Explanatory Memorandum to COM(2005)587 - Common rules and standards for ship inspection and survey organizations and for the relevant activities of maritime administrations (recast) - Main contents
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| dossier | COM(2005)587 - Common rules and standards for ship inspection and survey organizations and for the relevant activities of maritime ... |
|---|---|
| source | COM(2005)587  |
| date | 23-11-2005 |
- Grounds for and objectives of the proposal
The Community legislator has long been convinced of the need for appropriate action to deal with the organisations, generally known as “classification societies”, which inspect ships and issue ships’ certificates.
In its Erika I Communication, the Commission seriously asked whether the classification system as a whole made sufficient effort to attain the standards required. The existing system no longer suffices and must be further improved in order to separate the good operators from the bad, to remedy the shortcomings in a proportionate but effective manner, and to exclude from the system those who do not comply with it.
- Thus the Council, in its conclusions of 13 December 2002, stressed the Commission's role in the procedures for authorising and monitoring classification societies.
- In turn, the European Parliament, in its Resolution on improving safety at sea [2003/2235(INI)], asked the Commission to carry out effective monitoring and an audit of classification societies, their subsidiaries and participating undertakings and to introduce penalties for failure to comply with their obligations. In the Resolution it adopted following the sinking of the Prestige [2003/2066 (INI)], Parliament moreover reiterated the need to establish, at international and Community level, exhaustive technical inspection mechanisms which provide reliable information about the real state of ships.
As a response to these concerns, this proposal is intended to reform the present system for the recognition of classification societies by the Community established by Directive 94/57/EC (OJ L 319, 12.12.1994, p. 20), and more especially to:
strengthen the control systems of recognized organizations,
harmonise the current dual system of ordinary and limited recognition,
simplify and improve the structure of the Community recognition criteria,
reform the system of penalties,
clarify the scope and facilitate the application of certain provisions of the Directive.
It is essential to make use of the recasting technique during this fourth updating of the Directive in the interests of the transparency and legibility of Community legislation. Furthermore, apart from the substantive amendments proposed, recasting allows the recitals to the Directive to be updated.120
- General context
Technical safety standards are in practice developed partly by the International Maritime Organisation (IMO) through international conventions (“statutory” requirements) and partly by the classification societies through their technical rules and regulations (“class rules”). What these requirements and rules cover varies according to the convention, the subject matter and the type of ship.
The class rules cover the structural aspects of the ship (such as strength or stability and buoyancy); machinery (engines, steering gear, etc); equipment to be fitted on board; certain operational aspects (e.g. life-saving equipment, equipment for special cargoes such as on oil tankers and chemical tankers). Increasing convergence can be seen between the technical regulations of the main classification societies, but this does not necessarily translate into mutual recognition (especially as regards equipment).
In order to apply the international conventions, the flag State must carry out the inspections required and issue the relevant certificates, but either the former or both of these tasks may be delegated to a recognised classification society.
For the main international certificates to be issued, the ship must be built and maintained in accordance with the technical rules of a classification society. The classification societies therefore approve the plans and oversee the construction process. The classification societies are in full control of both the rules of substance and the inspection methods which they apply to certify that a newly built ship conforms to the said rules. If, as very frequently occurs, the classification societies act on behalf of the flag State, they will subsequently issue certificates of conformity with the international conventions. Throughout the ship’s life, the classification society will continue to issue the two types of certificate.
- The lack of cross checks in the system makes it unlikely that the quality of class certificates will ever be questioned when international certificates are issued. Errors made will inevitably have consequences downstream, including on the statutory certificates. They may affect a large number of ships before being detected.
- In practice, the choice of classification society depends on the relative strengths of the ship-owners and shipyards. While the major ship-owners generally manage to impose the societies they prefer, others have to accept the choice of the shipyard. Classification societies complain even publicly that they are subjected to pressure from major shipyards which can influence the market and the implementation of technical regulations because of their large volume of production. Once a classification society has been chosen for a newly built ship, it is that society which determines the equipment to be fitted on board since it is in a position of strength vis-à-vis the equipment suppliers, which are generally excluded from negotiations between the ship-owner, the shipyard and the society itself. Once the ship has been delivered to its owner and throughout its life, the classification society bills the ship-owner for both class work and statutory tasks. The ship-owner therefore becomes the sole client.
Performing these tasks demands total independence, adherence to a strict code of conduct, a particularly high level of competence, very specialised and continually evolving technical knowledge and particularly strict quality management.
- Provisions in force in the area covered by the proposal
Since the Community cannot introduce a regime that differs fundamentally from the international regime, it must make up for the shortcomings of this regime while ensuring the free provision of safety inspection and certification services for ships flying the flag of a Member State in the internal market.
Therefore, without essentially changing the status quo as described above, Directive 94/57/EC was careful to lay down strict criteria regarding independence and professional capability as a condition for the granting of Community recognition.
This mechanism then acts in two ways: firstly, the Member States must ensure that ships flying their flags are designed, built and maintained in accordance with the rules and regulations of a recognized organization or, in exceptional cases, on the basis of equivalent national regulations; secondly, tasks arising from international conventions may only be delegated to recognized organizations.
- Coherence with other policies and objectives of the Union
Improving the inspection of ships will have a direct impact on the environment as it will reduce the risk of accidents and the resulting pollution.
This reduced accident and pollution risk will also have a positive economic impact. These changes should also create a competitive and fairer environment for maritime transport operators by reducing unfair competition from substandard ships. These will be subject to stricter penalties, enabling operators of high-quality ships to benefit from lighter controls.
- Consultation of stakeholders
Consultation methods, main sectors targeted and general profile of respondents
In February 2005, the Commission consulted the representatives of the Member States and the shipping industry on the basis of staff working papers containing a detailed list of questions on the various options to be considered. These concerned (a) separating statutory from classification tasks, (b) reforming limited recognition, (c) reforming the system of penalties, (d) reforming the recognition criteria, and (e) certain aspects regarding the application of the Directive.
The Commission also called on the groups consulted to send in detailed comments in writing and thereafter established bilateral contacts with representatives of industry and the recognised organisations.
The European Maritime Safety Agency has carried out a study which has cast light on the problem of the accumulation of tasks and provided the basic data required for a detailed impact assessment.
There has been fierce resistance to the possible separation of tasks, with the recognised organisations themselves and most of the Member States preferring to see greater use made of vertical audits. The views received expressed clear support for a reform of limited recognition to eliminate the unwieldy nature of the system and the negative impact on the performance of the organisations concerned. The reform of the recognition criteria was also welcomed, together with reform of the system of penalties, especially by the recognised organisations themselves which expressed particular concern about its proportionality. All of these elements, which were broadly covered in the Commission's impact analysis, have been taken into account in the proposal.
- Collection and use of expertise
No recourse to external expertise was needed.
- Impact assessment
The data gathered and the detailed conclusions of the impact assessment are given in the attached document SEC ../.. , which is summarised below:
(a) Strengthening the control systems of recognised organisations
Community recognition has hitherto revolved around the question of professional standards without considering the risks inherent in the accumulation of tasks by the recognised organisations. Two types of solution have been examined:
- the introduction of cross checks during inspections and when issuing certificates, which means separating statutory tasks from classification tasks. The Commission’s analysis has shown the advantages of this arrangement, but it has one basic drawback: it can only apply to ships flying the flag of a Member State,
- strengthening the existing control mechanisms within an appropriate framework. Analysis shows this could improve the quality of the service and the effectiveness of inspections for all recognised organisations, regardless of the flag flown, and at a negligible price to these organisations. During the consultations and bilateral exchanges conducted by the Commission, the recognised organisations themselves advocated strengthening the vertical audits.
(b) Reform of limited recognition
Reforming limited recognition by extending it to cover all Community territory and replacing the present quantitative criteria by qualitative criteria is not expected to have any economic impact. The market situation will stay the same since the present system of limited recognition of an organisation can be extended at any time to other Member States if they so request.
(c) The recognition criteria
Simplifying and updating the recognition criteria, which does not impose any new obligations on recognised organisations, has no appreciable economic impact (except as regards prohibiting the use of non-exclusive surveyors, the impact of which would be small and would extend across the entire fleet classed by the recognised organisations).
(d) Reform of the system of penalties: introduction of financial penalties.
As this would be a purely legal change, reform of the system of penalties is not expected to have any economic impact.
(e) Other parts of the reform
As the changes would be purely of a legal nature, chiefly to clarify other provisions and/or ensure their proper application, new provisions regarding the legal structure of the recognised organisations, the Commission’s inspection powers and the exclusion of “security” aspects from the scope of the Directive are not expected to have any economic impact.
The Commission has carried out an impact assessment as provided for in its Legislative and Work Programme. The report can be found at
europa.eu.int/comm/secretariat_general/impact
3)
Contents
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- 2) CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT
- Summary of responses and how they have been taken into account
- The Commission has carried out an impact assessment as provided for in its Legislative and Work Programme. The report can be found at
- 5) ADDITIONAL INFORMATION
- Summary of the proposed action
(a) Improving the systems for the monitoring of recognised organisations (Article 21)
The recognised organisations should establish a joint body for quality system assessment and certification. The joint body must be independent, have all the necessary resources to enable work to be carried out in-depth and on a continuous basis, and be in a position to propose both individual and collective measures in order to improve the quality of the recognised organisations’ work. For this system to operate properly, it is also proposed that cooperation between the recognised organisations should be extended to ensure that their technical regulations are compatible and that these regulations and international conventions are interpreted and applied in a uniform manner. This will provide a common basis for evaluation and instruments which will enable the corrective measures referred to above to be taken with a view to achieving a uniform level of safety in the Community. Compatibility between the technical regulations should logically lead to the genuine mutual recognition of class certificates, for marine equipment as well, which would reduce the costs borne by suppliers and shipyards since it would no longer be necessary for certification to be carried out by several different societies. It is also necessary to create incentives for the Member States to play a more active role in the development of rules and regulations (currently optional) and in technical cooperation (compatibility between regulations, interpretation of international conventions).
(b) Reform of limited recognition
The present system which limits recognition according to the size of the organisation concerned makes it more difficult for an organisation to renew its fleet and hampers its performance and ability to evolve and improve. This is a totally undesirable situation. Furthermore, the system may be rendered meaningless if limited recognition is extended to several Member States, especially if this concerns large fleets.
The proposed reform is intended to eliminate these problems. Community recognition will no longer depend on size, but solely on quality and performance in terms of safety and environmental protection. In addition, it will be possible to prevent a recognised organisation, whatever its size, from acting on behalf of Member States in specialised areas for which it does not have the necessary capability (for example, specialised ships such as chemical tankers, gas tankers or large passenger ships).
(c) Reform of the recognition criteria
During successive reforms, the criteria for granting recognition have been developed and updated, and new obligations regarding transparency and cooperation have been imposed on the recognised organisations.
However, these reforms have resulted in a set of criteria that are somewhat disorderly, with sometimes unclear expressions and redundant provisions. The proposed reform is intended to simplify these criteria and make them more legible, to amend those which are difficult to apply and to fill certain gaps:
- clear confirmation of the need to have a number of inspectors in proportion to the fleet being classed, but without specifying a predetermined threshold for the granting of recognition,
- ending the use of non-dedicated inspectors by recognised organisations, a practice still allowed by the Directive for classification tasks. The unstable employment situation of these inspectors means that the independence and quality of their work is not sufficiently guaranteed despite the basic and further training given by the recognised organisations. While the use of dedicated inspectors from other recognised organisations is sometimes essential to ensure worldwide cover in all circumstances, it must remain the exception,
- requirement of legal personality and certification of the accounts of recognised organisations. Certification of accounts is essential to check the financial independence of the recognised organisations and for the reform of the system of penalties referred to below.
(d) Reform of the system of penalties
The Directive can only be applied effectively with cooperation and partnership between the recognised organisations, the Member States’ authorities and the Commission. Nonetheless, a policy to protect maritime safety and the environment must be backed up by a system of penalties to ensure public control over the activity of recognised organisations which do not fulfil their obligations.
The Commission believes it is essential that the principle of rectifying mistakes at source is upheld and strengthened, in particular in order to identify risks caused by infringements of the provisions of the Directive and to repair any possible consequences. In the most serious cases where there is an unacceptable risk to safety or the environment, it is also equally essential to withdraw recognition from the organisation in question.
The Commission therefore considers it necessary to simplify the present system of penalties and to make it more flexible and effective. This involves two-fold action:
- recasting of the present dual system and the creation of a single list of infringements and penalties applicable to both failure to comply with the recognition criteria and other obligations of the recognised organisations and to inadequate performance,
- replacing the suspension of recognition by the application of financial penalties. These are gradual and therefore fairer than suspension (which may be as disastrous for the organisation concerned as the withdrawal of recognition, depending on the size of the European component of its registered fleet). Financial penalties are also compatible with the demand for corrective action, which a system of periodic penalty payments would strengthen.
The financial penalties must above all be proportionate to the severity of the infringement and the economic capability of the organisation concerned. Two options can be considered: either a percentage of turnover or an amount per gross ton of the organisation's registered fleet, both graduated according to the circumstances of the case. While the first method is rather direct, the second option takes better account of the normal revenue structure of recognised organisations. However, the use of this option must be preceded by detailed analysis in order to ensure that penalties are dissuasive but fair. The Commission therefore considers it is sufficient for the legislator to determine the principles of the system and to establish a maximum amount of fine that can be imposed on a recognised organisation committing an infringement. Detailed implementing rules can then be adopted by the Commission with a committee procedure following a more detailed study carried out together with the Member States and with consultation of the recognised organisations.
(e) Commission’s powers of inspection
The Community must be able to ensure that recognised organisations apply the same strict standards to ships flying the flag of a third country as to ships flying the flags of the Member States since both sail in Community waters. The recognition criteria therefore make no distinction according to flag and are intended to ensure a uniform standard among the recognised organisations.
The right of access of Community assessors to ships and to information for the purpose of evaluating recognised organisations is already an implicit requirement of the Directive. It is therefore necessary to lay down the specific arrangements, in particular as regards:
- not allowing a confidentiality clause in an agreement to be invoked to restrict the Community inspectors’ access to the information necessary for the assessment of a recognised organisation (access to files),
- including relevant provisions in contracts between recognised organisations and shipyards and ship-owners for the issuance of statutory and class certificates, so that such issuance is subject to good cooperation of these parties (access to ships).
(f) Taking account of the legal structure of recognised organisations
Since the first recognitions were granted by the Member States, the recognised organisations have further developed and sometimes significantly changed their legal structure, generally making it more complex. A large number of legal forms currently exist, including foundations and limited liability companies as well as exclusive forms under certain non-Community legal systems.
In response to concerns expressed by the European Parliament, the Commission proposes to introduce a broad organisational concept which takes account of any foreseeable relationship of dependence between legal entities conducting, under the same umbrella, activities which fall within the scope of the Directive. This is to ensure that recognition (and therefore the applicability of the criteria and obligations under the Directive) applies at the highest level which corresponds to that concept. Both horizontal and vertical company groupings will then be sufficiently covered and will be either fully inside or outside of the Community system.
(g) Exclusion of security aspects
As it presently stands, the scope of the Directive is defined by reference to international conventions, including the Convention for the Safety of Life At Sea (SOLAS). Since its amendment on 12 December 2002, this Convention contains a section on security which has been transposed into the Community legal order by Regulation (EC) No 725/2004 of the European Parliament and of the Council of 31 March 2004 (OJ L 129 of 29.4.2004, p.
6). In accordance with the abovementioned new provisions of the SOLAS Convention, this Regulation provides for the concept of an “approved security organisation” based on criteria and arrangements which are incompatible with the spirit and scheme of Directive 94/57/EC. It is therefore necessary to exclude the “security” aspects from the scope of Directive 94/57/EC.
- Legal basis
The legal basis of the proposal is Article 80 i of the Treaty.
- Principle of subsidiarity
The principle of subsidiarity applies as the proposal does not concern an area in which the Community has exclusive competence.
The objectives of the proposal cannot be sufficiently achieved by action on the part of the Member States for the following reasons:
Isolated action on the part of the Member States is incompatible with the aim of ensuring the free provision of services for the inspection and survey of ships flying the flags of Member States while guaranteeing a high and uniform level of protection of safety throughout the Community, which requires particularly strict standards of professional competence and independence of the recognised organisations and monitoring of those standards.
The objectives of the proposal may be better achieved through Community action for the following reasons:
Monitoring of the obligations of recognised organisations and the imposition of penalties for non-compliance can only be performed effectively with the benefits of the swiftness and unity of action which the Community provides. This process can only be fair if all organisations concerned are evaluated in a consistent manner.
While it improves the modus operandi of the present Community system, this proposal does not in any way alter its substance. Thus its objectives can be better achieved by the Community.
The proposal is intended to strengthen the provisions of the existing Directive without changing its objectives or extending its scope.
The proposal therefore complies with the principle of subsidiarity.
- Principle of proportionality
The proposal complies with the principle of proportionality for the following reasons.
The proposed action does not represent an increase in Community intervention. On the contrary, it standardises and provides a framework for the self-regulatory mechanisms of the recognised organisations (control mechanisms), eliminates cumbersome procedures (limited recognition), updates the existing provisions (recognition criteria) and aims to make their application more flexible and efficient (reform of the penalties system).
No financial burden arises from this proposal either for the Member States or the Community budget. It provides added value in terms of safety and protection of the citizen, while the options chosen represent a negligible cost to economic operators.
- Choice of instruments
Proposed instrument(s): Directive.
Other instruments would not be adequate for the following reasons:
Replacing the present Directive by a Regulation would not fit in well with the system under which Member States are able to delegate their powers to inspect ships and issue certificates under the relevant international conventions.
4)
The proposal has no implications for the Community budget.
- Simulation, pilot phase and transition period
The proposal has been, or will be, the subject of a transitional period.
- Recasting
The proposal involves recasting of the legal provisions in force and is part of the Community programme updating and simplifying the Community acquis.
- Correlation table
The Member States are required to transmit to the Commission the text of national provisions transposing the Directive as well as a correlation table between those provisions and this Directive.
- European Economic Area
This draft instrument concerns an area covered by the EEA Agreement and must therefore be extended to cover the European Economic Area.