Brexit consequences on the shipping industry

By ASLA - Associazione degli Studi Legali Associati

di Studio Legale Mordiglia

Genova - The purpose of this brief insight is to analyze the problems inherent to customs operations, cabotage, navigation safety and the recognition of seafarers' qualifications following the end of the Brexit transition period.

As of 1 January 2021, the United Kingdom is no longer part of the Customs Union. This entails changes to the rules governing the movement of goods and the customs procedure for them. In particular, the end of the transitional period will involve: (i) the introduction of checks on goods at borders in several stages (up to complete checks from 1 July 2021); (ii) the imposition of special customs obligations on commercial operators importing controlled goods (such as excisable goods); (iii) the accession of the United Kingdom to the Common Transit Convention (CTC).

As far as customs controls are concerned, the relevant procedures will be carried out with different procedures and timing depending on the type of goods. In particular, standard documentation and basic customs requirements will be required in the first phase starting from 1 January 2021. In the next phase starting from 1 April 2021, will be required, for certain types of goods, additional certifications including health documentation. Finally, from 1 July 2021 the new customs procedure will enter into force in full and therefore full customs declarations will be required in addition to the increase in physical checks of the goods.

As regards goods with additional customs requirements, such as excisable goods, the importer could be allowed to use the Custom Freight Simplified Procedure (CFSP), a simplified procedure allowing faster customs treatment by means of an electronic customs system for imported goods. If the import involves sanitary and phytosanitary goods, the importer will be required to submit an import health certificate (EHC).

Finally, from 1 January 2021, the United Kingdom will accede to the Common Transit Convention (CTC) no longer as an EU Member State, but as a separate contracting party. It follows that EU- goods transported to the United Kingdom will first have to be placed under the export procedure, and only then they can be placed under the common transit procedure, with the exception provided for in the Ireland/Northern Ireland Protocol, according to which EU customs legislation will continue to apply to Northern Ireland.

In relation to cabotage, Article 1 of Regulation 3577/928, liberalizes the provision of maritime transport services within the EU Member States (maritime cabotage) to all Community shipowners who have their ships registered and fly the flag of a Member State. The concept of Community shipowner, as defined in Article 2 of the Regulation, includes:
(a) nationals of a Member State established in a Member State in accordance with the legislation of that Member State and pursuing shipping activities;
(b) shipping companies established in accordance with the legislation of a Member State and whose principal place of business is situated, and effective control exercised, in a Member State; or
(c) nationals of a Member State established outside the Community or shipping companies established outside the Community and controlled by nationals of a Member State, if their ships are registered in and fly the flag of a Member State in accordance with its legislation.

As a consequence of the end of the transition period, economic operators who do not fulfill the conditions set out in the definition of a Community shipowner will no longer have the right to provide maritime cabotage services in accordance with this Regulation. However, it should be noted that a Member State may, under its national law, decide not to impose restrictions on cabotage by vessels flying the flag of a third country.

With reference to the safety of navigation, Directive 2009/16 on port State control operations establishes the EU port State control system. The directive requires member States to ensure that foreign ships are inspected in ports by port State PSC officers for the purpose of verifying that the condition of a ship and its equipment comply with the requirements of international conventions and that the ship is supervised and used in compliance with applicable law and regulations. Directive 2009/16 also requires verification of compliance with a number of other requirements, including insurance certificates under Directive 2009/20. The port State control system ceased to apply to the United Kingdom from 1 January 2021 and the relations between the United Kingdom and the European Union will be governed by the Paris Memorandum of Understanding on port State control.

On the other hand, as regards the recognition of seafarers' qualifications pursuant to Directive 2008/106, each Member State recognizes the certificates issued to seafarers by other Member States or recognized third countries, so that seafarers holding such certificates can work on board. The recognition of qualifications takes place through two distinct procedures applicable, respectively, to certificates issued by other Member States and to those issued by recognized third countries:
(i) article 5 requires each Member State to accept the certificates issued to seafarers by other Member States;
(ii) article 19 provides that a Member State may, in respect of ships flying its flag, decide to validate certificates issued by third countries.

Pursuant to Article 5 of Directive 2008/106, certificates issued to seafarers by the United Kingdom will no longer be accepted or validated by an EU Member State. However, the validation of the title issued before the end of the transition period by the EU Member States will continue to be valid until its expiry. Furthermore, the recognition of certificates issued to seafarers by the United Kingdom by an EU Member State will be subject to the conditions and procedure set out in Article 19 of Directive 2008/106, in line with the UK's new status of third country.