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Owners shying away from Filipino seafarers over disability claims

Owners shying away from Filipino seafarers over disability claims
20 July 2018

While Filipinos remain the seafarer of choice for their English language ability and ease to work with there are other factors that discouraging international shipowners from choosing them to crew their vessels.

An issue that has dogged the industry for some years now are full disability claims, for relatively minor, non-career ending injuries, brought by ambulance chasing lawyers combined with an antiquated Garnishment Law that means awards are paid in full prior to appeal.

The Seafarers Protection Act enacted in 2016 was supposed to cap legal fees at 10% of the award to the seafarer, rather than as much as 40 - 50% as has been charged in the past, but in reality it has proved difficult to regulate private agreements between seafarers and the lawyers. Charles Jay De La Cruz, senior partner with law firm Del Rosario Del Rosario, tells Seatrade Maritime News: “It's been two years but the effects have not really been felt. It really requires education and orientation for the seafarers.”

While the seafarer is enticed by a much higher payout than originally offered under their employment agreement after legal fees the amount they receive can actually be less. “Sadly a group of lawyers see it as a business and the seafarer is not benefiting from this,” says Andrew Malpas, President of P&I Correspondent Pandiman.

There is a particular issue with cases brought for seafarers covered by Collective Bargaining Agreements (CBAs) which are heard by the National Conciliation and Mediation Board (NCMB) and full disability compensation is up to $250,000.

In cases brought for seafarers with contracts under the Philippines Overseas Employment Agency contract where the maximum payout is $75,000 and they are heard by the National Labour Relations Council (NLRC) De La Cruz estimates owners win around 50% of cases, for cases heard by the NCMB he says it’s just one in four.

While the owner or P&I Club can appeal Malpas says that a 70-year out-of-date Garnishment law means payouts have already been made, and the money spent by the time an appeal is heard in the Supreme Court. He says that International Group Clubs have paid out some $27m under garnishment. The result is shipowners deciding to opt for other nationalities to crew their vessels.

“I know shipowners who have moved ships because of decisions by the NCMB,” he says.

De La Cruz comments, “Shipowners in these depressed times would rather settle (out of court) or choose other nationalities (of seafarers).

Current figures on seafarer deployment by the Philippines in international shipping are hard to come by but the general perception in the industry is that numbers have dropped, and to a certain extent have been buoyed by cruise ship jobs such as hotel staff and entertainers. A presentation by Dohle Seafront Crewing at a recent NordCham Philippines Maritime Forum quoted government figures for 2016 that actual deployment numbers for seafarers dropped to 304,329 compared to 401,826 in 2015.

There are moves afoot to try find a solution to the issue of disability claims and Malpas is hopeful that it will be resolved. One possibility is that payments are held in escrow until an appeal is heard, however results of tripartite negotiations between the industry, government and the unions will likely take another two years to yield results.