What exactly does the ISM Code mean to ship brokers really? This is probably one of the most frequently asked questions around at present! To draw on various definitions, the International Safety Management (ISM) Code is a quality control system developed from the ISO 9002 Quality Management Standard. It was brought about to provide an international standard for the safe management and operation of ships and to minimize the risk of environmental pollution.

The code applied from the 1 July 1998 to bulk carriers, tankers, chemical tankers, gas tankers, passenger ships and high speed craft of 500 GT or more engaged in International Trade and from 1 July 2002, all other cargo carrying vessels in international trade and general cargo vessels. It is applicable to all countries of the European Union including those who are applying, as well as Canada, the USA and Australia. All member countries of the IMO have also undertaken to comply.

In order to become certified under ISM, a company will have had a successful audit of it and their vessel's safety practices. This is the responsibility of the flag state to carry out, either itself or by delegation to another accredited organization, i.e. Classification Societies. Once successful, the two documents issued and subsequently required for presentation by all vessels are:

1. The Document of Compliance (DOC)
2. The Safety Management Certificate (SMC)

Absence of one or both documents will be considered as non-compliance with the ISM Code requirements, and will result in the offending vessels being detained by Port State Control and being unable to trade internationally. Frequent and regular inspections will be run by Port State Control with several European countries already indicating that it will be strictly observed and maintained.

By its very nature then, the ISM Code and any possible non-compliance with it, will strongly influence brokers and their ability to fix suitable vessels.

To examine the extent of this, it is necessary to ascertain whose responsibility it falls under to ensure the documentation is in order. As already stated, this is the flag state, which in turn places responsibility on the Owners of the vessels.

It will become necessary therefore for both Owners and Charterers brokers to establish early in negotiations, that the vessel in question has the relevant documentation bringing an even added importance to the well-used phrase ‘check before fixing’!

The other aspect is to cover oneself legally and in response to this BIMCO has devised a broad and neutrally worded ISM clause to incorporate in both voyage and time charterparties. Further details are available from BIMCO, however for member's information the standard clause reads:

“From the date of coming into force of the International Safety Management (ISM) Code in relation to the Vessel and thereafter during the currency of this Charterparty, the Owners shall procure that both the Vessel and “the Company” (as defined by the ISM Code) shall comply with the requirements of the ISM Code. Upon request the Owners shall provide a copy of the relevant Document of Compliance (DOC) and Safety Management Certificate (SMC) to the Charterers. Except as otherwise provided in this Charterparty, loss, damage, expense or delay caused by failure on the part of the Owners or “the Company” to comply with the ISM Code shall be for the Owners’ account.”

On a day to day basis, it should therefore be incumbent upon the brokers fixing the vessel to insure that the Owners involved are in compliance with the ISM Code. Failure to do so could result in the charterer being left with a vessel detained at a particular port, unable to proceed or at the very least have substantial delays incurred. This of course not only affects the two Principals involved, but also results in time lost for the broker in possibly having to employ another vessel (this one suitable).

The Code also severely restricts any Owner who wishes to trade without these certifications and Owner’s brokers should endeavor to actively seek out the Owners that do comply, again in order to avoid possible delays and to also be seen as ‘first class’ brokers presenting best possible tonnage.

Where necessary, the Owners broker should make themselves aware of the Code’s requirements and their implications in order to be able to advise their Principals if needed. In the same vein, if the Owners wish, their broker should also make it well known to prospective Charterers that their Principals are accredited and therefore the preferable vessel for the cargo - possibly at a premium!

Perhaps this issue should also be addressed by the various shipping software manufacturers by including some notice of compliance in their vessel classifying software packages. This could enable brokers to ‘search’ specifically for compliant vessels and advise Charterers accordingly.

Finally, there are some who believe the ISM Code will not affect the industry as much as is being discussed, however it would appear certainly from the early indications, that it will be enforced stringently. It would therefore seem prudent that brokers, at the very least, make themselves aware of all possible implications and put themselves in a position to act positively on behalf of their principals if need be.

Debra Andreassen
Shipbroker
noraus@btinternet.com