YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014 THE NORTHERN SEA ROUTE – LEGAL AND...

YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014THE NORTHERN SEA ROUTE – LEGAL AND PRACTICAL ISSUES ARISING

RORY MACFARLANE INCE & CO

The Northern Sea Route (“NSR”)

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Northern Sea Route

•Russian Siberian coast•Barents Sea to Baring Strait•First navigated in 1897

c/f Northwest Passage

•Canadian Arctic coast•Also exiting via the Baring Strait•1905 - Amundsen / The Maud

Northern Sea Route c/f Southern Sea Route

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NSR – Potential Advantages

1. Less Time (reduced hire/freight).

2. Less Bunkers.

3. Avoids East African Piracy threat and associated costs.

4. Reduced CO2 emissions.

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NSR - Potential Disadvantages / Hazards

1. Seasonal. July – November (140 days).- Icebreaker support?

2. Navigational Issues:- not a linear route- insufficient charts- compass / GPS reliability- restricted visibility- transit close to coast (15m draft)

3. Casualty Response – (towage/salvage/spare parts).

4. Pollution clean-up costs.

5. Less flexible route commercially.5

NSR- Variations in Ice Flow

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2. Navigational Issues:- not a linear route - insufficient charts- compass / GPS reliability- restricted visibility- transit close to coast (15m draft)



5. Less flexible passage commercially.

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NSR – Potential Disadvantages / Hazards

The Petrozavodsk (2009)

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The Nordvisk (2013)

NSR – Potential Disadvantages / Hazards

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2. Navigational Issues:- not a linear route - insufficient charts- compass / GPS reliability- restricted visibility



5. Less flexible passage commercially.

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NSR - Legal Issues / Insurance

• INSOP / ARCOP / Lloyds JHC / Arctic Council. - all conclude that claims arising in arctic would be more expensive - emergency response to ships in distress inhibited

• Is the vessel sufficiently ice classed?

• Will the vessel receive ice breaker support?

• Lack of statistical data.

NSR therefore creates issues relating to: - Classification Societies - P&I Insurance - H&M Insurance

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Insurance – Classification Societies

Ice class notations differ among classification societies.

Ice class is not part of the main class.

Societies’ rules do not regulate the way vessels operate in ice-infested areas.

Implications for Insurers

Cover will not be prejudiced on the ground of loss of class.

Insurers must evaluate the risk and set requirements.

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Insurance – H&M

• Voyage in arctic waters could be a risk excluded (e.g. English Institute Warranties 1/7/76).

• Notify underwriters before transit.- Revised terms of cover- Additional premium- Ice deductible

[Note: the JHC has recommended a Russian-speaking desk officer for NSR transit]

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Insurance - P&I

• Generally no imposition of trading.

• Notify P&I of transit through NSR in advance.

• Alteration of risk.

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NSR – Legal Issues / Transit

Application Procedure Need a PermitWho: Ship owner/master or owner’s representative.When: >120 days before transit.

<15 days before transit.Where: The NSR Administration, Moscow.How: By email ([email protected]):

- pdf form- ship name / IMO number / details- contact details- ship owner statement- attachments (class cert. / insurance details etc..)

NB Contact ice breaker administration once application submitted.

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NSR – Legal Issues / Transit

After Application•Decision: - within 10 working days.•Notification: - within 2 working after decision.

- published on NSRA website.•Validity: - 365 days.

- no entry to NSR before permit effective period.

- exit from NSR before end of permit.•Report: - daily by master to NSRA – email.•Refusal: - information false or misleading.

- information incomplete.- vessel unsafe under Russian law.

•Fees: - transit costs (per ton / cargo).- ice breaker fees (unpublished).- ice pilot(s) fee.

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NSR – Ice breakers

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NSR – Legal Issues / General

Any different to other maritime routes/ voyages?

• Hire – increased risk of off hire / termination.• Routing – “navigational orders” ; “employment orders”.• Unsafe port.• Seaworthiness.

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NSR - Transit Facts & Figures

General•Up to 40% shorter than SSR / Suez route.•COSCO (Mv Yong Sheng), Sanko (Sanko Odysesy), Tsuchdi Shipping (Mv Nordic Barents), Vitol. •Sena Bulk / Hyundai – co-operative long term strategy.•“Golden Waterway” – 5% to 15% of China’s int. trade by 2020?

Transit Figures NSR2009 2 vessels.2010 4 vessels.2011 18 vessels.2012 46 Vessels.

c/f Suez Canal2012 1,500 per month / 18,000 per year.

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NSR - Transit Facts & Figures (cont.)

2013

#

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NSR Information Officehttp://www.arctic-lio.com

NSR Administrationhttp://www.nsra.ru/en/razresheniya/

NSRA Permit [email protected]

NSR Transit – master’s daily [email protected]

Ice Breakers and Ice Pilotshttp://www.rosatomflot.ru/?lang=enhttp://www.arctic-lio.com/nsr_icebreakersassistancehttp://www.nsra.ru/en/org_locman_provodka/

IMO 1024(26) - Polar Water Guidelineswww.imo.org/Publications/Documents/Attachments/Pages%20from%20E190E.pdf

NSR – Useful Websites / Email Addresses

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Beijing Dubai Hamburg Hong Kong Le Havre London Monaco Paris Piraeus Shanghai Singapore

Thank you

Rory [email protected]

YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014 THE NORTHERN SEA ROUTE – LEGAL AND...

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