Transport and Shipping Newsletter - December 2019 | News Roundup
Transport and Shipping Newsletter - December 2019 | News Roundup
Incoterms 2020: the new terms for the international sale of goods come into effect in January
The new version of the International Commercial Terms (Incoterms): Incoterms 2020 drawn up by the International Chamber of Commerce (CCI) for international trade will come into effect on January 1, 2020. The reason for the new version is the ICC’s commitment to revise the terms every ten years rather than the current 2010 version posing any great problems (note that China and Australia are now members of that organization). Unless the sale agreement expressly mentions that a specific version of the Incoterms applies to it, the new 2020 version will apply for agreements signed on or after that date.
Although the new version has not changed a great deal from the current 2010 terms, the following additions are notable:
- The DAT (Delivered at Terminal) Incoterm has been removed and replaced by the new DPU (Delivered at Place Unloaded) Incoterm. This is simply a change of nomenclature rather than a change to the Incoterms themselves, because the obligations and functions of both terms have basically remained the same. So the reason for the change is that because DPU is the only Incoterm in which the good is unloaded at the destination, the word “terminal” gave rise to some confusion in a few countries, especially in Latin America. As a result, it is now clarified that the good not only can be unloaded at a terminal or in transport infrastructure (port, airport, quay, and the like), but also at any point in the destination country that has equipment for unloading the good from the mode of transport, such as a factory or warehouse, for example.
- The FCA (Free Carrier) Incoterm now allows, in maritime transport scenarios, bills of lading to be issued after loading the good by stating “on board” to enable more efficient compliance with the usual document requirements for documentary credits as a payment method for the sale. Although this implies some contradiction with the meaning of the term bill of lading itself, because this document is usually issued, as its name suggests, when the goods are loaded on board the vessel rather than afterwards, the new addition is expected to speed up many sale transactions that were held up by the requirements associated with documentary credits.
- There are Incoterms relating to different types of transport insurance cover: CIP (Carriage and insurance paid to) and CIF (Cost Insurance and Freight). Under the CIP Incoterm, the seller is required to take out a transport insurance policy for the purchaser with broad cover, which relates to Clause A of the London institute cargo clauses. Whereas under the CIF Incoterm, the seller is only required to take out an insurance policy with minimum cover, which relates to Clause C of the London institute cargo clauses. The different requirements in relation to insurance is because CIF is customarily used for the maritime transport of grains, which often have a very low per-kilo price, and therefore requiring an insurance policy with maximum cover would considerably raise the cost of the policy, which would be detrimental to sellers’ negotiating power.
- It is explained in greater detail which party, seller or purchaser is responsible for the various customs formalities and, additionally, rules on goods in transit have been included for the first time. For these purposes, it is considered that the responsibility is held by the person assuming the transport risk up to the place of delivery. Therefore, for Incoterms EXW, FCA, FAS, FOB, CPT, CFR, CIP and CIP in which the transport risk is transferred at the point of origin, the responsibility for shipment under the goods in transit rules is assumed by the purchaser. By contrast, for Incoterms DAP, DPU and DDP under which the risk is transferred at the destination, the responsibility in this respect lies with the seller. The discussed change may be important for international sales in which the good has to go through several customs controls (especially in difficult or less developed countries) before arriving at the customs for the import country concerned.
- The Incoterms are reordered and reclassified according to whether they are for any mode of transport or for maritime transport, and lastly, their use in a specific order is recommended depending on the sale concerned.
Ports authority to amend Spanish ports legislation
The new Regulation EU No 352/2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports, which came into force on March 24, 2019, applies (article 4) to all maritime ports in the trans-European transport network which are listed in in Annex II to Regulation EU No 1315/2013 on guidelines for the development of the trans-European transport network. Among other important new legislation, Regulation EU 352/2017 also defines bunkering as a port service (article 2.a).
Even though the mentioned European regulation is no longer directly applicable throughout the EU and besides Legislative Royal Decree 2/2011 approving the Revised State Ports and Merchant Shipping Law (TRLPEMM, after its initials in Spanish) is, as a general rule, compatible with the European regulation, the state ports authority considers that the Revised State Ports and Merchant Shipping Law has to be amended, to:
- Treat all Spanish public ports (puertos de interés general listed in Annex I to the Revised State Ports and Merchant Shipping Law) as being in the trans-European transport network, because, although the majority are deemed to fall in that category, there are a few exceptions such as Puerto de Gandía and a few others;
- Define and provide rules on the supply of fuel as a port service (it is currently treated as a commercial service), which would also entail an amendment of the related port contract documents;
- Establish a transitional arrangement for the authorizations in force for the provision of the commercial service for the supply of fuel;
- Include the collection of cargo waste in the port service for the receipt of waste;
- Add various adjustments in relation to the minimum requirements applicable to providers, to approval of the contract documents, to publication of the proposed limit on providers, to the public service obligations, to the establishment of maximum prices in specific cases; and
- Establish a new price for the availability of the port service in specific cases.
Spanish ports to pay corporate income tax starting on January 1, 2020
The Spanish government has agreed, starting on January 1, 2020, to do away with the corporate income tax relief currently available to Spanish ports on the majority of their income (port fees, concessions, etc.). The tax credits for investments in ports will be kept however, and therefore their effective tax could be very similar to the current level.
That tax relief led the European Commission to launch an investigation on Spain (and other EU countries) due to considering that it gave Spanish ports a competitive advantage over other EU ports, deemed a form of state aid within the meaning of article 107 of the Treaty on the Functioning of the EU.
Following the Spanish government’s commitment, the European Commission has announced that it will end the proceeding launched against Spain. Moreover, Spain cannot be asked to recover and return the aid that has already been granted, because the tax relief already existed before Spain joined the EU and is therefore considered “existing aid”.
Spanish Markets and Competition Commission submits request for preliminary ruling in relation to stevedores
In 2014 the Court of Justice of the European Union (CJEU) held in a judgment delivered on December 11 in that year that the Spanish stevedore system then in force ran counter to the principle of freedom of establishment. This compelled Spain to pass various pieces of legislation to comply with that CJEU judgment. Namely:
- Royal Decree-Law 8/2017 amending the regime for workers for the provision of the goods handling port service (RDL 8/2017);
- Royal Decree Law 9/2019 amending Law 14/1994 on temporary employment agencies (RDL 9/2019); and
- Royal Decree 257/2019 on the rules for granting special aid for adaptation of the port stevedore sector (RD 257/2019).
RDL 8/2017 brought the need to amend the Fourth Master Agreement signed by representatives of the stevedore sector who, in fact, actually reached an agreement in this regard, approving, in summary, a number of obligations relating to subrogation of the employer.
In the opinion of the National Markets And Competition Commission (CNMC), that amendment introduced a number of commercial obligations among operators that went beyond collective bargaining and the provisions set out in RDL 8/2017, and therefore, due to considering that this could be tantamount to placing a restriction on the right to separation and free competition, it launched a penalty proceeding against the parties that signed that reform.
But before the penalty proceeding was completed, approval was given to RDL 9/2019 which again gave the representatives of the sector the chance to reach agreements establishing a mandatory subrogation of the stevedore companies as employers of the personnel of Sociedad Anónima de Gestión de Estibadores Portuarios (SAGEP) with retroactive effect. As a result, the CNMC has submitted a reference for a preliminary ruling to the CJEU which, briefly, asks whether, in the event of a conflict, EU Competition Law takes precedence over labor law (Spanish domestic law). Following the request, the CNMC interrupted the penalty proceeding mentioned above until the CJEU delivers a decision.
Access and use of modes of transport broadened for persons with disabilities
Royal Decree 537/2019 amending Royal Decree 1544/2007 on the basic conditions for accessibility and non-discrimination for access and use of modes of transport for persons with disabilities, which entered into force on October 10, 2019, allows, with no additional cost whatsoever for the user, access for:
- Wheelchairs with electric motors and scooters (as products aiding the mobility of persons with disabilities or reduced mobility) on maritime and land modes of transport where they do not exceed specific size restrictions and subject to being technically possible and safe; and
- Dogs assisting persons with epilepsy and diabetes on public transport in the same way as dogs assisting persons with disabilities are allowed.
Government approves implementing rules on fishing tourism business
The ministry for presidential affairs has approved the implementing rules on the fishing tourism business, as an additional activity in the fishing industry in Law 33/2014, of December 26, 2014, introducing measures for economic diversification of the industry.
Accordingly, Royal Decree 239/2019, of April 5, 2019, lays down the basic conditions for the conduct of fishing tourism activities that take place on board fishing vessels (on lists 3 and 4), and includes the following requirements for carrying on this activity:
- The fishing vessel must have a prior favorable report by the ministry of development on the conditions regarding maritime safety, navigation, human life at sea and the prevention of pollution;
- The fishing vessel must have a civil liability insurance policy in force or other equivalent financial security;
- Any tourists participating in fishing tourism activities are governed by the provisions applicable to staff other than crew and passengers, and they cannot carry on a fishing business activity;
- The vessel must have safe means of access for tourists, including, if need be, for persons with disabilities, and must comply with the other safety measures set out in the regulations; and
- For tax purposes, the income obtained from fishing tourism activities are taxed under the general tax rules applicable to the main fishing activity with which they are associated.
The activity will be supervised by the ministry of agriculture, fishing and food and by the ministry of development, in addition to any autonomous community powers over them.
New licenses approved within the nautical certificates for driving recreational craft
The nautical industry has gained ground in recent years which is mirrored in the modernization of maritime law on nautical matters through Royal Decree 238/2019, of April 5, 2019, adding licenses to the nautical certificates required for driving recreational craft and updating the safety measures in the use of personal watercraft (jet skis).
As stated in the preamble to the law, “there is a field of services in which the pay level does not make it attractive for merchant shipping professionals, and which does not match their high qualifications either, as happens with the activities related to carrying persons and supplies to recreational craft anchored in internal maritime waters or the performance of maritime and fishing trips on recreational craft, following the precedents established by the central government and autonomous community legislation in relation to fishing tourism. These limitations show that the licenses are not comparable with the professional qualifications in the field of merchant shipping and saltwater fishing”.
The new licenses added to the nautical qualifications required for recreational craft enable the holder, after passing certain skills tests and carrying out the necessary practical tests, to perform specific paid services such as those described below.
- The holders of yacht captain, yacht skipper and recreational craft skipper licenses are licensed to:
- Provide carriage services for supplies, only within internal maritime waters and on Spanish territorial sea waters up to a maximum distance of five miles from the port marina or beach where they leave, made using recreational craft and personal water craft (jet skis), to other craft or recreational vessels;
- Perform berthing, anchoring, towing or transferring activities for recreational craft within the waters belonging to ports, marinas or beaches, together with moving them to another port or place as long as the navigation does not take place at a distance over five nautical miles from the coast;
- Carry out sea testing for recreational craft and personal craft (jet skis); and.
- Driving vessels used for lifeguard activities on beaches.
- The holders of yacht captain and yacht skipper license can also skipper recreational craft carrying up to six passengers to carry out tourist trips and for recreational fishing activities, within the geographic area mentioned above.
- Moreover, the law also updates the safety measures for the use of personal watercraft (jet skis).