Page 10: of Maritime Reporter Magazine (February 1997)

MARINE FINANCE issued to the company operating the vessel, and that a Safety

Management Certificate (SMC) is issued to the vessel itself, clearly identifies the operator. The two "laws" work hand in hand to lay bare all operational interests, how- ever diverse and dispersed, to all claimants.

The insurance industry is also concerned with the effect of the

Code on the right of the owner or operator to limit liability, notably under the 1976 London

Convention. Limitation of liability is one of the sacred artifacts in the holy tabernacle of maritime law — and in particular, marine insur- ance — and has a profound effect on rates. The owner's or manag- er's prior knowledge of some proce- dural failure or operational or maintenance malfunction, obtained through the designated person link between the ship and top management, may result in the loss of P&I cover, while the loss of

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Circle 324 on Reader Service Card the right to limit liability may have an impact on the nature of avail- able insurance cover. In channel- ing accountability, the Code may bring about a number of secondary results. One of these is that if lia- bility exceeds the available insur- ance and assets of the responsible party, claimants could conceivably attempt to pierce the corporate veil and proceed against the assets of sister corporations, sub- sidiaries, affiliates and sharehold- ers. The Code clearly delineates the connection between vessel and management, and its transparen- cy requirements clearly point to the responsible party. Therefore, managers, owners and operators should carefully appraise their entire corporate structure so that affiliates cannot be unreasonably held liable in damages for errors or deficiencies for which they are not responsible.

As an example, some companies, in reviewing how they are struc- tured, may wish to ensure that the operating company that obtains the DoC is the one that they would not mind being identi- fied by the revenue authorities as exercising management control.

If the owner's operating decisions are actually made by an affiliate dressed up to look like a broker, charterer or agent, there is an ele- ment of risk that may be undesir- able. This could be because the broker or agent may be found by the authorities to have surprising- ly little revenue for a company with management responsibili- ties, and this could lead to further inquiries. In all likelihood, a well- capitalized company with non- interlocking directors would be immune from a legal incursion to establish responsibility. In requir- ing that a variety of documenta- tion must exist and be main- tained, including DoCs and SMCs, the Code has also created a trea- sure trove of information which can be used in litigation.

Vessel &

Equipment

Contract News

Samsung Wins Contract For

Two Chevron VLCCs

Chevron announced agreements to acquire two new double-hulled tankers as part of an ongoing fleet renewal program for Chevron

Shipping Company. The VLCCs 10 Maritime Reporter/Engineering News