Why is the independence of classification societies so important?

This article will explain the main characteristics of classification societies, the differences between their public and private role and why their independence is important for the marine industry.

 

What are Classification Societies?

Classification societies are private bodies, which originated in 18th century England where their task was to inspect the condition of ships and give a rating or “class” that was used for insurance purposes. Nowadays, they are responsible for a wider set of tasks - developing and applying technical standards for the design, construction and survey of ships and carrying out surveys and inspections on board ships. Classification societies always have to be up to date with the latest technological developments and build their knowledge as a result of the lessons learned from their experience with malfunctions and incidents. Each classification society can have its own standards which are applied to the building, maintenance and equipment installed on a ship. Because of their private nature, for-profit work and different standards classification societies can be in competition with each other.

 

What is the difference with Recognised Organisations (RO’s)?

Flag States have certain obligations under international and EU law but often they do not have enough technical experience, resources or global coverage to fulfil these by themselves. They can authorise a classification society to carry out statutory surveys and certification on their behalf. The classification society is then referred to as a Recognised Organisation (RO). There are more than 50 classification societies worldwide, but in the EU only 12 have recognition from the European Commission and fulfil this quasi-governmental role.

 

Why independence?

Classification societies have an interesting position in the industry - on one side, they are private entities that work for-profit and on the other, they perform public functions. They also work with parties on different levels in the distribution chain such as manufacturers, suppliers, ship builders, owners and operators and insurers.

Because of this, the independence and impartiality of classification societies is very important. One part of the definition in the IACS Charter is that the classification society “is not controlled by, and does not have interests in, ship-owners, shipbuilders or others engaged commercially in the manufacture, equipping, repair or operation of ships.” Also in the Charter, IACS gives requirements for membership, one of which is “Independence from ship-owning, ship-building and other commercial interests which could undermine the Classification Society’s impartiality”. The RO Code also mentions these obligations. RO’s are obliged to stay independent from any commercial interest when performing their statutory certification and services and prevent any outside influence on their work.

So whichever role they are in, classification societies must follow this obligation as their work is crucial for safety, compliance and the overall functioning of the marine industry. This can become difficult when interacting with two market players which do not benefit from each other’s work, for example, an OEM and an independent manufacturer.

 

Why is it important for our industry and EMISA?

            Without the requirements of independence and impartiality, a classification society might be able to give preferential treatment to certain clients and work against others. This can negatively affect technological innovation, the safety of ships and crews, free and fair competition and the work of Flag States. In order to function well, the marine industry needs classification societies and RO’s to maintain a high level of independence and impartiality.