LEGAL EFFECTS OF COVID-19 PANDEMIC ON SEAFARERS CONTRACT OF EMPLOYMENT

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Author
OSUALA EMMANUEL NWAGBARA
NIGERIAN MARITIME LAWYER

ABSTRACT

The recent Coronavirus (COVID-19) pandemic has created disruptions in many fields of human endeavor including the shipping and maritime industry. The importance of shipping trade to the world is made more prominent this time around by the various guidelines, advice and recommendations issued by the International Maritime Organization, the World Health Organization, the International Labour Organization and the World Customs Organization to keep sea trade moving inspite of the devastating effect of the pandemic on lives and businesses. It has no less impacted negatively on Seafarers contract of employment. Lockdown of cities are being implemented. The result is loss of earning for the forced extra time spent on leave ashore for seafarers on quasi permanent employment and frustration of fresh sign-on contracts for Seafarers on articled employment contracts. What is the adequacy of the remuneration if any offered to seafarers who are trapped on the vessels on the offshore and coastal waters. Seafarers are the frontline workers in the shipping and maritime trade. This short article examines the legal effects of COVID-19 pandemic on Seafarers contract of employment on vessels trading in Nigerian offshore and coastal and inland waters under Nigerian legal and regulatory frameworks. The article identifies and makes recommendations on the new challenges to be taken notice of in negotiating seafarers future contract of employment by national maritime authorities, maritime workers unions and s hip owners.

The recent Coronavirus (COVID-19) pandemic has created disruptions in many fields of human endeavor including the shipping and maritime industry. The importance of shipping trade to the world is made more prominent this time around by the various guidelines, advice and recommendations issued by the International Maritime Organization[1], the World Health Organization, the International Labour Organization[2] and the World Customs Organization[3] to keep sea trade moving inspite of the devastating effect of the pandemic on lives and businesses. These guidelines have been implemented by national governments through national regulations and marine notices by national maritime Authorities. In Nigeria the Nigerian Maritime Administration & Safety Agency (NIMASA) has consolidated and published many of the IMO-WHO-ILO-WCO guidelines, circulars and advice in NIMASA Marine Notice No. MN04/20/SNO1 to all Shipowners, Shipping agents, Operators, Masters, Seafarers, Flag States, Port States, Recognized Organizations and the Public[4]. Executive Orders have been issued.  COVID-19 has impacted negatively on ship building contracts, charter contracts, ship turn-around time in ports, cargo well time, cargo clearance at the Customs end and on cargo transportation, and delivery timelines. It has no less impacted negatively on Seafarers contract of employment. This short article examines the legal effects of COVID-19 pandemic on Seafarers contract of employment on vessels trading in Nigerian offshore and coastal and inland waters under Nigerian legal and regulatory frameworks.

A seafarer is defined by The Shipowners Club as “any person (including master and apprentices) engaged or employed in any capacity in connection with the business of any insured vessel, whether onboard or proceeding to or from such vessel”.[5] A Seafarer is also called a Seaman. The Britannia Steamship Insurance Association Limited defines Seaman as “A person (including the Master) engaged under articles of agreement or otherwise contractually obliged to serve on board an Entered Ship (except persons engaged only for nominal pay) including a substitute for such person and also including such persons while proceeding to or from such ship”.[6]

These definitions are offered within the context of ships insured or entered with the P & Clubs. Maritime Labour Convention (MLC) 2006 defines a seafarer as “any person who is employed or engaged or works in any capacity on board a ship to which this Convention (MLC} applies”[7] It is important to state that the provisions of MLC 2006 apply to all Seafarers[8]. However sometimes a question may arise as to whether everybody on board a ship is actually a seafarer. MLC 2006 provides that where this doubt arises, the question shall be determined by the competent authority in each MLC Member State after consultation with the ship-owners’ and seafarers’ organizations concerned with the question.[9] Many MLC Member States have stipulated guidelines containing a checklist of parameters for the determination such a question, such as:

(a) the category (occupational group) or capacity of the persons;

(b) the duration of the stay on board of the persons concerned;

(c ) the frequency of periods of work spent on board;

(d) the location of the person’s principal place of work;

(e) the purpose of the person’s work on board;

(f) who is responsible for the labour and social conditions for the persons;

(g) what form of work agreement is in place for the persons;

(h) the vessel owner’s assessment of that work agreement in relation to the standards created by the MLC, 2006.

(i) Whether the persons are expected to undertake duties related to the safety or security of the vessel or pollution protection.

Although as a general rule a contract of employment may be in any form, and not necessarily in writing,[10] in the case of seafarer employment contract, the law requires that it be made in writing.  MLC 2006 provides that “The terms and conditions for employment of a Seafarer shall be set out or referred to in a clear written legally enforceable agreement and shall be consistent with the standards set in the Code”[11] Standard A2.1 mandates Member Flag States to adopt laws or regulations requiring ships that fly their Flags to comply with the requirement that Seafarers working on ships that fly their Flags 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 MLC 2006. Employment agreements may be linked to a collective agreement or an enterprise bargaining agreement.

There are different types of seafarer contract of employment, such as articles of employment contract, collective bargaining agreement, enterprise bargaining agreement, ITF standard agreement, ITF total crew cost agreement, international bargaining forum agreement, ITF offshore standard agreements, ITF cruise ship agreements for catering personnel, etc. Our short comment is limited to only three types of agreement in the order of listing here-above:

  1. Articles of employment contract: These are a set of documents that constitute the contract between the seaman and the captain (Master) of a vessel.[12] As opposed to collective bargaining agreement, this type of seafarer contract of employment is made on terms as agreed between a particular seafarer and Shipowner or Master on behalf of the owner of the ship. Two or more seafarers (for instance ABs) may perform the same job on the same ship but with different salaries as negotiated and agreed between them and the shipowner respectively, depending on a number of factors, including sea time experience and labour cost in the country of a seafarer, among others.
  2. Collective Bargaining Agreement: This is a document that constitutes the contract between the different categories of seamen in the employment of a shipowner and the shipowner company. It is usually the outcome of collective bargaining reached between the representatives of the seamen (maritime workers union), and the representatives of the ship owning company. Sometimes the representative of the maritime labour department of the national maritime authority is present at the negotiation meetings. The outcome is signed by the seafarers representatives and the ship owning company representatives. It is not always that it is witnessed by the national maritime authority, especially if the negotiation has been based on the minimum standard set by the national maritime authority. Where a representative of the national maritime authority is present to witness and moderate the negotiations, the outcome of the collective bargaining is witnessed by the national maritime authority.
  3. Enterprise Bargaining Agreement – This is a collective agreement made at an enterprise level between employers and employees. As opposed to typical collective bargaining agreement, many shipping owning companies may enter into an agreement with their seafarers on terms and conditions, subject to approval of such agreement by a Tribunal, after a thorough appraisal. Australia offers a good example of the use of e nterprise bargaining agreement which is approved by the Fair Work Commission of Australia.

 

WHEN DOES A SEAFARER’S EMPLOYMENT COMMENCE?

A seafarer’s employment commences from the time he sets out to the vessel at sea, following sign-on, and ceases when the seafarer gets back home, provided he proceeds with dispatch to get home, after getting off the vessel. In the case of a foreign seafarer the employment ceases when the seafarer arrives his country of residence following repatriation. This understanding is very important because different legal considerations will apply when dealing with the effect of COVID-19 on the seafarer’s contract of employment in the context of this article. There are two or more situations in which COVID-19 situation may have bearing on the seafarer’s contract of employment.

The first situation is where a seafarer has been signed on and he leaves home to join the vessel but does not get to the vessel due to circumstances beyond his control. The question that arises in this scenario is whether the seafarer is at work. COVID -19 pandemic creates an unusual situation and the prevalence of the disease in the world at large and in Nigeria at the moment has led to Executive Orders both at the Federal and State levels, made within the context of  the provisions of sections 41 and 45  of the Constitution of the Federal Republic of Nigeria 1999.[13] Travel bans and city lockdowns have been announced and implemented with immediate effect. Many seafarers who signed on to join vessels, FSOs, FPSO and Rigs on Nigerian coastal waters and deep offshore were caught mid-way on the road to join their work vessels and work stations, by these travel bans and lockdown of cities. Chopper operations have been cancelled. All these are actions targeted at containing the spread of the COVID-19 pandemic. The seafarers have been forced to return to their homes following this cut-off event. The question is would these Seafarers be entitled to wages for this period? What is the effect of COVID-19 pandemic and the resulting government actions on their contract of employment?

NO PAYMENT FOR WORK NOT DONE

The principle of no payment for work not done appears to be applicable where the work anticipated to be done under a contract of employment is suspended by a supervening event beyond the control of the parties to the contract or where such supervening event completely brings the contract to an end. Seafaring is a unique profession. Two categories of seafarers cut off from joining their vessels or work platforms appear relevant in this appraisal. One category is made up of seafarers who were off duty for a defined period as contained in their contract of employment. The other is the category of seafarers employed for the first time to join vessels or platforms.

In the first category it would appear that the contract Is suspended by an event beyond the reasonable control of parties to the contract of employment and there will be no pay for the period. The uniqueness of seafaring job requires that each time a seafarer off duty (on leave ashore) would return to his vessel or platform he would have a fresh sign on, not necessarily a fresh contract, especially where there is a semblance of permanent employment as is the common feature of many collective bargaining arrangements in the maritime and oil and gas twin-sector in Nigeria. Many seafarers work two-months on, one month off. Returning seafarers who are cut-off from boarding their offshore vessels or platforms as a result of government measures to contain COVID-19 pandemic from spreading, would have to sign on again to go on board whenever Chopper operations resume and that is when their pay will commence. One challenge of seafaring job is that a seafarer is not paid wages (at-least not full wages) when he is off duty ashore. COVID-19 pandemic induced lockdown would have the effect of temporarily discharging a ship-owner from the twin obligation of providing work on board vessel and paying wages, to a signed-on seafarer who is cut off the vessel by the lockdown. The justification is that the lockdown has imposed on the seafarer the inability to be onboard. There is also the justification that no one gets paid for work not done. However seafarers in this category would be entitled to reimbursement of their cost of transportation for moving out and returning to their homes. It is likely that courts and arbitral tribunals would take this position, in the event of a dispute.

With regards to the other category of seafarers employed for the first time to join vessels or platforms, it would appear that their contract is frustrated, if lockdown persists for un-reasonable length of time as to eat deep into their contract. In such a case a court or arbitral tribunal would certainly regard a lockdown imposed in the wake of COVID-19 pandemic as a frustration event. In the case of ATTORNEY GENERAL CROSS RIVER STATE v ATTORNEY GENERAL OF THE FEDERATION & ORS,[14] the Supreme Court held: “……a Court would recognize that a contract is frustrated where after the contract was concluded, events occur which make performance of the contract impossible, illegal or something radically different from that which was in the contemplation of the parties at the time they entered into the contract. A contract which is discharged on the ground of frustration is brought to an end automatically by the operation of law, irrespective of the wishes of the parties.

It is most likely that the courts and arbitral tribunals would regard the outbreak of COVID-19 pandemic as an event of frustration in matters of contracts, considering the magnitude, especially in the context of the uniqueness of seafaring contracts, majority of which are for short periods. In many cases in Nigeria, the courts have recognized certain situations or events that can constitute frustration. These are: (a) Subsequent legal change, (b) Outbreak of war, (c ) Destruction of the subject matter or contract, (d) Government acquisition of the subject matter of the contract, (e) Cancellation by an unexpected event such as where the other party to a contract for personal service dies or where either is permanently incapacitated by ill health, imprisonment, etc. from rendering the service he has undertaken.[15]. It is submitted that COVID-19 pandemic would qualify as an event of frustration.

At the seas end are seafarers who are over staying their sign on period on board vessels and platforms, having been caught in the web of Executive Orders resulting in stoppage of Chopper operations to lift them to shore or otherwise issuance of shore passes by the Immigrations for onward journeys home. Crew change has become impossible in this circumstance. In many such cases, Seafarer’s contractual period of employment is over. Would such seafarers refuse to work? What would be the effect of refusal to work on the status of the vessels and on the safety and efficiency of the vessels in continuing to provide essential services. What would be the consideration offered to seafarers who continue to provide services.

It is submitted that under the doctrine of necessary, seafarers who are trapped in working vessels and platforms should and ought to continue to provide seafaring services until the lockdowns are lifted and crew change operations resume. Under the same doctrine, Seafarers who refuse to provide services in this circumstance except on grounds ill-health would be engaging in unethical and unseamanship behaviour. Where seafarers who find themselves in this circumstance refuse to provide services on board vessels and platforms, the effect may be that the vessel or platform is manned by a number of seafarers below the minimum safe manning level. Generally operating a vessel below the minimum safe manning level would mean that such vessel is not seaworthy, but this is only a general legal position

It is important however that seafarers who are trapped in working vessels and platforms should and ought to be remunerated for seafaring services provided until the lockdowns are lifted and crew change resumes. It is recommended that remuneration of such seafarers be calculated at the rate of 150 per-cent of normal wage payment. This will not only compensate such seafarers adequately but would also tune them up psychologically, being long at sea.

COVID-19 pandemic has certainly generated the need to create new clauses in standard seafarer’s contract of employment to take care of the issues examined In this article, and all of national maritime Authorities in charge of seafarers employment administration and regulation, ship owners and maritime workers union are invited to take note of these while negotiating contracts of employment for seafarers in the future.

DISCLAIMER:

Thanks for the time and attention you put in reading this abridged part of the article. It is not a legal advice on the topic. But you can get a comprehensive legal advice on the topic by contacting:

Osuala Emmanuel Nwagbara

Managing Partner.

Maritime & Commercial Law Partners,

33 Calcutta Crescent, Apapa Lagos Nigeria

TEL: +2348035300506 E-mail obisikechambers@yahoo.com

[1] See the IMO Circular Letter No.4204/Add.6 (27/3/2020) – Coronavirus (COVID-19)  – Preliminary list of recommendations for Governments and relevant national authorities on the facilitation of maritime trade during the COVID-19 pandemic.

[2] See the IMO Circular Letter No.4204/Add.10 (22/4/2020) – Joint Statement IMO-WHO-ILO on medical certificates of seafarers, ship sanitation certificates and medical care of seafarers in the context of the COVID-19 pandemic

[3] See the IMO Circular Letter No.4204/Add.9 (16/4/2020) – Joint Statement IMO-WCO on the integrity of the global supply chain during the COVID-19 pandemic

[4] NIMASA Marine Notice No. MN04/20/SNO1, Vanguard Newspaper of Thursday April 9, 2020.

[5] See Rule 67 The Shipowners Club Rules (2019) as amended.

[6] See the definition section of Britannia Steamship Insurance Association 2016 Rules, Class 3

[7] Article II (1) (f) Maritime Labour Convention (MLC) 2006

[8]Article II (2) Maritime Labour Convention 2006

[9] Article II (3) Maritime Labour Convention 2006

[10] See the Nigerian case of Mobil Producing Nigeria Unlimited & Anor v Udo Tom Udo (PC No.5421) (2008) LPELR-8440 (CA) pages 67-72, paras. A-D

[11] See Regulation 2.1 paragraph 1MLC 2006

[12] (https://en.wikipedia.org >wiki>ship (accessed 27/4/2020)

[13] Section 41 (1) of the Constitution of the Federal Republic of Nigeria 1999 guarantees citizens right to freedom of movement. While section 45 (1) (a) preserves the invalidity of any law made in the interest of defence, public safety, public order, public morality of public health, even where such laws temporarily suspends the right to freedom of movement.

[14] (2012) LPELR-9335(SC),

[15] See the case of Weco Engineering & Construction Co Ltd v Dufan Nigeria Ltd & another, (2019) LPELR-47211 (CA)

 

Chief Osuala E. Nwagbara
Maritime & Commercial Law Partners Barristers, Solicitors, Maritime & Commercial Law Consultants, Maritime Arbitrators and Mediators, Notaries Public 33 Calcutta Crescent, Apapa, Lagos,