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Tips for Maritime Business Owners to Weather the Storm

By Darren W. Friedman

In 2007, this country embarked on the longest lasting recession since WWII, and vessel owners have felt the impact of that storm. Budgets have been reined in, workloads redistributed, and new hires are a relative rarity. Weathering that economic storm means battening down the hatches, and donning fiscal life jackets. Survival in a turbulent sea requires limiting financial and legal liabilities. From a legal perspective, the following practical tips are based on actual experience. They have general application and may assist vessel owners to implement a practical liability mitigation plan.

Know what is on your property

Take a physical survey and inventory of your business. Assess the property for “attractive nuisances,” and any repairs that need to be made to sidewalks and public areas. Hold an annual or bi-annual meeting with your insurance agent to review your policy and ensure that your assets and operations are insured and that you have the appropriate coverage. Also, in light of the increasing environmental regulations and associated enforcement actions, ask whether your current policy covers your activities, and provides for any water- and land-based environmental pollution and clean-up coverage.

Know what your assets are and if they are insured

Make a list of equipment, vessels and vehicles (including those in operation, in storage or in dry dock) and run a report of what is currently insured. Make sure that newly purchased equipment is listed and properly insured. Remove from insurance the equipment, vessels and/or vehicles no longer owned by the company. Inquire whether your barratry coverage is sufficient in the event you experience a loss to the cargo you are shipping and the master or crew members actions were affiliated with causing the loss.

Know who is driving company cars

As a basic part of the hiring/termination process, make sure that all individuals with access to a company vehicle in connection with their employment duties have a valid license and are listed on the current liability policy.  Remove the individuals who are no longer employed.

Inspect boarding and loading docks, port structures and gangways

These structures should be inspected periodically by a qualified professional to ensure that they are safe, and comply with industry standards, particularly if they are accessible to non-employees and members of the general public. If you are ever faced with a claim for injury as a result of an unsafe condition, non-compliance with statutes or regulations only adds fuel to the fire.

Control liability for contracts

Make it mandatory to have any contractor coming on your premises, and particularly aboard a vessel, to execute a waiver of liability and agreement of indemnity. Require them to provide you with a copy of their current policy of insurance demonstrating coverage for their activities, and if possible, ensure that your company is an additional insured under that policy.

Statutory and regulatory compliance

Have an attorney or designated employee responsible for compliance issues. There are many compliance issues that arise in the maritime sector ranging from permits and documentation to the activity and operations of your business. For example, assess whether what is being stored or transported qualifies as a hazardous material (HazMat) . HazMats are subject to strict labeling, handling, storage, transportation and disposal regulations. Although there are too many HazMats to list here, examples of HazMats are batteries, paint, lubricants, and general cleaning products. Another example of a compliance issue concerns the Americans with Disabilities Act and provides compliance rules for both foreign and U.S. flagged passenger vessels.
Non-compliance with a regulating agency’s rules or regulations runs the risk of severe civil and or criminal penalties for vessel owners and depending on the agency rule, may apply to anyone involved.

Employee training

Ensure that employee training on safety issues is a required and documented part of the hiring process. Consult with your in-house attorney, or retain an outside attorney to review and opine on your safety policies and procedures, including proper documentation criteria for any shipboard crew. Require all new hires to learn the policies and procedures, and document their employment files to show that this was done.

Conduct routine cleaning and maintenance

Maintenance is not just a cosmetic concern. Keep an eye out for damaged flooring, drips, leaks, spills, and broken equipment. Keep warning signs and barriers, if necessary, available and accessible at all times for placement by staff to warn members of the public and limit their access to potentially dangerous conditions.

Crisis communication plan

Although your business may be operating “under the radar” from public scrutiny, it can become well known in an undesirable way, should any of your vessels be involved in an environmental incident or personal injury. Working with a public relations firm in advance of a crisis is helpful in many ways such as issuing positive press about your company’s business, partnerships, innovative practices, or charitable acts. It also provides an opportunity to have the firm understand the operations of your business, your base market and who and what your business may effect, so that they have the relevant background necessary and a good working relationship is established in the unfortunate event that a crisis arises. We also recommend an internal crisis communication plan: creating a list of employees to call in the event of a natural disaster, vessel incident, cargo loss, property loss (flood, fire, etc.) is a good start.
An ounce of prevention is almost always worth more than a pound of cure. However, prevention cannot guarantee immunity from or minimization of liability. Business owners are always encouraged to seek local counsel for their specific business in their distinct locale.

Darren W. Friedman is a founding partner of Foreman Friedman, PA. He handles complex litigation and appeals on behalf of cruise and cargo lines, as well as other corporate clients. Special contributions to this column were made by Associate Sharla Manglitz, a fourth-generation maritime executive who focuses her practice on commercial litigation and maritime matters; and Associate Elisa Sullivan who also focuses her practice on commercial litigation and maritime matters.

South Florida Legal Guide 2012 Financial Edition

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