January 31 - BIMCO is alerting companies to the global impact of the UK Bribary Act.
The Bribery Act entails potential difficulties for companies worldwide, including shipowners, as its provisions on paying and receiving bribes, including bribery of foreign public officials, and anti-corruption compliance provisions for commercial organisations apply extraterritorially and not only to companies based and offences taking place in the UK.
BIMCO warns that the United Kingdom Bribery Act 2010, which is scheduled to enter into force in April 2011, has potential severe consequences for international trade and the shipping sector worldwide due to its provisions relating to various bribery offences combined with the fact that it will have extraterritorial application and thus, in principle, apply also to offences committed outside the United Kingdom and by foreign commercial organisations with a business presence in the United Kingdom.
One of BIMCO's main concerns with respect to the Bribery Act relates to its possible prohibition on so-called facilitation payments made by crewmembers, shipping agents and others to be treated fairly and according to the law by public officials in certain countries and regions, for example in relation to port calls. While being strongly opposed to corruption and fundamentally against facilitation payments, it must be recognised that there are ports where such practices are common and almost impossible to counter. A prohibition could therefore make it practically impossible for shipping companies to carry out their legitimate activities in some parts of the world and risk distorting competition.
According to the specific wording of the Bribery Act, it is an offence to induce a person to perform improperly a relevant function or activity. This could give the impression that facilitation payments are not illegal per se in cases such as those described above relating to port calls. Nevertheless, as no specific exemption is spelled out this remains uncertain and will ultimately be a matter for the courts of the United Kingdom to decide.
Another problematic element of the Bribery Act relates to the strict liability imposed for the failure of commercial organisations to prevent bribery offences committed by a broadly defined group of associated persons. BIMCO believes that it would in many cases be extremely burdensome for companies to ensure strict compliance with this requirement. The Act prescribes that guidance will be published, but it would appear to be a matter of great uncertainty to determine whether procedures implemented to this effect would in fact be considered satisfactory and in accordance with these guidelines.
BIMCO says that it understands that a review of the Bribery Act has been announced, but the details of this review are so far not publicly known. BIMCO has expressed its concerns about the problematic aspects of the Act to relevant ministers in the United Kingdom and highlighted that the extraterritorial application of the Act entails an unwarranted burden for international business and brings with it a genuine risk that conducting global corporate activities with any link to the United Kingdom could become unattractive and practically impossible.