THE ROLE OF CLASSIFICATION SOCIETIES

by F.R. Chowdhury

Brief history:

An important group of organisations that exert considerable influence on the design, construction and safety of ships are the Classification Societies. Classification is defined as ‘a division by groups in order of merit’ – and this was precisely what was attempted in the early days of ship classification. It was done for the benefit of shipowners, cargo owners and underwriters in order to ascertain if a particular ship represented a reasonable risk. The origin of classification is associated with the name Lloyd’s Register of Shipping, which is the oldest society.

It was customary in the seventeenth and eighteenth centuries for merchants, shippers and underwriters to meet in coffee houses in London to discuss business. Ship lists were circulated in these establishments, which contained information concerning ships and these lists in particular were useful in providing underwriters with information concerning the degree of risk involved in insuring the ships and their cargoes. Amongst these coffee houses was one owned by an enterprising man called Edward Lloyd. His coffee house was originally in Tower Street but he later moved to Lombard Street. Lloyd provided a list or bulletin about ships as far back as 1702 and after being withdrawn for a time it was issued again in 1734 and that continued to be published until December, 2013 as Lloyd’s List. It was a glorious history of non-stop publication for 279 years. As time went on, the provisions relating to information about ships got more formalized and eventually a Register was published. Originally a business of classifying ships and insuring them went on under the same roof but eventually the two activities became entirely separate. Both activities took the name of the coffee house proprietor, the Classification side taking the name Lloyd’s Register of Shipping. Founded in 1760 to examine merchant ships and classify them according to their condition, today the organization’s expertise and activities extend far wider than the shipping field – shore based industries, offshore exploration and installations.

Today, Lloyd’s Register of Shipping is an independent authority, non-profit making, and relying entirely for its income on the fees charged for surveys and other services rendered. It is controlled by a committee representing shipowners, ship and engine builders, the Institute of London Underwriters, the Royal Institute of Naval Architects and Shipbuilders. Most other international classification societies follow the same pattern and try to maintain their independent entity and global network of service.

A Classification Society is now very much like a standard institute. It has its own rules and regulations for construction and classification of different kinds of ships. It acts without any prejudice to anyone’s interest. If the ship concerned meets the standards laid down in the Rules, then she is classed and she remains classed as long as she maintains the standards. This has earned a high degree of reliability, trust and fame for the classification society and has made it equally acceptable by almost all concerned in shipping. The role and function of the Classification Society will be better understood by analysing its relationship with other organisations and agencies involved in shipping.

Ship-owners:

For the shipowner, it is possibly one of the best technical consultancy services available. A good shipowner will always like to have an efficient ship and by having the vessel classed, he will have the services of the Society Surveyor available whenever there is a deficiency or breakdown and would get the best advice as to how the ship can be put back into same efficient good order as it were before. The modern classification rules involve mandatory inspection of each and every part and component of the ship, her machinery and equipment, once every four years, which

automatically ensures good upkeep and maintenance. Besides the shipowner enjoys the trust and confidence of the market as long as the ship is classed.

Underwriters:

It was for the underwriters that the Classification Society was first created. The underwriters required guidance on assessment of maritime risks. In the early days, the assessment was based on the capability of the Master and later it became the capability of the ship. Insurers would only cover a ship providing it had been built and maintained to Class requirements and standards. To demonstrate that a ship was classed with a Society, their mark was put on the side of the ship which was eventually combined with load line requirements for freeboard. The insurance policy in most cases will stand void if the vessel goes out of Class.

Administration:

The Classification Society is a big helping hand for the Administration. Because of its impartial role and total dedication to standardisation, the Administration finds it convenient to entrust certain statutory functions to the Society. It is to be borne in mind that the Administration remains legally and morally responsible for its obligations in respect of survey and certification under various international conventions. It is because of this reason that most of the established maritime nations continue to deal with Passenger Ship Safety Certificate, Cargo Ship Safety Equipment and Safety Radio Certificates directly, whereas the other ones such as Safety Construction, Load Line, IOPP, etc. are dealt with by the Societies with the Administration having a supervisory role. The authorization or delegation by the Administration will evidently refer to the condition that the subject vessel must be classed with the concerned Society so that the Society is in the full picture of the ship. The biggest advantage the Administration (and also the shipowner) derives is that the vessel can be inspected and surveyed almost anywhere through the global network of the Society. In certain cases, when the Safety Certificate (which the Administration may be dealing with directly) expires with the vessel in a foreign port, the Administration may authorise “case to case” basis for the Society to deal with the same on behalf of the Administration. The Rules and Regulations developed by the Society on a global basis are sometimes regarded as an asset to some of the developing countries who may not have the resources and the expertise to develop such elaborate Rules and Regulations on their own.

As explained earlier the Administration can only delegate functions and not responsibilities. It is for this reason that the Administration has to find some suitable way to monitor the work of the classification societies. Most agreements are based on IMO Resolutions 739 and 789. The societies remain obliged to make available survey status and other information to the Administration. In some cases the Administration can directly access through internet necessary ships’ files with the classification societies. Some of the reputable Administrations also conduct formal audit of the classification societies. However, to get the best out of Classification Societies the national administration has to be competent and efficient.

With ships being subjected to more survey, audit, inspection and certification, it has now become almost customary to delegate most of the functions to classification societies. The Administrations retain control over them by two distinct means. Some of them keep ISM audit and certification to their own control and, by audit and inspection of all cargo ships once every 30 months they can monitor the performance of the ship, company and the relevant classification society. The UK Administration (UK-MCA) also deals directly with passenger ship certification. Administration like that of the Bahamas appoint a number of (non-exclusive) inspectors/ surveyors around the world for

conduct of mandatory requirement of annual inspection to check and monitor performance of all concerned. This sort of annual inspection is essentially a national requirement.

International Organisations:

In the international sphere, IMO is the organisation dealing with technical aspects of maritime matters such as safety at sea and the protection of the maritime environment. The major classification societies formed an association of their own known as IACS, which is an associate member of IMO as an observer with consultative status. Perhaps it is the most active member amongst all the private international organisations providing IMO with data, information and advice so vital for adoption of various safety conventions (IACS has no voting right; only member states take decisions). In the field of safety construction IMO has the SOLAS Convention which gives guidelines on requirements relating to Sub-division and fire protection; Load-Line Convention dealing with stability requirements and closing devices and yet the Tonnage Convention indirectly encourages construction of stronger and safer ships with sufficiently spacious machinery space. It is the Classification Society which has made complete Rules and Regulations for construction of steel ships by incorporating the essential ingredients of various conventions, protocols, codes and resolutions of IMO and so far it has worked so well that there has been no need for a separate Convention on ship Construction. Many countries have Safety Construction rules, which are quite identical to Society Rules because of having the common safety provisions from international instruments but none possibly as elaborate as the Classification Rules.

Traders, Charterers, Brokers, etc.:

The shipping world today deals exclusively with classed vessels. It is so easy to find all the particulars from the Classification Register. A class record even shows major accident or damage including any outstanding condition of class. The owner is more readily accessible to the market; and the buyer, charterers, shipper, or even broker acts with confidence and knowledge. Classification is a central point of convenience for all parties dealing with shipping.

A ship without Class:

Classification in most countries is still not a legal requirement, but one can hardly think of a ship without being classed. In fact, most ships would be built under class. SOLAS74 (as amended) Part A-1 Regulation 3-1 now requires ships to be designed, constructed and maintained in compliance with structural, mechanical and electrical requirements of a recognized classification society. No financial institution will ever finance purchase of a ship that is not classed with one of the societies. A ship without ‘class’ can neither be insured nor mortgaged. It will be even more difficult to find crew willing to sail on a ship which is not classed. Nobody will risk giving cargo on such a ship and the ship will hardly have any value in charter or sale market. Yes, classification is virtually a must.

Certain Limitations:

A classification society is an almost non-profit making organization. Yet, it has to sell its services to the extent that it can earn enough to support its existence and carry on with at least some research and development work. The shipowner calls for the surveyor and pays for his services. There is no scope for voluntary services without payment. In the interest of its own business, the classification society would not like to take up the role of a policeman. These are some of the reasons why a

Classification Society can neither do the unscheduled inspection (the role of Flag State Administration) nor the Port State Control (checking safety standard of the visiting foreign ships by

the Port State Administration). However, once the Society is informed of deficiency of one of its classed vessels, it will probably put the vessel ‘off class’ if such deficiency affects the safety and the sea-worthiness. For obvious reasons a Classification Society would not get into inquiry/ investigation that would involve the conduct of the owners/ managers/ master and crew. Classification Societies would not normally like to displease its clients. The Classification Society cannot play any role in respect of STCW Convention except issue of ISO certificate to training institute. Training and certification of seafarers, issue of SMD and Flag State Endorsement are for the Administration to do.

IACS:

The major classification societies have formed an organisation of their own known as the International Association of Classification Societies. The purpose is to maintain a common approach towards safety standards. The Association attends the IMO meetings as ‘observer’ and makes valuable contributions with its research and findings. The IACS members are:

1. LR                   Lloyd’s Register (UK)                                    www.lr.org
2. BV                  Bureau Veritas (France)                                  www.veristar.com
3. DNV-GL        German-Norwegian merged                           www.dnvgl.com
4. ABS                American Bureau of Shipping (USA)             www.eagle.org
5. RINA              Registro Italiano Navalo (Italy)                      www.rina.org
6. NK                  Nippon Kaiji Kyokai (Japan)                          www.classnk.org.jp
7. CCS                China Classification Society (China)              www.ccs.org.cn
8. KR                  Korean Register (Korea)                                 www.krs.co.kr
9. RS                   Register of Shipping (Russia)                         www.rs-class.org
10. IRS                  Indian Register of Shipping                            www.irclass.org
11. PRS                 Polish Registry of Shipping                            www.prs.pl

There is one associate member –     CRS                    Croatian Register of Shipping

<fazlu.chowdhury@btinternet.com>