflicts, for example when the contract does not contain information about who the employer is, sometimes because there is confusion as to the role played by agencies with respect to the workers.85 The agency may sometimes even specify that it is hiring workers on its own behalf,86 a fairly typical situation for fishing vessels.87 Furthermore, these agencies have become so important for both the merchant and fishing sectors88 that countries like the Philippines have decided that Philippine nationals should be recruited exclusively through manning agencies.89
For all these reasons, and also because employers may hire crews through a manning agency and then vanish, national courts take them into consideration in their decisions as to who is responsible for an employer’s duties, sometimes building a case of joint liability.90 In Spain, ship management companies are recognised by Article 10(4) of the Spanish General Regulation on business registration and affiliation,91 although they had been considered illegal for some time.92 This provision poses a problem of interpretation, as shipping agents and manning companies’ activity is not in accordance with Article 43 of the Statute of Workers, which states that agency work is held to be illegal unless undertaken by licensed companies and for temporary purposes only, which is not true of manning agencies. In any event, the labour market has changed substantially for seafarers and fishermen as a result of its internationalisation, and the activity of shipping agents and manning agencies has been accepted and qualified as a mandate contract covered by Article 1717(2) of the Spanish Civil Code, which states that by contracting on their behalf, agents are acting on clients’ affairs, and therefore the employers are the shipowners.93 In addition, Article 10(4) stipulates that ship management agencies hiring and paying wages to Spanish seafarers and fishermen serving on foreign vessels are the employers too, for social security purposes. This provision brings together previous Spanish jurisprudence and builds a case for joint liability,94 with the aim of preventing the kind of fraud that occurs when crews are recruited through a manning agency and once the work has been completed the shipowner simply disappears as a company without fulfilling the terms of the employment contract. By the same token, Article 164(2) of the Spanish Law on Shipping establishes joint liability for contract fulfilment of both shipowners and foreign shipowners’ agents recruiting Spanish nationals or residents in Spain to serve on board foreign ships.
The same problems have arisen in the construction sector, leading the EU to considering the possibility of issuing a similar provision whereby the contractors are held liable in the event that the employers-subcontractors fail to fulfil their obligations to posted workers.95 In view of the impact of manning agencies in the maritime and fishing sectors, the EU should consider promoting the same for such cases.
Corporate Groups and Further Business Cooperation Schemes
Business cooperation among corporate groups may include transferring employees from one company to another or having one company in charge of hiring employees for the other, i.e., acting as a manning agency. From a legal standpoint, there are two likely scenarios: one in which one company acts as employer whereas the other is actually employing the workers96 and another where there is a chain of contracts whereby workers are transferred from one company to the other, sometimes retaining a dormant contract with the first employer. A good example of this is a case reported—but not published—in Germany97 concerning an officer domiciled there who served with Reederei Hamburger ER from 1959 to 1979. The contract was then cancelled by the parties, and the worker was employed by E. E. Shipping Company Ltd., the London branch of the German company, which in turn transferred him to different one-ship-companies based in Liberia, Panama and Cyprus, all of which were controlled by the German company.
In practice, many companies are set up with the sole purpose of restricting their assets to a single ship, the only one they operate. A ship owned by a single-ship company is usually over-mortgaged but is the company’s sole asset, which means that creditors are deprived of the possibility of arresting sister ships, for example.98 In these cases, the main problem is tracing the beneficial owner, who should be ultimately responsible for employment matters.99 All in all, corporate cooperation dramatically increases the risk of workers’ rights being infringed.100
Maritime law has developed specific business cooperation schemes, such as liner conferences and liner consortia, where companies are treated on an equal footing. In the case of liner conferences, each company operates individually in the market,101 whereas liner consortia involve participating companies pooling certain assets, such as crew, a central office and the fleet, to achieve a specific aim. Against this background, the question is who is accountable for any environmental damage or infringement of competition law, for example. The best answer comes from studying the type of legal relationship established between the companies: whether they have opted for being independent but operating as a consortium on the basis of specific contracts, in which case general accountability rules are applicable, or have set up a more sustainable scheme and specific answers to the liability issue are therefore to be sought within the scheme.102 This issue remains unresolved in cases where seafarers are assigned not to a particular vessel or company but to all participant companies in the consortium. Certain legal systems—including Spanish law—may deem this transfer of workers illegal, but the most feasible solution is for all companies involved in the consortium to be held jointly liable vis-à-vis crew members.103
Business cooperation in the fishing sector has been channelled through joint enterprises and temporary joint ventures aimed at exploiting fish stocks under the responsibility of the respective coastal states. According to Article 9(3) of the Council Regulation (EC) No 3699/93, a joint enterprise is ‘any company regulated by private law comprising one or more Community shipowners and one or more partners in a third country, constituted in the framework of formal relations between the Community and the third country, with the aim of fishing for and possibly exploiting fishery resources in the waters under the sovereignty and/or jurisdiction of the third country, with a view to the priority supply of the Community market’.104 In these cases, transferring crew involves the new company taking on all the first company’s rights and obligations. This is a very common pattern in Spain,105 typically involving Spanish fishermen hired by a Spanish employer to work on a vessel flying the Spanish flag. After the transfer, the employees work for a foreign company on a ship flying a foreign flag, but their former employer remains a stakeholder in the joint enterprise.
Joint enterprises are deemed legal by the European Union,106 although seagoing vessels in general are excluded from the scope of Directive 2001/23/EC of the Council of 12 March 2001 on the approximation of the laws of member states relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or part of undertakings or businesses.107 The same restriction may be adopted by member states on transposing Directive 2002/14/EC of the European Parliament and the Council of 11 March of 2002, which establishes a general framework for informing and consulting employees in the European Community.108 In its Communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions on ‘Reassessing the regulatory social framework for more and better seafaring jobs in the EU’, the Commission fortunately stated the need to re-examine this exclusion.109
Along the same lines, an assessment of the functioning of the two Directives jointly with others that also exclude seafarers and fishermen from their scope of application was initiated in 2010. The fundamental goal of the whole revision process is to make working at sea more attractive and appealing to young people by making it clear that working rights are the same as they are on land. The European Commission issued a Proposal for a Directive of the European Parliament and of the Council on seafarers by amending Directives 2008/94/EC, 2009/38/EC, 2002/14/EC, 98/59/CE, 2001/23/EC,110 including both Directives seeking to grant seafarers and fishermen working on ships registered in a member state or flying a member state’s flag a degree of protection equivalent to the one provided there.
184.108.40.206 Solutions Vis-à-Vis the Lack of Business Transparency
Piercing the Corporate Veil
When the relationship between companies is blurred and doubts are cast on whether they really are different entities, it may be necessary to raise the corporate veil in order to establish their joint liability.111 The doctrine of piercing the veil operates on the basis of different legal grounds and by recourse to different laws whose application to the issue depends on the legal relationship involved.112
For example, this doctrine is regularly applied in the shipping and fishing sectors in cases involving the arrest of vessels that are deemed by creditors to be the property of their debtors, even if the vessels are assigned to a different company. In such cases, national courts proceed to lift the veil in accordance with the International Convention relating to the Arrest of Sea-Going Ships and using their own law.113 As is discussed in Chap. 4, seafarers may well have recourse to the Convention to ensure that their claims against shipowners are paid, thus taking advantage of this doctrine. National jurisprudence proceeds by identifying when ships are to be deemed sister vessels on the ground of a number of indicators, including if (1) the vessels belong to the same owner, (2) the companies owning the vessels share assets that are used indiscriminately by both, (3) both are based in the same place, (4) they have a single insurance policy that is valid for all the ships in the fleet, (5) one of the companies is deprived of its decision-making capacity, and, above all, (6) all the companies—which usually operate as single-ship companies—are managed by the same business.114
However, there is no doctrinal consensus as to which law should be applicable when it comes to piercing the corporate veil, whether it is the lex causae or the lex fori.115 Bearing in mind what is at stake, i.e. identifying the employer in an employment relationship, the lex laboris would appear to be the best choice. However, most legal systems—including Spain’s—do not set out a clear definition of the procedure for piercing the corporate veil, and this has mainly been developed by the courts. As a result, the lex fori seems best placed to pierce corporate law on practical grounds: first, because it is the closest and most familiar to the courts that have to make the decisions and, second, because the other option may involve the application of different laws as is the case where there is a chain of employment contracts with different companies in the same group.116
As to when the veil should be lifted, the standard of proof required by national courts varies considerably. For some, the apparent confusion between the two companies to the point where third parties believe them to be a single company is enough.117 For other courts, there is a requirement to establish that there actually is a fiction, i.e., that the company that is the formal owner of a ship is a shell company run by the company that is accountable to creditors. There are examples of this modus operandi in the US,118 France,119 Italy,120 and Spain.121 In other cases, evidence of fraud or abuse of law is required, meaning that proof of intention to defraud creditors must be provided for corporate veil to be lifted, as shown by judicial opinions from the Netherlands,122 France,123 Greece,124 Italy,125 the US,126 the UK127 and Spain.128
The matter has also been raised before the CJEU.129 However, the wording of the questions at stake did not refer to the issue as such, as the case focused on determining which law was applicable to an individual employment contract concluded between a Dutch engineer and a shipowner based in Luxembourg. The contract was expressly subject to Luxembourg law, but the issue in point was whether the applicable law was that of the premises where the employee had to go to get his instructions and to which he returned after each voyage in one of the vessels owned by the shipping company. The establishment in question belonged not to the company but to a different business based in Belgium. Against this background, the CJEU was asked whether the Belgian company might be deemed to own the Luxembourg company for the purposes of designating the law applicable to the employment contract in the absence of choice of law. The plaintiff alleged that he always had to be given his instructions at this establishment, whose director was also the director of the Luxembourg company even though the employer’s authority had not been transferred to the other company, for which reason the Court made reference to the issue of lifting the corporate veil.130 In its judgment, the CJEU emphasised that the seized court must ‘take into consideration all the objective factors making it possible to establish that there exists a real situation different from that which appears from the terms of the contract’,131 making specific reference to its Eurofood IFSC judgment, according to which the lifting of the corporate veil must proceed when the legal person is a shell company.132 The CJEU would therefore seem to require a strict standard of proof when it comes to lifting the corporate veil. Nevertheless, this test is still to be developed at EU level, and the issue is presently in the hands of national courts.
Corporate Social Responsibility
The cross-border nature of businesses and the strengths and weaknesses stemming from their interaction with a number of regulatory and jurisdictional schemes are the driving force of a voluntary movement—encouraged by various national and international institutions—towards self-regulation, aimed at harmonising labour standards. Beyond hard law standards such as those contained in MLC, 2006, and WFC 2007, this movement promotes the development of soft law, i.e. codes of conduct for best practices in companies, affecting both internal and external matters.133
In this respect, it is worth noting the ILO’s drafting of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy,134 available to all companies interested in joining the movement. In the same vein, the United Nations has instituted the Global Compact to promote corporate social responsibility.135 Other non-governmental organisations have been working towards the same objective, including the International Organization for Standardization (ISO), which is developing the new ISO 26000 Standard on corporate social responsibility136 aided by the United Nations, with which it has signed a Memorandum of Understanding in order to meet, inter alia, the ILO standards.137 All in all, this movement put emphasis on ethics and fair play, which, for example, can be encouraged by banks and other financial institutions by making shipping and fishing businesses eligible for financing, among other reasons, on the grounds of management and treatment of personnel who work on board ships138 or simply by hiring only companies that show respect for labour standards on board.
The Organization for Economic Cooperation and Development (OECD) laid down the Guidelines for Multinational Enterprises, which addresses both individual and collective labour rights, among other matters.139 The Guidelines are unusual in that they appear as government recommendations aimed at multinational companies operating in or from their own territory. For this reason, they can be a powerful tool when it comes to interpreting the conduct of companies in a group; that is, the Guidelines should not be used exclusively to assess the activity of a business in the territory of the participating state, but also its mode of operation in foreign countries when operating from a participating state, including through subsidiaries.140
This opens the door for considering the parent company accountable for its subsidiaries’ actions. The Badger case, involving the Belgian subsidiary of a US parent company, is a good example of how to achieve the latter’s liability for the former’s operations by enforcing the principles stated in the OECD Guidelines: the Badger Company, Inc., with headquarters in Cambridge, US, ordered the closure of its subsidiary in Belgium, which had been declared bankrupt and had left wages unpaid, through other subsidiaries also located in Europe. The employees brought a claim against the US parent company, considering it accountable for the wages before the Belgian courts. As a result of public pressure, the Belgian government petitioned the Guidelines Committee on International Investment and Multinational Enterprises for an interpretation of the OECD Guidelines to decide who they were actually aimed at, whether it was only group members in the territory of the participating state or the entire group as a whole, as all the companies were integrated into a single economic unit, regardless of where the company involved had been established.
Had this position been adopted, there would have been grounds for understanding that the parent company was liable for its subsidiary’s debts. Thanks to the agreement reached by employees and the parent company, the Committee did not need to give an opinion on the matter in the end, but it did issue a statement that did not preclude this liability, although the emphasis was on the unavoidable analysis of the circumstances involving the case, i.e., there must be proof that the parent company has influenced the subsidiary’s decisions on the subject matter.141 Later on, the Dutch court responsible for the Batco case ruled—on the grounds of the principles contained in the OECD Guidelines—on the British American Tobacco Company’s liability in its closure of a Dutch subsidiary with the aim of transferring its activity to Belgium, without proper consultations with the relevant government agencies and employees.142
All in all, the case law is sparse but promising, firstly, for the purpose of forcing companies to sign a code of conduct—such as the one provided by the ILO or OECD—to respect and apply the code even when they make decisions that may affect other companies they control and, secondly, for the purpose of determining parent company liability for a subsidiary’s actions. With this in mind, the OECD has improved mechanisms for interpreting the guidelines by promoting alternative dispute resolution methods, although it highlighted the fact that codes of conduct remain soft law.143 Further initiatives focused on accountability and transparency, such as the Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.144 The debate as to whether codes of conduct should be made enforceable thus remains open.
A growing number of companies, especially multinational corporations, are adopting codes of conduct that often incorporate international standards. For example, problems caused by transnational collective bargaining are now being dealt with via the adopting of a code of conduct that is usually imposed by company managers and sometimes negotiated with trade unions.145 In such cases, it is interesting to address the question as to whether a code of conduct adopted by a parent company located in a developed country with subsidiaries in emerging countries is binding or not; this would be useful for finding out whether claiming against the parent company for issues related to the management of subsidiary workers on the ground of culpa in vigilando would be feasible, i.e., holding the parent company accountable for failing to prevent conducts that might be detrimental to workers’ interests or for failing to meet its commitments in terms of monitoring the subsidiary’s conduct as established in the respective code of conduct.146
Apart from international agreements, this approach to codes of conduct offers a tenuous possibility of improving the working conditions applicable in a given country, even on the high seas. But it also involves major constraints—hence the use of the adjective ‘tenuous’—as it depends on the respective court judgment as to the binding character of a code of conduct generally classified as soft law. In reaching such decisions, courts usually take into consideration the detail of the provisions contained in the code of conduct agreed by the company, the degree to which the code has been disseminated and therefore how much knowledge explicit and implicit addressees—such as workers—have about the code and the acceptance of what the code means to and for third parties.147 However, there is some reluctance towards adopting this approach, as it is likely to lead to conflicts with market freedoms, insofar as it could amount to a situation of abuse of a dominant position or to the imposition of trade barriers.148
In any case, the possibility of incorporating codes of conduct into an international contract, in which case their binding character may well increase, is worth exploring. In the cases mentioned previously in which different businesses cooperate, employment relationships are established between seafarers and one of the companies involved, whereas the other companies are not parties to such a relationship. Hence, it is simply not possible to file a contractual claim against any company other than the one involved in the contract, unless piercing the corporate veil is feasible. However, party autonomy may pave the way to a contractual claim if and when the code of conduct adopted by the group of companies is deemed to be incorporated in the contract at hand and therefore generates obligations that can be subject to legal action by third parties.
For our purposes, it is useful to explore the question of whether a company can force its counterpart to meet specific labour standards. This is usually done by choosing a counterpart from among firms that truly meet these standards149 or by forcing it to assume the company’s own code of conduct. The American company Wal-Mart serves as a good example here due to its involvement in a relevant case brought before the US jurisdiction.
The company had been sued on the ground that some of its suppliers in developing countries did not meet the standards set by its code of conduct, in particular the prohibition of forced labour and payment of minimum wages and overtime. In addition to ensuring that its suppliers enforced its code of conduct, Wal-Mart committed itself to monitoring its suppliers’ compliance with its standards. The plaintiffs therefore understood that an implicit contract had been established that was enforceable by third parties. However, the court failed to appreciate that the code of conduct gave rise to any obligations to third parties—workers in this particular case—as it simply set out company policy without providing sufficient detail to be deemed an offer that workers could accept, which would have generated contractual obligations.150 Contrario sensu, these obligations would arise if the company had adopted a code of conduct with an enforcement mechanism that could be invoked by third parties. It would then generate obligations vis-à-vis workers, which could be classified as contractual since they stemmed from the contract between the parent company and a supplier or partner, such as a shipping company.151 At any event and as commented above, this is a promising but still emerging way of making a parent company accountable for its subsidiaries’ actions.
2.5 International Labour Law
The globalisation process undergone by the merchant and fishing labour markets has led to the common understanding that the only factor that can balance the scales of global competition in its race to the bottom is international cooperation. However, the unstoppable growth of international trade has not been accompanied by comparable advances in terms of labour rights. In fact, these rights are carefully being excluded from World Trade Organization (WTO) authority, and their defence is being relegated to specific institutions, in particular the ILO, whose activities form the subject matter of the following pages.
It is also important to note that a number of routes have been explored with the aim of making multinational corporations comply with minimum labour standards; for example, the United Nations Conference on Trade and Development (UNCTAD) has suggested introducing a system of generalised tariff preferences for emerging states, granting them export advantages in exchange for participation in and implementation of international conventions, in particular those laying down minimum labour standards. The European Union also plays the role of ambassador for labour rights.152 Nevertheless, difficulties in monitoring the proper implementation of minimum labour standards cast doubt on the effectiveness of these routes.153
The ILO is a privileged forum when it comes to issuing rules on international labour law,154 and the fact that maritime employment deserves special attention has been clearly stated not only in numerous ILO Conventions on the matter but also in several Recommendations issued in cases where the consensus required for a convention was not achieved.155 The ILO has a unique structure and includes a participatory mechanism in which each national representation consists of four members, two representing the relevant government and two representing workers and employers from each member state respectively.156
A rough outline of the set of rights and obligations established by ILO Conventions with regard to maritime employment is provided in the coming pages; as our concern here is private international law and not international labour law, it is neither necessary nor desirable to go into detail. However, a brief run-through of the latter is essential since these conventions set up minimum standards and as such also need to be taken into account from the private international law standpoint. For example, the ILO’s efforts to force flag states to comply with their obligations to seafarers and fishermen are especially noteworthy as they amount to reinforcing flag state jurisdiction, regardless of the fact that other states may also be monitoring shipowners’ compliance with international labour standards.
Within its own set of conventions, which are characterised by a variable number of ratifications, the ILO draws a line highlighting the significance of those containing minimum standards deemed as essential, Convention No. 147 on Minimum Standards for Merchant Shipping (Minimum Standards) being a noteworthy example. In the same vein, it is worth mentioning the Declaration on Fundamental Principles and Rights at Work, adopted by the ILO in its 80th session in Geneva on 18 June 1998,157 by which the organisation sought to emphasise the core character of the freedom of association and the prohibition of forced and child labour and discrimination at work. All these principles need to be implemented by states regardless of the conventions they have signed.
This dividing line between the types of conventions raises many questions, as it involves advocating—to borrow ILO terminology—core labour standards in a context of growing international trade liberalisation,158 therefore moving away from a more belligerent stance aimed at effectively establishing a more advanced social framework in which the ILO takes a proactive and vigilant role in the implementation of labour rights.159
It is for this reason that MLC, 2006, was so welcome: it aimed to establish universally enforceable obligations, i.e., it is binding on all ships irrespective of the fact that they may be flying the flag of a non-member state—MLC, 2006, not only has to be implemented by vessels from the signatory countries but also covers all ships arriving at their ports, irrespective of their nationality. In fact, one of its main strengths is the increase in the number of officers involved in its proper compliance and, therefore, in the proper implementation of the labour rights it establishes. In our globalised world, enforcing rules on minimum working and living conditions is a complex task, and this has been the main cause for criticism of approaches such as that represented by the 1998 Declaration.
Although MLC, 2006, was the result of a consensus that had long been sought by trade unions, its success has been largely due to maritime employers’ contributions. Surprisingly, they were more interested than anyone else in drafting this document, as the Convention was seen as a way of achieving a system of fair competition in the shipping industry, one helping to level the playing field in the international arena.160 Thanks to the guarantees it included, this instrument’s implementation does not only depend on the number of states ratifying it but also depends on the tonnage they represent. This helps ensure that its application does not have detrimental effects on signatory nations and that its ratification does not actually lead to the very opposite of the outcome that the Convention intended to achieve, i.e., unfair competition from non-signatory states that may be benefitting from the fact that signatory nations have to apply stricter rules than non-signatory nations.
Most ILO Conventions and Recommendations do not apply to either artisanal or industrial fishing vessels, as agreed in a resolution adopted at the International Labour Conference of 10 November 1921.161 Building on the momentum generated by MLC, 2006, the ILO has drafted WFC 2007, whose scope goes beyond MLC, 2006, as it takes into consideration the deplorable working and living conditions on many fishing vessels,162 a factor that makes the Convention’s implementation absolutely essential. We can only hope that it will come into force at the earliest possible date.
The ILO’s intensive work is supported by both international and regional organisations such as the International Maritime Organization and the European Union respectively. In fact, the EU has issued numerous instruments and rules that are relevant to this study, despite the fact that its first steps were somewhat faltering, the result of insufficient legal competences with regard to employment matters, at least in the maritime transport sector163; however, there is a common fishing policy.164 The Union is currently an active member of the ILO and participated in and influenced MLC, 2006, negotiations.165 In 2009, the EU issued the Third Maritime Safety Package,166 designed to improve port state control over living and working conditions on board a ship. Council Decision 2007/431/EC167 and Council Decision 2010/321/UE,168 by which the EU authorised and encouraged member states to ratify MLC, 2006, and WFC 2007 respectively, are of particular interest. The EU has also reached an agreement on MLC, 2006, with trade unions and business associations with the aim of harmonising national legislation in accordance with the standards set out there,169 and a similar agreement has been reached regarding WFC 2007.170
In addition to ILO Conventions, it is worth mentioning that international human rights treaties also apply to seafarers and to fishermen and other employees working on board a ship, including on the high seas. To be more precise, this depends on each international treaty’s scope of application. In this regard, there is already a clear pronouncement on the scope of the European Convention for the Protection of Human Rights and Fundamental Freedoms (hereafter ECHR). In the case of Bankovic and others v. Belgium and 16 other States,171 the European Court of Human Rights (hereafter ECtHR) underlined the territorial nature of jurisdiction according to public international law and emphasised that exterritorial application is also admitted in some cases, as is the case with ships registered under or flying the flag of the state in question.172 Accordingly, the ECHR is also applicable on board ships sailing under the flag of a state party to the Convention.
Matters are different when it comes to treaties with a restricted scope of application, as exemplified by the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, adopted by the General Assembly in Resolution 45/158 of 18 December of 1990. Article 2 of this Convention specifies that migrant workers are anyone engaged, whether currently or in the past, in a remunerated activity in a country of which they are not nationals; ergo according to this definition, the Convention would be equally applicable to seafarers or fishermen employed on board a vessel registered in a state of which they are not nationals. However, the Convention does not apply to ‘seafarers and workers on an offshore installation who have not been admitted to take up residence and engage in a remunerated activity in the State of employment’.173 This is a significant exclusion and was adopted in response to pay gaps between countries supplying crew members, given that nowadays workers’ country of origin is taken into consideration when wages are paid.174
2.5.2 Minimum Labour Standards in the Shipping Industry
A quick glance at the ILO website reveals that there are over 60 conventions and some 40 recommendations on working conditions in the maritime transport sector. However, these have had different receptions and have had uneven numbers of ratifications, despite the fact that they all enabled an international labour code to be developed; indeed, this code was drafted as a way of avoiding unfair competition stemming from forum shopping. The outcome was MLC, 2006—adopted by the ILO at its 94th Maritime Session—which codifies most ILO Conventions on maritime employment matters and was described as ‘a single, coherent instrument embodying as far as possible all up-to-date standards of existing international maritime labour Conventions and Recommendations, as well as the fundamental principles to be found in other international labour Conventions’ and ‘designed to secure the widest possible acceptability among governments, shipowners and seafarers committed to the principles of decent work, that it should be readily updateable and that it should lend itself to effective implementation and enforcement’.175
MLC, 2006, was included in the 1999 ILO Decent Work Agenda and includes four main objectives: full employment, fundamental principles and rights at work, social protection and social dialogue. The deregulation process now prevailing in the international arena has also taken its toll on the ILO, which ought to measure its objectives in accordance with the general and bitter debate between those in favour of promoting employment creation and those who place the focus on improving social and working conditions, which, in turn, may halt the creation of new jobs.
MLC, 2006, was the result of a compromise that acknowledged both goals’ relevance, therefore giving fresh impetus to the debate, which now focuses on the true meaning of the term ‘decent work’, adding a certain flexibility in the application of international labour standards.176 Paradoxically, the first step taken in this direction was to make the Convention’s binding force dependent on ratification by at least 30 ILO members with a total share of not less than 33 % of world gross tonnage of ships.177 This minimum seeks to ensure that the Convention is complied with, as it imposes obligations that will only be effective when applied by a large number of states. The Convention came into force on 20 August 2013 after being ratified by 30 states representing 60 % of world gross tonnage.178
MLC, 2006 contains—amending where appropriate—37 maritime labour conventions,179 and also includes provisions on welfare and social security protection for seafarers.180 It comprises three separate but intertwined parts and includes 16 Articles followed by a set of Regulations and a Code, both structured into five Titles dealing with the following issues: minimum requirements for seafarers to work on a ship (Title 1); conditions of employment (Title 2); accommodation, recreational facilities, food and catering (Title 3), and health protection, medical care, welfare and social security protection (Title 4).
Unfortunately, MLC, 2006 does not address workers’ collective rights;181 nevertheless, in accordance with ILO Convention No. 147, ILO Convention No. 87 (1948) on freedom of association and protection of the right to organise and ILO Convention No. 98 (1949) on the right to organise and to bargain collectively are both applicable in this field.182 Finally, Title 5 deals with compliance with and enforcement of Convention provisions and constituted in itself a highly important breakthrough, for which reason it will be dealt with in a specific section later. Given the significance of this Title, it has been treated as the third pillar of the consolidated Convention.183 The Code contains two types of rules; Part A regulations and standards are mandatory, whereas Part B guidelines are not, although states have agreed to pay them due attention.184
The Convention is self-executing, but if states are unable to apply the principles and rights as provided for in Part A they may resort to ‘any law, regulation, collective agreement or other implementing measure considered to be substantially equivalent’, in accordance with the definition of ‘equivalent’ as laid down in Article VI(4).185 By means of this provision, the Convention aims to give material form to the compromise between promoting job creation and improving working conditions at sea: in this way, states are granted flexibility in applying the Convention in accordance with their particular circumstances and degree of development.
Flexibility in applying the Convention is also manifest in the general formulation of numerous provisions of Part A, leaving member states ample room for manoeuvre in its implementation. As stated in the Explanatory Note to the Regulations and Code of MLC, 2006, guidance on implementing the non-mandatory provisions in Part B is provided, but as they are non-binding, states may always resort to other types of measures.186
Despite the flexibility that nations have in implementing MLC, 2006, the Convention stands out as an efficient instrument aimed at harmonising legislation. This can be seen right from the start in the definitions in Article II, which includes such terms as ‘seafarers’, ‘seafarers’ employment agreement’, ‘seafarer recruitment and placement service’, ‘ship’ and ‘shipowner’, continuing with a reference to its broad scope of action, which includes ‘all ships, whether publicly or privately owned, ordinarily engaged in commercial activities’.187
Unfortunately though, the Convention excludes many categories of ships, such as warships, naval auxiliaries and those sailing exclusively in inland waters or the equivalent, in addition to other categories that are difficult to label. These exclusions will drive states to initiate consultations to clear up their doubts, as the Convention does not give any clues as to the final answer.188 In order to reduce uncertainty, the ILO has set up a public database and is currently compiling information on complying with MLC, 2006, and national case law interpreting these gaps.189
In general terms, the Convention’s proper implementation relies on national legislation, from which interpretative divergences will no doubt arise. Furthermore, these are encouraged inasmuch as some standards are of an open texture, and with this wording MLC, 2006, softened some obligations established in previous Conventions with a mandatory nature.190 The ILO webpage therefore provides guidelines on certain issues and regulatory models with a view to harmonising the transposing of mandatory and particularly non-mandatory standards in Part B of the MLC, 2006, Code into national law. These guidelines will be referred to in dealing with the Convention’s contents. The guidelines in fact form a handbook providing assistance on implementing MLC, 2006, the most general ones being those that make model national provisions available for states,191 as a kind of model laws.
In addition to the flexible approach that states are granted in implementing the Convention, the Code’s specific amendment procedure should also be mentioned. This innovative procedure does not require the formalities usually applied to the amending of international conventions, offering in turn a speedy response to global challenges. It aims to give all stakeholders a voice: governments, workers’ representatives and employers.192 However, as they contain core rights and principles and basic member state obligations, the Articles and the Regulations can only be amended in accordance with the procedure laid down in Article 19 of the ILO Constitution,