CHINESE SHIP POLLUTION RESPONSE ORGANISATION CONTRACTS (SPRO)

Published: 29 May 2015

Practical guidance & frequently asked question (FAQs) on contracting with a Ship Pollution Response Organisation (SPRO) in the People’s Republic of China (PRC) in compliance with the Prevention and Control of Marine Pollution from Ships Regulations.

Regulations in the People’s Republic of China (PRC) relating to the Prevention and Control of Marine Pollution from Ships first came into force on 1 January 2012. The recent publications on this subject can be found on the Circulars website page.

The requirement to contract with a Ship Pollution Response Organisation (SPRO) still remains a problematic issue for Members with ships calling in China. We provide some practical guidance below.

SCOPE OF REGULATIONS

The regulations require the owners/ operators of:

a) any ship carrying polluting and/or hazardous cargoes in bulk, or

b) any other vessel above 10,000 GT

to enter into a pollution cleanup contract with a competent Ship Pollution Response Organisation (SPRO) before that ship enters a PRC port.

The requirements do not apply to Hong Kong or Macau or inland waterways in China PRC except sea ports in Nantong. Neither do they apply to vessels below 10,000 GT carrying LNG or petroleum products, nor when on a ballast voyage.

SPRO CONTRACTS – PRACTICAL GUIDANCE

A number of issues have arisen in relation to the implementation of the SPRO contract requirements. In many ports, Members will have no option as to which SPRO they use – there being only one approved SPRO. In other, larger ports, however, Members may be presented with several options.

The Club regularly assists Members by vetting contracts tendered by SPROs in order to ensure that the terms do not raise potential issues in respect of P&I cover. We strongly recommend that Members contact the Club if they are in any way unsure about the contract they have been offered. The Club works closely with the International Group and has a broad knowledge of all the current issues.

Detailed guidance is provided in the FAQs produced by the International Group (IG), which is attached at the bottom of this page.

In order to help Members in dealing with SPRO contracts, the following points should be considered:

1) Is the SPRO capable of providing the required service?

A SPRO should publish details of its capabilities and should be requested to confirm to Members that they can provide the service required, for the relevant size of vessel.

2) Is the SPRO contract in the IG recommended form?

To ensure that the requirements of P&I cover are met, a model contract wording has been negotiated by the IG with the Beijing MSA. The most recent version is attached on the left hand side of this page.

Provided they do not conflict with the terms of the IG model contract or the terms of Club cover, additional terms may be included at Appendix III in the IG model form. Particular attention should be paid to any exclusion/limitation clauses added. If there is any substantial change to the clauses in the IG model contract, there could be a potential problem with cover. If in doubt, a SPRO contract should be forwarded to the Club for guidance.

3) Has the SPRO provided evidence of insurance?

The IG requires that SPROs provide insurance to cover their potential liabilities under the contract (up to a maximum of RMB 2m). The Club is not qualified to confirm the effect of individual Chinese insurance contracts. However, Members should request a copy of the SPRO’s certificate of insurance to establish that SPRO has adequate cover for the liabilities in the SPRO contract.

4) Does the contract provide for standby/retainer fees?

SPRO contracts allow for a standby or retainer fee per port call (separate from any fees payable in the event of an incident). In the IG model contract, this is provided for in Appendix II.1. The payment of such fees are a commercial matter for Members and do not affect Club cover.

5) Has the SPRO provided an ‘ITOPF approved’ cleanup response tariff?

In the IG model contract wording, provision is made for a tariff of cleanup response fees to be included at Appendix II.2. The IG requires that each SPRO’s tariff be approved by ITOPF to ensure that possible charges are appropriate and reasonable, taking into account prevailing market costs. If no tariff is provided, Members should request one from the SPRO.

When received, Members should refer to the Club to check that the tariff provided is the correct version that has been approved by ITOPF.

6) What if no IG wording, insurance or approved tariff is available?

If one or more of the requirements under points 2, 3 or 5 above are not met by SPROs, Members should use best endeavours to negotiate with the SPRO to obtain their agreement to meet those requirements, or should alternatively seek a different SPRO that is willing to satisfy all of those requirements.

Unfortunately, where there is no choice of SPRO and either an IG wording, insurance or approved tariff cannot be obtained, P&I cover cannot be confirmed. Members should contact the Club to check whether cover can be extended on a single voyage basis, to enable compliance with the PRC requirements.

7) Who is signing the contract on behalf of Members?

The contract can be signed by the owner/operator, its branch company, office, agency, the agent of the ship or the Master.

For further information and guidance on these requirements, Members may contact the Club.