1.2 About classification societies
Classification societies are independent private companies, whose main task is to inspect ships on behalf of the ship owner, since the ship owner’s hull and machinery insurers may require a form of quality assurance when determining if the insurance can be signed off. The classification society may also be requested to assess any damage under the policy should an accident occur and to oversee the quality of repairs. (1) Falkanger, Bull, Overby; Søret, 4. udg., København 2013, s. 81 ff with further references. This role has been held by the companies since the mid 18th century, a role strengthened perhaps in the late 19th century following Samuel Plimsoll’s political efforts to combat the unacceptable loss of life at sea in so called ‘coffin ships’; vessels that were frequently overloaded and often heavily insured.
In addition, classification societies approve vessels according to their own rules, which in shipping terminology means awarding a vessel its 'class'. The societies’ rules primarily contain specific technical parameters concerning, for example, the vessel’s navigational equipment, the thickness of the hull, the machinery or the life-saving equipment onboard, but the rules may also cover security procedures or other less objectively identifiable conditions. The societies' rules are at least as stringent and detailed as most flag States rules, although they may differ on several points.
The classification societies rely mainly on their good name and reputation. How accurate and updated are their rules? Do they employ suitably skilled and qualified surveyors? Do those surveyors have a reputation for being principled and incorruptible etc.?(2) Unfortunately, this latter criterion carries some weight. See e.g. the Swedish RO agreement clause 3.5, Code of conduct: »When performing its duties on behalf of the STA, the RO is to take into account every person’s equality before the law and is also to act in an objective and impartial manner. When performing duties in accordance with this agreement, RO employees may not give or receive gifts, rewards or other benefits«. (My emphasis).
It is not generally a requirement of the flag States that a ship has class, as long as it complies with the flag State's own requirements. However, the industry itself attaches a particular importance to class, just as a relevant ISO certification may be considered commercially necessary in other industries. Thus, if a vessel loses its class status due to poor maintenance, this would as a starting point be considered as valid grounds for an immediate termination of a charter party agreement,(3) See e.g. BPTIME 3, clause 9(2) or NYPE 2015, clause 6(a). but in addition the ship's insurance policies may no longer be valid.(4) See e.g. Gard Rules, rule 8(1) »Unless otherwise agreed in writing between the Member and the Association it shall be a condition of the insurance of the Ship that: a) the Ship shall be and remain throughout the period of entry classed by a classification society approved by the Association…«. See further regarding the Hull and Machinery Insurance Nordisk Sjøforsikringsplan, §§ 3-22, 3-23 and 3-27. When considering that most coastal States will insist that a ship within its territorial waters be suitably insured, a ship's trading area is therefore wholly conditional upon the ship's insurance certificates and policies being valid.(5) See e.g. the Danish Maritime Code (DMC) section 153, 154 and 197. Consequently, in real terms, the loss of certification means that the ship can effectively no longer trade. In addition, some of the certificates issued by the classification societies on behalf of the DMA are a necessary requirement without which the ship is not even allowed to leave port. Finally, in exceptional cases, the loss of certain certificates may result in the shipping company being denied its entitlement to operate vessels at all.(6) See judgment of the Eastern Court of Appeal of 18 March 2009, which upheld the finding of the DMA and the Danish Shipping Tribunal that the Skibsmæglerfirmaet H. Folmer & Co. I/S should be stripped of its “document of compliance”, meaning that the company would not be allowed to continue its ship management activities.