What impact will Brexit have on regulation of the maritime industry?

Posted in Banking and finance Transport

The role that the EU plays in the regulation of the maritime industry has been something which has been examined and debated in the context of this summer’s Brexit vote in the UK. The international regulation of the maritime industry is carried out by the International Maritime Organisation (the IMO), a specialised agency of the United Nations, of which all EU members are part but of which the European Commission has only observer status. The IMO is responsible for primary maritime regulations, including those governing safety at sea and environmental issues which are contained in international conventions such as the International Convention for the Safety of Life at Sea 1974 (SOLAS) and International Convention for the Prevention of Pollution from Ships 1973 (as amended by the Protocol of 1978) (MARPOL). However, the EU has also provided additional regulations in some of these areas such as in relation to environmental matters, for example on the regulation of air emissions from ships. EU regulations for Monitoring, Reporting and Verification (MRV) of carbon emissions from ships differ from those agreed at the IMO and are, or are felt to be, more onerous than the IMO’s regulations. Some in the industry have felt that this extra layer of regulation is unfair and will add unnecessary costs to operations which can be ill afforded.

So does a looming Brexit mean that UK shipping companies will be able to navigate away from this EU Maritime legislation? The reality is that this would be highly unlikely. The extent to which UK shipping companies will be subject to EU law will very much depend on the nature of the post-Brexit relationship we have with the EU, which is still uncertain. If the UK were to remain in the EEA, or if it were to have some form of access to the single market, then it is likely that Annex XII (which sets out EU shipping and other transport legislation) would apply to UK shipping companies. Should the UK not remain in the EEA and agree on a different path for its future with the EU, then this may not take UK shipping companies outside of the scope of the EU legislation entirely as UK shipping companies are likely to have to comply with some EU maritime policy by virtue of trading to, and using ports within the EU. If the UK were not part of the EEA and implemented its own maritime legislation, then there is a possibility that UK shipping companies may need to comply with triple regulations: UK, EU and international. Whilst it is highly unlikely that the UK would introduce additional or different maritime legislation to the international and EU regulations, there is the possibility that these could be implemented into UK law in an inconsistent way which could have an (albeit unintended) result of placing slightly different or additional requirements on UK companies for compliance. However, we would expect that this risk would be low and that the two main sources of regulation would continue to come from the IMO and the EU. So, we will have to wait to see the nature of the post-Brexit landscape in the UK, but for UK Shipping companies it seems unlikely that this will have a significant impact on the regulation of the maritime industry and in particular, on the perceived “dual layer” of legislation that some in the industry have been dissatisfied with.

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