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Stowage reform passed, now what?

Stowage reform passed, now what?

23 may 2017

Bernardo M. Cremades Román

Stowage Reform Passed, Now What?
Bernardo M. Cremades Román
In recent months, we have witnessed the slowdown in the work of port stevedores, driven by representatives of the Sociedad Anónimas de Gestión de Estibadores Portuarios (Sagep). This fact has been described as a "covert strike" both by private companies and by the Minister of Public Works. The scale of the conflict is considerable, since Spain carries out 53% of its trade with the European Union and 96% of transactions with third countries by sea. Many ships have been diverted to the ports of Lisbon, Tangier or Marseilles, and some sources speak of losses worth millions every day.
The obligation to liberalise the stevedoring sector dates back to Spain's entry into the EU in 1986. However, the reform of the State Ports Act of September 2011 maintained the monopoly regime of the Sagep, manifestly contrary to the freedom of establishment provided for in EU law. In November of that year, the European Commission sent a letter of formal notice to Spain, thus initiating the procedure for non-compliance that ended in a judgement condemning the EU Court of Justice on 11 December 2014. Since April 2016, the European Commission has another procedure opened against Spain for infringement of the above ruling. On May 12, the Council of Ministers approved a Royal Decree to that effect, validated yesterday by Congress, thus avoiding a new fine of 134,000 euros per day that would have accumulated to the pending fine of about 24 million euros. The reaction of the unions has been negative, announcing new strikes.
In accordance with the EU legal system, all state bodies are obliged to respect EU law. Unfortunately, the current situation and the delay in modifying the Spanish legislation applicable to stevedoring seems to undermine the useful effect of EU law and is causing considerable damage. However, those affected by this situation would have legal mechanisms to defend their rights. In the first place, an action could be brought against the Spanish State for infringement of Community law. The legitimacy requirements have been hardened with the latest reform of the Law on the Legal Regime of the Public Sector, which adds as a condition the prior obtaining by the individual of a final judgment dismissing an appeal against the administrative action that caused the damage and have alleged the breach subsequently declared. Naturally, this may lead to the obtainment of damages. of the excessively difficult damage caused.
Judicial claims
Secondly, an action could be brought against the Administration for the abnormal functioning of the public service. In this case, it seems that the delay in the execution of the sentence and the lack of minimisation of the harmful effects of a foreseeable strike would only be excusable if the Spanish State faced insurmountable difficulties that prevented it from doing so. Thirdly, the liability action against stevedoring companies could be analysed. This action will depend on the contract of the operator concerned and the liability regime of each of those involved. The Law of Maritime Navigation establishes that, even when the port operator has not been contracted by the recipient of the goods, the latter can claim directly from the operator for damages and losses caused. However, the right to strike greatly limits their liability.
Finally, States sign international treaties in order to encourage and protect the exchange of investments between different countries (commonly called APPRIs). Spain has more than seventy agreements in force that provide substantive protections for foreign investment. Most of these APPRIs allow the investor to choose whether to go to local courts or to an international arbitration tribunal - completely independent of the state receiving the investment - to settle claims resulting from treaty violations. Among other measures, it is common for these APPRIs to include the obligation to guarantee legal certainty for foreign investments. Since Spain did not immediately comply with the ruling of the EU Court in 2014, a climate of legal insecurity has been created against the international obligations assumed by the State, calling into question the principle of legality.

Spain has not been able to adapt adequately to a globalised port economy, and the situation is rather discouraging for investors. The State must now diligently guarantee a stable and predictable legislative and business framework. The dubious management of the situation and the uncertainty generated can lead not only to a wave of claims, both national and international, but also to the diversion of maritime traffic and port investors to ports that offer greater security and competitiveness.

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