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YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014

YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014 THE NORTHERN SEA ROUTE – LEGAL AND PRACTICAL ISSUES ARISING. RORY MACFARLANE INCE & CO. The Northern Sea Route (“NSR”). Northern Sea Route Russian Siberian coast Barents Sea to Baring Strait First navigated in 1897

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YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014

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  1. YPSN (HK) MARITIME SEMINAR – WEDNESDAY 19 FEBRUARY 2014 • THE NORTHERN SEA ROUTE – LEGAL AND PRACTICAL ISSUES ARISING RORY MACFARLANE INCE & CO

  2. The Northern Sea Route (“NSR”) • Northern Sea Route • Russian Siberian coast • Barents Sea to Baring Strait • First navigated in 1897 • c/f Northwest Passage • Canadian Arctic coast • Also exiting via the Baring Strait • 1905 - Amundsen / The Maud

  3. Northern Sea Route c/f Southern Sea Route

  4. NSR – Potential Advantages • Less Time (reduced hire/freight). • Less Bunkers. • Avoids East African Piracy threat and associated costs. • Reduced CO2 emissions.

  5. NSR - Potential Disadvantages / Hazards • Seasonal. July – November (140 days). • - Icebreaker support? • 2. Navigational Issues: • - not a linear route • - insufficient charts • - compass / GPS reliability • - restricted visibility • - transit close to coast (15m draft) • Casualty Response – (towage/salvage/spare parts). • Pollution clean-up costs. • Less flexible route commercially.

  6. NSR- Variations in Ice Flow

  7. NSR - Potential Disadvantages / Hazards • Seasonal. July – November (140 days). • - Icebreaker support? • 2. Navigational Issues: • - not a linear route • - insufficient charts • - compass / GPS reliability • - restricted visibility • - transit close to coast (15m draft) • Casualty Response – (towage/salvage/spare parts). • Pollution clean-up costs. • Less flexible passage commercially.

  8. NSR – Potential Disadvantages / Hazards • The Petrozavodsk (2009) The Nordvisk (2013)

  9. NSR – Potential Disadvantages / Hazards

  10. NSR - Potential Disadvantages / Hazards • Seasonal. July – November (140 days). • - Icebreaker support? • 2. Navigational Issues: • - not a linear route • - insufficient charts • - compass / GPS reliability • - restricted visibility • Casualty Response – (towage/salvage/spare parts). • Pollution clean-up costs. • Less flexible passage commercially.

  11. NSR - Legal Issues / Insurance • INSOP / ARCOP / Lloyds JHC / Arctic Council. • - all conclude that claims arising in arctic would be more expensive • - emergency response to ships in distress inhibited • Is the vessel sufficiently ice classed? • Will the vessel receive ice breaker support? • Lack of statistical data. • NSR therefore creates issues relating to: • - Classification Societies - P&I Insurance - H&M Insurance

  12. Insurance – Classification Societies • Ice class notations differ among classification societies. • Ice class is not part of the main class. • Societies’ rules do not regulate the way vessels operate in ice-infested areas. • Implications for Insurers • Cover will not be prejudiced on the ground of loss of class. • Insurers must evaluate the risk and set requirements.

  13. Insurance – H&M • Voyage in arctic waters could be a risk excluded (e.g. English Institute Warranties 1/7/76). • Notify underwriters before transit. • Revised terms of cover • Additional premium • Ice deductible • [Note: the JHC has recommended a Russian-speaking desk officer for NSR transit]

  14. Insurance - P&I • Generally no imposition of trading. • Notify P&I of transit through NSR in advance. • Alteration of risk.

  15. NSR – Legal Issues / Transit • Application Procedure • Need a Permit • Who: Ship owner/master or owner’s representative. • When: >120 days before transit. • <15 days before transit. • Where: The NSR Administration, Moscow. • How: By email (nsra@morflot.ru): • - pdf form • - ship name / IMO number / details • - contact details • - ship owner statement • - attachments (class cert. / insurance details etc..) • NB Contact ice breaker administration once application submitted.

  16. NSR – Legal Issues / Transit After Application • Decision: - within 10 working days. • Notification: - within 2 working after decision. - published on NSRA website. • Validity: - 365 days. - no entry to NSR before permit effective period. - exit from NSR before end of permit. • Report: - daily by master to NSRA – email. • Refusal: - information false or misleading. - information incomplete. - vessel unsafe under Russian law. • Fees: - transit costs (per ton / cargo). - ice breaker fees (unpublished). - ice pilot(s) fee.

  17. NSR – Ice breakers

  18. NSR – Legal Issues / General • Any different to other maritime routes/ voyages? • Hire – increased risk of off hire / termination. • Routing – “navigational orders” ; “employment orders”. • Unsafe port. • Seaworthiness.

  19. NSR - Transit Facts & Figures • General • Up to 40% shorter than SSR / Suez route. • COSCO (Mv Yong Sheng), Sanko (Sanko Odysesy), Tsuchdi Shipping (Mv Nordic Barents), Vitol. • Sena Bulk / Hyundai – co-operative long term strategy. • “Golden Waterway” – 5% to 15% of China’s int. trade by 2020? • Transit Figures NSR • 2009 2 vessels. • 4 vessels. • 2011 18 vessels. • 2012 46 Vessels. • c/f Suez Canal • 2012 1,500 per month / 18,000 per year.

  20. NSR - Transit Facts & Figures (cont.) • 2013 • #

  21. NSR – Useful Websites / Email Addresses • NSR Information Office • http://www.arctic-lio.com • NSR Administration • http://www.nsra.ru/en/razresheniya/ • NSRA Permit Applications • nsra@morflot.ru • NSR Transit – master’s daily reports • nsra-info@morflot.ru • Ice Breakers and Ice Pilots • http://www.rosatomflot.ru/?lang=en • http://www.arctic-lio.com/nsr_icebreakersassistance • http://www.nsra.ru/en/org_locman_provodka/ • IMO 1024(26) - Polar Water Guidelines • www.imo.org/Publications/Documents/Attachments/Pages%20from%20E190E.pdf

  22. Thank you Rory Macfarlane rory.macfarlane@incelaw.com

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