Ship-to-ship operations are ripe for potential contractual and legal disputes. To mitigate these concerns, clearly defined roles are required and careful planning needed.
When it comes to completing a successful ship-to-ship (STS) operation, the result is almost entirely dependent on what happens at the planning stage. During a recent webinar, HSEQ and compliance specialist Alasdair Adamson explained that in such operations, “it is all about organisation, developing safe and reliable procedures and ensuring everyone sticks to these procedures.”
The position in contractual liability is between the charterer and the vessel owner, not between the two vessel operators conducting the operation; exercising due diligence is the obligation of the parties to the contract. Complications may arise when apportioning liability, according to law firm Preston Turnbull partner Robert Collins.
Mr Collins said that STS operations can create legal situations that are like “no other” in shipping. The governing law and jurisdiction are generally established either by a contract between the parties, or decided by the law of the place where the damage occurs.
Mr Adamson noted that (making an exception for oil majors) a ship’s officers are not especially diligent in inspecting third-party STS equipment; 41% of webinar attendees agreed with this view. Diligence and the possibility of an accident are interlinked. “From an operational point of view, the amount of times when you think, there were so many indicators that could have made this result so very different, and that is at the root of a lot of issues in STS operations,” said Mr Adamson.
Mr Adamson added that while Masters retain absolute authority in decision making, a triumvirate of key decision makers – two Masters and a person in overall advisory control (POAC) – must provide unanimous approval for an STS operation to commence. In a poll, 68% of webinar attendees felt that Masters do not take enough responsibility for decision making and tend to agree with the POAC without question.
“STS can create legal situations that are like no other in shipping”
In another webinar, conducted by DYNAMARINe, the company’s director Alex Glykas noted that the POAC is in charge of any STS operation that takes place at sea. Where the STS operation is taking place within port boundaries, the mooring master is the designated person in charge.
Discussing equipment specifics, Mr Adamson said for fender certification, safety valve pressure tests should be based on the manufacturer’s guidance. More than three-quarters (78%) of respondents to a webinar survey felt that most low-contact damage in operations stems from the incorrect placement of secondary fenders.
Replacing a transfer hose depends on several factors, including the compatibility of the liquids that have passed through the hose, maintenance, pressure testing and storage. Operators are advised to monitor their equipment to ensure compatibility and demonstrate the equipment’s fitness for purpose to regulatory authorities.
One of the most dangerous elements of an STS operation is the transfer of personnel by basket between tankers. Mr Collins pointed out that where equipment is not certified for such use, the owners have strict liability in cases of injury and death. “If this happens and there is an issue as a result, then that owner and the insurer will have to pay out,” he said. An owner is unlikely to have a strong defence for such an act, despite it being industry practice.
From a liability perspective, Mr Collins said parties should aim for clarity in their contractual relationships by considering an official STS contract between vessels, with a choice of law and jurisdiction and by working with the insurers.
The STS process is covered by IMO in MARPOL and through guidelines issued by OCIMF. The latest (2nd edition) of OCIMF’s Ship to Ship Service Provider Management and Self Assessment Guide was issued in 2020 and was the subject of the OCIMF Ship to Ship focus group, which met in Texas in February 2020. Among the subjects on the agenda was the draft to OCIMF’s Guidelines for the Handling, Storage, Use, Maintenance and Testing of STS Hoses.
In the current guidelines on STS, the self-assessment programme encourages STS service providers to assess their safety management systems against key performance indicators. It provides a minimum expectation level and an additional three levels of increasing best practice guidance. The results can be used to develop plans that support the continuous improvement of management systems and the attainment of high standards of safety and pollution prevention.
“It is a tenet of ISM that shipowners have total control over safety”
The OCIMF STS guidelines covey industry best practice; where a shipowner has not followed the guidelines, the risk is increased. In that case, the shipowner may be in breach of the ISM code and will have to justify this in the risk assessment. It is a tenet of ISM that shipowners have total control over safety and that this responsibility cannot be passed to third parties, such as the STS service providers, the POAC or charterers.
In this respect, may a shipowner reject a nominated vessel that has not passed a SIRE inspection? A tanker with a current SIRE inspection shows proof that the vessel has been inspected and met SIRE criteria and is accepted by oil majors. Furthermore, the existence of a current SIRE inspection shows the charterer has accepted the safe berth clause in the charter. Therefore, the presence of SIRE is highly desirable.
If there is no current SIRE inspection, the shipowner my request proof that the nominated tanker is acceptable. Such proof would include evidence that the crew has STS experience and that the equipment (mooring lines, deck gear, hoses) is in class and in good order; however, responsibility rests with the shipowner.
Another important factor involves who is organising the STS. According to DYNAMARINe’s Mr Glykas, it is not clear from the OCIMF guidelines who is the organiser of the STS if the charterer has engaged an STS service provider. Questions to be asked in such instances are: how is the responsibility passed?; how does the charterer exercise due diligence over the STS service provider?; and what happens if the STS service provider does not have a Safety Management System (SMS)?
Case study: damage and responsibility
Background: a vessel owned by Fund A is managed by reputable tanker operator B. The vessel has been engaged in West Africa in numerous STS operations during the previous 24 months. It has sustained various mooring line breakdowns with damages on HMPE ropes at a cost in excess of US$60,000. Can the owner claim damages from B, claiming that the management is not in compliance with regulations?
The claim is based on the ISM responsibility of the tanker operator B. Why? In the ISM code, the tanker operator is responsible for modifying the control measures based on past findings. The damage sustained to the mooring ropes should have been incorporated into subsequent STS operations, but this was not done. The tanker operator was not learning from past mistakes.
The tanker operator was found to be in breach of the ISM code and settled to cover 60% of the sustained damage. The HMPE ropes were replaced with soft ropes and mooring failures reduced.
“Risk assessment is dynamic and if you manage a large number of ships, then make use of these records to adjust your risk assessment and the control measures,” said DYNAMARINe’s Mr Glykas.
This article is adapted from the Riviera webinar “STS operations: know your legal and operational responsibilities” and the DYNAMARINe webinar “Ship to ship transfer – Mapping of Guidelines – Requirements and Due Diligence Actions”