1 What is the current state of the shipping industry in your country?
The shipping industry has not been immune to the difficulties of recent years, such as the covid-19 pandemic and the recent war in Ukraine (and their related negative consequences). However, even though this sector has suffered a slowdown since 2020, it still represents a spearhead for the Italian economy, showing a positive trend towards pre-pandemic levels in 2021 and early 2022.
Large government grants (c. years.
2 What are the dominant shipping market trends affecting your country? What has been the impact of the covid-19 pandemic?
Online data shows that covid-19 has had a negative impact on trade markets. While we have witnessed a broad economic recovery after the covid-19 collapse, new destabilizing contingencies (such as the war in Ukraine) are now slowing down the process and making future economic developments uncertain.
In this scenario, the growing demand for goods cannot be met by a supply chain still struggling with the inconveniences caused by the pandemic. The supply chain is apparently experiencing bottlenecks, resulting in higher inflation (although Italy seems to be partially resisting).
The passenger and cruise transport sector, which has perhaps suffered the most from the consequences of the pandemic, is now beginning to recover.
3 Are there any recent national or international policy or legislative developments that could impact your country’s maritime market?
The implementing decree of the Italian PNRR modified the national regulation of the contract of carriage, whose previous legislation dated back to 1942.
These developments are likely to help revive the industrial sector. Our internal regulation will no longer be anchored solely on road transport: it will rather take into account innovations in the field of logistics and software, involving multimodal and naval transport. The methods for calculating any compensation payable by carriers and limiting their liability have been modified, bringing these rules closer to those resulting from the relevant international conventions.
With regard to international policy or legislative developments, mention should be made of EU Regulation 852/2020 and the Poseidon Principles.
4 What are the main regulatory and compliance issues for your country’s maritime market? What happens in the near future?
Growing interest in environmental sustainability is rising to the top of the legislative and political agenda. An example of this trend is the EU Regulation 852/2020, also known as the Taxonomy Regulation, establishing the technical selection criteria for several industrial sectors (including maritime transport) operating in the EU (i.e. say the conditions that each of these industrial sectors must meet to be considered green). Compliance with these criteria will lead, among other things, to the granting of tax advantages to green companies. Following this path, the European Central Bank is modifying the rules for absorbing banks’ capital, introducing lower absorption parameters for loans intended for green activities.
Following in the footsteps of the Poseidon Principles for Financial Institutions and the Ocean Freight Charter, the recently launched Poseidon Principles for Marine Insurance demonstrates the shipping industry’s growing interest in environmental sustainability and climate change. . Unlike the said EU Regulation, the Poseidon Principles are a private international act, created by some of the major marine insurance companies. Signatories and Affiliate Members commit to establishing global baselines derived from the methodology defined in the Poseidon Principles. Specifically, in the view of members, the four principles methodology (i.e. assessment of climate alignment, accountability, enforcement and transparency) would enable the marine insurance industry to achieve transparency and disclose the climate alignment of its hull and machinery portfolios.
5 What are the current sources of funding for the maritime industry? How do you think they will develop, and what are the advantages and challenges of financing a vessel in your country?
As mentioned above, the shipping market will likely be driven by increased liquidity over the next year.
Shipowners will have at their disposal substantial sources of funding from the European post-covid restructuring programs (i.e. the recovery plan for Europe and its NextGenerationEU), as implemented by the Italian government through the PNRR.
However, these sources are likely to be subject to strict eco-sustainability conditions arising, respectively, from commitments agreed between private parties (in the case of the Poseidon Principles) or commitments made at EU level (such as the taxonomic regulations).
6 Have there been any recent significant domestic or foreign court decisions or arbitral awards that have impacted your country’s maritime market?
The Court of Appeal of Campobasso recently rendered a judgment of interest to marine insurers operating in the yacht and H&M insurance markets.
This decision reaffirmed the applicability to H&M yacht insurance of the one-year limitation period provided for ship insurance by article 547 of the Italian Navigation Code.
The judgment overturned the first instance decision which had instead established that the two-year limitation period should be applied to H&M yacht insurance as provided for general insurance contracts by the Italian Civil Code (article 2952).
The above subject has been debated in numerous claims, in and out of court, in recent times, and it is important that the Italian courts continue to declare that the limitation period for marine insurance is one year in under Italian law and practice.
7 What is the outlook for your country’s maritime market? Which sectors are likely to grow and which are not?
According to the available data issued by the main marine insurance associations, the insurance industry has experienced an incredibly positive trend over the past year, thanks to a decrease in the number of marine accidents and an increase in the level basis of insurance premiums.
With regard to H&M insurance, the low loss rate has once again led to an increase in insurance premiums and deductibles. However, it could also be linked to a drop in maritime activity over the last two years due to covid restrictions, with the risk of a further increase in claims when full activity returns. A positive point for the H&M insurance sector linked to the ecological transition, the use of new fuel systems will force shipowners to take into account the associated risks and to protect themselves by taking out new insurance policies.
The inner track
What specific skills do clients look for in an effective maritime lawyer?
To assist and provide clients with the best strategy and solution to their demands, an international and business perspective is needed to deal with inter-jurisdictional negotiations or disputes, such as those that typically include insurers or shipping operators. Pragmatism and the ability to give clear and commercially sound advice is crucial. Finally, knowledge of the shipping, transportation and insurance industry is essential.
What are the key considerations for clients and their attorneys when arranging financing for a shipping transaction?
The answer will differ depending on whether the client is on the borrower’s side or on the lender’s side, as well as the structure of the transaction and the quality of the parties. One of the most important considerations for a bank financing the acquisition of a vessel is the law and jurisdiction of the state where the vessel is to operate.
Any issues relating to the correct registration and enforcement of securities on the vessel should be addressed with the assistance of a local solicitor.
What are the most interesting and difficult cases you have handled in the past year?
Our firm has been mandated by marine reinsurers involved in a facultative reinsurance treaty. We assessed whether reinsurers should provide coverage for two total loss claims. This was particularly sensitive due to the commercial relationship between the trading parties. We have also been mandated by marine and cargo insurers for an international shipment of freight which disappeared during transit and caused a total loss. In another instance, we were asked to assist both a marine insurer and the insured in the event of a fatal accident where a crew member was found dead. Our team intervened immediately after the claim and afterwards from the point of view of labor law and criminal law in the mutual interest of the insurer and the insured. We were also appointed to assist the owners of a deep sea tug shortly after a maritime accident involving the grounding of a tug in bad weather and the boarding of the tug. We provided immediate assistance after the victim managed to free the tug and fix the problem.