Merchant Shipping (Maritime Labour Convention) (Amendment) Bill

Order for Second Reading read.

4.04 pm

The Senior Minister of State for Transport (Mrs Josephine Teo): Mdm Speaker, I beg to move, "That the Bill be now read a Second time."

With more than 90% of world trade being carried by sea, seafarers play a vital role in enabling the world's economy. As one of the world's busiest ports, Singapore welcomes some 12,000 seafarers daily to our shores. We also have one of the largest ship registries in the world. Some 58,000 seafarers work on board Singapore-flagged ships.

Singapore is committed to enhancing the well-being of seafarers. In 2011, Singapore became the first Asian country to accede to the Maritime Labour Convention (MLC), an instrument adopted by the International Labour Organization (ILO) to establish minimum working and living standards for seafarers. Recently, the ILO amended the MLC to protect seafarers abandoned by their shipowners. These amendments to the MLC will come into force on 18 January 2017.

As a state party to the MLC, Singapore is obliged to give effect to the amendments. The amendments will require shipowners to procure insurance or other financial security to provide necessary support for abandoned seafarers, as well as to meet compensation claims for the death or disability of seafarers.

The proposed Merchant Shipping (Maritime Labour Convention) (Amendment) Bill 2016 seeks to amend the Merchant Shipping (Maritime Labour Convention) Act 2014 and to make a related amendment to the Work Injury Compensation Act.

Let me highlight the key provisions of the Bill. Clause 2 expands the scope of a ship-owner's obligation to repatriate a seafarer to include scenarios of abandonment. Clause 3 requires shipowners to have in force the necessary insurance or financial security from approved providers to cover shipowners' obligations. Such obligations include the repatriation of a seafarer and the payment of compensation in the event of a seafarer's death or long-term disability due to occupational injury, illness or hazard. Clause 4 empowers the Maritime and Port Authority (MPA)'s Director of Marine to grant and revoke the approvals of financial security providers. Clause 7 makes a related amendment to the Work Injury Compensation Act. It removes the requirement for shipowners to procure separate insurance if they have already done so under the Merchant Shipping (Maritime Labour Convention) Act.

Once the amendments come into force, Singapore-registered ships will be required to carry on board documentary evidence of the necessary financial security for inspection by foreign port authorities. Similarly, foreign-registered ships calling at our port will have to produce the necessary documentary evidence for MPA's inspection.

The seafarer unions and the industry have been consulted, and they are supportive of the Bill.

Mdm Speaker, Singapore is committed to protect the interests and welfare of seafarers. The proposed Bill ensures that we have the domestic legislation in place to give effect to the amendments to the MLC. Mdm Speaker, I beg to move.

Question proposed.

4.07 pm

Mr Louis Ng Kok Kwang (Nee Soon): Mdm Speaker, Singapore was the first few countries to ratify the ILO's Maritime Labour Convention in 2011, signalling our firm commitment to protect seafarers against abuse and exploitation – one of the biggest lapses and criticisms faced by the shipping industry today.

Singapore is a global maritime hub, ranked among the world's top 10 largest ship registries with more than 4,500 vessels on our register. Because of our global position, we must take the lead to ensure that we are a hub which is not just efficient, professional and reliable, but one which is also responsible. In this regard, I stand in full support of this Bill to codify into law the amendments to the Convention.

In 2015, I was appalled to read about the alleged slavery and trafficking in the Thai fishing industry. I could not believe the human rights atrocities reported, which I thought was inconceivable in the 21st century. While this Bill deals with merchant and not fishing fleets, reports have shown that similar problems do affect seafarers on board merchant ships.

We have travelled far since 2006 when MLC was first introduced and ratified by Singapore in 2011, but implementation and enforcement in all 77 countries took time.

In the meantime, reports continued to surface on abuses ranging from inhumane working conditions to the systematic cheating of seafarers' wages. And one case linked the death of a Filipino seafarer to a recruitment agency in Singapore, though MOM later clarified that the illegal activities occurred outside our borders.

Madam, the high seas are wrought with little oversight, weak rules and abuse of workers. Seafarers are fully dependent on the ratification of international conventions to protect their fundamental rights. The implementation of these conventions will be difficult, especially after these new amendments broaden the responsibilities of shipowners.

But Singapore is one of the few developed countries among the port states and we should be a shining example, being one of the first to implement the new rules.

Compared to other port states, we have adequate resources and a strong governance system to ensure the human rights of seafarers are codified and enforced. This Bill enables us to be that shining example.

I support all changes introduced by this Bill, in particular, affording better protection for abandoned seafarers and requiring shipowners to provide financial security for the compensation of seafarers and their families in cases of a seafarer's death or long-term disability.

In the spirit of these commendable amendments, I have the following questions.

One, will the Employment Act or the Employment of Foreign Manpower Act also be extended to seafarers for non-injury employment issues which could be in line with MLC's principles on clear employment conditions?

Two, will the Ministry be taking additional steps to ensure enforcement of these additional protections, given that seafarers have few opportunities whilst on land to access NGO and MOM aid channels?

I want to say that I am heartened by Singapore's enthusiasm towards responsible business practices. Although in the short term, shipowners will have to absorb higher costs for compliance, in the long term, it will ensure business continuity for Singapore's ports.

As we face increased competition from growing ports in China, our strict compliance with international law will stand out as a competitive advantage. In our pursuit of flexible, commercially-focused policies, we must continue to raise the profile of the human element in businesses – particularly for industries with a global nature, such as shipping.

We must continue to recognise that the fundamental protection of a human being cannot be subservient to business objectives. With that, Madam, I stand in strong support of the Bill.

4.11 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Madam, I declare my interest as a shipping lawyer.

This Bill wishes to introduce the amendments by the ILO to the MLC of 2006. Amongst other things, the proposed amendments will require shipowners to obtain financial security to cover up to four months of unpaid wages for their crew, repatriation costs and other expenses required of an abandoned crew, such as food, clothing, accommodation, drinking water, essential fuel for survival on board the ship, necessary medical care and any other reasonable costs or charges.

The amendments also introduce new mandatory requirements to ensure that seafarers who suffer death or long-term disability due to an occupational injury, illness or hazard are compensated fairly and without delay. The financial security required will be provided by marine insurance companies like Protection & Indemnity clubs, otherwise known as P&I Clubs.

Under this Convention, from 18 January 2017, all ships which are subject to this Convention will be required to carry and display onboard two certificates confirming that financial security is in place for: (a) the repatriation cost and outstanding wages; and (b) contractual payments for compensation for death or long-term disability. I shall refer to these certificates as MLC certificates for the remaining part of my speech.

Madam, the plight of seafarers who were abandoned by shipowners who have suffered from financial difficulties or denied their wages by their employers is something I am familiar with. I started work as a lawyer doing crew wage claim work for abandoned crew on board commercial ships in these exact circumstances which have given rise to the amendment to the MLC and, indeed, this enabling Bill.

In the second half of the 1990s, many shipping companies from the former Soviet Union countries faced bankruptcy. With the end of the Cold War and the break-up of the USSR, many of these shipping companies had struggled to survive. Their crew even had to arrest their own ships to sue for their own unpaid wages. Some of the crew were even emotionally reluctant to sue their companies as they had been sailing with their former state enterprises since the period of communist rule. Sometimes, these unpaid wages ran into months and even longer.

These days, we still see owners failing to pay crew wages when they run into financial problems, especially with the shipping industry being in the doldrums in the last few years. When companies collapse, they can leave crew stranded onboard with wages unpaid and, sometimes, even without funding for repatriation and, in some situations, even without provisions, as fleet management take time to work out solutions for the crew as well as with creditors. Some of us here may have read news of crew stranded onboard many ships all over the world which are owned by the Korean conglomerate, Hanjin. It may take quite a few months to settle these problems. I understand that a local company had a similar experience recently, albeit on a much smaller scale.

Typically, when a shipowner starts to owe its crew their wages, the crew may still continue to work on the vessel for a little while. The crew will often be alerted to take action when they know that the shipowner has other creditors, as, for example, when the ship receives a claim from trade creditors, or when their family is in hardship after not receiving their wages for some months.

There are practical reasons why crew may not take action for some time. It may not be convenient for the crew, given the way ship operations are run. Vessels have tight turn-around time and may not have much time in port. Crew may need to man the vessel even when the ship is in port. In some situations, the master may not grant permission for crew to go ashore. Sometimes, the owners or their agents may not allow the crew to go ashore and the agents' co-operation is required as they need to get the paperwork from local port authorities and also arrange for harbour launches to go to the anchorages to pick up the crew which can be costly to the crew.

Although in most jurisdictions, crew has the right to commence legal proceedings for unpaid wages and, under the Admiralty Laws for many countries, crew wages have higher priority than most other types of claims, in practice, crew may be reluctant to commence proceedings as they have to engage their own lawyers and fund their own litigation. Even if the crew manages to find a lawyer to file their crew wage claims, there may be competing claims in the same proceedings where a ship is arrested by creditors.

Crew wage claims may be only one of the competing claims among different creditors. If shipowners give up their ships, refuse to pay crew wages and let the ships be sold via judicial sale, all creditors will compete for a share of the sale proceeds. As crew wage claim takes higher priority than other claims, unpaid wages can often affect the claims of other creditors. However, that does not mean that crew will have it easy and their wages can always be recovered.

Sometimes, the crew wage contractual documentation may be far from ideal. For example, crew may be promised additional wages, overtime payment but, unfortunately, for the crew, the documentation from the shipowners supporting such payment may be less than perfect.

It is not uncommon these days to see competing claimants trying to overcome the higher priority which crew wages enjoyed over other claimants, by challenging such payments, often using intimidating and even lengthy Court applications, which come with the implied threat of legal cost, which may effectively pressure crew to settle for a smaller sum than as claimed.

Madam, with this Convention, the provision of the financial security from insurance companies for unpaid crew wage claims and death, disability claims as well as repatriation costs and provisions will provide some welcome assurances to the crew. Coincidentally, it may also be welcomed by other trade creditors as the crew wage claims may not eat into the judicial sale proceeds of abandoned ships which are arrested.

Madam, with this Convention, I understand that shipowners have to display their MLC certificates for the required financial security on board the vessel and the crew can contact the insurers directly. This seems rather convenient but, in practice, this will only work if the owners will allow the crew unrestricted access to the insurers, whether by phone, email or shore visits to the offices of insurers.

Madam, it is not uncommon to see owners disputing liability to crew for wages on the ground that their crew is employed by the ship managers or by manning agents directly. Sometimes, the owner did not pay the ship managers or manning agents for the crew's wages and, as a result, the latter may delay or fail to pay the crew. I am glad that, under this Convention, even if the contract is entered into between the crew and manning agents, and not with the owners, the crew can now look to the financial security under this Convention.

Much as this convention is a good and big step in the right direction and will bring comfort and assurance to many seafarers, I can still see some practical limitations, which I hope this Government and the world maritime community can continue to make efforts towards.

One, the financial security system is to secure up to four months' wages. If the outstanding wages exceed four months, the crew may still need to instruct their own lawyers to effect recovery of their unsecured amount. Hence, this convention does not fully assist the crew with unpaid wages of more than four months. There are a small number of shipowners whose crew may not be paid wages on a regular basis. They may, for example, be paid their full wages at the end of the contract term, which can be a few years. Meantime, they may be given, say, a small allowance. They may use such an allowance to buy daily necessities.

Often, when such crew try to stop work and return home, often due to unhappiness with poor working conditions, the owners may threaten not to pay their salaries in full. The crew's only option will be to leave the vessel and instruct lawyers to file a claim in Court. But the crew may not have the funds to do so. Some of the crew may even have entered into one-sided contracts with manning agents. Included in this category are some fishing fleets, which I understand come into Singapore port for various reasons. These are not Singapore-registered vessels. They are foreign-owned and have foreign crew. For the crew on these vessels, sadly, this Convention may be academic to them and will not really improve their lot.

Madam, I understand that for the purpose of the financial security required by this Convention to secure the various crew-related claims, the IG group, or the world's Protection and Indemnity clubs, who are the top-tier group of P&I clubs, are going to provide automatic additional cover, presumably with additional premium and they will provide cover to ships regardless of whether they belong to a flag-state, who is the signatory state to this Convention. This is great news, as it would ensure that the crew of more ships can enjoy the security intended under this Convention.

However, with regard to crew who are serving on board ships which are not entered with these P&I clubs or on board many more smaller home-trade vessels which are not as well regulated for various reasons, whether crew can enjoy protection under this Convention will depend on whether their ship has the requisite insurance coverage. We should not assume that this is a given in all cases.

Madam, under this Convention, seafarers have to be serving on board at the time of claim. The crew can only make any claim on the MLC certificates if they are still serving on board. It brings the possibility of owners repatriating seafarers by giving false assurances that outstanding wages of claims will be paid after repatriation. But once repatriated, the financial security may no longer assist the seafarers. And the seafarers will have to engage lawyers to pursue their claims.

Madam, I understand that all states which are party to this Convention are required to implement the requirements of this Convention in a way that ensures that the ships flying the flag of a state, which has not ratified this Convention, do not receive more favourable treatment. I also understand that all states which are party to this Convention are also obliged to have effective port state control to ensure ships entering its port meet the requirements of this Convention.

Madam, not all port or flag-states may be signatories of this Convention. Some ships which come into Singapore port may come from flag-states which are not signatories. To ensure consistent protection of crew under these provisions, port-states like Singapore which are signatories to this Convention must carry out consistent enforcement when vessels enter port. Singapore is a major maritime hub. We have one of the world's busiest ports. And we have one of the largest ship registries in the world. We have to do our part, both as a port-state as well as a flag-state, to ensure that shipowners comply with the IMO Conventions or regulations and to make this Convention and this Bill work. In this connection, may I ask the Senior Minister of State how will MPA ensure that all ships entering Singapore, especially those which are not registered with the Singapore registry, have their MLC certificates in place?

Madam, this Convention is certainly a good and big step in the right direction, in so far as it provides more protection and assurance in respect of repatriation cost, unpaid wages, compensation for death and long-term disability. However, I feel that there is still more that we can do to improve on the certainty of seafarers being paid their fair wages and being paid in a timely manner. Madam, I am in support of the Bill.

4.23 pm

Ms K Thanaletchimi (Nominated Member): Madam, the minimum standards prescribed by MLC have done much to protect and improve the work environment of seafarers in accordance with ILO standards regulating merchant shipping.

Amongst other broad terms and benefits, it is important that conditions of their employment are taken care of. In addition, they must be sufficiently cared for in the areas of health protection, medical care, welfare, accident prevention and, if injury were to inadvertently happen, there must be sufficient assistance given for workplace injury which includes adequate compensation to ensure their long-term survivability. We need to ensure seafarers are able to return home safely at no cost in cases of abandonment or repatriation for reasons such as illness, injury, shipwreck, trading in a war zone or if the shipowner fails to fulfil his or her legal obligations to the seafarers.

Madam, while I fully support the Bill, I certainly hope that we could beef up penalties against irresponsible shipowners who commit unscrupulous actions, such as abandonment, or failure to pay salaries or not providing necessary maintenance and support. In other words, apart from getting the shipowner to repatriate the seafarer, what further actions can be taken against shipowners who commit such irresponsible acts?

Can the seafarers be reassured if the terms of coverage by a contract of insurance or other financial security will include all the liabilities included in the Work Injury Compensation Act?

It is equally imperative that the seafarers know their rights and understand what employers' obligations are. In this aspect, there should be greater transparency of cases of how repatriation have been managed by shipowners, awareness of the legislation to the various stakeholders, especially the seafarers, adequate education and easy access for seafarers to reach out for help, assistance and counselling.

In this aspect, the maritime unions have been and continue to do a great job in representing the concerns of these seafarers, especially when they are stranded at sea. Shipowners must provide financial security to assure compensation in the event of death or long-term disability of seafarers due to occupational injury, illness or accidents due to work hazards. The legislation now makes it even more concrete of their obligations in this aspect.

Madam, the Bill is a step in the right direction. One must value human lives and workers' rights for fundamental protection, prevention of accidents, incidents and, if it happens, provide both psychological and material support through expeditious treatment, smooth repatriation and fair compensation. With this, I am in favour of the Bill.

4.26 pm

Mr Patrick Tay Teck Guan (West Coast): Mdm Speaker, I rise in support of the Bill. However, on behalf of our unions and workers in this industry, I wish to raise two issues with regard to this Bill.

First, does the financial security system provide abandoned seafarers with direct access, sufficient coverage and expedited financial assistance?

The amendments have treated the abandonment scenarios envisioned in the MLC amendments as scenarios where shipowners are required to repatriate the seafarer. I have several questions.

Do the amendments allow the seafarer to tap on the contract of insurance or financial security to "provide direct access, sufficient coverage and expedited financial assistance" in scenarios of abandonment as envisioned by the amendments to MLC?

Can the contract of insurance be tapped on to pay for "necessary maintenance and support" of the seafarer, for example, adequate food, accommodation, drinking water supplies, essential fuel for survival on board the ship and necessary medical care when the seafarer has not been provided with such necessary maintenance and support by the shipowner? And can the contract of insurance be tapped on to pay outstanding wages to the seafarer when the seafarer has not been paid wages for more than two months?

Second, is it possible for seafarers to tap on the contract of insurance or financial security when the ship has been arrested or when the shipowner is under receivership?

The shipping industry has been squeezed on both the supply and demand sides: too many vessels, not enough scrapped, while global trade has slowed down. The Baltic Dry index, a measure of freight rates for bulk carriers that carry commodities like coal and iron ore, has plummeted by 95% since its peak in 2008. Even oil tankers are suffering. Container lines are now also in particularly bad shape. Sending a container from Shanghai to Europe costs half what it did in 2014, according to figures from the Chinese city's shipping exchange. More shipowners are expected to run into difficulties.

For example, the stranded crew of Hanjin Rome, owned by the bankrupt Hanjin Shipping Company, had sat off the eastern coast of Singapore. The vessel was placed under Court arrest here on 29 August after German shipowner Rickmers filed a civil claim for money it says it is owed by Hanjin.

According to the Maritime Port Authority of Singapore, once a ship is arrested, anything that enters or leaves the ship has to be approved by the Supreme Court, including change of crew. Crew members would have to apply for permission from the Supreme Court to be repatriated. In an arrested ship, at least half the number of officers, engineers and crew or watchmen, security guards must be on board at all times to meet the minimum manning requirement.

In the case where the ship has been arrested and where seafarers on board have not been provided "necessary maintenance and support, including adequate food, accommodation, drinking water supplies, essential fuel for survival on board the ship and necessary medical care", would the seafarers be able to tap on the financial security system to seek financial assistance in this regard?

In the case where a shipowner is in receivership and has not paid its seafarers' wages for more than two months, would the seafarers be able to tap on the financial security system to seek financial assistance in this regard?

Mdm Speaker: Senior Minister of State Josephine Teo.

4.30 pm

Mrs Josephine Teo: Mdm Speaker, I thank the Members for their comments and their support for the Bill.

Mr Patrick Tay and Ms Thanaletchimi have spoken from the Labour Movement's perspective; Mr Louis Ng from a humanitarian perspective; and I have found particularly useful from Mr Dennis Tan, speaking from his insights as a very experienced shipping lawyer. I shall attempt to address some of the points that were raised.

Mr Louis Ng rightly pointed out that "seafarers are fully dependent on the ratification of international conventions to protect their fundamental rights." And this is why Singapore was the first Asian country to ratify the MLC and why we are moving this Bill to bring the provisions of the Act up to date with the latest enhancements to the MLC. After all, it is a Convention designed specifically to address the needs of seafarers working onboard ships.

The Act today already includes a comprehensive range of employment rights and non-workmen injury compensation for seafarers, which makes it unnecessary to also extend coverage of the Employment Act and Employment of Foreign Manpower Act to seafarers. For instance, the Act provides a seafarer with the right to return home when he decides not to renew his employment agreement. His trip home will be paid for by his employer. There is no such provision for most other types of employees.

This Bill will expand the seafarer's right to return home when the shipowner fails to provide for his necessary maintenance, or owes his salary for more than two months. Mr Patrick Tay will be glad to know that the provisions in the Bill will allow seafarers to tap the insurance or financial security to pay for such items in case shipowners refuse to or are unable to do so. This is the added protection that is currently not available. The financial security provider will also cover up to four months of outstanding wages and other entitlements under the seafarer's employment agreement. So, it depends on what is in the employment agreement.

The same arrangement also applies to ships under arrest or shipowners in receivership. Should a shipowner face difficulties in tending to his seafarers' needs onboard an arrested ship, the local Court sheriff may arrange for a port agent to tend to the maintenance of the seafarers. In other words, seafarers can have better peace of mind that their well-being is not left to the mercy of the shipowners. The local Court Sherriff can appoint a port agent.

On a related note, I am glad to inform Mr Patrick Tay and also Mr Dennis Tan that the seafarers onboard Hanjin Rome, which was the vessel that was arrested in Singapore by its creditors, are in good health and their salaries have been paid on time. There is adequate food, water and medical supplies onboard the vessel. We know this because the unions, together with the Maritime Port Authority (MPA), made an inspection. And those who have requested for repatriation were repatriated by the shipowner. Should the owner of an arrested ship like Hanjin Rome renege on their repatriation obligations in future, then the provisions in the Bill will kick in to provide relief to the seafarers.

In response to the clarification sought by Ms Thanaletchimi, the insurance or financial security required must provide the same extent of coverage of employers' liabilities as under the Work Injury Compensation Act (WICA). In other words, seafarers are no worse off being covered under the MLC Act instead of under WICA.

After the Bill comes into force, MPA will require a ship to carry documentary evidence, or MLC certificates, as Mr Dennis Tan refers to. These MLC certificates must be carried in order to show that necessary insurance or the financial security has been procured. And the shipowners must also let the seafarers have the contact details of the financial security provider ‒ the Member has already mentioned that. In the unfortunate event that a shipowner fails to comply with his repatriation obligations, the affected seafarers may contact the provider directly, or through the MPA, to request assistance.

Aside from the provisions in the Bill, I would like to assure Ms Thanaletchimi and Mr Louis Ng that MPA has measures in place to deal with irresponsible shipowners or employers. Seafarers can use the satellite phone or the Internet onboard the ship to get in touch with MPA to raise any matter of concern. I know that Mr Dennis Tan highlighted that, sometimes, the shipowners or the ship managers may make things very difficult for the seafarers. That is a very valid point, which is why I think it is very important to work with our unions. Work with our unions to educate the seafarers and also to provide to them alternative avenues of feedback, alternative avenues where they can raise their grievances. So, that is something that we take very seriously. Work in partnership with the unions to make sure that the seafarers' rights are not only protected on paper, but that they are, in effect, properly protected. Should any owner of a Singapore-registered ship fall short of fulfilling its obligations, MPA can take Court action to impose financial penalties or even de-register the ship from the Singapore Registry.

Furthermore, in its capacity as the port state authority, MPA can inspect all ships calling at Singapore. And a ship may be detained when it is found to be non-compliant with international conventions, including the MLC. And to the point that the Member made, consistent enforcement is absolutely right. I fully agree with the Member. And MPA carries out regular spot-checks to make sure that the MLC certificates are, in fact, being procured properly. And if MPA has reason to suspect that any vessel, whether they are flagged in Singapore or elsewhere, is not in compliance with any of these international conventions, then MPA will do whatever it can to make sure that these shipowners are taken to task.

Mdm Speaker, this Bill will fulfil Singapore's obligation as a state party to the MLC. As pointed out by Members, the MLC provides better protection to seafarers but, of course, it is not without its limitations. So, from the Government's perspective, we expect to continue to work together with the unions and to look for more avenues to improve the welfare and working conditions for the seafarers onboard Singapore-registered ships.

Mdm Speaker: Are there any clarifications? None.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mrs Josephine Teo].

Bill considered in Committee; reported without amendment; read a Third time and passed.