World Ports in a Changing Environment

World Ports in a Changing Environment PRESENTATION BY FRANS VAN ZOELEN CHAIR LEGAL COMMITTEE OF INTERNATIONAL ASSOCIATION OF PORTS AND HARBORS IN CONTEXT OF THE MARITIME LAW IN THE XXI CENTURY IBEROAMERICAN INSTITUTE OF MARITIME LAW S XII INTERNATIONAL CONGRESS 1

Contents of Presentation International Association of Ports and Harbors (IAPH) 1. Background and Structure of IAPH 2. Back Bone of IAPH: Technical Committees 3. Relevant Policy Issues: HNS Convention, Bunker Convention, and Wreck Removal Convention Places of Refuge Port Reception Facilities LNG and Ports Ship Emission Control Port Clean Air Program Security The European Arena: The EU in the post-port Directive Period The EU-Commission s Communication on this subject is expected to be published in October 2007. The EU-Communication will focus on six policy areas: - Port Performance and Hinterland Connections - Capacity Expansion and the Environment - Modernisation - Level Playing Field - Ports and Cities - Work in Ports This part of the presentation will be written after the EU-Communication has been published. 2

International Association of Ports and Harbors (IAPH) 1. Background and Structure History in brief The International Association of Ports and Harbors (IAPH) has been founded on 7 November 1955 in Los Angeles, U.S.A., where 126 delegates from 38 ports and port organizations of 14 countries gathered to celebrate the birth of this worldwide body of ports and harbors. Prior to 1955, preliminary work for creating IAPH had been initiated by three Japanese, Gaku Matsumoto (President of Japan Port & Harbor Association), Chujiro Haraguchi (Mayor of Kobe) and Toru Akiyama (Vice Minister of Transport), culminating in convening the very first International Port and Harbor Conference, Kobe, Japan, 1952, on the occasion of the 30 th anniversary meeting of Japan Port and Harbor Association. The Kobe Conference resolved to next meet in 1955, in Los Angeles, USA, which finally gave birth to IAPH. Missions IAPH is often referred to as the "United World Ports", in which the global port community, such as Port CEOs, Port Directors and Port Managers are represented to promote and advance their common cause and interests. To accomplish these goals, IAPH strives to achieve the following missions: To promote the development of the international port and maritime industry by fostering cooperation among members in order to build a more cohesive partnership among the world's ports and harbors, thereby promoting peace in the world and the welfare of mankind. To ensure that the industry's interests and views are represented before international organizations involved in the regulation of international trade and transportation and that they are incorporated in the regulatory initiatives of these organizations. To collect, analyze, exchange and distribute information on developing trends in international trade, transportation, ports and the regulations of these industries. 3

IAPH's motto is "World Peace Through World Trade - World Trade Through World Ports". As clearly stated in its constitution, IAPH is committed to "promoting peace in the world and the welfare of mankind" as its ultimate goal. Membership growth in the past 50 years When IAPH was still in its infancy in 1956, it comprised 44 Regular Members (ports and harbors) of 13 countries and 30 Associate Members of 9 countries. In the past five decades IAPH has been growing steadily and has been developed into a global alliance of ports: IAPH represents some 230 ports of 90 countries, which today account for over 60% of the world sea-borne trade in terms of metric ton and more significantly nearly 85% of world container traffic in terms of TEU. In addition, more than 100 shipping, stevedoring and warehousing businesses, national and regional port associations, port and maritime research institutes, and manufacturers of portrelated products are represented in IAPH as Associate Members. 4

2. Back Bone: Technical Committees Internal Organization IAPH IAPH divides the world into the following three regions: African/European Region (Africa and Europe, including Madagascar and the Asian countries on the Mediterranean and Aegean Seas) American Region (North and South America, including Hawaii) Asia/Oceania Region As contained in the IAPH Constitution and By-Laws, the principle of equal regional representation is reflected in every aspect of IAPH activities, especially the election of the President, Vice Presidents, Members of the Board and the Executive Committee. In practice, Vice Presidents of IAPH are the representatives of the three regions who are entrusted to coordinate all IAPH matters in the region. They can accordingly call, hold and chair their regional caucus, Exco or Board meetings on a regular basis. Right now the Presidency, that changes every two years, is in the hands of Mrs. O.C. Phang, CEO of Port Klang Authority in Malaysia, 1 st Vice President is Mr. Gichiri Ndua of the Kenya Ports Authority, 2 nd Vice is Mr. Bernard Groseclose of the South Carolina State Port Authority in the US and finally to close the global circle, the 3 rd Vice is Mr. Lim Heng Tay, Chief Executive, Maritime & Port Authority of Singapore, Singapore. Mr. Tom Kornegay, CEO of the Port of Houston Authority is the immediate past President. As far as IAPH Conferences are concerned, they rotate among the three regions in a cycle of six years; this process has been observed over the past decades i.e. the 2005 Conference was in Shanghai, 2007 was in Houston, 2009 will be in Genoa and the 2011 Conference will be in Asia again, i.e. in Busan. IAPH Head offices are in Tokyo, Japan where Secretary General Dr. Satoshi Inoue and his staff reside. The European Office maintains the contacts with most of the international organisations and also with non-governmental organisations such as the International 5

Chamber of Shipping the Oil Companies International Marine Forum, International Navigation Association PIANC et cetera. Cooperation with other Organizations IAPH considers its friendly relation with other international organizations with an interest in port and maritime affairs very important, as such collaboration between all parties concerned helps initiate a concerted action to highlight and solve issues of mutual concern. Recognized as the only international organization representing the voice of the world port industry, IAPH has been granted Consultative Status as Non-governmental Organization (NGO) by six United Nations specialized agencies and bodies including the International Maritime Organization (IMO) and the International Labour Organization (ILO). This status has enabled IAPH to represent the views of port managers and directors and protect the interests of the global port industry at large. Technical Committees IAPH as a membership organization addresses and tackles various issues of interest and concern to the entire membership through committees. All household matters are dealt with by Internal Committees. Other demanding tasks of addressing and examining issues impacting the global port industry is done by eight Technical Committees grouped under three overall subject areas: Communications & Training - Human Resources Development Committee - Communication and Community Relations Committee Port Safety, Security & Environment - Port Safety and Security Committee - Port Environment Committee - Legal Committee Port Development, Operations & Facilitation - Port Planning and Development Committee - Port Opeartions and Logistics Committee - Trade Facilitation and Port Community System Committee 6

As in other associations also within IAPH the Technical Committees function as back bone. With this is meant that the work is done in these committees and by the members of these committees. I take the liberty to say a few words about the Legal Committee of IAPH. In this committee port lawyers from various environments and with various backgrounds are active. They bring in their specific skills and experiences. One of the advantageous is of course a rapid exchange of information and learning from other approaches. IAPH s Legal Committee did put considerable energy into creating a Legal Database on International Maritime Conventions. This database is accessible in the membership area of IAPH s website. Next to that the Legal Committee is preparing A Digital Handbook for Port Lawyers which is in the phase of accomplishment. These tools can function as expert systems for port lawyers (but also for port management in general) who have to acquaint themselves with these subjects. These all are fine examples of added value of being a member of IAPH. Being active in IAPH is rewarding as it is working together with a fine group of fellow professionals in a period full of challenges. With this I mean that it is expected that in the coming decade the world trade will double and maybe even triple. It is an enormous challenge in which the ports play a vital role. In this respect it is true that the ports united in IAPH are a sleeping giant. 7

3. Various Policy Subjects International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS), London 1996 HNS is a private law convention which provides uniform rules for an adequate and effective compensation of persons who suffer damage caused by accidents in connection with the carriage of hazardous and noxious substances by sea. HNS will establish a liability regime and a two-tier compensation system. Under HNS the ship-owner is liable for the loss or damage up to a certain amount, which is to be covered by compulsory insurance (1 st tier). In addition, a compensation fund (the HNS Fund) will provide supplementary compensation if the victims do not obtain full compensation of their damage from the ship-owner or his insurer (2 nd tier). This Fund will establish a guaranteed level of compensation of up to 250 million SDR. The Fund is contributed to by companies and other entities receiving a certain minimum quantity of HNS relevant cargo per year. Under HNS, the ship-owner is strictly liable, regardless of fault, for any damage caused by the hazardous substances carried by his ship. The relevance to Ports is that after its entry into force, HNS will be relevant for issues of (limitation of) liability and compensation whenever a port authority or the port community at large suffer damage because of hazardous and noxious substances escaping from a ship. In addition, the certificate of compulsory insurance may be subject of inspection by the port state authorities. The Convention has not yet entered into force at present only 8 States have ratified the HNS Convention, representing a mere 3,9% of the world s shipping tonnage. International Convention on Civil Liability for Bunker Oil Pollution Damage London, 23 March 2001 The Bunker Convention provides uniform rules with regard to the liability for and compensation of pollution damage resulting from the escape or discharge of bunker oil from ships. The Bunker Convention fills the gap left by other international conventions such as CLC and HNS which do not apply to bunker oil spills. The conference which adopted the Bunker Convention also adopted three additional resolutions, 1) on limitation of liability, 2) on promotion of tech- 8

nical co-operation and 3) on the protection of persons taking measures to prevent or minimize the effects of oil pollution. The Relevance to ports is that when the Bunker Convention enters into force will provide a conclusive liability and compensation scheme for pollution damage resulting from the escape or discharge of bunker oil from ships. For ports, where such pollution damage may easily occur, the Bunker Convention, through the compulsory insurance requirement and the obligation to carry an insurance certificate on board, offers easier ways to ports to obtain compensation of such pollution damage, even if the ship-owner s liability is subject to limitation. The Convention has not yet entered into force at present only 16 States have ratified the Convention, representing 15.76% of the world s shipping tonnage. Convention on the Removal of Wrecks, Nairobi 2007 The Convention has been adopted at the Diplomatic Conference held in Nairobi, May 14-18 2007 and provides uniform international rules and procedures allowing states to ensure the prompt and effective removal of wrecks. The convention defines rights and obligations for the identification, reporting, locating and removal of wrecks which pose a hazard to navigation or the marine environment. The scope of application of the convention is limited to hazardous wrecks within the convention area, i.e. the exclusive economic zone of a state party, a concept defined in Part V (articles 55 to 75 Unclos) as an area beyond the territorial sea, not extending more than 200 miles from the coast. The convention does not apply to wrecks in the territorial sea, but under article 3(2) of the Convention states can extend the application of the convention also to their territorial waters. The Relevance to Ports is that the Convention provides uniform rules for prompt and effective removal of hazardous wrecks within the Exclusive Economic Zone. Under the convention the affected state is entitled to require the registered owner of the ship to remove the wreck. If the registered owner does not remove the wreck, the affected state may remove the wreck and will be able to recover the cost of the operation. The Convention has not yet entered into force. 9

Places of Refuge IMO adopted at its 23rd Assembly, December 2003, the following two resolutions setting out procedures for dealing with ships in distress. Guidelines on places of refuge for ships in need of assistance Guidelines on Maritime Assistance Services (MAS) IAPH respects the Guidelines in that they provide coastal States and political decision makers in the context of ships in distress seeking a Place of Refuge a procedural and operational framework to deal with the issue. However, IAPH believes that the currently applicable international legal framework is not conclusive and satisfactory for Places of Refuge, as the issue of liability and compensation for any damage resulting from granting or denying a place of refuge to a ship in distress is not adequately addressed or covered. While IAPH is fully aware of the traditionally observed principle of rendering assistance to vessels and persons in distress at sea and respects IMO initiatives to that end, it firmly believes that a new convention is needed. This convention should render the approach that the decision to give or deny access to a Place of Refuge to a ship in distress should be based on a case by case approach. In this approach the potential for damage immanent to refusing access should be compared with the potential for damage immanent to permitting the ship in distress to access the Place of Refuge. In case the risk of damage if the ship were to remain on the high seas is higher than the potential for damage to be caused in the Place of Refuge, the ship should in principle be given access to remedy its troubles in a Place of Refuge. IAPH s initial position is worked out in IAPH Position Paper on Places of Refugee to the 90th Session of IMO's Legal Committee, April 2005: www.iaphworldports.org/issues/placesofrefuge- IAPHPosition-IMOLeg90(18-29Apr2005).pdf. IMO discussed this matter at the 89th (October, 2004) and 90th (April 2005) session of its Legal Committee and concluded that At this point in time, there was no need to draft a convention dedicated to Places of Refuge and 10

the more urgent priority would be to prompt ratification and implement the existing liability and compensation conventions. After these new frameworks (i.e. the HNS Convention, the Bunker Convention and the Wreck Removal Convention) being in place, IMO will consider the effects and again validate the necessitation of specific international rules in the context of Places of Refuge. In August 2005, CMI proposed a new legal instrument to complement IMO s Guidelines on Places of Refuge. IAPH expressed its view at CMI s conference in February 2006 and IMO s Legal Committee meeting in April 24-28, 2006, stating that while appreciating CMI s works, IAPH respects at this stage IMO s decision to prompt ratification of related conventions. In the context of the debate within CMI concerning its draft Instrument on Places of Refuge, IAPH further worked out its position in its letter of 22 June 2007 to CMI: www.iaphworldports.org/issues/iaphpositiontocmi(places%20of%20refuge)- 22June2007.pdf Port Reception Facilities The International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 (Marpol 73/78) regulates ships not to discharge wastes and polluting substances into sea and requires states to provide sufficient reception facilities for ship wastes. In accordance with the IMO s Guidelines for ensuring the adequacy of port waste reception facilities adopted in March 2000, the contracting states have been working on this requirement, but there still remain persistent complaints about inadequacy of reception facilities from shipping industry. To tackle this issue, IAPH together with other maritime organizations such as BIMCO, ICS, INTERCARGO, INTERTANKO and OCIMF, formed up The Shipping and Port Industry Reception Facility Forum several years ago. In October 2006, the Maritime Environment Protection Committee (MEPC) of IMO adopted an Action Plan to formally take up the issue of inadequacy of port reception facilities, which was drafted by the Flag State Implementation (FSI) sub-committee based on the Industry Forum s Action Plan. The Action Plan covers six categories, such as reporting, information on port reception facilities, equipment/technology, types and amount of wastes, regulatory matters and technical co-operation assistance. 11

IAPH in full support to the IMO s Action Plan is working closely with the MEPC members to make progress on identified key issues. IAPH firmly believes it as basic premise that 1) reception facilities should be provided to handle wastes of ships normally calling at the port and 2) costs for reception facilities should be recovered from users. In July 2007, IMO s MEPC at its 56 th session agreed on the following main issues. 1) Amendment of the reporting format for inadequacy of reception facilities to incorporate new categories of Noxious Liquid Substances (NLS) due to the entry into force of the revised MARPOL Annex on January 1, 2007. 2) Establishing a corresponding group to especially progress on the Action Plan work items of a target completion date of up to 2008. 3) Amendment of the target completion date for work item 6.1(development of assistance and training program) of the Action Plan to be brought forward from 2010 to 2009. Ship Emission Control For freight movement, shipping is regarded far more efficient in energy consumption and environmentally friendly than any other mode of transportation. Nevertheless, as global trade and shipping activities are rapidly expanding, reducing air emissions from ships has become one of the priority environmental issues in the world. IMO has developed and promulgated international regulations on air emission from shipping activities with MARPOL Annex VI, which was ratified in 2004 and entered into force on May 19, 2005. For controlling sulfur oxides (SOx), it sets global cap of 4.5% m/m on the sulfur content in marine fuels and further sets stringent limit of 1.5% m/m for the SOx Emission Control Areas (SECA). The Baltic Sea Area was designated as 1 st SECA with enforcement on May 19, 2006 and the North Sea and English Channel will follow as the 2 nd SECA on November 22, 2007. As for nitrogen oxides (NOx) emission from ships, IMO has set relevant regulations and requirements for marine diesel engines and exhaust gas treatment systems. IMO is now considering further tightening up ship air emission controls, for which several proposals have been submitted by the contracting governments. At its 56 th session in July 12

2007, the Marine Environment Protection Committee (MEPC) of IMO reviewed various options and approaches. One of proposals is to adopt global use of distilled fuel, which was argued against by shipping industry with a concern of possible increases of CO₂ in processing the heavy fuel oil and also uncertainty of market supply capability. Therefore it was decided to task a scientific group of experts to study and review the impacts of future fuel options not only on environment and human health but also on shipping and petroleum industries. The group will report the results to MEPC in March 2008. Meanwhile, the European Union (EU) has adopted it s own measures to regulate air emissions by Sulfur Directives, whereby 1.5 % m/m or less sulfur content of marine fuel is allowed for all ferries calling at EU ports from August 11, 2006. The EU is likely to revise and tighten its Directives to apply all vessels in the EU waters. Security In August 2006, when two years had passed since the SOLAS amendments and the ISPS Code entered into force on July 1 st 2004, IAPH conducted a worldwide survey on port security among its member ports. The survey revealed that the ISPS Code had generally been smoothly implemented and significantly improved awareness for port security among those in the port industry. Member ports also reported that exercises and drills as required by the ISPS Code were fully implemented with active participation of parties concerned, and port facility security plans were under strict audit and review. Developing member ports, however, stressed their continued needs for technical and financial cooperation to further enhance port security. UNCTAD s survey report of the costs of meeting the security requirements in ports, in which IAPH participated, was published in March 2007. The main objective of the study was to establish the range and order of magnitude of the ISPS Code-related expenditures made from 2003 through 2005. Based on survey responses, UNCTAD estimated the port-related expenditures of the ISPS Code to range between about $1.1 billion and $ 2.3 billion initially and $400 million and $ 900 million annually. These expenditures would be equivalent to increases in international maritime freight payments of 1% and 0.5 % respectively. The report shows that the port industry relies on various approaches to finance those costs, ranging from full funding by ports through government assistance to market-driven solutions such as security surcharge levied on port users. 13

IAPH has also endorsed to promote a holistic approach to the security system of global logistics chain, well beyond port terminals and port areas. To this end IAPH has been working closely with the World Customs Organization (WCO), especially at the Private Sector Consultative Group (PSCG) to consider key issues relating to implementation of the WCO s Framework of Standards to Secure and Facilitate Global Trade. IAPH has also been taking active part in the International Standards Organization (ISO) working group to develop ISO 28000 series of Supply Chain Security Standards. LNG and Ports The International Energy Agency (IEA) says that the world s energy demand is likely to grow by more than half over the next quarter of the century and this means all in the transport chain have to expand capacity. Ports furthermore need to take into account a trend of diversification among energy resources. While oil will stay on the main stream, LNG will rapidly increase its share, not only due to diversification policy of consuming countries but also their recognition of LNG as clean energy. When used, LNG is much lower in CO₂, SO₂ and NO₂ than other major energy resources such as oil and coal. Participants of the IAPH Conference in Houston in April/May 2007 heard that LNG will take an increasing role of the US energy scene as a result of the US administration s policy change, and imports will have to grow to meet demands. Currently more than 40 LNG terminals are being developed or proposed along the US coast. In Europe, development of LNG terminals is also gearing up. France, for instance, is developing large new LNG terminals at Ports of Dunkirk and Le Havre in addition to present terminals at Fos Marseilles and Nates-St Nazaire. Another LNG terminal at Port of Rotterdam, first ever in the Netherlands, is expected to become operational in 2010. Japan, where 25 LNG terminals are presently in operation, the largest concentration in the world, is planning to further expand its capacity. China, which is already the largest consumer of oil after the US, is increasing its imports of LNG very rapidly. China s first LNG receiving terminal was developed in the southern province of Guangdong at Dapeng Bay, which received the first LNG carrier in June 2006. Ports will have to effectively cope with increasing demands of LNG, taking into full consideration a range of requirements of safety, security and environment. In October 2006, 14

IAPH organized a special session on development of LNG terminals during the Executive Committee meeting in Shizuoka, Japan. Also IAPH has been compiling relevant information and references on LNG terminals to assist member ports in planning, developing and operating LNG terminals. Port Clean Air Program The world economy continues to globalize, international maritime trade is drastically increasing and port throughputs are similarly growing at unprecedented rates. No doubt, the world economy and trade could not sustain their growth without efficient port operations throughout the world. As ports continue to play such critical roles, however, their harmony with the natural environment, locally and globally, should be ensured. IAPH has been extensively addressing a range of environmental issues over the years. Ports are the meeting place of virtually all modes of transport, resulting in multiple emission sources often close to cities where air quality may affect health and quality of life. Moreover, in view of emerging serious concerns of the global warming, IAPH wants to draw more attention to air quality of port areas and undertake as many efforts as possible to reduce air emissions from port operations. IAPH following its basic position established in Mumbai in April 2006 adopted a significant resolution on Clean Air Program for Ports in Houston in May 2007. IAPH urges ports, members and non-members alike, to take active and effective steps towards clean air programs, while stressing the critical need to develop integrated action plans for respective ports and also recognizing that no one-size-fits-all solution exists for ports with their large variations in pollution level, emission sources, geographical and meteorological conditions. To assist ports, IAPH is now developing the Tool Box for Port Clean Air Programs, guidelines on air emission control measures related to each of main emission sources of port such as ships, harbor crafts, yard equipment, trucks, rails and construction equipment. It is to be made available at the IAPH website towards the autumn of 2007. One of such measures being introduced is to completely shut down ship engines and instead supply shore power while ships are at berth. It is known as Alternative Maritime Power (AMP) or cold ironing. IAPH believes that a common technical standard internationally 15

accepted for power supply should be developed before a variety of standards are adopted at ports. IAPH has already started close collaboration with ISO who is to develop technical standards for power supply connection. 16

Curriculum Vitae Frans van Zoelen Frans van Zoelen is Head of the Legal Department of Port of Rotterdam Authority and Legal Counselor of the International Association of Ports and Harbors (www.iaphworldports.org). He chairs the Legal Committee of the International Association of Ports and Harbors and the Legal Committee of the Dutch National Ports Council (www.havenraad.nl/english/). He sits in the Board of the Dutch Association for Maritime and Transport Law (www.nvzv.nl). Frans van Zoelen has a civil and public law background with specializations in real estate law, company law, competition law and maritime law. His focus is on the interface between public and private sector, a focus useful for navigating in port environments. Frans van Zoelen also is a long distance runner and a writer of short stories for Dutch and UK literary magazines. 17