The Independence and Impartiality of ROs
Classification societies play a double role in the maritime industry. They are both private entities working for profit and perform some public functions as Recognised Organisations. We aim to shine some light on this matter and highlight some possible issues, which can potentially affect other parties as well.
What are Classification Societies?
Classification societies are private bodies, which originated in 18th century England where their task was to inspect the ship’s condition and give a rating or “class” used for insurance purposes. Nowadays, they are responsible for a larger set of tasks – developing and applying technical standards for the design, construction and survey of ships and carrying out surveys and inspections onboard ships. Classification societies always have to be up to date with the latest technological developments and build their knowledge based on the lessons learned from malfunctions and incidents. Each classification society can have its own standards 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 compete amongst each other.
What is the difference with Recognised Organisations (ROs)?
Flag States have certain obligations under international and EU law. Often they lack 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.
Classification societies have an interesting position in the industry. On one side, they are private entities that work for-profit. On the other, they perform public functions. They also work with parties on different levels in the distribution chain such as manufacturers, suppliers, shipbuilders, owners, operators, and insurers.
Because of this, the independence and impartiality of classification societies are crucial. The IACS Charter states 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 that could undermine the Classification Society’s impartiality”. The RO Code also mentions these obligations. ROs are obliged to stay independent from any commercial interest when performing their statutory certification and services and prevent outside influence on their work.
So, whichever role they are in, classification societies must follow this obligation. 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. To function well, the marine industry needs classification societies and ROs to maintain a high level of independence and impartiality.