Indonesian Shipping Law – Marine Casualty

Legal Updates | Indonesian Shipping Law – Marine Casualty

In the event of a ship collision, grounding or other major casualties, there are a number of key provisions in Indonesia that will impact upon the liability and response of interested parties.

Collision

With regard to liability in a collision, the Indonesian Commercial Code ("ICC"), which was enacted in the 19th century, provides that:

If the collision is caused by force majeure, or if there are doubts as to the cause of the collision, the damages shall be borne by those who have suffered them.
If the collision is caused by the fault of one of the colliding vessels, liability to remedy the damages shall be borne by the vessel that committed the fault. Wirjono Prodjodikoro, an Indonesian scholar, stated that a collision caused by a defect (unseaworthiness) of the vessel shall also be considered as the fault of the vessel.
If the collision is caused by the fault of two or more vessels, the liability of each vessel is in proportion to the degree of their respective faults. Prodjodikoro stated that the test of fault is the impact of the fault on the damage suffered, irrespective of the intention (culpa) of the vessel.
If a vessel being towed collides due to the fault of the towing vessel, the owners of both the towed and the towing vessel shall be jointly and severally responsible for the damage.

Upon declaring independence in 1945, Indonesia decided that the articles of the ICC would continue to be followed unless they were contrary to the Constitution.

Under Law No. 17 of 2008 regarding Shipping ("Shipping Law"), unless it can be proven otherwise, the master of the vessel shall be held liable in a vessel accident.

As to collisions, Indonesia has ratified the 1972 International Regulations for Preventing Collisions at Sea, by way of Presidential Decree No. 50 of 1979, but has not ratified the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels.

Pollution

Indonesia has ratified the following treaties:

The United Nations Convention on the Law of the Sea of 1982 ("UNCLOS"), by way of Law No. 17 of 1985.
The International Convention for the Prevention of Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto and by the Protocol of 1997 ("MARPOL"), by way of Presidential Decree No. 46 of 1986 and Presidential Regulation No. 29 of 2012.
The International Convention on Civil Liability for Oil Pollution Damage of 1969 and its amendment of 1992 ("CLC"), by way of Presidential Decree No. 52 of 1999.

Indonesia has not ratified the International Oil Pollution Compensation ("IOPC") Fund Convention of 1992 and the Supplementary Fund Protocol of 2003.

Under the Shipping Law, all crew members in a vessel are obliged to prevent and mitigate environmental pollution from their vessel. In addition, vessel owners or operators are obliged to procure an insurance policy for their pollution liability. Failure to comply may result in imprisonment and/or fines for vessel owners or operators.

Salvage/general average

The Shipping Law was further implemented by Minister of Transportation ("MOT") Regulation No. PM 71 of 2013 on Salvage and Underwater Works, as amended by MOT Regulation No. PM 33 of 2016 ("MOT Reg 71/2013, as amended"). This regulation defines salvage as the provision of aid to a vessel and/or its cargo that has suffered a vessel accident or perils of the sea, including removing the shipwreck or underwater obstacle or other objects.

MOT Reg 71/2013, as amended provides that a salvage operation may only be conducted by a business entity specifically engaging in the salvage business, fulfils the technical requirements under MOT Reg 71/2013, as amended and holds a permit from the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or "BKPM") upon the recommendation of the Directorate General of Sea Transportation ("DGST").

Under Article 547 of the ICC, a salvage reward shall be paid for any salvage operation. Such a reward must be paid even if the salvage operation is not successful unless otherwise agreed by the parties. The salvor is also entitled to receive compensation for costs, losses and loss of profits.

Indonesia has not ratified the York Antwerp Rules, but parties may agree to incorporate such rule within their agreements. In the absence of a contractual provision on general average, the provisions of the ICC shall apply.

Wreck removal

Indonesia has not ratified the Nairobi International Convention on the Removal of Wrecks of 2007.

The Shipping Law, as implemented by MOT Reg 71/2013, as amended, obliges a vessel owner to remove its shipwreck and/or cargo that is disturbing navigational safety and security within 180 days after such vessel and/or cargo sank.

MOT Reg 71/2013, as amended also requires vessel owners to ensure their vessels with wreck removal insurance or protection and indemnity insurance from an insurance company recognized by the Government of Indonesia. This requirement is waived for war vessels, state vessels used for governmental duty, and motor vessels with a gross tonnage of fewer than 35 tonnes.

Limitation of liability

Indonesia has not ratified the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships of 1957 or the International Convention on the Limitation of the Liability for Maritime Claims of 1976, including their Amendment Protocols.

Based on the original text of Article 474 of the ICC, the liability of a vessel owner due to vessel collision or cargo claims is limited to 50 gulden (the currency used by the Netherlands during the East Indies occupation) per cubic meter of the net tonnage of a vessel. A mechanically moved vessel shall have the tonnage of the machinery added to the gross tonnage to determine the net tonnage for vessel collision liability. However, the tonnage of such machinery shall be deducted from the gross tonnage to determine net tonnage for cargo claims liability. The ICC uses 50 guldens because the ICC was enacted during the Dutch occupation of Indonesia and it has not been amended since Indonesia’s independence in 1945.

Indonesian law does not specifically regulate the form or amount of a limitation fund. In practice, a shipper may request the vessel owner to provide a cash deposit to be used as a limitation fund.

SSEK - 30th July 2018

digg

See more Legal Updates

Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)