Shipowners exodus feared over blocking of escrow provision on Senate’s Magna Carta for Seafarers

As published by Manila Bulletin on March 28,2023

Several manning agencies, which provide thousands of Filipino seafarers to foreign shipowners, are bothered by the non-inclusion of the escrow provision in the Senate version of the Magna Carta for Filipino Seafarers.

Lawyer Noli Partido, head of the legal division of the Associated Marine Officer’s and Seamen’s Union of the Philippines, explained that the escrow provision which they have been pushing serves as a protection of employers against the so-called ambulance chasers in the industry. 

Ambulance-chasing in the maritime industry refers to the alleged modus of persuading injured seafarers to file cases against their employers for claims.  Such problem is one of the issues raised by foreign shipowner groups in discussions pertaining to improving the chances of hiring more Filipino seafarers. 

Based on the initial report, ambulance-chasing in the Philippines reportedly serves as one of the major reasons why Filipino seafarers are losing jobs onboard global merchant vessels.

“Although the Senate bill on the Magna Carta of Filipino Seafarers is still up for interpellation and a series of bicameral committee meetings, the removal of the escrow provision is a big blow to the stakeholders and are now preparing for the gradual demise of the Philippine maritime industry as shipowner exodus shall remain unabated,” said Partido.

The Magna Carta for Filipino Seafarers’ House of Representative version, or the House Bill (HB) 7325 that already passed on the third and final reading last March, has included Section 51 or the Escrow provision that is seen to protect foreign shipowners from unscrupulous claims of some erring seafarers in connivance with ambulance chasers.

Under Section 51 of HB 7325, the monetary award for seafarers from the National Labor Relations Commission will be deposited to an escrow account until the “issuance of judgment by the appropriate reviewing court or when the employer or manning agency fails to perfect the appeal or petition for review.”

But what worries manning agents right now, according to Partido, is that Senate Committee on Overseas Workers Affairs removed the Escrow provision on the proposed bill’s Senate version last week.

International shipowners, local manning agents, and the biggest seafarer unions in the Philippines are supportive of the escrow provision because they all see it as an institutional solution to ambulance chasing syndicates, which continue to proliferate despite Republic Act 10706, or the Seafarers’ Protection Against Ambulance Chasing Act. 

Partido said the escrow provision in House Bill 7325 has guardrails to protect the seafarers as wages, statutory claims, and undisputed claims will not be included in the escrowed account as clearly indicated in Section 51 of the bill.

Also, the International Maritime Employers Council (IMEC), the biggest group of international shipowners in the world, have expressed their concern on the glaring problem of ambulance chasing in the Philippines, “which has been turning off a number of their members for paying off huge but often concocted crew claims to add to their operational costs. 

A number of IMEC members have in fact decided to do away with Filipino seafarers and have instead gone to India and South Africa to hire crew for their vessels.

“IMEC had expressed serious concerns even before the pandemic as more and more of our members had decided to look elsewhere given that it was practically impossible to win a claims case in the Philippines on merit. No matter how strong the evidence, corrupt arbitrators often did not even hear the case and simply awarded in favor of claimants based on their lawyers’ submissions without even considering the employers’ response,” said Francesco Gargiulo, chief executive officer IMEC said in a virtual dialogue with officials of the Department of Labor and Employment (DOLE) and the Department of Migrant Workers (DMW) in March this year. 

Nelson Ramirez, of the United Filipino Seafarers (UFS), also wrote an open letter to President Ferdinand Marcos Jr. in April where he specifically asked to support the escrow provision which “will protect the Filipino crew of international vessels from predatory ambulance chasers.” The biggest international seafarer union, International Transport Workers’ Federation (ITF) issued a statement also last month calling for the “need to overhaul the Philippines system of seafarer workplace compensation, which has over time, seen the rise of widespread predation by so-called ambulance chasing lawyers.”

Earlier, President Ferdinand Marcos Jr. Marcos also recognized the severity of the issue during his meeting with international seafaring unions and shipowners in Brussels in December last year.

Data from claims decisions by the National Labor Relations Commission (NLRC) and the National Conciliation and Mediation Board (NCMB) also attest to why foreign shipowners are getting turned off from the continued hiring of Filipino seafarers.

According to lawyer Iris Baguilat, chairperson of the Association of Licensed Manning Agencies (ALMA), more than P2.5 billion worth of monetary claims awarded by NCMB alone from 2018 to 2022 have been reversed by either the Court of Appeals or the Supreme Court. 

“The seafarers were ordered to restitute the amount to the shipowners but were unable to do so because more than half of the claims that they got already went to ambulance chasers whom they contracted to file and claim on their behalf,” Baguilat said.

Baguilat also cited that from a market share of 45 percent in 1995, Filipino seafarers onboard global merchant vessels have steeply declined to 14 percent by 2021 because of the unabated exodus of foreign shipowners caused primarily by ambulance chasing.

“The escrow provision is a win-win formula in favor of both seafarers and the manning industry. Note that without foreign employers, there will be no Filipino seafarers onboard international vessels. When one employer leaves the country to search for crew in other countries, Filipino seafarers lose their jobs. It is also a loss to the manning industry,” said Capt. Gaudencio Morales, president of the Filipino Association for Mariners’ Employment (FAME)

“So those who caused employers to leave the country are doing a disservice to the seafaring industry and the country,” he added.