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Owners pursue Filipino ambulance-chasers
As unions and employers negotiate renewal of a global labour agreement that already means Filipino seafarers can earn over USD 1,500 a month, ship owners are appealing to their government in Manila to put the brakes on the ambulance-chasers. The talks at the International Bargaining Forum (IBF) have already seen an opening claim for a 15% rise in total crewing costs from unions in the International Transport Worker Federation (ITF), while their counterparts in the employers’ Joint Negotiating Group (JNG) have stressed shipping’s still fragile state without putting a figure, at least publicly, on their counter-claim.
The previous round of IBF talks ended in 2011 with a 7.5% rise that, spread over three years, translated into 1.2% annual pay rises. The increase had followed a two-year freeze agreed in response to the global financial crisis of 2008.
The new agreement, due to come into effect next year, is expected to revert to the two-year system that has been used since the IBF began life a decade ago. Many expect an increase in line with the 4.95% two-year rise in the minimum wage for an AB agreed last month between the ITF and ship owners at the International Labour Organisation (ILO).
As the IBF agreement talks continue (another round is due next month before a final meeting in June), ship owners – many, no doubt, with a JNG presence – are lobbying the Philippines Government to reform a legal system that means they have to pay out to meet questionable compensation claims for injury and illness even before they have had a chance to appeal the awards made against them by lower courts.
The sums involved, in what is known in legal parlance as “garnishment”, are far from trifling. In September last year, ship owners were owed more than USD 6 million by claimants and their lawyers in 98 cases where earlier decisions by the country’s National Labor Courts (NLCs) had been either overturned or reduced on appeal.
The chances of getting even a fifth of that back seem at the moment slim. In three other cases where the awards totalled USD 178,000, only USD 19,700 has been recovered. Claimants who have succeeded in the NLCs tend to have spent most, if not all, of the money (much of it paid to the ambulance-chasers) before superior courts hear any appeals in a process that can take as long as seven years.
The figures are from the report by the International Group (IG) of P&I clubs submitted last October to the National Labor Relations Commission (NLRC). The IG used the figures to illustrate the garnishment problem and proposed a system of escrow accounts to handle NLC awards pending appeals.
The report claimed ambulance-chasing lawyers has significantly increased in number and that, based on the number of cases involving IG members in the last few years, they had profited “unfairly” (even at a conservative fee level of 25%) by more than USD 1.5 million from exploiting the compensation system. One particular law firm involved in over a fifth of cases could have, if it were charging the more usual 40%, earned USD 517,000.
The IG believes the figures in its report represent the “tip of the iceberg”, as many ship owners prefer to settle awards made by NLCs rather than go through the lengthy and expensive process of appealing.
But it insists the seafarers are not to blame for the present situation; instead it blames the legal system, which the growing number of “claimant lawyers” are able to exploit “for their personal gain”. Claimants are also “rarely aware” – no doubt kept in the dark by the ambulance-chasers – that employers can claim the money back.
The report added that the contribution made by Filipino seafarers both to the economy in remittances that are approaching USD 5 billion a year and in manning a large part of the world fleet was “substantially overshadowed” by the daily frustrations encountered in the country’s legal system when dealing with “unmeritorious and dishonest” claims, albeit relatively small in number.
The NLRC, however, rejected the IG’s escrow proposal, arguing it did not have the “jurisdictional competence”. Last month the IG wrote to the Philippines’ Labor Secretary, claiming its concerns were endorsed by other industry groups, such as JNG member, the International Maritime Employers Council (IMEC), and by seafarers’ unions.
It called on The Philippines to press ahead with proposed reforms of the legal system, stressing the concerns raised in the October paper struck at “the very issues of integrity and fairness in the system” which had had a “detrimental impact” on how it was perceived.
It seems unlikely failure to reform what the IG calls an inequitable system will result in ship owners deserting Manila, dubbed the manning capital of the world, in droves.
But the frustrations at the perceived bias and injustice in the courts, when added to concerns at the quality of training (a long-dreaded decision by the European Commission on continuing recognition of Filipino certificates of competency is imminent), might mean owners look elsewhere in earnest for their crews.
Some might, however, point to the success P&I clubs have had in weeding out fraudulent claims for injury and illness by introducing pre-employment medical exams to detect pre-existing conditions. The checks are thought to have saved ship owners over USD 100 million over the last 15 years.
The garnishment problem is another reminder of how heavily reliant shipping now is on The Philippines for its crews. A survey last September by IMEC of its 189 members revealed that Filipinos accounted for 34% of the 209,342 seafarers they employed (43% of ratings, 36% of cadets or trainees and 24% of officers).
It is also a further example of how compensation culture, fuelled by “no win, no fee” ambulance-chasing lawyers, has spread not just around the world but in shipping, despite compensation levels in employment agreements like the IBF regarded as generous by industry standards.
With little prospect of garnishment vanishing soon, ship owners may have to be even more generous, if only to spite the ambulance-chasers.
Source: BIMCO
The previous round of IBF talks ended in 2011 with a 7.5% rise that, spread over three years, translated into 1.2% annual pay rises. The increase had followed a two-year freeze agreed in response to the global financial crisis of 2008.
The new agreement, due to come into effect next year, is expected to revert to the two-year system that has been used since the IBF began life a decade ago. Many expect an increase in line with the 4.95% two-year rise in the minimum wage for an AB agreed last month between the ITF and ship owners at the International Labour Organisation (ILO).
As the IBF agreement talks continue (another round is due next month before a final meeting in June), ship owners – many, no doubt, with a JNG presence – are lobbying the Philippines Government to reform a legal system that means they have to pay out to meet questionable compensation claims for injury and illness even before they have had a chance to appeal the awards made against them by lower courts.
The sums involved, in what is known in legal parlance as “garnishment”, are far from trifling. In September last year, ship owners were owed more than USD 6 million by claimants and their lawyers in 98 cases where earlier decisions by the country’s National Labor Courts (NLCs) had been either overturned or reduced on appeal.
The chances of getting even a fifth of that back seem at the moment slim. In three other cases where the awards totalled USD 178,000, only USD 19,700 has been recovered. Claimants who have succeeded in the NLCs tend to have spent most, if not all, of the money (much of it paid to the ambulance-chasers) before superior courts hear any appeals in a process that can take as long as seven years.
The figures are from the report by the International Group (IG) of P&I clubs submitted last October to the National Labor Relations Commission (NLRC). The IG used the figures to illustrate the garnishment problem and proposed a system of escrow accounts to handle NLC awards pending appeals.
The report claimed ambulance-chasing lawyers has significantly increased in number and that, based on the number of cases involving IG members in the last few years, they had profited “unfairly” (even at a conservative fee level of 25%) by more than USD 1.5 million from exploiting the compensation system. One particular law firm involved in over a fifth of cases could have, if it were charging the more usual 40%, earned USD 517,000.
The IG believes the figures in its report represent the “tip of the iceberg”, as many ship owners prefer to settle awards made by NLCs rather than go through the lengthy and expensive process of appealing.
But it insists the seafarers are not to blame for the present situation; instead it blames the legal system, which the growing number of “claimant lawyers” are able to exploit “for their personal gain”. Claimants are also “rarely aware” – no doubt kept in the dark by the ambulance-chasers – that employers can claim the money back.
The report added that the contribution made by Filipino seafarers both to the economy in remittances that are approaching USD 5 billion a year and in manning a large part of the world fleet was “substantially overshadowed” by the daily frustrations encountered in the country’s legal system when dealing with “unmeritorious and dishonest” claims, albeit relatively small in number.
The NLRC, however, rejected the IG’s escrow proposal, arguing it did not have the “jurisdictional competence”. Last month the IG wrote to the Philippines’ Labor Secretary, claiming its concerns were endorsed by other industry groups, such as JNG member, the International Maritime Employers Council (IMEC), and by seafarers’ unions.
It called on The Philippines to press ahead with proposed reforms of the legal system, stressing the concerns raised in the October paper struck at “the very issues of integrity and fairness in the system” which had had a “detrimental impact” on how it was perceived.
It seems unlikely failure to reform what the IG calls an inequitable system will result in ship owners deserting Manila, dubbed the manning capital of the world, in droves.
But the frustrations at the perceived bias and injustice in the courts, when added to concerns at the quality of training (a long-dreaded decision by the European Commission on continuing recognition of Filipino certificates of competency is imminent), might mean owners look elsewhere in earnest for their crews.
Some might, however, point to the success P&I clubs have had in weeding out fraudulent claims for injury and illness by introducing pre-employment medical exams to detect pre-existing conditions. The checks are thought to have saved ship owners over USD 100 million over the last 15 years.
The garnishment problem is another reminder of how heavily reliant shipping now is on The Philippines for its crews. A survey last September by IMEC of its 189 members revealed that Filipinos accounted for 34% of the 209,342 seafarers they employed (43% of ratings, 36% of cadets or trainees and 24% of officers).
It is also a further example of how compensation culture, fuelled by “no win, no fee” ambulance-chasing lawyers, has spread not just around the world but in shipping, despite compensation levels in employment agreements like the IBF regarded as generous by industry standards.
With little prospect of garnishment vanishing soon, ship owners may have to be even more generous, if only to spite the ambulance-chasers.
Source: BIMCO
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