Ulgener

-Prof.Dr.M.Fehmi Ulgener

Demurrage is the payment of liquidated damages because of the breach of contract by the charterers by not completing the loading or discharging operations within the period called as laytime, which length is determined as per the individual charterparty. This is a well established rule in shipping law, but according English law that is.

in parallel of this principle, charterers are not able to benefit from the laytime exceptions, (since they are in breach of the contract) that is to say of the exceptions which are stopping the clock of laytime, i.e. Sundays and holidays will be counted as demurrage, even if there is a “shex” provision in the charterparty, or those times during which operations can not be made due to weather conditions will be counted also on demurrage. The principle of “once on demurrage always on demurrage” is the short description of this state of law as per English law. Therefore even this principle does not lay within the clauses of the charterparty, the result is as stated above, i.e. a clause in this regard is not changing the law, it is merely repeating the law.

This is different in some other laws; according German, Turkish and Scandinavian legal systems are heading in a different direction. As per these laws, charterers who could not complete the loading and discharging operations within the laytime are not in breach of the contract, on the contrary they have the right top keep the vessel at the berth to complete the operations even a further period (called demurrage), but they have to pay for it this time. In different words owners are obliged to make their vessel be used for loading and discharging during laytime without asking any return (since the owners have calculated and included the expenses etc of laytime into the freight) and also during the period of demurrage but this time in consideration of a payment. Therefore as per these laws use of demurrage is a right of the charterers given by law.

This difference is of course coming with a result; unless the charterparty contains “once on demurrage always on demurrage” clause, all the exceptions stopping the clock within the laytime can be also used for the period of demurrage, i.e. in order to make sure to reach the effect as per English law, this clause must be added to the charterparty. (There are contradictory articles within the new Turkish Commercial Code, therefore the effects are yet to be tested)

-T.Duygu Yazici Araci

On March 30, 2023, the “Law on Amending the Environment Law and Some Laws and Decree Law No. 375” (“Amendment”) was adopted by the Turkish Grand National Assembly and this Amendment entered into force on April 5, 2023. With the said Amendment, two important changes were made in the Environmental Law, as well as some regulations on other issues. It was stated that the need for a more reasonable regulation of pollution fines was stated as the reason for this change.

Pursuant to the amendment, the phrase “10 Turkish liras” in sub-paragraph (4) of subparagraph (i) of the first paragraph of Article 20 of the Environment Law was changed to “11.59 Turkish liras” and the following sentence has been added after the phrase “administrative fine is imposed” in the first paragraph;

““However, for tankers, ships and other marine vehicles larger than one hundred thousand gross tonnage, an administrative fine is imposed on the basis of one hundred thousand gross tonnage.”

Accordingly, in the event that tankers, dry cargo ships and other marine vehicles cause pollution with garbage, sewage and gray water, the amount of fines we published in our newsletter at the beginning of this year will change as follows;

Up to 1,000 GT
TL 502.48 per GT
(approx. USD 25 as per April 2023 exchange rate)
TL 1,507.44 per GT for companies
(approx. USD 75 as per April 2023 exchange rate)

Between 1,000 and 5.000 GT
TL 100.50 per GT
(approx. USD 5 as per April 2023 exchange rate)
TL 301.50 per GT for companies
(approx. USD 15 as per April 2023 exchange rate)

Over 5,000 GT
TL 50.23 TL 11.59 per GT
(decreased from approx. USD 2.5 to USD 0.5 as per April 2023 exchange rate)
TL 150.69 TL 34.77 per GT for companies (decreased from approx. USD 7.5 to USD 1.5 as per April 2023 exchange rate)

Additionally, if the tanker, ship and other marine vehicles causing environmental pollution are larger than one hundred thousand gross tons, an administrative fine will be imposed on the basis of one hundred thousand gross tons, i.e. no addition will be made to the penalty amount for over one hundred thousand gross tonnage.

-Canberk Tuygan

According to MARPOL Annex VI Rule 14, from 1 January 2020, the sulphur content of marine fuels used outside designated Emission Control Areas must be below 0.50 m/m %. MARPOL Annex VI Rule 4 allows the use of an "equivalent" means of compliance (such as a scrubber). Effective from 1 March 2020, the carriage for use of non-compliant fuel on board ships that are not equipped with equivalent means of compliance is also prohibited.

With the letter dated 24.10.2019 and numbered 36712415-160.02-E.78801 of the Republic of Turkey Ministry of Transport and Infrastructure General Directorate of Maritime Affairs, it was reported that exhaust gas cleaning systems (scrubber) will be accepted as an equivalent application within the scope of the 4th rule of MARPOL Annex Vl instead of using suitable fuel for the ships that wish to comply with the sulphur limits.

As it is known, exhaust cleaning systems are a relatively new technology and are divided into two as closed and open systems. If the water used for the system is supplied from the sea, washed and then released back to the sea for the natural cleaning effect of the marine environment, these systems are called open type exhaust gas cleaning systems. However, if the water used in the Exhaust Gas Cleaning System is mixed with some alkaline form, i.e. caustic soda, to neutralise the particles in the exhaust gas and given to the system, these systems are called closed type exhaust gas washing systems. The water used in this system is fresh water and circulates continuously in the system. As can be understood, the closed exhaust system is a more costly system.

In the circular dated 3 February 2020, as in the case of open exhaust cleaning systems, "...some countries may impose local restrictions or complete bans on the discharge of scrubber wash water into the sea on the grounds that it adversely affects the structure of seawater and the natural life of the sea in the light of scientific data. In our country, there are currently no restrictions or prohibitions on the discharge of scrubber washing waters into the sea and scrubber types, and these issues fall within the jurisdiction of the Ministry of Environment and Urbanisation...". However, these statements have created an uncertainty as to whether the use of open exhaust cleaning system is legal or not, and caused a perception as if the function of discharging the wash water of open systems to the sea is not prohibited.

In order to eliminate this confusion, a "reminder" letter dated 06.04.2021 was published by the Ministry of Environment and Urbanisation General Directorate of Environmental Management. The issue reminded in the letter is the provision in subparagraph (b) of Article 23 of the Regulation on Water Pollution Control: "In the seas entering the sovereign territory of Turkey; it is forbidden to discharge garbage, oil and oil derivatives and bilge waters contaminated with them, dirty ballast waters, sludge, slop, oil and similar solid and liquid wastes from ships, all kinds of cargo residues and wastes of aircraft navigating in the airspace over these seas." According to this provision, discharging the wash water from the open exhaust cleaning system into the sea is not in compliance with the Regulation of 2004, which is currently in force.

In brief, the equivalent compliance means permitted to be used in Turkish territorial waters are closed exhaust cleaning systems or open exhaust cleaning systems only if the wastes/sludges generated during the treatment of exhaust cleaning water and collected in the tank are given to the appropriate land facilities against a receipt and recorded in the exhaust gas cleaning system logbook.

It is of great importance for charterers to consider these issues while evaluating the offers of the owners who offer to allocate the ship with HSFO with open scrubber system with a more favourable price instead of LSFO especially in time charter contracts.

-Yagizalp Kirca

It is possible to define a ship management contract, which is widely used in the maritime transportation, as a contract concluded between the Owners and the ship managers, whereby the management of the ship belonging to the Owners in commercial, technical or other areas is wholly or partially entrusted to the ship managers for a certain fee. Since the ship managers are in direct interaction with third parties in the areas where it undertakes the management of the ship, they frequently faces lawsuits against them. However, in accordance with Turkish Law, is it possible for third parties to direct their claims to the ship manager? In this newsletter, we will examine whether the third parties can claim from the ship managers pursuant to the provisions on the Owners’ liability.

SHIP MANAGERS CANNOT BE CONSIDERED AS OWNERS IN THEIR RELATIONS WITH THIRD PARTIES

Under Turkish law, the Owners are liable for the debts arising from the operation of the ship. According to the Turkish Commercial Code, in order for a person to be held liable as an Owner, it must use a ship belonging to itself or to another person in maritime trade on its own behalf and account for the purpose of earning profit.

TURKISH COMMERCIAL CODE ARTICLE 1061- (1) The shipowner is the ship owner who uses its ship in the water for the purpose of gaining benefit.

(2) A person who uses a ship which is not its own in the water on its own behalf or through the master for the purpose of gaining benefit is considered to be the shipowner in its relations with third parties.

According to the ship management contract, the ship manager is a person who performs the duty of ship management for a fee determined in the contract. The fact that the ship manager manages the ship for a predetermined fee shows that he does not use the ship on his own behalf and account, but performs the works related to the management of the ship on behalf and account of the Owner for the fee specified in the contract. For this reason, it is not possible for the ship manager to be considered as the Owner against third parties and therefore to be liable to third parties who are damaged. There are also decisions of the Supreme Court on this issue.

11th Civil Chamber of Supreme Court, Decision No. 2017/863 E. 2018/6634 K. dated 24.10.2018

"The court held that the ship owner transferred to the ship manager the authority and obligation to manage the ship on his behalf in return for a fee pursuant to the "..." contract, the ship manager did not use the ship in maritime trade on his own behalf and account, the gains and losses arising from the operation of the ship belong to the Owner, Defendant company is not the Owner of the ship subject to the lawsuit, the defendant company is not the Owner of the ship but it is the ship manager of the ship, and the ship manager is an representative in the sense of Article 32 of the Obligations Code No. 818 (Article 40 of the Turkish Obligations Code No.60102) and an agent in the sense of Article 116 of the Code No. 6762 (No. 6102 .... 102), ... It has been decided to dismiss the lawsuit due to the lack of passive hostility on the grounds that a lawsuit can only be filed against the agent on behalf of his client in accordance with Article 117."

LIABILITY OF THE SHIP MANAGERS IN CASE OF AN ORGANIC BOND BETWEEN THE OWNERS AND THE SHIP MANAGERS

Although the ship managers are not considered as the Owners in their relations with third parties, it is frequently encountered that the courts hold the ship managers liable for the damages suffered by the third party. The courts base this decision on the organic bond between the ship managers and the Owners. One of the most important features of the ship management contract is that the ship managers do not have any organic bond with the Owners. In the event that the ship manager is a subsidiary of the Owner company or has any organic bond with the Owner, it is not possible to refer to a ship management contract. In such a case, the relationship is defined as a relationship of indirect representation.

If it is proved that the ship manager is a company with organic bonds with the shipowner, the ship management agreement between them is deemed invalid by the court on the grounds that it is collusive and is not taken into consideration in determining the hostility. The ship manager, who is organically bound to the Owners in any way, will be liable to third parties in the capacity of the Owners, since it will be assumed that it manages the ship on his own behalf and account, despite the existence of a ship management contract.

Briefly, according to Turkish Law, the Owners are liable for the debts arising from the operation of the ship, and the persons who use the ship in commerce on their own behalf and account shall have the title of Owners against third parties. The ship manager is the person who undertakes the management of the ship belonging to the shipowner for a fee determined in the contract and manages the ship on behalf and account of the Owners. Since the ship manager does not meet this condition, it is not liable to third parties for the debts arising from the operation of the ship. However, if it is proved that there is an organic bond between the Owner and the ship manager, the ship manager shall be considered to be using the ship in trade on its own behalf and account and shall be liable for the claims of third parties who are damaged.