Last updated 19 January 2012

China has overhauled its system for managing marine pollution. The aim of the regulations is to provide one comprehensive set of rules to govern the prevention of pollution and to ensure the swift and effective clean up operations in the event of ship pollution.

The Maritime Safety Administration (MSA) is the leading authority to enforce the regulations and to administer prevention of pollution and clean up operations.

In the event that any pollution hits the shoreline it is highly likely that the Environmental Protection Agency for that region may also become involved.

However for the purposes of The Regulations on the Prevention and Control of Maritime Pollution from Ships 1 March 2010 the MSA is the authority handling the enforcement and implementation of this regulation.

The PRC Regulations on the Prevention and Control of Marine Pollution from Ships provide a comprehensive code on a wide range of pollution issues.

The most immediate concern is a requirement entering into force 1 January 2012 requiring ships calling at any Chinese port to have pre-contracted with an approved pollution clean-up contractor, known in China as SPRO.

The requirement applies to ships:
a) carrying polluting and hazardous cargoes in bulk and
b) to any ships over 10,000 gt.

Non-compliant ships may be refused entry.

More information about which ships must comply and which level of responder they require is found in Table of Contracting Requirements which is Annex IV to the IG Circular of 6 December 2011.

The MSA has indicated to the IG that “hazardous cargo” is determined by reference to a catalogue of cargoes. The owners or operators of a vessel carrying a cargo in bulk which appears on this list must meet the SPRO requirements. It should be noted that the list includes liquefied gases and that gas tankers therefore need to comply.

 

Developing Situation

Members are advised that the situation is developing very quickly and on a daily basis such that this Commentary will be updated to take into account developments. For latest information see Latest Developments. However below we seek to give some basic answers to questions recently being asked by Members.

 

What is the Regulation on the Prevention and Control of Maritime Pollution from Ships 1 March 2010?

• It is a comprehensive new regulation to deal with pollution and other related activities such as slop and sludge collection. The Regulation on the Prevention and Control of Maritime Pollution from Ships 1.3.2010 (hereinafter referred to as the RPCMPS) can be described as the primary regulation and from this primary regulation you have a number of subordinate regulations implementing RPCMPS.
   
  The subordinate regulations put into action the spirit of RPCMPS and set out the logistics for implementing RPCMPS.
   
  For example one of the enabling regulations is The Measures on the Administration of the Civil Liability Insurance for Oil Pollution Damage from Ships which came into force on the 1 October 2010. This regulation seeks to ensure that insurance companies for vessels have the relevant financial standing. For now all P&I Clubs within the International Group qualify under this regulation.
   
  Another example of an implementing regulation is the Regulations for the Prevention of Marine Pollution of Ships and Relevant Operation Activities which will come into force on the 1 February 2011.
   
  There are also the Rules on the Emergency Prevention and Response to Marine Pollution from Ships which will come into force on the 1 January 2012.
   
  As stated above this seeks to regulate what vessels entering China should do to prevent pollution and respond to pollution in the event of a pollution incident. For example the requirement to sign prior to entry into Chinese waters a mandatory contract with an approved oil spill response company known as a SPRO. As advised we will focus on this aspect for this Commentary.
   
  There will be more regulations to come for example the Investigation and Handling of Marine Pollution.
   
  Below is a graph which illustrates the regulations and their relationship to The Regulations on the Prevention and Control of Maritime Pollution from Ships 1 March 2010.

Click on graph to enlarge

 

How will it affect me?

• For vessels wishing to enter into Chinese ports and conducting operations off the port, before they enter such designated areas they will be obliged to sign contracts with a duly authorized Chinese pollution response companies called SPROs if:
     a. they carry polluting hazardous cargoes
     b. all other ships over 10,000 gt

 

What is a SPRO?

• SPRO is short for Ship Pollution Response Organizations.
   
  The MSA will publish lists of 4 levels of qualified, Ship Pollution Response Organizations - SPRO. For now the MSA is focusing on the Level 1 list of SPROs. Level 1 being the highest qualified SPRO.

 

Is the list of SPRO published yet?

• Yes. The List has been published and frequently updated. For latest list see IG Circular of 6 December 2011 Annex I.
   
  Approval is normally valid for three years and approved SPROs are provided with a Certificate by MSA.

 

When do I have to sign the contract?

• From 1 January 2012 you will have to sign a contract with a SPRO prior to entry to a port/designated area if your vessel comes within the categories described above.

 

What is the designated area?

• Entering PRC ports and operations off the port.

 

What type of contract do I have to sign?

• The MSA has drafted a contract which has mandatory terms contained in it. The IG has reviewed and approved the contract which is attached as Annex II to the International Group Circular published on 6 December 2011.

 

What is in the Contract?

Owners obligations

• The owner is described as party A in the contract.
• The owner must provide basic information of the ship and vessel schedule before the entry into port/designated area.
• Keep the agreement on board the ship.
• All crew must be familiar with the contents of the agreement.
• Cooperate with the SPRO to carry out emergency response drills.
• inform the SPRO immediately and carry out oil pollution control and clean up action in the event of an oil spill.

Does this mean that the owners have to arrange the oil booms?

• No
• In the event of an oil spill the owner would be required to notify the SPRO immediately and take such measures on board his ship that he can take to minimise the oil pollution.
• For example listing of the vessel, and transferring the oil.

 

SPROs obligations

• Be approved by the MSA
• Maintain corresponding capability of pollution response
• Confirm the information from the owners and emergency standby in writing
• Provide the owners with pollution response operation plan
• Carry out pollution control and clean up factions in the event of oil pollution accident.

 

Are any terms mandatory?

• Yes. The clauses on rights and obligations are mandatory. Amendment is not allowed to these.

 

What law applies?

• Chinese PRC law
   
  You have a choice of jurisdiction:
     1. Chinese Maritime Courts
     2. China Maritime Arbitration Commission
     3. MSA Mediation.
   
  The choice should be indicated by inserting √ in the appropriate box (do not use an “x”).

 

Who signs the contract?

• The contract must be concluded and signed by the "operator".
   
  An "operator" is defined as the owner, manager or actual operator.
   
  For operators not domiciled in China, the contract may need to be signed by a branch, office or agent located in mainland China (not Hong Kong). However, the latest guidance from MSA indicates that overseas operators can sign the contract with the SPRO direct and do not need to employ an agent.
   
  It appears that the port agents, law firm other entity located in mainland China can sign. Companies able to provides services as agents are Huatai & CMS - see under Consultancy Services.
   
  However they must submit documentation to the MSA to evidence their authorisation.
   
  If it is necessary to use an agent, the IG has developed standard authorisation letter in conjunction with MSA. Please see the link here to the standard authorisation.
   
  Agents must be approved by MSA. For latest list of approved agents see Latest Developments.
   
  The Master may also sign the contract, which may be necessary in urgent cases such as a diversion to land an injured seafarer or carry out emergency repairs. However an authorisation letter is still required. It is recommended that Masters only sign in emergency cases.
   
  We suggest that the Master keeps such an authorisation letter on board in case of an emergency. The letter can be addressed to “the master of (ship name)” rather than naming the individual master.

 

In summary:

• The contract may need to be signed by the operator of the vessel, and be a Chinese national or corporate entity, or law firm. However, recent information from MSA suggests that overseas operators may be able to sign.
   
  If agents are used, they must be located in China not Hong Kong or Macau.
   
  It can be signed by the Master in an emergency.

 

Apart from the mandatory terms can Owners add in additional terms?

• Theoretically yes you would be able to negotiate non mandatory terms with the SPROs.
   
  However, much will depend on the size of the Owners, the frequency of calls to Chinese ports, and the SPROs themselves whether they will negotiate terms or not. Time limitations are also likely to be a factor.
   
  If time is short members may wish to see if they can contract on a voyage basis to start with to give them more time to arrange/discuss with SPROs for future calls.

 

Do SPROs need insurance?

• Yes. Owners should check that SPROs have insurance which meet the requirements of Article 6.3 of the Agreement. Suitable Insurance is available through PICC.

 

What terms should I add?

• What terms will depend on each members own requirements.
   
  However members may wish to ask some questions of SPROs to assist them in their discussions for example:
  If members will call at several ports regularly within China members may wish to consider using an approved consortium.

 

Can you negotiate this daily retainer rate?

• Yes you can.
   
• You are always free to look at the SPROs listed by the MSA in the various locations and discuss with them their rates and see which ones are flexible.
• You may wish to ask for a rate to be per voyage basis and not on a daily basis.
• If you have many calls at the port every year you may wish to have an annual rate apply.
• You may wish to think about how the daily rate will apply if the vessel is on demurrage.
• Can the SPRO give you a free or low rate if unexpected port delays occur?
• Can the SPRO agree to no rate applying or a low rate applying in the event of dry docking congestion?
• These are all questions you can ask of the SPRO.
• However remember it may take time to negotiate with the SPRO.

 

Can the Club do this for me?

• No, unfortunately the Club cannot assist members with this.
   
• Any discussion of daily rates is a commercial matter which the member needs to do themselves given this will be for members own account.

 

Can I get advice on the response rates?

• Consideration of rates for response costs is being coordinated by the International Group based on technical advice from ITOPF. Tariffs maybe passed to the Association although it may take several days before a response is available, especially bearing in mind the holiday season. Please, therefore, contact the Association as soon as you can should you wish help in this regard.

 

Is there anyone that can help me?

• Yes. Please refer to Consultancy Services.
   
  Other entities may well be able to assist and this list may be updated .

 

Do I have to have a contract for every port?

• Yes if you fit within the criteria, i.e. a ship over 10,000 gt or a ship carrying polluting cargoes. If there is no approved SPRO in the port, MSA may accept a contract with a SPRO in a nearby port. It is possible to engage Consortia covering various ports who must be approved by MSA. For the latest list of approved consortia, see under Latest Developments.

 

What about SPROs offering umbrella cover or consortium arrangements covering different ports?

• A SPRO may act on behalf of its branches or interlocking units to provide a one stop service (see attached Supplementary Notice). The SPRO or Consortium must submit documents first to MSA and before signing a contract you should check that the MSA is satisfied that the necessary formalities have been complied with. The SPRO must be located in China (not Hong Kong or Macao). For the latest list of approved consortia, see under Latest Developments.

 

What about unforeseen calls?

• Technically under the regulations you will need to enter into a contract with a SPRO even if it is an emergency call.

 

What if I do not have time to negotiate a contract with the SPRO in an emergency situation?

• In an emergency situation the Master could sign the contract with the SPRO.

 

Do I have to keep a copy of the contract on board?

• Yes, together with a copy of the Pollution Response Operation Plan prepared by the SPRO.

 

What about dry docking - do I still have to have a contract?

• This is unclear at the moment. Much will depend on the location of the dry dock in question and whether it comes within the designated areas. Members are advised to contact through their agent the local MSA to request clarification.

 

How do I choose the SPRO?

• You must choose a SPRO that is on the approved list.
   
  There are likely to be several SPROs on the approved list within any given jurisdiction so there should be some choice of SPROs.
   
  You may wish to take into account the following factors:
• Whether the SPRO has links with other SPROs in other ports so they can offer a one stop service.
• Whether the SPROs has had any previous experience in handling pollutions.
• What resources the SPROs has at his disposal both for at sea and shoreline clean up operations.
• History and experience.
• How many spills attended.
• Training.
• Ask to see training manuals for staff.
• Onsite training.
• Cooperation with local MSA.
• Previous drills attended.
• Planned drills for the future.
• Equipment
     - ask to see equipment lists, maintenance and tests lists.
• Vetting.
• If possible ask whether company audited vetted by independent vetting agent.
• Interaction with Owners.
• What plans they have for joint training experiences and drills with MSA and owners.
• Focus of the SPRO is really sludge & slops collection or pollution clean up.

 

I am not expert in oil pollution how can I judge what resources the SPROs has?

• If the SPRO in question is willing to be audited there are auditors that can look at this for you.
   
  See under Consultancy Services.

 

Does the club have any preference for which SPRO I should choose?

• You must choose a SPRO from an approved list.
   
  Ideally it would be one with good experience in previous pollution, and good resources and working ability with MSA. However as this is very new it may take some time for SPROs to build up the right experience therefore the Club has no preference so long as the SPRO is an approved SPRO at the right level.
   
  Which SPRO a member chooses will depend on the Members individual needs and requirements.

 

Can the Club choose the SPRO for me?

• No. This is an operational matter for members especially bearing in mind the rates charged which will be for members account.

 

Are there any companies that can independently advise on SPROs?

• Yes. Please see under Consultancy Services.