Third

Edition
Lloyd’s Practical Shipping Guides
The ISM Code has been mandatory for almost every commercial vessel in the world for
more than a decade, and yet there is very little case law in this area. Consequently, there

ISM Code
remains a great deal of confusion about the potential legal and insurance implications of
the Code.

This third edition represents a major re-write and addresses significant amendments that
were made to the ISM Code on 1st July 2010 and 1st January 2015.

This book provides practitioners with a practical overview of, and much needed guidance
on, the potential implications of failing to implement the requirements code. It will be
hugely valuable to DPAs, managers of ship operating companies, ship masters, maritime
lawyers and insurance claims staff.

Professor Phil Anderson is widely recognised as one of the world’s leading authorities
on the ISM Code and marine safety management, and he combines extensive experience
as a Master Mariner, a P&I insurance practitioner, an Expert Witness and consultant, and as
a distinguished academic. He is currently Professor in Practice and Head of the Maritime
Studies Faculty at the University of Trinidad and Tobago.

LAW / MARITIME LAW

ISM CODE
Professor Phil Anderson
A Practical Guide to the Legal and Insurance Implications

Third Edition

Cover image: © Robert Harding Picture Library Ltd / Alamy

www.routledge.com/informalaw

Routledge titles are available as eBook editions in a range of digital formats Professor Phil Anderson
Third Edition published 2015
by Informa Law from Routledge
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© Dr Phil Anderson
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First Edition published 1998 by LLP
Second Edition published 2005 by LLP
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Anderson, Philip, 1952– author.
ISM code : a practical guide to the legal and insurance implications /
Dr Phil Anderson. – Third edition.
pages cm. – (Lloyd’s practical shipping guides)
Includes bibliographical references and index.
ISBN 978-1-84311-885-5 (hardback : alk. paper) – ISBN 978-1-315-
72022-7 (ebook : alk. paper) 1. International Safety Management
Code. 2. Ships – Safety regulations. I. Title.
K4165.A53 2015
363.12′30681 – dc23
2014043526

ISBN 978-1-84311-885-5
eISBN 978-1-31572-022-7

Typeset in Bembo
by Florence Production Ltd, Stoodleigh, Devon
1 Introduction and underlying
principles

1.1 Introduction to the third edition

This book is not, and is not intended to be, a legal text book for lawyers. The
primary purpose of this book is to provide a wide range of lay individuals
engaged in the shipping and marine insurance industries as well as flag
Administrations, Recognised Organisations (ROs), Port State Control Inspectors
(PSCIs) and others involved in International Safety Management (ISM) Code
implementation or monitoring with practical guidance on the potential
legal implications and consequences of ISM Code compliance. However, it
is hoped that the legal professional will also derive useful insight into some of
the practical application of the Code and the potential legal consequences
of non-compliance. The book should also provide a useful reference to the
numerous, but potentially relevant, Conventions, resolutions, rules, regulations,
guidelines and other documents which may need to be considered within the
context of the legal implications of compliance with the requirements of
the ISM Code.
Any party involved in a dispute, claim or prosecution must obtain
professional legal advice from a suitably qualified legal adviser.
Whilst the author has endeavoured to identify many of the more relevant
reference documents, he does not claim that this is in any way a complete or
exhaustive list. Also, whilst the author has endeavoured to ensure that the
various documents referred to are the latest editions, this is not guaranteed and,
in any event, new and updated editions of documents are being published on
a regular basis. It is crucial, therefore, that anyone requiring up-to-date advice
makes reference to original sources whenever necessary to ensure that the latest
editions are being consulted. A detailed Bibliography is included towards the
end of this book in which the title of each document is listed as well as the
edition consulted during the author’s writing process.

1.2 Background to the ISM Code

What must be understood when considering the historical development of the
ISM Code and its possible impact on the safe management of ships and the
2 ISM Code: A practical guide
protection of the marine environment is that it does not, and never has, existed
within a vacuum or in isolation. There were many other requirements and
initiatives being developed simultaneously within the maritime sector alongside
ISM during the relevant period.
The ISM Code exists as part of the International Convention for the Safety
of Life at Sea, 1974, as amended (SOLAS), which is itself under a constant state
of change and improvement. During the time of ISM Code development other
International Maritime Organization (IMO) Conventions, such as the Inter-
national Convention for the Prevention of Pollution from Ships, 1973, as
modified by modified by the Protocol of 1978, relating thereto (MARPOL)
and the International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers 1978, as amended, including the 1995 and 2010
Manila Amendments (STCW), were also the subject of major changes and
improvements; although it is correct to say that the ISM Code may be thought
of as an umbrella under which all the other Conventions and Rules and
Regulations operate – and a practical management tool which will assist ship
operators with the safe operation of their ships. There have also been other
significant developments, such as the International Ship and Port Facility
Security Code (ISPS Code) in 2004 and, more recently, the Maritime Labour
Convention 2006 (MLC).
In addition to the developments with mandatory rules and regulations, there
were also many initiatives and activities being taken by various stakeholders
in the shipping industry, including charterers, marine insurers, and specific-
ally the Protection/Protecting and Indemnity Association (P&I Clubs), as well
as Port State Control (PSC), for example, all of which were encouraging the
safer operation of ships and protection of the marine environment. Pressure from
the oil majors led to the introduction of vetting inspections – the Oil Companies
International Marine Forum (OCIMF) Ship Inspection Report Programme
(SIRE) – and the introduction of the Tanker Management Self Assessment
(TMSA). P&I Clubs were becoming increasingly involved in conducting their
own ‘condition surveys’ and imposing restrictions on cover where deficiencies
were identified – or even refusing to provide insurance cover. Clubs were
actively developing loss prevention/accident prevention initiatives to assist their
members with the management of their operational risks and generally to reduce
accidents and claims. Industry bodies such as the International Chamber of
Shipping (ICS) and the International Shipping Federation (ISF), the Baltic and
International Maritime Council (BIMCO), the International Association of
Independent Tanker Owners (INTERTANKO), the International Association
of Dry Cargo Shipowners (INTERCARGO), the International Association of
Shipmanagers (INTERMANAGER) and others were developing initiatives to
encourage risk reduction and safer operation of ships. The International
Association of Classification Societies (IACS) continued to develop numerous
initiatives and projects – particularly on technical subjects which would
assist in making ships safer. PSC was becoming increasingly more sophisticated
with its inspection of foreign ships visiting its ports, identifying deficiencies and
 Introduction and underlying principles 3
assisting with the enforcement of compliance with international conventions.
Other governmental and inter-governmental organisations – such as the US
Coast Guard and the European Union (EU) through the work at the European
Maritime Safety Agency (EMSA) – were actively involved in developing a wide
range of maritime safety initiatives.
The ISM Code was never seriously perceived to be a panacea which would
solve all the shipping industry’s accident and claim problems. However, in
conjunction with all the many other safety and risk management-related
activities which were also taking place around the world, there should have
been a very good chance that the ISM Code would contribute to significant
progress in making ships safer and protecting the marine environment. To what
extent that may have been achieved is not an easy question to answer, but will
be explored and considered later in this book.
Within the context of this book, another very important issue – which must
never be forgotten and which should be kept clearly in mind when reading,
or otherwise referring to this book – is that the ISM Code was never intended
to create new interparty liabilities. The Code was formulated with the clear
purpose of improving and extending standards of maritime safety.1 Although
there are some who appear to insist that, through its Safety Management System
(SMS), a ship operator is required to ‘guarantee’ the safe operation of its ships
and protection of the marine environment. The author does not share such
idealistic and academic counsels of perfection. In his 20 or so years’ involvement
with the ISM Code, the author has not yet encountered a perfect SMS; he
has come across some excellent systems, many which are adequate but, sadly,
some which are simply not fit for purpose.

1.2.1 Historical reasons

Most writers on the subject attribute the origins of the ISM Code to the Formal
Investigation carried out by Sheen J into the capsize of the cross-channel ferry
MV Herald of Free Enterprise in March 1987, when 193 passengers and crew
members lost their lives.2 Whilst the author does not altogether disagree with
that observation, he would suggest that that tragic incident was simply one of
the better-known disasters of the late 1980s and into the 1990s which had
shaken not only the shipping industry and marine insurance providers to their
very foundations, but the size and extent of the problem was finally reaching
the attention of the world media and pressure started to mount on politicians
and national governments to act.

1 This most helpful observation is attributed to Mr Simon Kverndal QC, ‘The ISM and ISPS
Codes: Influence on the evolution of liabilities’: paper presented at the Second International
Colloquium, organised by the Institute of International Shipping and Trade Law, Swansea
University, held at Swansea on 14–15 September 2006. Published in Thomas, D. Rhidian
(ed.), Liability Regimes in Contemporary Maritime Law (Informa Law, 2007), Ch.9.
2 Department of Transport (UK), MV Herald of Free Enterprise. Report of Court No. 8074 – Formal
Investigation (Hon. Mr Justice Sheen, Wreck Commissioner), 29 July 1987 (Her Majesty’s
Stationery Office, 1987), ISBN 0 11 5508287.
4 ISM Code: A practical guide
However, it is important to be reminded of the scathing words of Sheen J,
in his report of the MV Herald of Free Enterprise Formal Investigation, on his
findings with regard to the shore-based management and the way in which
safety was, or rather was not, being managed, because they sum up the
problem in stark and uncompromising terms:
At first sight the faults which led to this disaster were the aforesaid errors of omission
on the part of the Master, the Chief Officer and the assistant bosun, and also the
failure by Captain . . . to issue and enforce clear orders. But a full investigation
into the circumstances of the disaster leads inexorably to the conclusion that the
underlying or cardinal faults lay higher up in the Company. The Board of
Directors did not appreciate their responsibility for the safe management of their ships.
They did not apply their minds to the question: What orders should be given for
the safety of our ships? The directors did not have any proper comprehension of
what their duties were. There appears to have been a lack of thought about the way
in which the HERALD ought to have been organised for the Dover/Zeebrugge
run. All concerned in management, from the members of the Board of Directors
down to the junior superintendents, were guilty of fault in that all must be regarded
as sharing responsibility for the failure of management. From top to bottom the body
corporate was infected with the disease of sloppiness. This became particularly
apparent from the evidence of . . . , who was the Operations Director and . . . ,
who was Technical Director. As will become apparent from later passages in this
Report, the Court was singularly unimpressed by both these gentlemen. The failure
on the part of the shore management to give proper and clear directions was a
contributory cause of the disaster. This is a serious finding which must be explained
in some detail . . . 3
There is certainly evidence that the problems with regard to the failure by
some ship operators to manage their ships safely pre-dated the Herald disaster.
For example, in July 1986, following publication of the report into the loss of
the MV Grainville, the UK Government issued M Notice 1188 (this was
subsequently updated and superseded in August 1990 by M Notice 1424)
entitled ‘Good Ship Management’. This commended a publication titled Code
of Good Management Practice in Safe Ship Operations, which had been produced
jointly by the ICS and the ISF.
A brief extract from M Notice 1188 ‘Good Ship Management’ of 1986
provides a glimpse of some ideas which were, in due course, to evolve into
the ISM Code:
The efficient and safe operation of ships requires the exercise of good management
both at sea and ashore . . . The overall responsibility of the shipping company
requires the need for close involvement by management ashore. To this end it is
recommended that every company operating ships should designate a person ashore
with responsibility for monitoring the technical and safety aspects of the operation

3 Herald of Free Enterprise – Formal Investigation, paragraph 14.1.

 Introduction and underlying principles 5
of its ships and for providing appropriate shore based back-up . . . Stress is placed
upon the importance of providing the Master with clear instructions to him and his
officers. The instructions should include adequate Standing Orders. There: should
be close co-operation and regular and effective communication in both directions
between ship and shore.
In the UK, the tragic loss of the MV Herald of Free Enterprise in March 1987
resulted in the introduction of the Merchant Shipping (Operations Book)
Regulations 1988, which were laid before Parliament and came into force in
December of that year as Statutory Instrument 1988 No. 1716. These
Regulations are applicable to all UK passenger ships on short sea trade (Class
II and IIA) and were developed around the two central tenets of:
• all such ships shall carry an ‘operations book’ containing instructions and
information for safe and efficient operation; and
• owners are required to nominate a person (known as the Designated
Person) to oversee the operation of their ships and to ensure that proper
provisions are made so that the requirements of the operations book are
complied with.

M Notice 1353 was issued in October 1988 giving detailed guidance on

how compliance with these regulations could be achieved. Attention was also
drawn to M Notice 1188 (superseded by M Notice 1424), the ICS/ISF
publication Code of Good Management Practice in Safe Ship Operations.
In the UK, Statutory Instrument 1988 No. 1716, the Merchant Shipping
(Operations Book) Regulations 1988 was subsequently superseded by Statutory
Instrument 1997 No. 3022, the Merchant Shipping (ISM Code) (Ro-Ro
Passenger Ferries) Regulations 1997 and Statutory Instrument 1998 No. 1561,
the Merchant Shipping (International Safety Management (ISM) Code)
Regulations 1998.
Following a request by the UK delegation on 19 November 1987, the IMO
Assembly adopted Resolution A.596(15) – Safety of Passenger Ro-Ro Ferries,
which called upon the Maritime Safety Committee (MSC) to develop
guidelines concerning shipboard and shore-based management to ensure safe
operations of roll-on/roll-off (Ro-Ro) passenger ferries. Resolution A.596(15)
was, eventually, to evolve into the development of the ISM Code, which will
be discussed in more detail below in section 1.2.2.
Before considering that evolutionary development at IMO, it is important
to recognise another important issue which was instrumental in the way in
which the ISM Code developed – that is the recognition that most of the
accidents which had been occurring appeared to be attributable to ‘human
error’.
Whilst the revelation from the MV Herald of Free Enterprise Formal Inquiry
– that one of the major causal factors which resulted in the disaster was the
poor standards of shore management – was being absorbed by the shipping
industry, amongst marine insurance providers and others involved in the
6 ISM Code: A practical guide
commercial operation of ships there was growing concern about the sheer scale
of the maritime accident and claim problem which was becoming apparent
during the mid- to late 1980s.
During the period 1987 to 1990, protection and indemnity (P&I) insurance
claims, and consequently the cost of P&I insurance, rose on average by more
than 200 per cent. It is understood that a similar phenomenon was also
experienced with Hull and Machinery (H&M) claims and premiums. Various
reports were commissioned by government agencies and by industry to try to
provide an explanation of what might be behind this problem: could it all really
be simply down to poor management standards?
In 1988 the UK Department of Transport funded research which was carried
out by the Tavistock Institute and which led to the report The Human Element
in Shipping Casualties.4 The conclusions of that report were taken to the IMO
by the then Surveyor General’s Organisation, the role of which was later taken
over by the Marine Safety Agency.
In 1991 what was at that time the world’s largest P&I Club, the United
Kingdom Mutual Steamship Assurance Association (Bermuda) Limited,
through its managers, Thomas Miller P&I, who provided P&I insurance to
approximately 25 per cent of the world fleet, issued its first ‘Analysis of Major
Claims’. In 1992 the House of Lords Select Committee on Science and
Technology, under the then chairmanship of Lord Carver, issued its report,
Safety Aspects of Ship Design and Technology.
A common factor was appearing to emerge in the findings and conclu-
sions of each report, which was basically that these accidents and incidents
were arising primarily as a result of human failings. For example, in the Human
Element in Shipping Casualties report, it was stated that the human element was
found to be causative in over 90 per cent of collisions and groundings and over
75 per cent of contacts and fires/explosions. The UK P&I Club report
concluded that human error accounted for 58 per cent of all claims and the
House of Lords/Carver Report concluded at section 4.2 that ‘[i]t is received
wisdom that four out of five ship casualties – 80% – are due to human error . . .’.
On reflection these conclusions should not have come as any great surprise.
Whilst statistical data are probably not available, it is suggested that ‘human
error’ or ‘human factors’, or whatever other title one wishes to give the phe-
nomenon, have been responsible for most maritime accidents throughout
history, and that the figure is probably much closer to 100 per cent. Just how
close you come to 100 per cent would depend where the investigator/
researcher stopped in tracing the particular causal chain for any particular
accident. The problem really boils down to the fact that there were, in
numerical terms, many more accidents and claims which were costing more
in terms of lives, environmental damage and money than ever before, and the
situation seemed to be getting worse. It appeared, therefore, that a major
problem which also needed to be tackled was a human element problem.
4 Tavistock Institute (on behalf of the UK DOT), The Human Element in Shipping Casualties.
(HMSO, 1988), ISBN 0 11 551004 4.
 Introduction and underlying principles 7
However, in the opinion of the author the two things leading to accidents
– i.e. the falling standards of shore-based management and the increase of
on-board human errors – were much more closely connected than is generally
recognised.
To understand the connection it is necessary to understand not only what
had been happening in the shipping industry during the 1980s, but also to
understand the world economic situation at that time.
Since the late 1970s, world economies had been suffering badly – partly as
a result of increasing oil prices – and many countries had been plunged into
deep recession. This had a direct effect on the shipping industry in at least two
significant ways: firstly, the cost of fuel oil, which was a major part of the daily
operating costs of any ship, were escalating steeply and, secondly, world trade
slowed down, which meant fewer cargoes to be carried, which in turn, as a
result of the most basic law of economics – the law of supply and demand –
forced down freight and charter rates. For most ship operators at that time it
simply was not possible to operate their ships at a profit or even at a break-
even cost.
Many ship operators were faced with a stark choice: if they were to survive
the recession they would either have to sell their ships and get out of shipping,
which some did, or find ways of cutting costs. For those who remained in ship
operations the methods adopted to reduce operating costs were often drastic,
short-term and, in the opinion of the author, short-sighted.
Clearly the ship operators had no control over the cost of fuel, although it
was possible to achieve efficiencies in fuel costs by operating their ships at
reduced speeds. Fuel consumption in a diesel engine tends to drop almost
exponentially with reductions in speed. A ship operator also had limited
control over insurance costs, although premium could usually be reduced by
increasing the deductible, i.e. that amount of any insurance claim which the
insured was prepared to cover themselves before making a claim under their
hull and machinery (H&M) or P&I cover.
However, costs over which the ship operator may have more control were
those relating to personnel and those relating to maintenance. To achieve
savings in those areas, for many ship operators, it was necessary first of all to
change the registration of the ships and leave their traditional Flag – which
was usually the country where the ship operators were based and from which
they operated their business. Accordingly, many operators ‘flagged out’ and
registered their ships under ‘flags of convenience’ (FOCs) or with ‘open
registers’ (ORs). An immediate consequence of this was that they were no
longer compelled to employ nationals of the country from which they operated
– as had been previously been the case, to varying degrees, with traditional
national Flags. The salary and employment benefits expected of European and
Scandinavian seafarers were significantly higher than the expectations of a
labour force recruited in a ‘developing country’.
Accordingly, many ship operators dismissed their European and Scandi-
navian seafarers, particularly below the rank of Master and Chief Engineer and
8 ISM Code: A practical guide
recruited from areas where salary expectations were low – particularly in South
East Asia. Not only were major changes made to the nationality of the seafarers
being employed but the numbers of crew members being employed on-board
were, at the same time, reduced considerably. One major underlying problem
was that, at that time, very little investment had been made in the training of
the seafarers who were now being employed – in large numbers. Within a very
short period of time ships which had been manned by well-educated, highly
skilled and very experienced seafarers were now being operated by, perhaps,
a well-qualified and experienced Master and Chief Engineer, but with a crew
who had received little by way of basic education and training, particularly in
maritime-related subjects, had few skills and very little experience. Further, the
crew size had typically been reduced by over one-third.
Shore-based office staff did not escape the drastic cost-cutting exercise. All
but essential managers and staff were dismissed – including Marine Super-
intendents and personnel involved with safety and training-related roles.
All but absolutely essential maintenance – i.e. maintenance which was
necessary to get the ship, and cargo, to its destination – was cut. Periods
between dry-docking were extended and any other related areas where costs
could be cut and savings made were affected.
Those decisions may have achieved a short-term cost saving but, very
quickly, were to have significant financial consequences. The author is in
no doubt at all that it was no coincidence that the significant increases in the
number of accidents and value of claims which ultimately led to the develop-
ment of the ISM Code – as previously discussed – occurred a relatively short
time after the industry started making the drastic cost-cutting exercises.
The problems which resulted in the significant maritime accidents of
the mid- to late 1980s were indeed linked to reducing standards of shore-
based management and ‘human errors’ – but the report into the MV Herald of
Free Enterprise disaster and the investigations into ‘human element’ issues may
not have gone deep enough to truly understand the full scope of the underlying
problems.
However, continuing with the overview of the historical development of
the ISM Code, it would be appropriate to consider what had been taking place
at IMO, where steps were being taken to introduce something which was
going to be ground-breaking and radically different from anything IMO had
produced previously.

1.2.2 Developments at IMO

The ISM Code evolved at IMO during the late 1980s and into the early 1990s
and continues to evolve up to this present day and will, no doubt, continue
to evolve further in the future.
Following on from the successful proposal submitted by the UK delegation,
in the aftermath of the MV Herald of Free Enterprise disaster in 1987, to the IMO
Assembly and the adoption, on 19 November 1987, of Resolution A.596(15)
 Introduction and underlying principles 9
which had called upon MSC to develop guidelines concerning shipboard and
shore-based management to ensure safe operations of Ro-Ro passenger ferries,
work commenced.
At the 57th session of the IMO MSC in May 1989, the UK delegation
pressed, unsuccessfully at that time, for the draft guidelines contained in MSC
56/WP.4 (this working paper was ultimately adopted at the 16th Assembly, in
October 1989, as Resolution A.647(16) and is the forerunner to the ISM Code)
to include the two principles upon which Statotory Instrument 1998 No. 1716
the Merchant Shipping (Operations Book) Regulations 1988 were founded.
Further impetus was given to the need for these amendments to SOLAS
when fire swept through the Norwegian passenger/car ferry MV Scandinavian
Star in April 1990, with the loss of 158 lives. That tragedy initiated action
within the IMO that resulted in the inclusion of paragraphs ‘4.7 Designated
person ashore’ and ‘4.8 Operations documentation in Resolution A680(17)’
which were adopted on 6 November 1991, revoking Resolution A.647(16).
At the 18th session of the IMO Assembly on 4 November 1993, Resolution
A.741(18) was formally adopted. This revoked Resolution A.680(17) and
constitutes verbatim the International Management Code for the Safe
Operation of Ships and for Pollution Prevention (International Safety Manage-
ment (ISM) Code). This was incorporated on 19 May 1994 into SOLAS as
Chapter IX, entitled ‘Management for the Safe Operation of Ships’.
To introduce the ISM Code as a new Convention in its own right would
have taken a considerable length of time to achieve and would have involved
much bureaucracy. The decision to incorporate it as a new chapter of an existing
Convention – SOLAS – was to use a process known as tacit acceptance. Tacit
acceptance basically facilitates the quick and simple modification of Conventions
to keep pace with the rapidly evolving technology in the shipping world.
There is a very interesting article contained in a paper on the IMO website
describing the history of the tacit acceptance concept and the problems which
had previously been experienced in introducing new Conventions – or
changing existing Conventions at IMO. However, for the purpose of this
present consideration, let it be sufficient to explain that:
The remedy for this, which has proved workable in practice, in relation to a number
of conventions, is what is known as the “tacit” or “passive” acceptance procedure.
This means that a body which adopts the amendment at the same time fixes a time
period within which contracting parties will have the opportunity to notify either
their acceptance or their rejection of the amendment. Or to remain silent on the
subject. In case of silence, the amendment is considered to have been accepted by
the party5
With the entry into force, on 1 July 1998, of the 1994 amendments to
SOLAS, which introduced a new Chapter IX into the Convention, the ISM
Code was made mandatory.

5 ‘Adopting a Convention, Entry into force, Accession, Amendment, Enforcement, Tacit

acceptance procedure’: IMO website, www.imo.org.
10 ISM Code: A practical guide

SOLAS – Chapter IX
Regulation 3
Safety management requirements

1. The company and the ship shall comply with the requirements of
the International Safety Management Code. For the purpose of this
regulation, the requirements of the Code shall be treated as mandatory.

The mandatory compliance with the requirements of the Code was actually
split into two phases, determined by the perceived risk levels of ship types:

• Phase 1 – not later than 1 July 1998:

• passenger ships, including passenger high-speed craft;
• oil tankers;
• chemical tankers;
• gas carriers;
• bulk carriers;
• cargo high-speed craft;
. . . of 500 gross tonnage and upwards.

• Phase 2 – not later than 1 July 2002:

• other cargo ships;
• mobile offshore drilling units (MODUs);
. . . of 500 gross tonnage and upwards.

The application of the Code was to be mandatory for all such vessels
involved in international voyages. It was not mandatorily applicable to
government-operated ships used for non-commercial purposes. However,
some Administrations, Governments and ship operating companies who did
not have to comply mandatorily, for whatever reason, did decide to comply
voluntarily.
It should also be noted that, following the loss of a further Ro-Ro passenger
ferry, the Estonia, in 1994, with the tragic loss of 852 lives, the Council of the
European Union adopted Council Regulation (EC) No. 3051/95 of 8
December 1995 on the safety management of Ro-Ro passenger ferries. From
1 July 1996, i.e. two years before the IMO/SOLAS Chapter IX compliance
deadline, this regulation made compliance with the ISM Code mandatory for
seagoing Ro-Ro passenger ferries operating a regular service to or from a port
of an EU Member State. Statutory Instrument 1997 No. 3022, the Merchant
Shipping (ISM Code) (Ro-Ro Passenger Ferries) Regulations 1997 provide
for the enforcement of that Council Regulation in the UK.
 Introduction and underlying principles 11
The following list provides a chronology of the most significant events
during the evolution of the ISM Code up to the present time:

• 1987 – Resolution A.596(15): Safety of Passenger Ro-Ro Ferries;

• 1989 – Resolution A.647(16): Guidelines on management for the safe
operations of ships and for pollution prevention;
• 1991 – Resolution A.680(17): Revised Guidelines on management for the
safe operations of ships and for pollution prevention;
• 1993 – Resolution A.741(18): International Management Code for the
Safe Operation of Ships and for Pollution Prevention (International Safety
Management (ISM) Code);
• 2000 December – amended by Resolution MSC.104(73) – entered into
force 1 July 2002;
• 2004 December – amended by Resolution MSC.179(79) – entered into
force 1 July 2006;
• 2005 May – amended by Resolution MSC.195(80) – entered into force
1 January 2009;
• 2008 December – amended by Resolution MSC.273(85) – adopted on 1
January 2010 – entered into force 1 July 2010;
• 2013 June – amended by Resolution MSC.353(92) – entered into force
1 January 2015.

The significance of some of the more important amendments which have

been made to the Code – including the latest amendments contained in
Resolution MSC.353(92) – will be discussed as they become relevant in the
following chapters of this book.
Chapter IX of the annex to SOLAS, which had been adopted by the 1994
SOLAS Conference, was accepted on 1 January 1998 and entered into force
on 1 July 1998. The text was amended by Resolution MSC.99(73) in
December 2000 and these amendments entered into force on 1 July 2002. It
was also amended by Resolution MSC.194(80) in May 2005, and these
amendments entered into force on 1 January 2009.
Within the context of this book, and recalling a point made earlier – i.e.
that the ISM Code was never intended to create new interparty liabilities; rather
the Code was formulated with the clear purpose of improving and extending
standards of maritime safety – there is a further very important point which
must be understood. The text of the ISM Code was not written with the idea
that each word might be scrutinised in fine detail by a court of law. Without
wishing disrespect to the original drafting committee and authors of the Code,
it would have to be accepted that the drafting, in parts, is not always clear and,
in parts, is inconsistent. For example in Section 10 of the Code, at 10.2.2, there
is mention of ‘non-conformities’, but these would appear to be quite different
in nature from the non-conformity defined in Section 1.1.9 and the Non-
conformities dealt with in Section 9.1 of the Code. Part of the explanation for
these inconsistencies and poor drafting is, apparently, the result of the original
12 ISM Code: A practical guide
drafting committee having to agree to compromise on a whole range of issues
to maintain momentum and to ensure that certain fundamental concepts were
kept in the Code.
Whilst most ship operators and their staff, as well as Administrations/ROs,
PSCIs and the like, tend to understand the intentions behind the different
sections of the Code, it does mean that lawyers and academics struggle
sometimes to decipher the precise meaning and intention and become
embroiled in linguistic gymnastics arriving at meanings and conclusions which
were almost certainly never intended.
The courts have still had very few opportunities to interpret the legal
requirements of the ISM Code and to consider, from a legal point of view,
what is actually required with regard to satisfying the compliance requirements.
The occasions when direct non-compliance with the requirements of the ISM
Code and Chapter IX of SOLAS, which affect the mutual obligations or
liabilities of maritime users, may be rare. However, there are many ways, or
potential ways, in which the requirements to comply with the Code may have
considerable indirect impact on the development of liabilities and enforcement
of contractual obligations. It is those indirect consequences of the introduction
of the ISM Code, to the reshaping rather than the creation of liabilities, that
will become most significant.
A few of the cases which have been before the courts include:

• The criminal prosecution of the operators and Master of the offshore

support vessel Viking Islay, following the tragic loss of three lives on-board,
in 2009 included an alleged breach of Regulation 4 of Statutory Instrument
1998, No. 1561, the Merchant Shipping (International Safety Management
(ISM) Code) Regulations 1998 – i.e. a failure of the duty to comply with
the ISM Code.6
• In 2013, in the Commercial Division of the High Court in London, a
dispute involving the vessel MV Nancy under a marine insurance contract
which included an express warranty that ‘Vessels ISM (International Safety
Management Code) Compliant’.7
• In the United States, following an incident on 7 November 2007 in San
Francisco Bay when the container vessel Cosco Busan contacted the
supports of a harbour bridge, resulting in serious pollution of the Bay,
the ship managers faced a criminal prosecution. On 13 August, 2009 the
managers pleaded guilty to felony obstruction of justice and false state-
ment charges for creating false and forged documents after the crash at the
direction of shore-based supervisors with an intent to deceive the US Coast
Guard and were fined US$10 million. During the prosecution various
allegations were made, and were accepted, that there had been failures to
adequately train and familiarise the Master and crew in various aspects of

6 R. v. Vroon Offshore Services Ltd. & MV ‘Viking Islay’ (2009).

7 Sea Glory Maritime Co. and Another v. Al Sagr National Insurance Co. (The MV Nancy) [2013]
EWHC 2116 (Comm); [2014] 1 Lloyd’s Rep 14.
 Introduction and underlying principles 13
shipboard operations relevant to navigation, passage planning, master-pilot
exchanges etc., most of which were indirectly relevant to the Company
SMS.
• A further US case which centred around certain alleged unsafe working
and operational practices – and thus involved consideration of the
Company SMS – is the tragic case of the Deepwater Horizon – in which
a number of crew members were killed and serious pollution followed a
blow-out of an oil pipe-line. On 4 September 2014 the Federal Judge
overseeing the multidistrict litigation issued a long-awaited ruling as to
liability. The trial judge concluded that the Deepwater Horizon spill was
caused by BP’s gross negligence and wilful misconduct. According to an
article circulated by US attorneys, ‘Blank Rome Maritime: “. . . BP could
face liability for as much as $18 billion in Clean Water Acts penalties . . .”’,8 the
human injury and fatality compensation claims would be separate.

There were two older cases in the High Court in London in 2002, which
discussed some ISM-related issues:

• Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and
Another (The Eurasian Dream);9 and
• The Torepo.10

However, whilst these two cases are often referred to when discussing the
legal implications of the ISM Code – and they will be in this book – neither
of them actually set any helpful legal precedents, although Cresswell J, in The
Eurasian Dream and the Admiralty judge, as he then was, Steel J, in The Torepo,
have provided some useful guidance. In The Eurasian Dream, for example,
although Cresswell J did not hold that the inadequacy of the ISM type
documentation alone amounted to causative unseaworthiness, he identified a
number of deficiencies, which he grouped together when concluding that the
ship was unseaworthy. He held:

The Eurasian Dream [2002] – Cresswell J

150. The Eurasian Dream was not in a suitable condition and suitably
manned and equipped. Although it is convenient to categorise the findings
of unseaworthiness under three headings (The Vessel’s Equipment;
Competence/Efficiency of the Master and the Crew; and Adequacy of
the Documentation Supplied to the Vessel) I emphasise that these findings
overlap and should be seen as one cumulative set of deficiencies.

8 Circulated email from Blank Rome Maritime, dated 8 September 2014: ‘Trial Judge
Concludes the Deepwater Horizon Spill Caused by BP’s Gross Negligence and Wilful
Misconduct’.
9 [2002] 1 Lloyd’s Rep. 719.
10 [2002] 2 Lloyd’s Rep. 535.
14 ISM Code: A practical guide
Clearly, a question which arises, and it is not an unreasonable question, is
why there have been so few occasions for the courts to consider the legal
implications of the ISM Code?
Although perhaps not realising it at the time, or fully anticipating the
consequences, Lord Donaldson, in his 1998 Cadwallader Lecture ‘The ISM
Code: the road to discovery?’,11 made the following prophetic statement:

. . . while the Woolf reforms will rightly limit the scope of general discovery and,
in particular, will put paid to the tactics of presenting your opponent with a haystack
and inviting him to look for the needle, it will again, rightly, open the door to more
specific tightly focussed orders. The ISM Code, although primarily not so intended,
will I believe prove to be the lens which produces that accurate focusing . . .

Whilst the author has been involved as ISM Consultant or expert witness in
well over one hundred legal cases around the world, often involving very
similar issues, very few of these cases have ever reached the courts – almost all
settled amicably out of court, usually following the exchange of Experts’
Reports. This is, invariably, directly linked to the limited and more focused
discovery which Lord Donaldson anticipated.
With a sense of irony, one consequence of this, however, is that the courts
have had very few opportunities to interpret the Code, either with regard to
its requirements or linguistically. This is actually of great concern, not only
because the law has become almost stagnated in this area but also because the
same issues, often involving the concerns and interpretation of the same words
and phrases within the Code, are regularly appearing in the disputes which are
being settled. A purpose of this book will be to share and discuss some of those
issues and concerns from a legal perspective.

GUIDELINES TO ADMINISTRATIONS: HISTORICAL DEVELOPMENT AND

CURRENT STATUS

Ahead of the mandatory compliance deadlines for the implementation of the

requirements of the ISM Code, it had been recognised that steps may need
to be taken to try to ensure, as far as possible, a level of standardisation of
interpretation, application and verification of the requirements of the Code
by the various Administrations. In 1995, the IMO Assembly, recognising the
need for uniform implementation of the ISM Code and that there might be
a need for Administrations to enter into agreements in respect of the issuance
of certificates by other Administrations in accordance with SOLAS Chapter
IX and the ISM Code, developed ‘Guidelines for Administrations’. Whilst this
was an excellent, well-intentioned, initiative by IMO, in practice, in the
experience of the author, it has only partially achieved its original objectives.

11 Published at [1998] LMCLQ 526.

 Introduction and underlying principles 15
This view is supported by the significant range of compliance levels achieved
by the spectrum of Flag Administrations as reflected in their respective rankings
in the Paris Memorandum of Understanding (MoU) so-called White – Grey –
Black List, which is discussed in detail in Chapter 2, section 2.3.1.
However, from a historical perspective, the Guidelines to Administrations
have continued to be updated to keep in line with changes and amendments
to the ISM Code and Chapter IX to SOLAS. The following chronology
summarises the most significant amendments up to the present time:

• 1995 – Resolution A.788(19) – Guidelines on implementation of the Inter-

national Safety Management (ISM) Code by Administrations;
• 2001 November – Resolution A.913(22) – Standards on ICM Code
certification arrangements;
• 2009 December – Resolution A.1022(26): Guidelines on implementation
of the International Safety Management (ISM) Code by Administrations;
• 2013 December – Resolution A.1071(28) – Revised Guidelines on the
implementation of the International Safety Management (ISM) Code by
Administrations – took effect from 1 July 2014.

It should be noted at this point that, whilst Flag Administrations are the
parties with the responsibilities to verify, certify and monitor compliance with
the requirements of the Code on-board ships which fly their Flag and in
Companies operating those ships, those tasks are frequently delegated by the
Administrations to so-called ROs.12 ROs would, of course, also be expected
to be guided by the IMO Guidelines to Administrations.
Most Administrations restrict their ROs to Classification Societies who are
full members of IACS. In 1996, IACS expanded upon the IMO Guidance to
Administrations and produced a detailed ‘Guidance to IACS Auditors to the
ISM Code’, IACS Recommendation No 41. This publication went through
four revisions, the last being Rev. 4, December 2005. This version appears to
be still valid and in force, although of course there have been numerous
amendments to both the Code and the Guidance to Administrations since that
time.
The potential relevance and significance of these Guidelines to Adminis-
trations and the IACS Guidelines to Auditors will be discussed in detail in
Chapter 2, section 2.3.2 below and at the appropriate sections throughout this
book.

1.2.3 Effectiveness of implementation

A number of related questions are frequently put to the author, usually along
the lines of: is the ISM Code working? has the ISM Code achieved its

12 The role of both Administrations and ROs will be discussed in detail in the next chapter of
this book.
16 ISM Code: A practical guide
objectives? has the ISM Code reduced accidents? Even though the Code
has been mandatory for nearly 20 years for some categories of ships, and over
12 years for all ship types, the author still finds it impossible to provide an
unqualified Yes or No answer to these questions.
There are two main issues which make it very difficult to provide an
unambiguous answer:

• Firstly, as was discussed in the first paragraphs of section 1.2 above, the
ISM Code does not exist in a vacuum or in isolation – there were
numerous other rules, regulations, guidelines and initiatives relating to
safety and the management of safety and risk which were being developed
simultaneously with the ISM Code. Hence, any success, or otherwise, in
reducing accidents is likely to have been influenced by a number of
different factors, although the ISM Code would, almost certainly, have
been one of them.
• Secondly, it has proved extremely difficult to obtain any meaningful and
reliable empirical, quantitative or qualitative data which would be
adequately robust to draw any firm conclusions.

However, it will be appropriate to consider some sources of information which

may provide an insight.

Research
There has been a limited amount of research carried out into these and other
related issues.
The author conducted the first major piece of research into ISM Code
implementation during 2001 as part of his post-graduate work leading towards
a Doctorate of Professional Studies with the Middlesex University. This was
three years after the mandatory compliance deadline for Phase 1 vessels and in
the run-up towards the compliance deadline for Phase 2 vessels.
Approximately 70,000 questionnaires were distributed for completion by a
wide range of identifiable stakeholders from different sectors of the industry:
seafarers, governmental and intergovernmental bodies, Classification
Societies/ROs and many others. Three thousand completed responses were
returned for analysis. The responses tended to be more subjective than
objective; they were, on the whole, quite negative about the ISM Code and
were inconclusive.13
In May 2002, MSC, at IMO, agreed that an analysis should be undertaken
to assess the impact of the ISM Code on the safety of ships to ascertain
its contribution to the enhancement of safety in the shipping industry. The

13 An analysis of that research is included in: Cracking the Code – The relevance of the ISM Code
and its impact on shipping practices (The Nautical Institute, 2003 ISBN 1 8700 77 63 6).
 Introduction and underlying principles 17
Secretariat was instructed to collect from regional PSC MoUs/Agreements,
IACS and industry organisations their information on the impact of the ISM
Code on ISM Code-certificated ships vis-à-vis detentions, serious deficiencies,
casualties, etc., as well as any assessment of the impact of the ISM Code and
its effectiveness on ships.
In an attempt to make a meaningful assessment, the Secretary General
established a Group of Independent Experts (GIE) – which included the
author – comprising experts from governments, organisations, universities and
the shipping industry and the Secretariat to collect and analyse data to study
the impact of the ISM Code and its effectiveness. The inaugural meeting of
the GIE was on 12 November 2004. The data/information collection method-
ology was very similar to that used by the author in 2001, i.e. self-completing
questionnaires.
The GIE, on conclusion of its study in late 2005, submitted its report to
the Secretary General on its findings and recommendations. This was
subsequently made available by IMO as: MSC 81/17/1 – Role of the Human
Element – Assessment of the impact and effectiveness of implementation of
the ISM Code.14 A summary of the findings and recommendations are given
below:

GIE
Conclusions and recommendations
1. The group had recognised that the so called ‘hard data’ to be
collected, for example from PSC detention records, would have had
serious limitations in indicating any effects of the ISM Code
implementation. Therefore, the group had recognised the need to
rely on the experts’ judgment on the impact of the ISM Code based
on collectively gathered subjective opinions from various levels of
the shipping industry.
2. The group had developed four questionnaires for shipboard personnel,
shore-based personnel, shipping companies and Administrations. All
data received in response to the questionnaires was collated by the
World Maritime University (WMU) and submitted to the IMO
Secretariat for preliminary analysis. The group was then invited to
scrutinise and validate the data and preliminary analysis.
3. The group had found that the overwhelming majority of responses
were supportive of the ISM Code. The consensus among the group
was that interest shown in the study was highest among those who
had generally enjoyed some benefit from the implementation of the
ISM Code. It was the group’s considered opinion that, whilst the

14 The GIE Report can be accessed on the IMO website: www.imo.org.

18 ISM Code: A practical guide

results could not be claimed to be a representative sample from across

the industry, they nevertheless represented a model of collective
experience from amongst those that support the Code. The group
had also agreed that this was a limitation in the methodology of the
data-gathering exercise and believed that it could only be addressed
by investing in a study employing researchers in the field to ensure
that the views of non-supporters could be specifically captured.
4. Based on the data collected, the group concluded that:
a. where the ISM Code had been embraced as a positive step
toward efficiency through a safety culture, tangible positive
benefits were evident;
b. ISM Code compliance could be made easier through a reduction
in the administrative process by:
i. streamlining and reducing the paperwork that supported
ISM Code compliance, particularly the SMS;
ii. greater use of technology and information technology (IT)
to reduce paperwork;
iii. identifying common areas in the ISM Code and, for
example, the ISPS Code and integrating documentary
requirements;
iv. motivating seafarers to use the reporting and monitoring
systems towards the improvement of SMSs;
v. involving the seafarers in the development and continuous
improvement of ISM manuals;
vi. increased integrated training for all concerned;
vii. exploring measures to reduce the cost of compliance; and
viii. improving ISM Code compliance monitoring and
developing performance indicators; and
ix. the impact of PSC in this area had not been explored but
certainly appeared to merit further study;
5. The group recommended that:
a. a further study should be undertaken, at a later date, specifically
to examine:
i. cause and effect between ISM Code implementation and
flag State safety records;
ii. the relationship between PSC and ISM Code compliance;
and
iii. whether textual changes in the requirements of the Code
could make compliance easier and lead to an improved
safety culture;
b. in response to data produced for this study:
i. methods to streamline the implementation of the Code
through technology and increased use of IT should be
explored;
 Introduction and underlying principles 19

ii. the alignment of ISM and ISPS Codes in shipboard

documentation should be considered;
iii. a reduction in paperwork should be encouraged;
iv. guidelines for Administrations should be revised to make
them more user friendly; and
v. new guidelines to assist companies to implement the Code
should be developed;
c. the results of the study be given widespread publicity across the
industry in order to show how positive attitudes to ISM Code
could yield tangible operational, financial and safety benefits.

Bearing in mind that this research was being carried out by/on behalf of
the IMO, there was, generally, a rather disappointing response. Thankfully,
2,959 seafarers completed questionnaires. However, only 39 ship operating
Companies and 89 shore-based personnel out of the entire international ship-
ping industry responded and only 32 out of about 170 flag Administrations
responded – although the 32 Administrations which responded represented
nearly half the world’s Convention fleet subject to the provisions of SOLAS
Chapter IX by gross tonnage. It is not known whether such a poor level of
participation by shore-based staff, Companies and Administrations was as a
result of apathy, disinterest or some other reason – but it is surely cause for
concern.
Whilst these reports included some interesting subjective comments, the
reports of both the author (2001) and IMO (2005) are of limited value since
they cannot claim to represent a good cross section of the key stakeholders
and contain little by way of measurable data. At this time a further, more robust
study on an international basis has not yet taken place.

Accident statistics
It continues to be very difficult to obtain meaningful statistical data which might
provide some indication as to whether or not the ISM Code, and the other
safety management initiatives which have been actively working alongside ISM,
as mentioned above, have had any measurable impact on accidents and claims
internationally. However, some information, although limited, is available from
which trends can possibly be detected. For example, the insurer Allianz15 and
the International Union of Marine Insurance (IUMI)16 publish some very
interesting statistics which appear to show possible certain trends.

15 A copy of ‘Allianz Global Corporate & Speciality – Safety and Shipping Review 2013’ can
be accessed on www.agcs.allianz.com/assets/PDFs/Reports/AGCS%20Safety%20and%20
Shipping%20Review%202013%20WIDE.pdf.
16 The PowerPoint slides from the IUMI Annual Conferences can be accessed on their website
at www.iumi.com.
20 ISM Code: A practical guide

200
180
160
140
120
100
80
60 Losses
40
20
0
2001–2002

2002–2003

2003–2004

2004–2005

2005–2006

2006–2007

2007–2008

2008–2009

2009–2010

2010–2011

2011–2012
Figure 1(a) Trend – total losses all ships 2001–2012 (based on Allianz Global Corporate
& Speciality/Lloyd’s List Intelligence Casualty Statistics)

0.45
0.4
0.35
0.3
0.25
0.2
Total Losses
0.15
0.1
0.05
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Figure 1(b) Trend – total losses, all ships, 1997–2013 (based on IUMI/Clarksons)

Figure 1(a) shows a slow but general downward trend of ship losses by
number of ships lost between 2001 and 2012. The graph is based on tabulated
information which appeared in Allianz Global Corporate & Speciality – Safety
and Shipping Review, page 9. Allianz attributes the original source of its table
to Lloyd’s List Intelligence Casualty Statistics, Analysis AGCS.
The IUMI statistics are not based on numbers of vessels in absolute terms
but, rather, are based on a percentage by number of vessels compared with
the world fleet – which has been growing during the relevant period – and
thus represent a more realistic figure. However, the trend for total losses 1997–
2013 as percentage by number of vessels compared with world fleet – vessels
over 500 gross tonnage – is very similar to the downward trend in the Allianz
 Introduction and underlying principles 21
statistics. Figure 1(b), using approximate figures based on data from graphs as
appear in slides of a PowerPoint presentation from the IUMI Annual
Conferences, shows this downward trend but over a longer time period.
Clearly, this general downward trend of total losses during a 15-year period
is very encouraging. However, it is only one measure – at the extreme end of
the accident scale. It has not been possible to obtain accident and claims statistics
covering this period with regard to liability type claims as covered by the P&I
Clubs – which would be extremely interesting and useful – but in the IUMI
PowerPoint presentation from its 2013 Annual Conference there are some
details of what they refer to as ‘serious incidents’. The term is not defined but
is clearly distinguished from ‘total losses’. Based on data derived from the IUMI
PowerPoint it is possible to discern a very different trend. Figure 2 shows this
trend when serious losses and total losses are combined for the period
1997–2013 by number of vessels over 500 gross tonnage.17

1200

1000

800

600
Serious and
400 Total Losses

200

0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Figure 2 Trend – serious and total losses – all ships 1997–2013

(based on IUMI/Lloyds List)

What is interesting in these statistics is that the trend of serious incidents,

including total losses, rose steadily from 1998 – i.e. Phase 1 ISM Code imple-
mentation – peaking in 2007 and dropping back to a figure which was still
higher than the 1998 figure in 2013. Clearly it is of considerable concern that
during the period under consideration – i.e. since the implementation of the
ISM Code – the number of ‘serious losses’ actually increased almost threefold
by 2006/2007. During this same period, in terms of the number of total losses,

17 The figures are approximate and are based on data from graphs which appear in slides of a
PowerPoint Presentation from the IUMI Annual Conferences, which can be accessed on their
website at www.iumi.com – IUMI original data attributed to Lloyds List.
22 ISM Code: A practical guide
there would seem to have been a slow but steady improvement, as indicated
in Figure 1(b).
Whilst it has not been possible to obtain meaningful statistics from the P&I
Clubs, it was the case that the P&I insurance premiums continued to increase
significantly during the mid-2000s and only during the last few years has there
been a stabilisation with regard to annual calls. This would appear to coincide
with the accident and claims experience indicated in the IUMI statistics for
‘serious losses’.
Without more robust statistics it is not possible to draw any clear con-
clusions, although the indications are that there is still some considerable ‘room
for improvement’ in the field of reducing accidents and claims.

Concentrated inspection campaigns

The Paris and Tokyo MoUs have conducted three Concentrated Inspection
Campaigns (CICs) on ISM Compliance since the Code became mandatory.
The first two CICs were conducted to coincide with the Phase One and Phase
Two implementation deadlines of July 1998 and July 2002 and were mainly
carried out to verify whether a SMS had been effectively implemented
on-board. The most recent CIC was carried out from 1 September to 30
November 2007.
The Paris MoU distributed a Press Release on 29 January 2008 with some
preliminary details. It reported that 5,427 inspections were carried out within
the Paris MoU on 5,120 ships, although several of the ships were inspected
more than once. It further reported a matter of serious concern, that one out
of five inspections apparently showed ISM deficiencies (non-conformities)
corresponding with 1,031 inspections. In total 1,868 ISM non-conformities
were recorded during the inspections and 176 inspections resulted in a deten-
tion where one or more major non-conformities (MNCs) were found.
Apparently, three prominent MNC categories became apparent:

• effective maintenance of ship and equipment;

• emergency preparedness;
• reports of non-conformities and accident occurrences.

The performance of the flag States were measured by reference to detentions

rates with an average during the CIC of 5.4 per cent. The Press Release
identified the worst and best detention rates, with the worst running at 16.2
per cent and the best at 0 per cent (see Table 1).
Apparently, during the CIC, almost every PSC inspection within the Paris
MoU region, subjected the SMS to verification in more detail for compliance
with the international standards. PSC Officers verified that the SMS on-board
was not a ‘paper exercise’ but that the master was ‘fully conversant’ with the
SMS and ship’s personnel were able to ‘communicate effectively’ in the
execution of their duties related to the SMS.
 Introduction and underlying principles 23
Table 1 Paris MoU – CIC results 2007

Worst performing Best performing

Albania Azerbaijan
Comoros Belgium
Cook Island Bermuda
DRP Korea China
Sierra Leone Denmark
Slovakia Faroe Islands
St Vincent Grenadines Finland
Syrian Arab Republic France
India
Ireland
Latvia
Luxembourg
Isle of Man
Philippines
Spain
Thailand
United States

The Paris MoU concludes by suggesting:

Although some serious problems were encountered in general it can be said that the
CIC shows that the ISM system is starting to work onboard ships. Both ship-
owners and crews on board understand the system and implement it. The Paris
MoU will keep monitoring the implementation of the management systems to ensure
the ISM requirements are complied with.

The Tokyo MoU secretariat issued a Press Release on 20 February 2008

when, with cautious optimism, it concluded: ‘It does appear that the inspection
campaign was successful and indicated that for most ships and ISM operators, the safety
management system is functioning and understood on board.’ The statement explained
that, unlike previous ISM CICs, this CIC was aimed at determining whether
the SMS on board the inspected ships was not only effectively implemented
but also whether it was being effectively maintained. According to the report,
Tokyo MoU member authorities inspected 4,094 vessels, detaining 108 (2.6
per cent) as a direct result. The overall PSC detention rate during the campaign
period was 5 per cemt. This compares with an average regional detention rate
in January–August 2007 of 5.9 per cent. With regard to detention performance,
the lowest performing ship type was general cargo/multi-purpose ships. These
accounted for 29 per cent of all inspections and 61 per cent of the detentions.
That gave these ships the highest detention rate, of 5.5 per cent. The next
highest detention rate was offshore service vessels, with a detention rate of 5.3
per cent. But this figure may be misleading, as only 19 ships of this type were
inspected, of which one was detained. Interestingly, 70 gas carriers were
inspected, with three being detained. This resulted in a detention rate of 4.3
per cent, which gave gas carriers the third-highest detention rate.
24 ISM Code: A practical guide
Other detention rates for ship types, in order, were:

– other types of ship 4 per cent (25 inspections);

– NLS tankers 3.4 per cent (29 inspections);
– oil tankers 2.3 per cent;
– bulk carriers 1.7 per cent;
– refrigerated cargo vessels 1.5 per cent;
– container ships 1.1 per cent;
– chemical tankers 1.05 per cent.

The Secretariat drew specific attention to the pleasing performance of bulk

carriers, having been subject to 1,093, or 27 per cent of all inspections with
only 1.7 per cent detentions.
With regard to the performance of individual flag States subject to more
than 10 inspections, the five states with lowest performance were as shown in
Table 2.

Table 2 Tokyo MoU – CIC results 2007

Lowest performance
Korea, DPR 4 detentions (18.2%)
Georgia 2 detentions (14.3%)
Thailand 6 detentions (12.2%)
Indonesia 2 detentions (11.1%)
Mongolia 3 detentions (10.3%)

The statement reported that, if the total number of detentions is considered,

Panama had 28 detentions out of 1,440 inspections (1.9 per cent) and Cam-
bodia had 26 detentions from 254 inspections (10.2 per cent)
Whilst there was some cause to be cautiously optimistic, it was quite
apparent from both the Paris MoU and the Tokyo MoU – which is also
reflected in the statistics related to normal inspections – that there appear to
be significant and serious differences between flag Administrations in the
way they verify and monitor compliance with the requirements of the ISM
Code on-board ships which fly their flag and in Companies which operate
those ships.

1.2.4 Further developments

The ISM Code, and the management of safety generally, are kept under regular
review within the IMO as well as within industry bodies and governmental
organisations around the world. As has been stated a number of times already,
and will be repeated again throughout this book, the ISM Code does not exist
 Introduction and underlying principles 25
within a vacuum, nor can it be ‘pigeon-holed’ and kept separate from other
safety, operational risk and pollution control activities. The Code is an umbrella
under which all the safety-related, training and pollution Conventions and rules
and regulations operate.
Accordingly, when ‘developments’ with the Code are considered, it is also
important to remember that other developments within SOLAS, STCW and
the addition of new MARPOL Annexes are highly relevant. It will be neither
feasible nor appropriate to attempt to review all of them here. However,
mention will be made of some of the more significant changes which have
occurred since the publication of the second edition of this book and which
will be discussed in more detail in the relevant sections of his book dealing
with those specific topics.
A comprehensive review of STCW commenced in January 2006 and
culminated in a Conference of Parties to the STCW Convention, held in
Manila, Philippines, from 21 to 25 June 2010, that adopted a significant
number of amendments to STCW and the STCW Code. The relevance and
potential implications of some of the amendments will be discussed elsewhere
in this book – specifically in Chapter 3, section 3.3.2 below, dealing with
resources and personnel.
Also of special note is the development and implementation of the
MLC 2006. It is designed to become a global legal instrument that will be the
‘fourth pillar’ of the international regulatory regime for quality shipping,
complementing the key Conventions of the IMO such as SOLAS, STCW,
and MARPOL.
The MLC 2006 contains a comprehensive set of global standards, based on
those that are already found in the maritime labour instruments (Conventions
and Recommendations) adopted by the International Labour Organization
(ILO) between 1920 and 1996. It brings all except four of the previously
existing maritime labour instruments (International Labour Standards (ILS))
together in a single Convention that uses a new format, with some updating,
where necessary, to reflect modern conditions and language. The Convention
consolidates and revises the existing international law on all these matters.

Developments following the GIE research and report

It will be recalled from that part of section 1.2.3. above – Effectiveness of
implementation – dealing with research, that the IMO had established a GIE
to work with the Secretariat and conduct research into the effectiveness of the
ISM Code. The GIE submitted their findings and conclusions to the IMO,
along with recommendations for further action to take to complete the task
they had set out to achieve. The IMO made the report available as MSC
81/17/1. These recommendations are set out in section 1.2.3 above.
Some, but not all, of the recommendations have been actioned. The follow-
ing recommendations have been actioned, to varying degrees:
26 ISM Code: A practical guide
• Some textural changes in the requirements of the Code have been made
(these will be discussed below).
• Guidelines for Administrations have been revised. The Guidelines were
replaced by Resolution A.1022(26) in December 2009 and Revised
Guidelines on the implementation of the International Safety Manage-
ment (ISM) Code by Administrations were adopted by Resolution
A.1071(28) in December 2013. This resolution revoked Resolution
A.1022(26) with effect from 1 July 2014. These amendments will be dis-
cussed in more detail in Chapter 2, section 2.3.1 below.
• New guidelines to assist companies to implement the Code have been
developed. Three particular IMO Circulars can be identified:
o MSC-MEPC.7/Circ.5 – Guidelines for the Operational Imple-
mentation of the International Safety Management (ISM) Code by
Companies, adopted 19 October 2007. This Circular was revised as
a consequence of the adoption of Resolution MSC.353(92) – revisions
to the ISM Code – at the 92nd session of the MSC (12–21 June 2013)
and the revised version is now MSC-MEPC.7/Circ.8 – Revised
Guidelines for the Operational Implementation of the International
Safety Management (ISM) Code by Companies. This Circular will be
discussed in more detail in Chapter 2, section 2.4 below.
o MSC-MEPC.7/Circ.6 – Guidance on the Qualifications, Training
and Experience necessary for undertaking the role of the Designated
Person under the provisions of the International Safety Management
(ISM) Code, adopted on 19 October 2007. This Circular will be
discussed in more detail in Chapter 2, section 2.4, and specifically
section 2.4.3 below.
o MSC-MEPC.7/Circ.7 – Guidance on Near-miss Reporting, adopted
on 10 October 2008. This Circular will be discussed in more detail
in Chapter 3, section 3.4.1 below.

Amendments to the ISM Code

It will be recalled that the ISM Code had been adopted in 1993 as Resolu-
tion A.741(18). The Code was amended in in December 2000 by Resolution
MSC.104(73), which entered into force on 1 July 2002. It was further amended
in December 2004 by Resolution MSC.179(79), which entered into force on
1 July 2006. It was further amended in May 2005 by Resolution MSC.195(80),
which entered into force on 1 January 2009. However, the two amendments
made following the GIE Report of 2005 contained more significant
amendments: an amendment in December 2008 – Resolution MSC.273(85),
which was adopted on 1 January 2010 and which entered into force on 1 July
2010, and amendments in June 2013 by Resolution MSC.353(92), which
entered into force on 1 January 2015.
 Introduction and underlying principles 27
Some of the more significant revisions made in Resolution MSC.273(85)
and Resolution MSC.353(92) will be discussed here and will be expanded upon
in the relevant sections elsewhere in this book.

MSC.273(85) – ADOPTED 1 JANUARY 2010, ENTERED INTO FORCE

1 JULY 2010

To some extent this was a tidying-up exercise in which a number of require-

ments were rephrased, or otherwise corrected, to clarify the actual intentions
of the Code. There was also some important expansion of certain issues,
particularly with regard to the relevance of risk assessment/risk management
to the ISM Code.
Although these are now historical developments, it is believed that it will
still be a worthwhile exercise to comment on the amendments since they may
have a significant bearing not only on what is required by the Code in
practice, but also on the potential legal implications.
The first amendment was to clarify the definition of an MNC, which
appears at 1.1.10 of the Code. Up until this amendment the definition was as
follows:

1.1.10 ‘Major non-conformity’ means an identifiable deviation that poses a serious

threat to the safety of personnel or the ship or a serious risk to the environment that
requires immediate corrective action and includes the lack of effective and systematic
implementation of a requirement of this Code.

Some had interpreted this definition, incorrectly, to mean that there must be
two components of a non-conformity to render it an MNC, i.e. it must pose
a serious threat to safety or a serious risk to the environment and includes the
lack of effective and systematic implementation of a requirement of the Code.
That was not the intention. The intention had been that either of those
components would constitute an MNC. Hence the amendment:

MSC.273(85)
Section 1.1 Definitions
1 In paragraph 1.1.10, the words ‘and includes’ are replaced by the
word ‘or’
28 ISM Code: A practical guide
The new definition now reads:

ISM Code
1.1.10 Major non-conformity means an identifiable deviation that poses a
serious threat to the safety of personnel or the ship or a serious risk to
the environment that requires immediate corrective action or the lack
of effective and systematic implementation of a requirement of this
Code.

The next amendment was, in the opinion of the author, perhaps the most
important of all the amendments and represented a significant move forward
for the ISM Code.
It had been a widely held opinion since the Code was first developed,
including the opinion of the author, that the ISM Code anticipated a ‘risk-
based’ approach to the management of safety. However, the author understands
that there had been opposition during the original drafting stage, from certain
Administrations/shipowners, to the idea of introducing a clear risk-based
approach, apparently arising from a fear that this would increase the cost of
development and implementation and would increase the extent of the
paperwork involved. If this is correct, then they were misconceived ideas. This
resulted in the original version of the Code containing a far from clear
reference to identifying risks in the Objectives, which had stated:

1.2.2 Safety management objectives of the Company should, inter alia: . . .

.2 establish safeguards against all identified risks; . . .

This would appear to be an incorrect use of the word ‘risk’, since it is ‘hazards’
which are identified during risk assessment and a risk level is then calculated.
In any event, there was a lack of clarity as to what was actually required of a
Company in order to satisfy this objective. It certainly did not appear to go so
far as to suggest that a Company was required to conduct risk assessments.
Interestingly, the IACS Guidance to their ISM Auditors18 correctly
understands what was intended but does not actually extend their under-
standing to make it a requirement. When discussing the Objectives, at p. 8,
they say:

18 IACS Rec. No. 41 – Guidance for IACS Auditors to the ISM Code (Rev. 4 Dec 2005).
 Introduction and underlying principles 29

IACS Rec. No 41, Rev. 4 Dec 2005

Although it is not often referred to as such, the development and
implementation of a documented safety management system is an exercise
in risk management. The drafting or amendment of written procedures
involves looking at the company’s activities and operations, identifying
what could go wrong, and deciding what should be done to try to
prevent it. The documented procedures are the means by which the
controls are applied. To help all the companies in establishing safeguards
against all identified risks the IACS had developed ‘A GUIDE TO RISK
ASSESSMENT IN SHIP OPERATIONS’.

In the experience of the author, few SMSs, at that time, had been developed
along the line suggested by IACS, although they had been verified and
approved even though there was no obvious evidence that safeguards had been
established against all identifiable risks (hazards).
However, the amendment contained in MSC.273(85) was to provide some
clarification:

MSC.273(85)
Section 1.2 Objectives
2 The existing subparagraph .2 of paragraph 1.2.2 is replaced by the
following:
‘. . . . 2 assess all identified risks to its ships, personnel and the environ-
ment and establish appropriate safeguards; and . . .’

The significance of this amendment will be discussed in more detail in Chapter

3, section 3.2 below.
The next amendment clarified, to a limited extent, the frequency with
which a Master was required to review the SMS on-board. The original
requirement, as set out in Section 5.1.5 of the Code, had been far from clear.
It simply stated:

5.1 The Company should clearly define and document the master’s responsibility
with regard to: . . .

...

.5 reviewing the safety management system and reporting its deficiencies to the shore-
based management.
30 ISM Code: A practical guide
Whilst some Companies had set clear and specific requirements – e.g. once
per year or once per tour of duty of each Master – others had been far from
clear. The amendment which was made through MSC.273(85) did not define
a minimum frequency and left that decision to each Company. It stated:

MSC.273(85)
5 Master’s Responsibility and Authority
3 The word ‘periodically’ is added at the beginning of paragraph 5.1.5.

Interestingly, IACS, in Rec. No. 41 – Guidance for IACS Auditors to the ISM
Code, Rev. 4 2005, at pages 18–19, states that it expects a frequency of ‘not
more than a year’.
The next series of amendments all involved the same basic issue, which
highlighted an anomaly in the language that had been used at various places
in the original version of the Code. Whilst the intention had, apparently, been
correctly understood, the original language of the Code was at least potentially
misleading. For example, the original wording of section 7 of the Code had
been:

7 DEVELOPMENT OF PLANS FOR SHIPBOARD OPERATIONS

The Company should establish procedures for the preparation of plans and
instructions, including checklists as appropriate, for key shipboard operations
concerning the safety of the ship and the prevention of pollution. The various tasks
involved should be defined and assigned to qualified personnel.

What this original requirement appears to have required of the Company was
that it must establish ‘procedures for the preparation of plans and instructions etc.
. . . for key shipboard operations’ (emphasis added) – whereas what was clearly
intended, and required, was for the Company to establish procedures, plans
and instructions etc. . . . for key shipboard operations . . .’. Accordingly, a new
version of section 7 was provided:

MSC.273(85)
7 Development of Plans for Shipboard Operations
4 The existing section 7 is replaced by the following:
‘7 Shipboard Operations
The Company should establish procedures, plans and instructions,
including checklists as appropriate, for key shipboard operations concern-
 Introduction and underlying principles 31

ing the safety of the personnel, ship and protection of the environment.
The various tasks should be defined and assigned to qualified personnel.’

A similar anomaly had existed with the introduction to Section 8.1 of the Code
dealing with Emergency Preparedness, which had originally required:

8.1 The Company should establish procedures to identify, describe and respond to
potential emergency shipboard situations.

Whilst the original intention had, apparently, been correctly understood, the
phraseology was amended to ensure the requirement was clear:

MSC.273(85)
8 Emergency Preparedness
5 The existing paragraph 8.1 is replaced by the following:
‘8.1 The Company should identify potential emergency shipboard
situations, and establish procedures to respond to them.’

Although taken out of sequence, as it appears in MSC.273(85), a similar

anomaly as had appeared in Section 7 also appeared in the original version of
Section 10.3, which had read:

10.3 The Company should establish procedures in its safety management system
to identify equipment and technical systems the sudden operational failure of which
may result in hazardous situations. The safety management system should provide
for specific measures aimed at promoting the reliability of such equipment or
systems. These measures should include the regular testing of stand-by arrangements
and equipment or technical systems that are not in continuous use.

The requirements with regard to establishing procedures was amended as

follows:

MSC.273(85)
10 Maintenance of the Ship and Equipment
7 In paragraph 10.3, the words ‘establish procedures in its safety
management system to’ are deleted.
32 ISM Code: A practical guide
The new version of Section 10.3 now reads:

ISM Code
10.3 The Company should identify equipment and technical systems the
sudden operational failure of which may result in hazardous situations.
The safety management system should provide for specific measures
aimed at promoting the reliability of such equipment or systems. These
measures should include the regular testing of stand-by arrangements and
equipment or technical systems that are not in continuous use.

The amendment to the requirements of Section 9.2 of the Code was

intended to clarify and make explicit the reason why the implementation of
corrective action was required. The original version simply required:

9.2 The Company should establish procedures for the implementation of corrective
action.

The amendment made it clear what should be achieved through such corrective
action:

MSC.273(85)
9 Reports and Analysis of Non-conformities, Accidents and
Hazardous Occurrences
6 The existing paragraph 9.2 is replaced by the following:
‘9.2 The Company should establish procedures for the implementation
of corrective action, including measures intended to prevent recurrence.’

The original version of the Code had made a clear requirement on the
Company to carry out internal safety audits, but it did not prescribe the
minimum frequency at which such audits should be conducted. It simply stated:

12.1 The Company should carry out internal safety audits to verify whether safety
and pollution-prevention activities comply with the safety management system.

It had become industry standard practice, and was stated as the minimum
frequency in the IACS Rec. No. 41 – Guidance for IACS Auditors to the ISM
Code, Rev. 4, 2005, as stated at page 39, that a Company would conduct such
an internal audit at least once every 12 months. The amendment made this the
mandatory minimum frequency for conducting such internal safety audits:
 Introduction and underlying principles 33

MSC.273(85)
12 Company Verification, Review and Evaluation
8 Paragraph 12.1 is replaced by the following:
‘12.1 The Company should carry out internal safety audits on board and
ashore at intervals not exceeding twelve months to verify whether safety
and pollution-prevention activities comply with the safety management
system. In exceptional circumstances, this interval may be exceeded by
not more than three months.’

The amendment to Section 12.2 was to use a more appropriate word when
describing the need to evaluate the SMS:

MSC.273(85)
9 In paragraph 12.2, the words ‘efficiency of and, when needed, review’
are replaced by the words ‘effectiveness of’.

The amended version of 12.2 then read:

ISM Code
12.2 The Company should periodically evaluate the effectiveness of the
safety management system in accordance with procedures established by
the Company.

The amendments in MSC.273(85) also included additional requirements with

regard to SMS verification and certification by way of new paragraphs to be
inserted at the end of Section 13:

MSC.273(85)
13 Certification and Periodical Verification
10 The following new paragraphs 13.12, 13.13 and 13.14 are added after
the existing paragraph 13.11:
‘13.12 When the renewal verification is completed after the expiry date
of the existing Safety Management Certificate, the new Safety
34 ISM Code: A practical guide

Management Certificate should be valid from the date of completion of

the renewal verification to a date not exceeding five years from the date
of expiry of the existing Safety Management Certificate.
13.13 If a renewal verification has been completed and a new Safety
Management Certificate cannot be issued or placed on board the ship
before the expiry date of the existing certificate, the Administration or
organization recognized by the Administration may endorse the existing
certificate and such a certificate should be accepted as valid for a further
period which should not exceed five months from the expiry date.
13.14 If a ship at the time when a Safety Management Certificate expires
is not in a port in which it is to be verified, the Administration may
extend the period of validity of the Safety Management Certificate but
this extension should be granted only for the purpose of allowing the
ship to complete its voyage to the port in which it is to be verified, and
then only in cases where it appears proper and reasonable to do so. No
Safety Management Certificate should be extended for a period of longer
than three months, and the ship to which an extension is granted should
not, on its arrival in the port in which it is to be verified, be entitled by
virtue of such extension to leave that port without having a new Safety
Management Certificate. When the renewal verification is completed,
the new Safety Management Certificate should be valid to a date not
exceeding five years from the expiry date of the existing Safety
Management Certificate before the extension was granted.’

These additional requirements will be discussed in detail in Chapter 3, section

3.1 below.
An amendment was made to Section 14.4.3 of the Code simply to clarify
that the ‘audit’ which was mentioned in the original version was indeed the
‘internal audit’:

MSC.273(85)
14 Interim Certification
11 In paragraph 14.4.3, the word ‘internal’ is inserted after the words
‘planned the’.

A new specimen form was also included with MSC.273(85) titled ‘Endorse-
ment where the Renewal Verification has been Completed and Part B 13.13
of the ISM Code Applies’.
 Introduction and underlying principles 35
MSC.353(92) – WHICH ENTERED INTO FORCE ON 1 JANUARY 2015

Resolution MSC.353(92) makes two significant amendments to the ISM Code

and introduces seven new footnotes, plus an explanatory paragraph explaining
the status of the footnotes. The first significant amendment is a new paragraph
to be inserted into Section 6 of the Code which deals with Resources and
Personnel:

MSC.353(92)
6 Resources and Personnel
1 The existing text of paragraph 6.2 is replaced with the following:
‘6.2 The Company should ensure that each ship is:
.1 manned with qualified, certificated and medically fit seafarers in
accordance with national and international requirements; and
.2 appropriately manned in order to encompass all aspects of
maintaining safe operations on board*.
* Refer to the Principles of minimum safe manning, adopted by the Organization by
resolution A.1047(27).’

This is an interesting and important addition to the Code and will be discussed
in detail in Chapter 3, section 3.3.2 below. Briefly it reinforces the
requirements of SOLAS, Regulation V/14 and Resolution A.1047(27) –
Principles of Minimum Safe Manning, which requires a ship operator to make
an assessment of the minimum safe manning requirements for each of its ships,
based upon criteria and guidance set out in Resolution A.1047(27) and to
submit this for approval to the relevant Administration(s), which will then issue
a Minimum Safe Manning Document/Certificate.
The second important amendment relates to Section 12 of the Code,
which is involved with Company Verification, Review and Evaluation and
makes a specific requirement on the Company to positively verify that
everyone involved in ISM-related tasks is actually doing what is required of
them:

MSC.353(92)
12 Company Verification, Review and Evaluation
2 The following new paragraph 12.2 is inserted after existing paragraph
12.1 and the existing paragraphs 12.2 to 12.6 are renumbered as 12.3 to
12.7:
36 ISM Code: A practical guide

‘12.2 The Company should periodically verify whether all those

undertaking delegated ISM-related tasks are acting in conformity with
the Company’s responsibilities under the Code.’

It should be noted that there is no distinction between sea-going staff and

shore-based staff. Hence the verification would apply to members of the highest
levels of management, line managers, Designated Person Ashore (DPAs), etc.,
as well as ship’s Masters, Chief Engineers and all other members of the ship
staff. Auditable records of such verifications will need to be maintained. These
issues will be discussed in greater detail in Chapter 3, section 3.3.6 below.
A number of footnotes providing cross-references to various IMO Circulars
and Guidance documents have been included through MSC.353(92):

MSC.353(92)
Footnotes and paragraph for foreword of the publication of the
Code
1 In paragraph 1.1.10, the following footnote is added after the words
‘Major non-conformity’:
‘Refer to the Procedures concerning observed ISM Code major non-conformities (MSC/Circ.1059-
MEPC/Circ.401).’

2 In paragraph 1.2.3.2, the following footnote is added after the word

‘account’:
‘Refer to the List of codes, recommendations, guidelines and other safety and security-related non-
mandatory instruments (MSC.1/Circ.1371).’

3 The following footnote is added at the end of the title of section 3:

‘Refer to the Guidelines for the operational implementation of the International Safety Management
(ISM) Code by Companies (MSC-MEPC.7/Circ.5).’

4 The following footnote is added at the end of the title of section 4:

‘Refer to the Guidance on the qualifications, training and experience necessary for undertaking the
role of the Designated Person under the provisions of the International Safety Management (ISM)
Code (MSC-MEPC.7/Circ.6).’

5 The following footnote is added at the end of the title of section 8:

‘Refer to the Guidelines for a structure of an integrated system of contingency planning for shipboard
emergencies, adopted by the Organization by resolution A.852(20), as amended.’
 Introduction and underlying principles 37

6 The following footnote is added at the end of the title of section 9:

‘Refer to the Guidance on near-miss reporting (MSC-MEPC.7/Circ.7).’

7 The following footnote is added at the end of the title of section 11:
‘Refer to the Revised list of certificates and documents required to be carried on board ships
(FAL.2/Circ.127, MEPC.1/Circ.817 and MSC.1/Circ.1462).’

8 The following new paragraph is added to the foreword of the

publication of the Code:
‘The footnotes given in this Code are inserted for reference and guidance
purposes and do not constitute requirements under the Code. However,
in accordance with paragraph 1.2.3.2, all relevant guidelines, recom-
mendations, etc. should be taken into account. In all cases the reader must
make use of the latest versions of the referenced texts of the document
specified in a footnote, bearing in mind that such texts may have been
revised or superseded by updated material.’

Whilst these cross-references are useful and relevant, what is of particular

interest is the new paragraph to be added to the Foreword and, specifically,
the reference to Section 1.2.3.2. of the ISM Code because it provides some
excellent examples of the types of ‘Guidance’ which must be taken into
account by a Company when developing its SMS.

1.3. Underlying principles

In this section some of the main underlying principles behind the philosophy
of the ISM Code will be explored briefly. Many of these underlying principles
will be discussed in more detail in context in the next three chapters, when
attention is turned to ‘key players’ and ‘compliance requirements’. Some of
the most important underlying principles are not to be found in the Code itself
but, rather, in a Preamble to the Code. Many of the ideas included in the
Preamble are prerequisite requirements which must be understood and
correctly applied before any SMS can stand any chance of functioning
effectively.

1.3.1. Purpose and key objectives

International standard
Paragraph 1 of the Preamble to the Code describes, in a single sentence, the
purpose of the Code:
38 ISM Code: A practical guide

ISM Code
Preamble
1 The purpose of this Code is to provide an international standard
for the safe management and operation of ships and for pollution
prevention.

The use of the term ‘standard’ in Preamble paragraph 1 is not strictly correct.
The ISM Code was developed along the lines of other Management Systems
– particularly Quality Management Systems, which will be discussed in more
detail below. Those Management Systems are supported by quite a strict
compliance document – referred to as a Standard – e.g. Quality Management
Systems have ISO:9001. Anyone wishing to be accredited to that Standard must
be able to demonstrate that they have complied with each of the Standard’s
specific requirements. The ISM Code, on the other hand, whilst setting out
general compliance requirements, is based upon an idea of ‘self-regulation’ and
allows a ship operator considerable latitude with regard to how it achieves
compliance with the objectives/goals of the Code.
In practice, this should not be a particular problem, since the intention is
quite clear, i.e. that the Code requires all ship operators: however big or small,
whatever type of ship they operate and wherever they be located, to have a
management system which will ensure that they all achieve at least the same
minimum standard of compliance with the requirements of international
Conventions relevant to the management of safety and protection of the marine
environment. The key objective of the Code is set out in Section 1.2.1:

ISM Code
1.2.1 The objectives of the Code are to ensure safety at sea, prevention
of human injury or loss of life, and avoidance of damage to the
environment, in particular to the marine environment and to property.

The concepts of ensuring safety at sea, prevention of human injury or loss

of life and avoidance of damage to the environment are clearly within the ambit
and remit of IMO and are clearly understandable. However, it is important to
notice that, almost as an after-thought, the objective has been extended to
include ‘damage . . . to property’. Property damage is not something IMO would
traditionally be involved with.
Property could include, for example, the ship itself and the machinery and
equipment on-board, other ships, fixed objects such as piers, jetties and bridges,
floating objects such as navigation buoys, underwater objects such as pipelines
and cables, and cargo carried in the ship. What is important to understand,
 Introduction and underlying principles 39
therefore, is that the requirements of the Code – e.g. to establish procedures,
plans and instructions, for key shipboard operations – as required under Section
7 of the Code – will include such things as loading, carrying and discharging
cargoes. Hence, if there is damage to cargo, then a cargo claimant will expect
there to be relevant SMS procedures in place and audit trails to confirm that
the relevant procedures were followed.
The requirements of the ISM Code are indeed very wide-ranging and most
activities on-board ship will be subject to ISM compliance and SMS procedures.

Leadership and management

However well written and produced the Manuals and Checklists of an SMS
may be, if there is not commitment and good leadership from the management
– specifically the highest levels of management – of a Company, then the
chances of the SMS being effective are very small indeed. This idea is stated
very clearly in paragraph 6 of the Preamble to the Code:

ISM Code
Preamble
6 The cornerstone of good safety management is commitment from the
top. In matters of safety and pollution prevention it is the commitment,
competence, attitudes and motivation of individuals at all levels that
determines the end result.

The demonstration of the commitment of the highest levels of management

to safety must go far beyond signatures appearing at the bottom of a ‘Safety
and environmental protection policy’, as required by Section 2 of the Code,
however well written such policy document may be. The demonstration of
commitment of the highest levels of management to safety must be clearly
visible, apparent and must be believed by all other managers and staff
throughout the Company, both shore-based and on-board each ship. It must
also be believed by sub-contractors such as manning agents. Clearly, if there
is commitment and leadership from the highest levels of management, then
Department Heads, Line Managers, Superintendents, Masters, Chief Engineers
and Chief Officers (C/Os) will all be inspired to follow the example of their
leader and make their own commitment to safety management and, in turn,
lead their teams. The more junior managers and staff ashore, and the other
officers and crew on-board will then be motivated to make that commitment
to safety management and the SMS – it will have a cascade effect. Such personal
commitment, from top to bottom in a Company, will, as a natural process,
lead to the development of a so-called ‘safety-culture’, which will be a further
key to preventing accidents and controlling operational risk – which will be
discussed in more detail below.
40 ISM Code: A practical guide
A personalised system
It is to the great credit of IMO and the original drafting committee that they
did not attempt to set out a single set of prescriptive rules and regulations which
would have to be complied with by all ship operators. They went down a road
of ‘self-regulation’ – and for good reason. Clearly, the way in which a large
Ship Manager, with a diversified fleet of nearly 1,000 ships trading worldwide
is, almost certainly, going to have a very different structure and management
approach to, say, the operator of two small bulk carriers trading around the
Mediterranean. Such differences have been recognised and the issue is set out
in paragraph 4 of the Preamble to the Code:

ISM Code
Preamble
4 Recognizing that no two shipping companies or shipowners are the
same, and that ships operate under a wide range of different conditions,
the Code is based on general principles and objectives.

However, whilst the operational organisation and resources might be very

different from one ship operating company to another, every Company,
however big or small and whatever types and size of ships they operate, and
every ship operator must comply with the requirements of the same ISM Code.
The way in which they achieve compliance is likely to vary considerably.
Some operational procedures may actually be very similar, irrespective of the
type or size of ship – e.g. navigation and bridge watchkeeping – whereas other
operational activities may be very different dependent on ship type – e.g. cargo-
handling will be very different on-board a crude oil tanker from, say, a
container ship or a passenger cruise ship.
The author has seen documented SMSs comprising more than 30 large and
very full arch-lever files and also extremely complex electronic systems
attempting to cover every conceivable situation imaginable. He has also seen
an approved SMS contained within a single folder, with almost no detail at
all. Based upon experience of having reviewed in detail a considerable number
of documented SMSs, it is the opinion of the author that the most useful and
workable SMSs will be contained within two to four arch-lever files. This topic
will be discussed in more detail in Chapter 3, section 3.3 below.

Safe practices
Although quite general, a core objective relevant to safe working practices is
set out at Section 1.2.2.1 of the ISM Code:
 Introduction and underlying principles 41

ISM Code
1.2.2 Safety management objectives of the Company should, inter alia:
.1 provide for safe practices in ship operation and a safe working
environment;

However, this is not only a key feature of the IMS Code but also of the ILO
MLC 2006, which will be considered in some detail in Chapter 3, section 3.3.2
below.

Risk management
It is the opinion of the author that the development and implementation of
the ISM Code is an exercise in risk management. This has already been
discussed briefly at section 1.2.4 above when reviewing the amendments
introduced by Resolution MSC.273(85). This topic will be discussed in more
detail in Chapter 3, section 3.2 below.

A compliance umbrella
The ISM Code contains very little by way of detail – the entire Code is set
out in 14 pages of A5 size paper: see Appendix 2 to this book. Most of the
detail with regard to what ship operators and their staff – and indeed adminis-
trations – need to comply with is contained in other Conventions, Rules,
Regulations etc. What the ISM Code requires is for the Company to develop
an SMS which will ensure that all the requirements and obligations set out in
those Conventions etc. will be complied with. Most non-compliances which
occur will actually be a non-compliance with a requirement of one of those
Conventions. However, the fact that such a non-compliance has arisen is likely
to be indicative of a weakness or a failing of the management system which
will be a non-conformity with the Company SMS.

1.3.2. Application
Section 1.3 of the ISM Code simply states, with regard to ‘Application’ that
‘The requirements of this Code may be applied to all ships’.
It is certainly correct that the Code can apply to all ships, but it is mandatory
only with regard to the following categories of vessels, in accordance with
SOLAS, Chapter IX, Regulation 2:
42 ISM Code: A practical guide

SOLAS – Chapter IX
Regulation 2
Application
1. This chapter applies to ships, regardless of the date of construction, as
follows:
.1 passenger ships including passenger high-speed craft, not later than
1 July 1998;
.2 oil tankers, chemical tankers, gas carriers, bulk carriers and cargo
high-speed craft of 500 gross tonnage and upwards, not later than 1
July 1998; and
.3 other cargo ships and mobile offshore drilling units of 500 gross
tonnage and upwards, not later than 1 July 2002.
2. This chapter does not apply to government-operated ships used for
non-commercial purposes.

It should also be noted that the ISM Code applies to ‘SOLAS’ ships, i.e.
‘ships engaged on international voyages . . .’.19 International voyage means a voyage
from a country to which the present Convention applies to a port outside such
country, or conversely.20
A State can, if it so wishes, extend the categories of ships to which the ISM
Code applies as well as making the Code applicable to ships engaged on
domestic voyages – e.g. in the EU, requirements were put in place through
EC Regulation 336/2006 relating to certain domestic cargo and passenger ships
to comply with the ISM Code from 24 March 2008. In conjunction with that
EC Regulation, the UK Maritime and Coastguard Agency (MCA) Marine
Information Note – MIN 342(M) dealt with ‘International Safety Management
(ISM) Code Implementation on Domestic Vessels’. In the United States the
US Department of Homeland Security/US Coast Guard have worked with
the ‘brown water’ towing vessel industry and have developed a set of safety
regulations governing the inspection, standards and SMSs for towing vessels –
generally referred to as ’46 CFR Subchapter ‘M’. Although this has been in
the development stages since initial authority was granted in section 415 of the
Coast Guard and Maritime Transportation Act of 2004, it is believed that the
consultation process is now in its final stages and once enacted will require all
domestic towing vessels to comply with requirements which are almost
identical to the ISM Code.

19 SOLAS, Part A, Regulation 1.

20 SOLAS, Part A, Regulation 2.
 Introduction and underlying principles 43
Ship operators involved in operating ‘domestic’ vessels may voluntarily agree
to adopt the requirements of the ISM Code and develop an equivalent SMS.

1.3.3 Management systems

Systems approach to management

Management can be considered to be the process of planning, organising,
leading and controlling the efforts of organisation members, and of using all
other organisational resources to achieve stated organisational goals.
Most management systems are based upon the Plan > Do > Check > Act
model. This model has been usefully tabulated by the UK Health and Safety
Executive (HSE):

Table 3 The read-across between Plan, Do, Check, Act and other management
systems21

Plan, Do, Check, Conventional health and safety Process safety

Act management
Plan Determine your policy Define and communicate
Plan for implementation acceptable performance and
resources needed
Identify and assess risks
Identify controls
Do Profile risks Record and maintain process
Organise for health and safety safety knowledge
Implement your plan Implement and manage
control measures
Check Measure performance Measure and review
(monitor before events, performance
investigate after events) Learn from measurements
and findings of
Act Review performance investigations
Act on lessons learned

This model may also be shown in a simplified diagram (see Figure 3).
The way in which this model can be applied to an SMS as anticipated by
the IMS Code will be discussed in detail in Chapter 3, section 3.3 below.

21 Managing for Health and Safety (UK Health and Safety Executive, 3rd edn, 2013), ISBN 978–0-
7176–64566, accessible at www.hse.gov.uk/managing.
44 ISM Code: A practical guide

• Plan • Do
Step 1 Step 2
Establish standards Implement plans to
for health and safety achieve objectives
management based and standards
on risk assessment
and legal requirements

Step 4 Step 3
Review against Measure progress
objectives and with plans and
standards and take compliance with
appropriate action standards

• Act • Check

Figure 3 Plan > Do > Check > Act model

The threefold mantra

A very simple but useful way of understanding what is required of a Company
with regard to compliance with the ISM Code is the so-called ‘threefold
mantra’, which says:

• say what you do;

• do what you say that you do; and
• show that you do what you say that you do.

A Company says what it does through its SMS Manual(s), which will include
instructions and standard operating procedures, as well as checklists and
reporting forms, and guidelines such as fleet circulars. These standard operating
procedures and supporting checklists, etc. must then be brought alive through
implementation of the systems and the Company must do what it says that
does, in a consistent and standardised way. Objective evidence should be
produced in the form of checklists, completed forms and other similar records
which will confirm that the Company is doing what it said it does. The primary
purpose of producing this objective evidence is to allow the Company, as part
of the monitoring process, to check and measure how effective, or otherwise,
 Introduction and underlying principles 45
its SMS is in practice, such that any weaknesses can be identified and dealt with
by way of corrective action. The use of this objective evidence to defend a
Company’s position in a court case is secondary.

Auditable systems
A key feature of a management system is being able to monitor how well the
system is performing – which is of course a major feature of the third step in
the threefold mantra discussed above. In its most simple terms, an audit trail
will need to be created which can be followed by an auditor to verify that the
SMS is working or to identify any weaknesses which may require corrective
actions. The audit trail will basically follow the threefold mantra. It will start
by looking at what the Company says that it does – e.g. in its SMS manuals
– and will then look for objective evidence to confirm that the Company,
through its staff on-board ship and ashore, has been doing what it was supposed
to be doing.
However, a very important point to understand – and to keep in mind –
is that whilst a Company will no doubt strive to ensure that its documented
procedures are complied with exactly as intended, by all personnel at all times,
such an idealistic situation is unlikely to be achieved in practice.
What must be understood is that within any SMS, and particularly with
regard to its implementation, there are many variables, and people are the
greatest variable of all. People are also prone, on occasions, to make mistakes
or behave in an irrational way. An SMS may not work 100 per cent as intended
but that, in itself, is not a major problem. The problem arises when the SMS
is not working as intended and no one is aware of that fact. In that case,
problems and mistakes go uncorrected.
Accordingly, the monitoring of the SMS is paramount. Unfortunately,
however, an unhealthy misconception appears to have developed in the very
early days of ISM implementation – probably even ahead of the mandatory
compliance deadline dates. That was to view observations and non-conformities
as being negative things and perceived as ‘black marks’ against the ship and/or
the Company. As a consequence they tended to be, and still tend to be in some
Companies and on-board some ships, ‘hidden away’ and not admitted. This
is not only a very serious misunderstanding but also very dangerous and, almost
certainly, committing the SMS to failure.
Contrary to what may appear, on first sight, to be a problem – and as
perceived by some in the industry and some related sectors – there is nothing
wrong with an auditor identifying a number of non-conformities or observa-
tions. Indeed the opposite is true, since this will now allow weaknesses in the
system to be identified and corrective action taken to deal with the weakness
and, effectively, strengthen and improve the system before an accident occurs.
This will also be the case with regard to even an MNC, since by identifying
the MNC it will allow important corrective action to be taken before the major
accident happens.
46 ISM Code: A practical guide
Things can start going wrong for a number of reasons: it may be something
simple, such as a change of a member of staff, and the new member of staff
requires some additional training or familiarisation. It maybe that the non-
conformities are occurring because the operational conditions on-board have
changed such that the existing procedure is no longer entirely suitable or
relevant or applicable and thus the procedure itself may need to be re-written.
It may be that there has been a change in a regulation and the ship staff are
complying with the new regulation – again, the procedure itself may need
updating.
Some time ago, the author encountered a situation during a post-casualty
investigation which highlighted a serious related problem which was based on
perceptions by the shore-based management, including the DPA, that non-
conformities and deficiencies which existed on-board would be viewed
negatively by charterers and Class/ROs, and so deliberate attempts were made
to conceal the extent of the on-board problems. The following ‘anonymous’
case study explains what was found:

CASE STUDY
The vessel had been involved in a serious navigational incident involving
poor chartwork and bridge management/watchkeeping practices. A full
annual internal safety audit had taken place only weeks before the
incident when the DPA spent nearly 10 days on-board sailing with the
vessel during an ocean passage.
The Audit Report recorded four observations and two non-
conformities – for which Non-conformity Reports (NCRs) were raised
and appropriate Corrective Action Plans (CAP) developed.
None of the observations or non-conformities recorded involved
navigation or watchkeeping-related procedures or activities.
However, during a review of some general paperwork, a document
was discovered which clearly was not intended to be included. The
document also related to the internal audit which had taken place on-
board just prior to the incident but was an ‘unofficial’ record of a further
75 observations, non-conformities and deficiencies which had been
identified by the DPA during the audit. Many of these included problems
with regard to bridge records and navigational practices.
When challenged with this ‘unofficial list’ the DPA explained that,
if he had recorded all the deficiencies and non-conformities as official
NCRs and prepared an official CAP, then this could have produced
serious problems with PSC as well as with charterers and would have
made him look bad. He went on to explain that he told the Master and
officers what they were doing wrong and that they must be more careful
and also provided some more specific on-board instruction.
 Introduction and underlying principles 47

Collectively, the unofficial list of observations, non-conformities and

deficiencies indicated a potentially serious problem with the competence
and ability of the Master and Deck Officer, in particular, and should have
been treated as an MNC. If it had been, and if appropriate corrective
action had been taken to deal with the situation as a MNC, then the
risk level which existed would have been reduced to acceptable levels
and there is a very good chance that the incident would have been
prevented.

No management system will be perfect – on occasions things can, and will,

go wrong. This should be expected, and if things are starting to go wrong with
the implementation of the SMS then it is crucial that they are identified quickly,
which will then allow appropriate corrective action to be taken. Through the
audit process, observations and non-conformities, along with reports of
hazardous occurrences and near misses, are the means by which a Company
can identify things starting to go not according to plan, and thus do something
to correct the situation. If non-conformities are not acknowledged and dealt
with then non-conformities, and more so MNCs, will increase the probability
of accidents happening to very high levels.
The systems will be audited from at least two perspectives:

• internal safety audit by the Company;

• external audit by the flag Administration/RO acting on behalf of the
Administration.

The Company internal audit will be primarily concerned with whether the
SMS is being effectively implemented.
The flag Administration/RO audit will be primarily concerned with
whether the implementation of the SMS is compliant with the requirements
of the ISM Code, and particularly with Section 1.2.3 of the Code.
Auditing, and monitoring of the SMS generally, will be considered in more
detail in Chapter 3, sections 3.1.1 and 3.3.6 below.

An SMS
A much more detailed exposition of the requirements of an SMS will be
provided in Chapter 3, section 3.3 below. For the purposes of this introductory
section and consideration of some basic principles, we will consider only one
requirement by way of a fundamental ‘objective’ of the Code.
Although it is only a very small section within the ISM Code, the
requirements and expectations of Section 1.2.3 are enormous. As an ‘Objec-
tive’, the Section requires:
48 ISM Code: A practical guide

ISM Code
1.2.3 The safety management system should ensure:
.1 compliance with mandatory rules and regulations; and
.2 that applicable codes, guidelines and standards recommended by the
Organization, Administrations, classification societies and maritime
industry organizations are taken into account.

The ISM Code actually contains very little by way of detail with regard to
what must be achieved – or, indeed, how to achieve it – the detail of what
must be done is contained in other places. The thrust of Section 1.2.3 is to
the effect that an SMS developed by the Company should ensure that
compliance will be achieved with all relevant rules and regulations – i.e. laws
– of the flag of the vessel and will, in theory, also include the rules and
regulations of ports/countries visited which apply to foreign ships visiting its
ports. Further, that a whole raft of unspecified ‘guidelines’ are to be ‘taken into
account’. On the face of it, that is an enormous requirement by any standard.
It should be a relatively easy task to identify all the relevant ‘rules and
regulations’ of the flag Administration which must be complied with and to
ensure that the SMS includes sufficient detail to comply with those
requirements. However, from a practical point of view, it may become much
more problematic to ensure compliance with all ‘local’ laws, rules and
regulations of ports/countries which each of the Company’s ships might visit
during its anticipated trading operations, although this potential problem
should not be over stressed since most ‘local’ rules and regulations will be based
on the same IMO and ILO Conventions as the flag Administration rules and
regulations. However, there are a number of countries which have developed
a number of additional rules and regulations – e.g. the United States – and if
an incident did occur in its jurisdiction, then its court may well find the SMS
was deficient if it did not ‘ensure compliance with’ a specific rule or regulation
which had perhaps been breached and which had contributed to the incident.
Even more problematic, potentially, is to identify exactly which ‘applicable
codes, guidelines and standards’ should be ‘taken into account’. Also, from a
practical as well as a legal point of view, what is actually meant, or intended,
by the expression ‘taken into account’?
These issues will be explored in more detail in Chapter 3, section 3.3.1
below.

1.3.4 Tailor-made SMS

An important underlying principle behind the ISM Code is that the Code does
not prescribe how a ship operator should develop its SMS or what material
should be included – indeed, on the face of it, the ISM Code provides
 Introduction and underlying principles 49
considerable latitude to ship operators to develop their own SMS which will
best suit the purposes of the individual Company, provided the end result
satisfies the Objective of the Code, as per Section 1.2, as well as the functional
requirements, as per Section 1.4, and the more specific requirements as set out
in the main body of the Code. Paragraphs 4 and 5 of the Preamble state:

ISM Code
Preamble
4 Recognizing that no two shipping companies or shipowners are the
same, and that ships operate under a wide range of different conditions,
the Code is based on general principles and objectives.
5 The Code is expressed in broad terms so that it can have a widespread
application. Clearly, different levels of management, whether shore-
based or at sea, will require varying levels of knowledge and awareness
of the items outlined.

Also of note is Section 11.3 of the Code, which reads:

ISM Code
11.3 The documents used to describe and implement the safety
management system may be referred to as the Safety Management
Manual. Documentation should be kept in a form that the Company considers
most effective. Each ship should carry on board all documentation relevant
to that ship.
(emphasis added)

This represented a significant shift by IMO away from issuing detailed

prescriptive rules and regulations which had to be strictly complied with and,
on the face of it, this was a novel and brave initiative by IMO to expect the
industry to be self-regulating. However, such freedom does, inevitably, bring
with it potential problems, some of which could be very serious.
Firstly, because there is no ‘blueprint’ to work from, those tasked with the
job of verifying compliance – i.e. the flag Administration/their ROs – will, if
they are to perform their task effectively, need to study very carefully thousands
of different SMSs to verify that each one ensures compliance with all the
mandatory rules and regulations and takes into account a myriad of codes and
guidance, as well as ensuring compliance with the Functional Requirements
50 ISM Code: A practical guide
of Section 1.4 of the Code and the other requirements from the body of the
Code. This is certainly no easy task and, as is discussed in some detail in Chapter
3, section 3.1.1 below, in the author’s experience, often inadequate time is
allocated to such verifications and some SMSs are approved which
demonstrably do not comply with all the requirements of the ISM Code.
Secondly, whilst an increasing number of ship operating companies
understand the importance of continuity of employment with regard to its sea-
staff, there are still many Masters, officers and crew members who are not in
regular employment with one company and frequently move around between
different ship operating companies. One effect of Masters and officers moving
between different ship operating companies for employment is that each time
they move they will, almost certainly, be confronted with a new SMS – with
new/different procedures and instructions – as well as forms and checklists
which they must learn and become familiar with. In the case of a Master,
he/she must become ‘fully conversant’ with the company SMS prior to taking
command.22
Some ship operating companies made little or no attempt to produce their
own SMS manuals – rather, they bought ready-made, off-the-shelf, manuals
from so-called ISM Consultants. It was a mandatory requirement to have an
SMS and so those companies bought a ready-made SMS which appears to have
satisfied some flag Administrations, which issued a Document of Compliance
(DOC) to the company and an SMC to each vessel on the back of these off-
the-shelf manuals. This was a classic example of the ‘compliance culture’ which
existed, and still exists, in some sectors of the ship operating industry and which
will be discussed below.
Some Companies did, however, make some efforts to customise the ‘off-
the-shelf’ manuals they had bought to fit in more closely with their own
operation but, inevitably, the manuals referred to someone else’s SMS and not
theirs – hence, lack of ‘ownership’.
In the event of an accident or incident, the content of the SMS manuals
will, almost certainly, be studied and scrutinised very closely and are likely to
be the subject of criticism, irrespective of whether or not they have been
‘approved’ by the flag Administration.

1.3.5 Transparency
During the 1970s and 1980s it became increasingly common, in some sectors
of the industry, for the true or beneficial owner(s) of a ship to hide behind a
so-called ‘corporate veil’. Each ship appeared to be owned by a ‘one ship
company’, i.e. the ship was the only asset of that company, and the company
registered in a far-away place where it was extremely difficult, if not impossible,
to establish who the actual owner(s) was. One important, and deliberate,

22 See ISM Code, Section 6.1.2.

 Introduction and underlying principles 51
consequence of such an arrangement was that, if the ship was involved in a
major accident or incident and subject to large potential claims or prosecution,
or otherwise had incurred significant debts, then the ‘one-ship-company’
could get rid of its only asset – go out of business and basically walk away from
its responsibilities, obligations and liabilities.
One important aspect of the ISM Code is that it attempts to introduce a
whole new level of transparency into the operation of ships, or at least those
aspects relevant to safety, protection of the environment and operational risk.
The ISM Code includes the concept of the ‘Company’ which will have the
responsibility for ensuring compliance with the requirements of the Code. The
Company is defined at Section 1.1.2:

ISM Code
1.1.2 Company means the owner of the ship or any other organization
or person such as the manager, or the bareboat charterer, who has
assumed the responsibility for operation of the ship from the shipowner
and who, on assuming such responsibility, has agreed to take over all
duties and responsibility imposed by the Code.

Connected with this definition and in the section of the Code which deals
with Company responsibilities and authority, Section 3.1 of the Code requires:

ISM Code
3.1 If the entity who is responsible for the operation of the ship is other
than the owner, the owner must report the full name and details of such
entity to the Administration.

In such circumstances the shipowner must identify the individual or

organisation who has agreed to take over all duties and responsibility imposed
by the Code. It is the name and address of that individual/organisation which
will appear on the DOC and Safety Management Certificate (SMC).
Something which should be understood, however, from a legal perspective,
is that whilst a shipowner might be able to delegate the tasks with regard to
‘. . . all duties and responsibility imposed by the Code . . .’ to the Company,
the legal responsibilities cannot be delegated. This may become significant, for
example, if a member of the ship’s crew is injured because of an ineffective/
inadequate SMS – the seafarer’s legal action will usually be against the ship-
owner; if cargo is damaged on-board because of badly maintained hatch cover,
as a consequence of an inadequate maintenance management system, the cargo
owner/subrogated underwriter will look to the shipowner for compensation
52 ISM Code: A practical guide
under the contract of carriage, not the Company whose SMS would have
included the maintenance management/planned maintenance system. Further,
it is very unlikely that a shipowner would be able to argue successfully, in
defence or in mitigation, that it had employed a first class Company to manage
safety and operational risk and that it was the Company which had failed to
do what it was supposed to do and which resulted in the loss or damage.
A shipowner may have a legal recovery action against the Company,
although, assuming the management agreement is on, say, a BIMCO Shipman
98 form, the maximum compensation will usually be limited to 10 times the
annual management fee.

1.3.6 Commitment from the top

However, much time and effort has gone into producing the SMS manuals,
or however much money may have been paid to so-called ISM consultants to
purchase ready-made Manuals, if an SMS is to be effective, ensuring that the
Objective as stated in section 1.2.1 are achieved – i.e. ‘to ensure safety at sea,
prevention of human injury or loss of life, and avoidance of damage to the environment,
in particular to the marine environment and to property’ – then those involved at
the sharp end with the implementation of the SMS must be motivated and
enthused. That motivation will be as a result of good and effective leadership
and that leadership must come from the very top of the organisation. Paragraph
6 of the Preamble to the Code makes an extremely important and relevant
point in this regard:

ISM Code
6 The cornerstone of good safety management is commitment from the
top. In matters of safety and pollution prevention it is the commitment,
competence, attitudes and motivation of individuals at all levels that
determines the end result.

That commitment from the top must be a genuine commitment, it must

be very apparent and must be believed by all members of the team, both in
the office ashore and on-board each ship.
The author has encountered many situations, and has discussed this matter
with many individuals, when it has become apparent that whilst the highest
levels of management may have stated their commitment to safety and
protection of the environment – e.g. by signing a Company ‘Safety and
Environmental Protection Policy’, which says all the right sort of stuff – the
people in the office ashore and on-board the ships simply do not believe them
– their perception is that this is nothing more than ‘lip-service’. The following
case study records an incident which was reported to the author by the actual
Master involved:
 Introduction and underlying principles 53

CASE STUDY
It was the Master’s first trip with this particular ship operator, which was
a medium-sized ship management company. During his interview he was
shown a copy of the Company ‘Safety and Environmental Protection
Policy’ and it was emphasised that it was Company policy that safety
always comes first.
The ship had discharged and then loaded a full cargo at the same North
European port. Whilst in port, many ships stores had arrived and had to
be taken on-board, a full stem of bunkers was taken, some statutory and
Class surveys were undertaken, as well as a PSC inspection.
Assessing the on-board situation, the Master realised that not only he,
but also all deck officers and crew and most engineer officers, had been
working almost constantly for nearly 72 hours and were showing clear
signs of fatigue. Accordingly, the Master phoned the Operations Manager
and explained the situation and he advised the Operations Manager that
he intended delaying sailing, which would have involved a night-time
passage through the very busy Dover Straight and English Channel with
fog forecasted, and allowing his officers and crew, as well as himself, to
catch up with some sleep. The Operations Manager attempted to
persuade the Master to sail, since the vessel was on time charter and the
ship would be put off-hire. However, the Master maintained his position,
the ship remained alongside overnight, and he and the crew rested.
At about 08:30 hours the next day a Superintendent arrived on-board
from the Company accompanied by a relief Master. The original Master
was told to pack his cases, hand over to the relief Master and return home.
On arriving home, the Master contacted the Company and was
advised that he should consider himself suspended without pay. He did
not receive any more work or pay from that Company and experienced
considerable difficulty obtaining employment from other companies,
since potential new employers would contact the previous employer for
a reference and the previous employer did not appear to have forgiven
the Master for putting safety first.

If there is genuine commitment from the top towards safety and protection
of the environment – and if that commitment is believed – then the potential
is there to develop and implement an SMS which will reduce the probability
of accidents happening to very low levels. But it requires a considerable
amount of hard work on the part of all involved.
The author has encountered a number of SMSs which were working
extremely well and where success could be measured both quantitatively and
qualitatively. On all occasions the commitment from the top – which included
active involvement by senior management in safety management – was very
apparent. There was also a strong commitment to the idea of continuity of
54 ISM Code: A practical guide
employment where people of the right calibre had been recruited and were
retained within the Company on a permanent basis. The author has never
encountered an SMS which is working extremely well where at least these two
components were not present.

1.3.7 Not a substitute for employing competent staff

Although it should not need to be said, even the very best SMSs should never
be considered a substitute for employing competent staff. Unfortunately there
were, and still are, some ship operators who appear to be of a view that an
SMS can be developed which will engineer out human errors – or at least
totally compensate for human inadequacies. On that basis they appear to have
resigned themselves to what they see as an inevitability of employing seafarers
who do not have an acceptable level of education, either at basic level or
professional level, and who do not have the requisite skills to effectively perform
their duties. This resignation appears to be founded in the perceived recognition
that young people with a good education and leadership skills simply do not
want to embark upon a seagoing career. The way these Companies attempt
to overcome these inadequacies is by developing very detailed SMS manuals,
either hard copy or electronic with powerful search engines, such that the
answer to every conceivable question the designers could think of can be found
in the manual as standard operating procedures. Effectively, the individuals are
trained to find the answers to problems they may encounter during their day-
to-day activities, and during emergency situations, in the manuals. This
approach is usually accompanied by micro-management from the office ashore.
Such ideas as these are not only mistaken but fundamentally wrong and,
potentially, highly dangerous.
It is very unlikely that anyone will ever read voluminous manuals; keeping
them under review and up to date becomes increasingly difficult and the more
procedures which exist, the more opportunities there will be for non-
conformities to occur. However, the real danger of trying to develop and
provide manuals which purportedly contain the answer and solution to every
conceivable question and problem which arises – combined with a perception
that Masters and the rest of the ship staff are expected to use the manuals in
this way – is that, inevitably, the Masters and the rest of the ship staff will
actually stop thinking for themselves. They will waste valuable time searching
for the correct answer to everything in the manuals.
Because of the almost infinite number of permutations and combinations
of facts which may come together in day-to-day and emergency situations on-
board a working ship, it will simply be impossible to design a documented
management system – even one backed up by a micro-management system
from the office ashore – which will cover every eventuality. Any such approach
would clearly be non-compliant with the requirements of Section 6 of the
ISM Code as well as the requirements of safe manning, STCW and the STCW
Code and the MLC 2006 – all of which will be discussed in some detail in
Chapter 3, section 3.3.2 below.
 Introduction and underlying principles 55
It is true that shortages in seafarer labour have been predicted for a number
of years now, although predictions made in 2005 were perhaps overly
pessimistic. Possibly the most authoritative source of information on this
subject is the ‘Manpower 2010 Update’ research studies commissioned by
BIMCO23 and the ISF24 using the Warwick Institute for Employment Research
at the University of Warwick, with assistance from the International Maritime
Conventions Research Centre at Dalian Maritime University, Peoples
Republic of China.25 The study is conducted every five years and was last
completed in 2010.
In the 2010 update it was estimated that the worldwide supply of seafarers
stood at about 624,000 officers and 747,000 ratings, i.e. a total workforce of
nearly 1.4 million. The 2010 update estimated demand for seafarers in 2010
was 637,000 officers and 747,000 ratings. This would suggest that the situation
in 2010 was one of approximate balance between demand and supply for ratings
with a modest overall shortfall of officers (about 2 per cent). However, this
does not necessarily mean that individual shipping companies are not
experiencing serious recruitment problems. A closer examination of the data
also suggests that there are problems with the supply of particular grades of
seafarer, particularly senior officers and engineers in some labour markets, and
concerns about over future availability of senior management-level officers.
There was also evidence of continuing recruitment and retention problems in
some sectors of the industry. In the conclusion to the 2010 Update ‘Highlights’
a very important observation is made:

It is important to stress that the industry requires well qualified and high calibre
seafarers capable of adapting to change and handling the wide range of tasks now
required of them. Any training programme provided must ensure quality is not
compromised in the quest for increasing quality . . .

From a legal perspective, clearly any Company which decides to com-

promise the full compliance requirements of Section 6 of the ISM Code on
the basis that its SMS will compensate for possible shortcomings in the know-
ledge or skills of seafarers it employs, needs to rethink its ideas as a matter of
urgency. It would, almost certainly, render the SMS seriously defective and
deficient, such that an MNC would need to be raised and the Administration
would need to withdraw the DOC and SMCs.
The employment of properly qualified, certificated and experienced sea-
farers, who are adequately motivated through good and effective leadership, is
a prerequisite to establishing an ISM Code-compliant SMS which stands any
chance of achieving its objectives.
IMO, in conjunction with industry and seafarer’s organisations, has been
involved the ‘Go to Sea!’ campaign, which was launched in November 2008

23 BIMCO: www.bimco.org.
24 ISF: www.marisec.org.
25 www.imcrc.dlmu.edu.cn.
56 ISM Code: A practical guide
in association with the ILO, the ‘round table’ of shipping non-governmental
organisations (NGOs) – BIMCO, ICS/ISF, INTERCARGO and
INTERTANKO – and the International Transport Workers Federation. The
specific aim of the ‘Go to Sea!’ campaign is to promote seafaring as an
attractive option for young people of the right calibre, one which can provide
them with rewarding, stimulating and long-term prospects, not only at sea but
also in the broader maritime industry.
On the occasion of the Seafarers Day (25 June 2012), the IMO Secretary
General, Mr Koji Sekimizu, included the following message in his address:

My message is to all young persons on the verge of choosing a future career to

seriously consider seafaring, as even today it provides the chance to see the world
and get paid for doing so! It also provides for a fulfilling and rewarding professional
career either as a lifelong seafarer or as a springboard for related professional jobs in
the maritime industries ashore.

1.3.8 Buy-in by Company personnel

If an SMS is to be effectively implemented and work in practice, then those
directly involved in the implementation process must believe in the SMS and
be adequately motivated to want to make it work. In other words, there must
be ‘buy-in’ by those individuals, both on-board ship and in the office ashore,
into the SMS and the management of safety within that Company.
The people who probably know best of all how specific tasks should be
performed, what hazards may be anticipated, how best to manage those hazards
and reduce the associated risk, i.e. how the various tasks should be performed
safely, will be those individuals involved at the ‘sharp end’ of the imple-
mentation process: the Master, Officers and crew on-board ship. The
availability of such knowledge and experience within a Company should be
fully utilised during the development stage of producing standard operating
procedures, checklists, guidelines, etc., which will form the core of the
Company SMS.
One of the conclusions reached by the IMO GIE research in 2005, and as
reported in MSC 81/17/1, was the following:

MSC 81/17/1
10.7 The following conclusions are drawn: . . .
• ISM Code compliance could be made easier through a reduction in
the administrative process by: . . .
o involving the seafarers in the development and continuous
improvement of ISM manuals; . . .
 Introduction and underlying principles 57

Involving the seafarers in the development and on-going improvement

process of the SMS will result in ‘buy-in’ by those seafarers who will then be
proud to consider the SMS ‘their’ SMS and not something imposed upon them
by the Company management and/or external consultants. The resulting sense
of ‘ownership’ of the SMS by the seafarers will be a great motivating factor to
ensuring effective compliance.

1.3.9 A question of culture

Any discussion about the ISM Code and SMSs will, almost inevitably, include
discussions about a number of different ‘cultures’, such as ‘compliance culture’,
‘safety culture’, ‘company culture’, ‘no-blame culture’, ‘just culture’, and no
doubt a number of other related ‘cultures’. An understanding of some of these
conceptual ideas is crucial to understanding what is required to successfully
implement an ISM Code-compliant SMS. Accordingly, this first chapter will
conclude with an exploration of some of the issues involved. The discussion
will continue in the final, concluding, chapter when the so-called ‘Swiss
cheese’ model of Professor James Reason will be considered in light of a
maritime-related SMS.
There are a number of different ways in which the word ‘culture’ can be
used in the English language, either as a noun or as a verb. Most of these
concern nationalities or bacterial growths and have little or no relevance to
the way it is being used in this discussion, which is about organisations.
Firstly then, let us be clear about what is actually meant, or intended, when
the word ‘culture’ is used within the organisational context of the conceptual
ideas under consideration here. Two brief, but useful, definitions are included
in the online Merriam-Webster Dictionary26 which should help to explain what
is intended:

Merriam-Webster Dictionary
. . . a way of thinking, behaving, or working that exists in a place or
organization (such as a business) . . .
. . . the set of shared attitudes, values, goals, and practices that characterizes
an institution or organization . . .

26 www.merriam-webster.com/dictionary/culture.
58 ISM Code: A practical guide
A further, helpful definition, has been offered by Professor James Reason,27
although he was quoting from a another source:28

Shared values (what is important) and beliefs (how things work) that interact with
an organisation’s structures and control systems to produce behavioural norms (the
way we do things around here).

There are negative cultures, which have the propensity to have an adverse
effect on the Company and the implementation of its SMS; and positive
cultures, which will enhance the SMS and have the potential to produce
beneficial results for the Company.
An example of a negative culture, at least so far as ISM Code compliance
and successful and effective implementation of an SMS are concerned, is a
compliance culture. However, it is important to understand that, to quite a
significant degree, prior to the introduction of the ISM Code and the
introduction into the shipping industry of ideas of the systems approach to
managing safety, compliance culture was the normal accepted and expected
behaviour of those working on-board a commercial ship. We were provided
with detailed sets of rules and regulations and we were expected to comply
with those prescriptive rules and regulations – i.e. we were told what we had
to do and we did it. By doing so, we could be sure we were doing what was
required and expected of us and we would be granted our Statutory and Class
Certificates. However, such a compliance culture can stifle initiative and the
drive for continual improvement in the way we manage safety. The ISM Code
introduced new ideas, going beyond a compliance culture. It identifies goals
which must be achieved but it allows the individual ship operator to devise its
own methods of achieving those goals, through the development and
implementation of a tailor-made SMS. Unfortunately, the ideas within a
compliance culture appear to be so deeply entrenched within some sectors of
the ship operating industry that some individuals – and some Companies –
appear to be experiencing considerable difficulty letting go and adopting new
ideas, such as the development of a safety culture. Sometimes the correct words
are used but the conceptual ideas have clearly not been understood.
A typical example of this phenomenon is the Company which talks about
‘safety culture’ when referring to the inclination of their employees to comply
with rules and regulations and to act safely, whereas this does not describe a
‘safety culture’; rather, it describes a ‘compliance culture’. Sometimes the
culture and style of management is such that the natural, unconscious bias is
for production – or maintaining sailing schedule – over safety; or a tendency
to focus on the short term, or being highly reactive as opposed to proactive.

27 Reason, J., Managing the Risks of Organisational Accidents (Ashgate Publishing, 1997), p.192.
28 Uttal, B., ‘The Corporate culture vulture’, Fortune, 17 October 1983.
 Introduction and underlying principles 59
The UK HSE suggests that symptoms of poor cultural factors can include:

• Widespread, routine procedural violations;

• Failure to comply with the company’s own SMS (although either of these can also
be due to poor procedural design);
• Management decisions that appear consistently to put production or cost before
safety.29

The author continues to encounter regularly examples of compliance

culture, where Companies are paying little more than lip service to their SMS.
These typically take the form of the Company buying ready-made, ‘off-the-
shelf’ SMS manuals from so-called ISM Consultants; ensuring that checklist
forms are completed with all boxes ticked, even though the relevant checks
have not actually been carried out; and superficial verification audits of such
systems by certain Administrations/ROs which then issue a DOC to the
Company and an SMC to each ship, apparently confirming compliance.
Indeed, certainly during the early days of implementation, the focus of many
had been on the need for Companies to comply with the ISM Code within
specified deadlines and to be issued with DOCs and SMCs. However, the
underlying purpose of the ISM Code is to move shipping away from a culture
of ‘unthinking’ compliance with external rules towards a culture of ‘thinking’
self-regulation of safety.
The irony is that a Company which chooses to adopt such a compliance
culture and do just enough to get its DOC and SMCs will still have to incur
costs and commit other resources to obtain its DOC and SMC – which are
required to allow the Company to operate and for the ships to trade – but
with no other tangible benefits. The cost and resources required to develop
and implement an SMS as intended by the ISM Code would not be
significantly more and would have the potential for delivering significant
returns on a Company’s investment.
Whilst there are a number of ‘positive’ cultures which are regularly discussed
in connection with the development and implementation of an ISM Code-
compliant SMS, most of these are actually sub-cultures linking in to the
concept of the ‘safety culture’. However, having said that, it is the author’s
opinion that safety culture is actually a sub-culture of a ‘company culture’.
These possible interrelations emanate from ideas developed by Professor James
Reason30 and will be discussed below.
We shall return to discuss the idea of a ‘company culture’ later, and will
focus initially on the concept of the ‘safety culture’. The development of the
idea of safety culture should be thought of as part of an evolutionary process
to reduce accidents which has been taking place since the end of the Second
World War. During the period from the mid-1940s through into the 1960s,

29 UK HSE – Common topic 4 – Safety culture: www.hse.gov.uk/humanfactors/topics/

common4.
30 Reason, J. Managing the Risks of Organisational Accidents (Ashgate Publishing, 1997).
60 ISM Code: A practical guide
attempts were made to reduce accident rates by improving ‘hardware’, i.e.
protective and effective guards, safer and more reliable equipment, etc. From
the 1960s into the 1980s the emphasis shifted towards improving employee
performance through more careful selection, recruitment and training, as well
as such things as incentives and reward schemes. From the late 1980s to the
present time, when the emphasis changed again towards the way ship operators
managed and organised their operations – especially with the introduction of
SMSs, which arrived in the shipping industry in the mid- to late 1990s.
Although the idea of safety culture is almost synonymous with the idea of
developing and implementing an effective ISM Code-compliant SMS, there
is no mention of safety culture – or any other type of culture – anywhere in
the ISM Code or in Chapter IX of SOLAS. To that extent it cannot be said
that the development of a safety culture is a mandatory requirement. It is,
however, clearly implied. Further, IMO Resolution A.1071(28) makes a very
clear reference to the importance of safety culture in paragraph 1.1.4:

Resolution A.1071(28)
1.1.4 The application of the ISM Code should support and encourage
the development of a safety culture in shipping. Success factors for the
development of a culture that promotes safety and environmental
protection are, inter alia, commitment, values, beliefs and clarity of the
safety management system.

An almost identical reference appears in MSC-MEPC.7/Circ.5:

MSC-MEPC.7/Circ.5
1.1.4 The application of the ISM Code should support and encourage the
development of a safety culture in shipping. Success factors for the
development of a safety culture are, inter alia, commitment, values and
beliefs.

The concept of safety culture exists in most high-risk industries and became
established in some of those industries a long time before it became common
practice in the shipping industry. Hence it should come as no surprise that we
look to those other industries for some guidance on the subject. A classic
definition of safety culture, for example, is that promoted by the Advisory
Committee on the Safety of Nuclear Installations (ACSNI) which states:
 Introduction and underlying principles 61
The safety culture of an organisation is the product of individual and group values,
attitudes, perceptions, competencies, and patterns of behaviour that determine the
commitment to, and the style and proficiency of, an organisation’s health and safety
management. Organisations with a positive safety culture are characterised by
communications founded on mutual trust, by shared perceptions of the importance
of safety and by confidence in the efficacy of preventive measures.31

Much of our thinking and understanding of safety culture, and indeed of

the theory of accident causation and the prevention, as illustrated in the so-
called ‘Swiss cheese’ model discussed in the final chapter of this book, is
attributable to the pioneering work of James Reason, Professor of Psychology
at Manchester University, in other high-risk industries during the 1990s. In
his influential work Managing the Risks of Organisational Accidents32 Reason
identified a number of components, or sub-cultures, of a safety culture:

• informed culture;
• reporting culture;
• just culture;
• flexible culture; and
• learning culture.

The concept of the ‘informed culture’ would probably equate to what is

generally meant by the idea of safety culture, in which case there would be
four sub-cultures. The relationship between these sub-cultures can perhaps be
understood from Figure 4.
In the following we consider each component in turn, and utilise Reason’s
own definitions.

Informed culture
This is the core, and in most important respects an informed culture is a safety
culture. According to Reason, it requires the creation of a safety information
system that collects, analyses and disseminates information from incidents and
near-misses as well as from regular proactive checks on the system’s vital signs.
All of the activities can be said to make up an informed culture – one in which
those who manage and operate the system have current knowledge about the
human, technical, organisational and environmental factors that determine the
safety of the system as a whole.

31 ACSNI Human Factors Study Group: Third report, ‘Organising for safety’ (HSE Books,
1993).
32 Reason, J. Managing the Risks of Organisational Accidents (Ashgate Publishing,1997).
62 ISM Code: A practical guide

Reporting
culture

Informed
Learning
culture/ Just culture
culture
safety culture

Flexible
culture

Figure 4 The components of a safety culture, based on Reason 1997

Reporting culture
Any safety information system depends crucially on the willing participation
of the workforce, the people in direct contact with the hazards. To achieve
this, according to Reason, it is necessary to engineer a reporting culture – an
organisational climate in which people are prepared to report their errors and
near-misses.

Just culture
An effective reporting culture depends, in turn, on how the organisation
handles blame and punishment. In the early days of SMS development in the
shipping industry, which had been carried over from other high risk industries,
attempts were made to introduce what was known as a ‘no-blame culture’. In
practice, such an idea is neither feasible nor desirable. Some intentional actions
by personnel cannot be tolerated – e.g. alcohol or drug abuse, reckless
 Introduction and underlying principles 63
non-compliance, arson, etc. As Reason says, a blanket amnesty on all unsafe
acts would lack credibility in the eyes of the workforce. More importantly, it
would be seen to oppose natural justice. Accordingly, there developed the idea
of a ‘just culture’ – in which there is an atmosphere of trust where people are
encouraged, even rewarded, for providing essential safety-related information,
but in which they are also clear about where the line must be drawn between
acceptable and unacceptable behaviour.

Flexible culture
According to Reason, a flexible culture takes a number of forms, but in many
cases it involves shifting from the conventional hierarchical mode to a flatter
professional structure, where control passes to task experts on the spot, and then
reverts to the traditional bureaucratic mode once the emergency has passed.
Such adaptability is an essential feature of the crisis-prepared organisation and
depends crucially on respect – in this case, respect for the skills, experience
and abilities of the workforce and, most particularly, the first-line supervisors.

Learning culture
Finally, an organisation must possess a learning culture – the willingness and
the competence to draw the right conclusions from its safety information
system, and the will to implement major reforms when their need is indicated.
The ultimate objective of a safety culture is to prevent human injury or loss
of life, avoid damage to the environment and to property. Whilst some sectors
of the shipping industry have recognised and understood the nature of a safety
culture and how it can help achieve this key objective of the ISM Code, other
sectors of the industry appear still to have some way to go along the road of
understanding.
Experts typically describe safety culture in terms of values, beliefs and
practices that the Company management and the staff, on-board and ashore,
share, to ensure that risks are minimised and mitigated to the greatest possible
degree. In other words, they raise safety to the highest priority, over everything
else, including commercial pressures.
Within a true safety culture every member of the Company team, whether
managing director or operations assistant, Master or able bodied seaman (AB),
thinks about safety, thinks about ways of improving safety and then taking
appropriate action, and this is done as a matter of normal routine daily practice,
almost subconsciously.
In the author’s experience there are very few accidents, incidents or unsafe
acts which, with the benefit of hindsight, could not have been prevented.
Almost all could be traced to some form of human or organisational error. If
people had been thinking constantly about safety, as occurs in a safety culture,
many of those accidents and incident would simply not have occurred.
64 ISM Code: A practical guide
The IMO suggests that the key to achieving a safety culture is in:

• recognising that accidents are preventable through following correct

procedures and established best practice;
• constantly thinking safety; and
• seeking continuous improvement.

In words reminiscent of Professor Reason the IMO goes on to suggest:

It is relatively unusual for new types of accidents to occur on board and many of
those that continue to occur are due to unsafe acts by seafarers. These errors, or
more often violations of good practice or established rules, can be readily avoided.
Those who make them are often well aware of the errors of their ways. They may
have taken short-cuts they should not have taken. Most will have received training
aimed at preventing them but, through a culture that is tolerant to the ‘calculated
risk’, they still occur.33

The development of a safety culture does not lend itself to prescriptive rules
and regulations, or to a culture of blind compliance; it requires people at all
levels within a Company to look afresh at the way they behave and to take
personal responsibility for managing and improving safety and operational risk.
In the experience of the author, an effectively developed and established
safety culture is always supported by a well-established company culture.
Probably the strongest evidence of a company culture existing is in the
language used by the employees, both on-board ship and in the office ashore.
When discussing the way work is carried out, or attitudes towards such things
as health and safety within the Company, if the staff use language along the
lines of ‘. . . we do this, or we do that . . .’, then there is a good indication that
a company culture exists. There is an indication of a sense of belonging. On
the other hand, if the language used is along the lines of ‘. . . they do this, or
they do that . . .’, then that provides a good indication that a company culture
does not exist or has not been effectively established. There is alienation
between the management and staff.
Once a company culture is well established then the development of a safety
culture would occur quite naturally, provided there was good leadership and
motivation from the highest levels of management which cascaded down
through the organisation.
Interestingly, the UK HSE also appears to have identified the same
relationship between company culture and a safety culture when it says:

An organisation’s culture can have as big an influence on safety outcomes as the

safety management system. ‘Safety culture’ is a subset of the overall company culture
. . . 34

33 A short pamphlet titled ‘Safety Culture’, posted on the IMO website: www.imo.org.
34 UK HSE – Common topic 4 – Safety culture: www.hse.gov.uk/humanfactors/topics/
common4.
 Introduction and underlying principles 65
From a legal point of view, it is probably correct to say that there is no
mandatory requirement in the ISM Code, or elsewhere, to develop and
implement a safety culture. However, the development of a safety culture is
clearly implied throughout, and an effectively developed and implemented SMS
which is not fully supported by a safety culture being practiced by those
involved in the SMS implementation process is almost inconceivable.
The existence of a well-developed safety culture will provide a strong
indication that the SMS is probably also well-developed and effectively
implemented such that, if an accident does occur, then other causes, not
attributable to an inadequate SMS, are most likely to be at issue. On the other
hand, the absence of a safety culture within a Company – including on-board
its ships – is almost certainly indicative of an inadequate and ineffective SMS.
Before leaving this topic, it is perhaps worth reflecting on further benefits
which should flow from an established safety culture, for example that it can
save a Company money – i.e. it is actually good investment. ISF produced a
pamphlet,35 accessible through the IMO, which makes the following claim:

How Can A Safety Culture Save Money?

The following benefits have been derived by shipping companies from the conscious
attempt to practise a safety culture:
• reduction in lost employee hours
• reduction in hospital costs
• reduction in sick leave
• reduction in pollution costs
• reduction in cargo damage
• reduction in insurance premiums

In the same pamphlet the ISF includes the following challenge:

How can companies check if they are losing money?

A simple check on whether or not a shipping company may be losing money
unnecessarily is to see if the company’s operational managers can provide senior
managers with the following information:
• How many ‘Lost Time Accidents’ did the company’s crew members have last
year and was this better or worse than the year before?
• What proportion of the company’s personal accidents were caused by a simple
failure to follow established procedures, i.e. were totally avoidable and should
never be repeated?

35 Courtesy of International Chamber of Shipping, ‘Safety Culture’, undated pamphlet produced

by the ICS, may be accessed through the IMO website: www.imo.org.
66 ISM Code: A practical guide
• How does the accident record of the company compare with that of its
competitors? Is the company capable of finding out?
• What proportion of last year’s costs resulting from accidents were not repaid
by insurance and were in fact covered by the company directly?
If operations managers appear unable to answer any of these questions satisfactorily,
it is possible that the company may be losing money unnecessarily and that there
is more that might be done to encourage the practice of a safety culture.
Introducing radical improvements to a company’s safety culture cannot be achieved
overnight, but the first stage, and the key to success, is commitment from the most
senior level of management including managing directors, finance directors and
everyone else at boardroom level.
The full benefits of a commitment to implement a total safety culture may take four
or five years to materialise, but experience has shown that real results can be achieved
within as little as one or two years.

5
Lost time
4 accident
frequency
3 rate

0
Year 1 Year 2 Year 3 Year 4 Year 5

Figure 5 ISF – Implementing a safety culture: the experience of a multinational shipping

company
Reproduced with kind permission of ICS.

A well-established safety culture, where there is commitment from the

highest levels of management and ‘buy-in’ by all employees, both in the office
ashore and on-board ship, should assist considerably with ensuring compliance
with the requirements of the ISM Code, and this in turn should reduce
considerably the probability of accidents, the risk of the Company being
found legally liable following an accident, and could save the shipowner
money.
 Introduction and underlying principles 67
1.4 Conclusion to the introduction and underlying
principles
In this introductory section we have considered some of the reasons why the
ISM Code became necessary, what it is trying to achieve and how it is trying
to achieve it.
Many of the underlying principles and philosophy behind the Code will
now be explored in more detail in the next chapters as we examine the role
and responsibilities of the key players in the development, implementation and
monitoring of the ISM Code requirements. We shall then look in detail at how
those requirements should be put into practice during the daily working of a
Company and its ships, consider what might go wrong and what the legal
consequences might be.
 Third
Edition
Lloyd’s Practical Shipping Guides
The ISM Code has been mandatory for almost every commercial vessel in the world for
more than a decade, and yet there is very little case law in this area. Consequently, there

ISM Code
remains a great deal of confusion about the potential legal and insurance implications of
the Code.

This third edition represents a major re-write and addresses significant amendments that
were made to the ISM Code on 1st July 2010 and 1st January 2015.

This book provides practitioners with a practical overview of, and much needed guidance
on, the potential implications of failing to implement the requirements code. It will be
hugely valuable to DPAs, managers of ship operating companies, ship masters, maritime
lawyers and insurance claims staff.

Professor Phil Anderson is widely recognised as one of the world’s leading authorities
on the ISM Code and marine safety management, and he combines extensive experience
as a Master Mariner, a P&I insurance practitioner, an Expert Witness and consultant, and as
a distinguished academic. He is currently Professor in Practice and Head of the Maritime
Studies Faculty at the University of Trinidad and Tobago.

LAW / MARITIME LAW

ISM CODE
Professor Phil Anderson
A Practical Guide to the Legal and Insurance Implications

Third Edition

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Routledge titles are available as eBook editions in a range of digital formats Professor Phil Anderson