Shipping and Transport Bulletin - February - March 2019 - Nctm Studio Legale
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Shipping and Transport Bulletin
February – March 2019In this issue
“Not interested”: according to the the Council of State, shipping agents and shipbrokers cannot
speak in the interest of the shipowners regarding the pilotage tariffs 4
New evaluation parameters for concession applications: the last three criteria issued by the Italian
Ministry of Infrastructures and Transport 6
EU Regulation 2017/352 on port services and financial transparency: "limitations" to the number of
providers of port services and public service obligations (second part) 8
Planning of energy and environmental sustainability of port systems: Guidelines approved 9
New structures for shipping finance: sale and lease back 12
Protection of personal data in air transport 13
Contributions from Nctm Offices Around the World 17
Nctm Events 20
Nctm Pressroom 20
2In this issue:
We return to a topic of great interest in this period: the updating of pilotage tariffs. A recent ruling
by the Council of State established the inadmissibility “for initial lack of interest” of the appeal filed
by the Association of Shipping Agents and Shipbrokers of the Veneto Region to challenge the
increase in the above-mentioned tariffs decided in 2016.
We consider the last three latest evaluation criteria for the application/renewal for maritime
concessions pursuant to Article 18 of Italian Law 84/94 issued by the Italian Ministry of
Infrastructures and Transport by the Circular published on the Italian Official Gazette on 5 February
2018.
Let’s continue our analysis of the Regulation (EU) 2017/352, with particular reference to the issue
connected with the faculty, recognized in favor of the management bodies of the ports, to limit
the number of providers of port services in the ports under their jurisdiction.
The crisis in the shipping sector has involved non-profitability of shipping loans for banks. The
limited access to financial resources has forced shipowners and other shipping operators to turn to
new financing structures. One of them, certainly the most widely used in 2018, is so-called “sale
and lease back”.
On 17 December 2018 the Italian Ministry of Environment and for the Protection of Land and Sea
approved the “Guidelines for the drafting of Energy-Environmental Planning Documents of Port
Systems – DEASP”. Let’s learn more about this document.
After illustrating, in the previous issue of our newsletter, the impact of Regulation (EU) 679/2016
(the “GDPR”) on the Italian system, it is now appropriate to highlight that, at the same time as the
GDPR, also the Directives (EU) 2016/680 and 2016/681 were issued for personal data protection
purposes.
We want to thank our colleagues at Nctm Brussels’s office for their contributions highlighting the
most significant actions taken by EU institutions in the international shipping and trade sector.
You will also find a list of our events taking place at our Milan and Rome offices, in addition to the
usual update on our firm’s activities over the past two months.
3“Not interested”: according to the Council of State, shipping agents and
shipbrokers cannot speak in the interest of the shipowners regarding the
pilotage tariffs
We return to a topic of great interest in this period: the updating of pilotage tariffs. In the last issue
of our Shipping & Transport Bulletin we analysed the problems related to the world of Italian
pilotage, including the determination and updating of pilotage tariffs.
A recent ruling by the Council of State (“CoS”), confirming a decision of the Regional Administrative
Court of Veneto, established the inadmissibility “for initial lack of interest” of the appeal filed by the
Association of Shipping Agents and Shipbrokers of the Veneto region to challenge the increase in
the tariffs in question decided by decree No. 11 of 27 December 2016 of the Ministry of
Infrastructures and Transport - Venice Maritime Division.
Ekaterina Aksenova Shipping agents and shipbrokers had claimed to be holders of an interest since their "role is
Senior Associate, Genoa
necessary for the functions assigned to them by the Italian Navigation Code on the promotion of
Telephone: activities and business of shipowners".
+3902725511
E-mail: But the Council of State, while recognizing the existence of a personal, current and concrete interest
e.aksenova@nctm.it necessary to propose the appeal, has highlighted that in reality “shipowners are those, immediately
and directly, suffering from the alleged damage caused by the challenged tariff determinations”.
The Council of State further specified that shipowners - despite having participated in the procedure
for the approval of the tariffs through their trade unions - did not object to the increases established
by the aforementioned decree.
So, in fact, the CoS has denied any interest of shipping agents and shipbrokers in relation to the
issue of tariffs, arguing that, if need be, shipowners should be the ones to comment on the tariff
increase, and in any case, this should be done directly during the procedure for the approval of the
tariffs through the trade unions.
The ruling in question turns out to be of interest for two reasons: (i) first of all, because it highlights
the lack of shipping agents’ and shipbrokers’ representative power with respect to shipowners'
interests, which - as we will see below - is limited only to the cases provided for by Article 288 of
the Italian Navigation Code; (ii) secondly, because it underlines the importance of having a trade
union representing and protecting the interests of shipowners in the determination and updating
of pilotage tariffs.
As regards the first aspect, Article 288 of the Italian Navigation Code clarifies that the shipping agent
can promote actions on behalf of the shipowner only within the limits of the representation
mandate given to the same by the shipowner. Therefore, Article 288 of the Italian Navigation Code
links substantial representation to legal representation, thus excluding any representation on the
part of the shipping agent with regard to relationships and contracts from which the latter has been
completely excluded.
This approach has been reaffirmed several times in the case law of the Court of Cassation, which
specified that “With regard to maritime transport, the shipping agent, pursuant to Article 288 of the
Italian Navigation Code, is responsible for the legal representation of the shipowner within the same
limits of the substantial representation conferred to him, and within such limits he can promote
actions or be brought to trial as representative, irrespective of a specific power of attorney on the
4part of the shipowner, but said representation excludes contractual obligations that fall outside the
relationships managed by the shipping agent”1.
It is therefore evident that the determination of the tariffs and/or the updating of the same cannot
fall within the powers of representation under Article 288 of the Italian Navigation Code, since the
shipping agent does not take part in this procedure on behalf of the shipowner, which participates
in it through its trade union.
On the other hand, with regard to the second aspect, the problem that emerges is the true
representativeness of trade unions. As already highlighted in the previous issue of our Shipping &
Transport Bulletin - the tariff setting criteria and mechanisms applying to pilotage are decided by
the Ministry of Infrastructures and Transport subject to a joint preliminary investigation conducted
by the General Command of Harbour Masters and joint unions of Port System Authorities, service
providers and port users.
However, in the past few years, the concentration between service providers and shipowners,
gathered in the same trade union, seems to have slowed down the debate on the issues highlighted
by the Italian Antitrust Authority (“AGCM”) over twenty years ago and so far, never resolved2. In
fact, this was also confirmed by the ruling in question, where it states that shipowners, “despite
having participated in the procedure for the approval of the tariffs through their trade union, did not
object the increases challenged before this Court”.
So, the examined court ruling highlights again the need to solve a long-standing problem that
moreover - as seen in previous issues of this Shipping & Transport Bulletin3 - has been repeatedly
challenged by both the AGCM and the Court of Justice of the European Union.
1 Italian Supreme Court, Sec. II, 8 June 2012, No. 9354
2 See October-November 2018 and December 2018 – January 2019 issues of our Shipping & Transport Bulletin
3 See October-November 2018 and December 2018 – January 2019 issues of our Shipping & Transport Bulletin
5New evaluation parameters for concession applications: the last three criteria
issued by the Italian Ministry of Infrastructures and Transport
This article focuses on examining the three latest evaluation criteria for the application/renewal for
maritime concessions pursuant to Article 18 of Italian Law 84/94 issued by the Italian Ministry of
Infrastructures and Transport (“MIT”) by the Circular published on the Italian Official Gazette on 5
February 2018.
The three parameters at issue are quoted below for ease of reference:
e) “employment level, including also instructions on the use of temporary labour”;
Simone Gaggero f) “capability to ensure operational continuity of the port”;
Senior Associate, Milan
g) “sustainability and environmental impact of the proposed industrial project, level of technological
Telephone: innovation and industrial partnership with universities and scientific research centres included in the
+3902725511
activity programme”.
E-mail:
s.gaggero@nctm.it
As far as the parameter under e) is concerned, it should be noticed, in the first place, that the same
refers to a topic (employment) that – given its undisputed public interest features – has always been
of paramount relevance in every administrative procedure relating to the concession and/or
renewal of concession and authorizations in the port sector.
The above-mentioned parameter makes express reference to the use of temporary labour by the
applicant concessionaire. The rationale of such a reference might relate to the provision set forth
under Article 17, paragraph 15-bis, of Law 84/944. Indeed, according to such provision, Italian Port
System Authorities (“AdSP”) may allocate part of their income (arising out of taxes on loaded and
unloaded goods) to the financing of training activities or to the relocation of the staff of enterprises
providing temporary workforce for port activities. In times when many of these enterprises are in
financial distress and should be destined to shrink in size, also in consideration of the technological
development that nowadays urges towards fully automated terminals (consequently decreasing
terminal operators’ need for workforce), it seems logical that the AdSP are interested in evaluating
how much the entrepreneurial projects submitted by applicant concessionaires may “help” said
enterprises, by providing job opportunities to their staff.
Still with reference to the employment issue, it is appropriate to remind also the importance of the
provisions laid down by European Regulation EU 2017/352 (see in particular Article 9.3) on the so-
called “safeguard clause”. Said clause, quoted in the footnote for ease of reference5 essentially
4 “In order to enhance employment, professional innovation and professional updating of the staff of enterprises or of
agencies providing workforce, Italian port System Authorities may allocate part of its income, not exceeding 15 per cent of
the income arising out of taxes on loaded and unloaded goods, to the financing of training activities, of staff relocation,
including the redeployment of staff totally or partially unable to accomplish port operations and services on other different
areas, and of early retirement incentive plans for workers of enterprises or of agencies under this article. In order to avoid a
serious harm to the operativity of the port, Port System Authorities may fund operations aimed at restoring the economic
balance of enterprises or of agencies providing workforce within the recovery plans signed by the same Authority.”
5 Should the award of a concession or public contract result in the change of a port services provider, the managing body of
the port, or the competent authority, may demand that the rights and obligations of the outgoing provider of port services
arising from a contract of employment, or from an employment relationship as defined by the national law, and existing at
the date of said change, be transferred to the newly appointed provider of port services. In such event, the staff previously
engaged by the outgoing port services provider will be granted the same rights that they would have been entitled to in the
event of transfer of undertaking within the meaning of Directive 2001/23/EC.
6allows the managing entity of a port, in case of “change” of concessionaire, to demand that the
rights and obligations of the outgoing concessionaire – arising out of a contract of employment and
in force at the date of the “change” – be transferred to the incoming concessionaire.
As far as the parameter under f) is concerned, it should be noticed instead that the provision seems
to refer, in particular, to the hypothesis in which the operational plan submitted by the applicant
concessionaire contemplates the carrying out of works and is therefore aimed at giving priority to
applications (and the relevant underlying projects) that reduce to the minimum any interruption of
port activities and interferences of said works with the proper port functioning.
Accordingly, this parameter may seem an “instrument” to somehow favour present concessionaires.
If it proves true that we can no longer talk of a “right of insistence” (which has been fully repealed
by the law of the European Union), it is also true that such a criterion might seem to favour
enterprises that are already concessionaires, for which no major issues as to operational continuity
would arise. Therefore, the parameter being examined seems legitimate unless “fraudulently
exploited” so as to revive the aforesaid right of insistence.
Finally, as far as the parameter under g) is concerned, it should be noticed that said parameter -
with a very broad content – makes reference to a set of elements that are somehow “new” or, at
least, so far not “formally” acknowledged in a single legal provision.
Such elements may be deemed of actual interest with respect to the pursuit of public interest. Let’s
think, first of all, about environmental features, which certainly affect the sphere of public interest.
From this standpoint, we assume that, by way of example, “green” solution projects for the actual
performance of port activities (use of the latest generation means and equipment able to reduce to
the minimum the environmental impact, use of renewable energies, new electrification sources
from wharfs, electric systems, etc. etc.) may be positively evaluated.
In this respect, also the reference to technological innovation prospects may be consistent with the
logic to pursue the public interest, so much so in a context – such as the one we live in nowadays –
where technological innovation (including for ports) seems concerned with the need for a stronger
environmental protection. In such a scenario, the circular under analysis emphasizes the need for
protection also by “rewarding” concessionaires entering into partnership agreements with research
centres and universities, in order to foster the innovation process within port industries.
So, we have concluded our examination of the parameters issued by the MIT to the AdSP in order
to set the technical and economic criteria to be employed when comparing competing applications
for the concession/renewal of maritime concessions under Article 18 of Italian law 84/94.
All that remains is to wait and see how the AdSP will actually implement said criteria, keeping in
mind – to ensure transparency and neutrality within the administrative action – that such criteria
(and their relevant scorings) shall have to be disclosed by the AdSP before the beginning of the
comparative processes among competing applications.
7EU Regulation 2017/352 on port services and financial transparency:
"limitations" to the number of providers of port services and public service
obligations (second part)
We continue the analysis of the regulation of port services established by Regulation (EU) 2017/352
with particular reference - first of all - to the topical issue of the faculty, given to managing bodies
of the port, to limit the number of providers of port services in the port falling within their
competence. We will then deal with the issue of "public service obligations".
In Article 6 of the regulation, the European legislator indicates some reasons, already mentioned in
the previous issue of our newsletter that, alone or jointly, enable the managing bodies of the port
to limit the number of providers with reference to a specific port service.
Barbara Gattorna The aforementioned reasons include, first of all, the scarcity or reserved use of port areas6, provided
Senior Associate, Genoa that the limitation complies with the programming plans already adopted by the managing body of
the port or with plans adopted by "any other public authorities competent in accordance with the
Telephone: national law". This formula is not exactly clear, but certainly seems to limit at least formally the
+3902725511
E-mail: discretionary power of the managing body of the port7.
b.gattorna@nctm.it
Nevertheless, the rule provides that the limitation of the number of operators can be implemented
by the managing body when its absence would, de facto, run counter to the need to ensure "safety"
and "environmental sustainability" of port operations8. It should be noted that this provision seems
to leave a rather wide discretionary power to managing bodies, also by virtue of the fact that the
concepts of safety in port and environmental sustainability are not defined or described by the
regulation itself, but left "open".
Moreover, the reasons justifying the limitation of the number of providers of a specific port services,
include the case in which the dimensions of the port infrastructure and the volumes of port traffic
generated by it are such that the operations of multiple providers of port services in the port would
not be possible9.
However, this provision must be coordinated with the subsequent provision of the same article
being commented10, dealing with the case in which the managing body of the port11, due to its
dimension and the limited volumes of traffic generated, provides port services itself.
Given that, in the latter case, a natural monopoly is generated12, the rule requires that, in such small-
scale realities, the Member States "shall take such measures as are necessary to avoid conflicts of
interests".
Should the managing body of the port intend to apply limitations in the permitted cases, it shall
submit a “reasoned”13 proposal to limit the number of providers, after which the subjects involved
will have a deadline of 3 months to file their remarks. At the end of this period, the managing body
is authorized to publish the decision to actually proceed to the limitation and therefore to follow an
6 Article 6.1 lett a)
7 Article 6.1. lett a)
8 Article 6.1. let c)
9 Article 6.1, lett d)
10 Article 6.6
11 or a legally distinct entity which it directly or indirectly controls
12 Article 6.6.
13 Article 6.2.
8open selection procedure, which must necessarily be transparent and non-discriminatory14. Hence,
the type of service requested and the information deemed essential by the managing body for the
purpose of submitting the application should be made public.
With regard to public service obligations, we will first examine how the regulation "authorizes" the
Member States, in particular through the managing bodies of ports, to impose on port services
operators the obligation to operate certain port services in the form of "public services". Given that
the European legislator has defined the public service obligation as "a requirement defined or
determined in order to ensure the provision of those port services or activities of general interest”
we can consider the services in question as those activities that, reasoning according to
organizational or commercial convenience, the operator - if not "obliged" - would not provide or in
any event would not provide under the conditions that may be imposed on him15.
This obligation, however, should not be understood as the European legislator’s aspiration that
European ports - through the use of their operators – undertake a real public and general obligation
for the provision of port services, but rather as a commitment, shared by managing bodies and
operators, aimed at ensuring, for example, the availability of port services in a non-discriminatory
way for all users and on an ongoing basis (day and night) or, again, aimed at ensuring economic
accessibility to services transport to certain categories of users. The European legislator also
mentions the need for port services operators to supervise the entry, mooring and stay of ships in
compliance with EU environmental regulations, choosing, also in this case, not to define specific
duties.
To the exact opposite of an imposition, the aspiration of the Union seems therefore that to raise
standards and share the so-called good practice: the regulation requires that if a Member State
decides to adopt a public service obligation in all the national ports, it shall notify said obligation to
the EU Commission.
In the next issue, we will focus on workers' rights, financial transparency and autonomy of port
managing bodies, thus completing our overview of Regulation EU 2017/352.
Planning of energy and environmental sustainability of port systems: Guidelines
approved
On 17 December 2018 the Italian Ministry of Environment and for the Protection of Land and Sea
(Ministero dell’Ambiente e della Tutela del Territorio e del Mare “MATTM”) approved the
“Guidelines for the drafting of Energy-Environmental Planning Documents of Port Systems – DEASP”
(the “Guidelines”).
In particular, the Guidelines implement the provisions of Article 4-bis of Law No. 84/94, introduced
by Legislative Decree No. 169/16.
14 Article 6.4.
15 Definition No. 14 of the Regulation
9Said Article 4-bis of Law No. 84/94 provides that the port system planning must respect energy and
Valentina Cavanna environmental sustainability criteria. To such end, the Italian Port System Authorities (“AdSP”) will
Senior Associate, Milan promote the drafting of the Planning Document (DEASP) so as to achieve “adequate objectives, with
specific reference to the reduction of CO2 emissions”.
Telephone:
+3902725511 The Planning Document (DEASP) will be adopted directly by the AdSP, with no need for further
E-mail: approval by other entities, and if necessary must be updated every 3 years.
v.cavanna@nctm.it
Said document is formally independent from the general planning of the port system, even though
it should make reference to the specialist technical contents of the Port System Regulatory Plans
(“PRdSP”).
Through the Planning Document (DEASP), the AdSP will define “strategic directions for the
implementation of specific measures”, with the aim of improving energy efficiency and promoting
the use of renewable energies over the port area, determining in particular:
(i) interventions (i.e.: plants, facilities, structures and works), and measures (i.e.:
introduction of emissions standards in the authorizations issued to operators,
granting of benefits, application of incentives schemes etc.) to be enacted;
(ii) coordination strategies between interventions and environmental measures with the
planning of infrastructural interventions in the port system;
(iii) adequate energy and environmental measures monitoring interventions made, to
understand their efficiency.
In particular, the Guidelines regulate the Planning Document (DEASP) structure, the method for
measuring CO2 emissions of the port system, examples of interventions for their reduction, as well
as the method to carry out a cost-benefit analysis (“ACB”).16
More specifically, the Guidelines establish that the starting point for the drafting of the Planning
Document (DEASP) must be the “picture of the current situation” in terms of CO2 emissions of the
Port Systems, through the calculation of the carbon footprint.
It should be noted that – for the purposes of drafting the Planning Document (DEASP) – it is
envisaged that the AdSP as well as the other players of the system falling within the port context,
as defined by the PRdSP, be directly involved, by way of example, considering also passenger,
commercial and industrial terminals, as well as commercial and service vessels engaged in mooring
operations (on docks or by the sea), among the sources of energy consumption and of CO2 emissions.
In this regard, it would be reasonable to expect AdSP to get in contact with the “system” players
mentioned above (first of all, terminal operators), asking them to provide, by way of example,
specific information relating to facilities existing in their sites, as well as data on developed power
capacity (kW) and on fuel consumption by their own operational means. All the above, in order to
be able to process the aforesaid picture of the current situation in terms of CO2 emissions.
16Defined by the Guidelines as “a technique to assess and optimize the variation in economic well-being, deriving from an
investment, through the definition and measurement of costs and benefits – including social ones – of a project over a given
reference period”. Still according to the Guidelines, social costs and benefits are not only those for the project proposer, but
rather those for the community, also from an environmental and social perspective.
10Also, in light of the data collected, AdSP – within the determination of emissions reduction targets
– may then begin liaising with operators in order to evaluate the possibility to implement
interventions/investments aimed at pursuing the above-mentioned “environmentally” relevant
targets.
Again, in this framework, a peculiar attention to the environment with a subsequent trend
“supporting” eco-friendly operative means could emerge, consistently with the evaluation criteria
for concessions applications relating to “sustainability and environmental impact of the project” set
out in the circular of the Italian Ministry of Infrastructure and Transport of 5 February 2018 (which
is extensively analyzed in another article of this Newsletter).
It should also be noted that, according to the Guidelines, intervention proposals – depending on the
category of interventions17 - are subject to the application of the ACB, which must duly take into
account social and environmental aspects.
It should be reminded that the ACB – as specified in the Guidelines – is the instrument
recommended for the prior evaluation of economic benefits of public interventions in port areas, in
compliance with Legislative Decree No. 228 of 29 December 2011 on the valuation of investments
relating to public works.
Interventions described in the Guidelines include interventions encouraging the electrification of
consumptions, such as the realization of systems for the provision of shore power to mooring
vessels (so-called cold ironing), so as to reduce the need for using the ship engines to produce
electricity. Indeed, shore power connection may reduce CO2 emissions by more than 40% thanks to
the improvement of the efficiency of production/distribution of electric energy.
By way of example, the Guidelines indicate other possible types of interventions such as the
production of energy from renewable sources (e.g.: photovoltaic plants and mini-wind farms) and
the improved energy efficiency of buildings and areas within the port area.
To conclude, the Guidelines provide some interesting case-studies – on energy efficiency and the
use of renewable sources – that concern several Italian ports and have as their subject-matter, inter
alia, cold ironing installations, lift truck prototypes fueled by dual fuel system (diesel and GNL) and
modern photovoltaic plants.
17 In particular, according to the Guidelines, the evaluation procedure is not compulsorily required in case of energy-
environmental interventions (other than public works or public utility works), promoted by private operators working in
ports, that do not imply public capital contributions but may give access to grants and incentives for energy efficiency and
renewable sources. In such a case, port authorities will collect from said operators the information needed to complete the
set of energy-environmental data necessary to the Planning Document (DEASP) (avoided CO2). Said interventions are
nevertheless inserted in the Planning Document (DEASP) to contribute to the accomplishment of emissions reduction targets
within the port area.
11New structures for shipping finance: sale and lease back
The crisis in the shipping sector has involved non-profitability of shipping loans for banks. Indeed, a
number of loans and, particularly, those granted to small shipowners were not repaid by them and
much debt restructuring took place. This and other reasons have led some leading banks to
withdraw their commitments in shipping finance. The limited access to financial resources has
forced shipowners and other shipping operators to turn to new financing structures.
One of them, certainly the most widely used in 2018 (which can be expected also in 2019) is so-
called “sale and lease back”.
Emanuele Caretti Sale and lease back can be structured in various ways. If the ship to be financed is still to be built,
Senior Associate, Milan the shipping company will order its construction from a shipyard under a standard shipbuilding
contract. Upon delivery, the ship shall be promptly sold under a memorandum of agreement to a
Telephone: leasing company or, in any event, to a lender, who will officially purchase the ship through a special
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purpose vehicle entitled to carry out financial lease activity. At the same time, said special purpose
E-mail:
e.caretti@nctm.it vehicle shall charter the ship to the same shipping company that ordered its construction under a
“bareboat charter”18.
The main documents to be considered, negotiated and executed in such transaction are basically
the following three: (i) shipbuilding contract, (ii) memorandum of agreement (whereby the ship is
sold by the shipowner to the leasing company) and (iii) bareboat charter (whereby the ship is
chartered by the leasing company to the shipowner).
Alternative structures can be provided. For instance, if the ship has already been built and is
operating, there will be no shipbuilding contract. Another solution involves the leasing company
taking over the shipbuilding contract by entering into a contract amending the same whereby the
leasing company becomes a party to the shipbuilding contract together with the shipyard and the
shipowner. In such a way, the leasing company shall pay the instalments set for the construction of
the ship directly to the shipyard and directly become the owner of the ship upon delivery. In such
case, the entering into the memorandum of agreement shall not be required.
The security package shall be consequently adjusted to the sale-and-lease back structure. The
mortgage, if requested, shall therefore no be longer granted by the shipowner but by the leasing
company in favour of the actual lender of the transaction (if different from the leasing company).
In the event that the ship is under construction, the security shall however include: (i) assignment
of refund guarantees, i.e. all rights and interests arising from refund guarantees in favour of the
leasing company (refund guarantees are the repayment guarantees that a bank usually grants as a
security for payment of the instalments payable by the shipowner to the shipyard); (ii) general
assignments of all earnings, insurance and requisition compensations relating to the ship; (iii)
insurance assignments (limited to insurance); (iv) pledges over bank accounts to which the ship’s
earnings are transferred; (v) any pledge over equity interests of the shipping company; (vi) first-
demand guarantees of the shareholders and/or holding companies of the shipping company; (vii)
manager's undertakings (i.e. a deed of commitment and subordination to the rights of the leasing
company executed by the technical and/or commercial manager of the ship; (viii) any negative
shares pledge (i.e. a commitment by the charterer’s shareholders not to dispose of their interest in
the charterer or allow distribution of dividends until the debt to the leasing company is paid in full).
18A bareboat charter is a contract whereby the shipowner provides the charterer with the ship, the relevant appurtenances
and on-board documents required for navigation and the charterer provides all the other things (including the crew).
12Furthermore, reference must be made to letters of quiet enjoyment. A letter of quiet enjoyment is
a security document in favour of the shipowner/charterer involving an undertaking by the lender
(which, as mentioned above, may even not coincide with the leasing company) not to enforce the
securities in its favour until the owner / charterer has fully and timely paid the hires.
By sale and lease back, the instalments of the loan payable by the shipowner to the leasing
company/lender of the transaction, including capital and interest, are in all respects hires of the
charter. The advantages for the leasing / lender company are considerable.
Normally, shipping loans involve a shipowner retaining ownership of the ship. In case of non-
payment by shipowners of loan instalments or any other default, the bank shall start an
enforcement procedure aimed at recovery of the loan and enforcement of the mortgage. In certain
countries like Italy, such action can take a long time and it is therefore customary to enforce the
mortgage in "favourable jurisdictions".
Under sale and lease back, the leasing company or the actual lender is the owner of the ship and -
in the event of non-payment of hires - may promptly terminate the bareboat charter and take
possession of the ship in any part of the world.
Sale and lease back can also be used by companies undergoing financial restructuring under Article
67 and 182-bis of Italian bankruptcy law19. As is known, companies entering into debt restructuring
agreements are bound by strict (financial and non-financial) covenants for a number of years. By
the tool in question, the company under restructuring formally sells the ships to a leasing company
and takes it back on a bareboat charter basis. By doing so, the company under restructuring releases
itself, at least in relation to those ships subject to sale and lease back, from the strict covenants
imposed by the restructuring agreement. On the other hand, the implementation of a transaction
like the one described certainly gives rise to considerable doubt on the part the banks involved in
restructuring because, as a matter of fact, they are deprived of the further securities associated with
the ships involved in sale and lease back, which remain outside the “restructuring perimeter”.
Consequently, if vessels generate earnings exceeding the amount needed for repaying the loan,
such excess cash cannot be redistributed to the banks involved in restructuring.
In general, one can say, however, that sale and lease back is becoming the most widely used tool
for international finance transactions involving cargo ships and one may also expect that it will
remain the most widely used financing instrument in the near future.
Protection of personal data in air transport
Foreword
After illustrating, in the previous issue of our newsletter, the impact of Regulation (EU) 679/2016
(the “GDPR”) on the Italian system, it is now appropriate to underline that, at the same time as the
GDPR, Directives (EU) 2016/68020 and 2016/68121 were issued.
19 Royal Decree March 16, 1942, no. 267.
20 Transposed in Italy by Legislative Decree 51 of 18.5.2018.
21 Transposed in Italy by Legislative Decree 53 of 21.5.2018.
13Such Directives are, along with the GDPR, part of the same EU data protection reform package,
falling within the specific and delicate framework of personal data processing carried out in the
context of investigation for crime prosecution. Although gone unnoticed (as attention was much
more focused on the GDPR), the two Directives at issue are not less relevant for personal data
Filippo Di Peio protection purposes.
Of Counsel, Rome
More specifically, Directive 2016/681 relates to the processing of so-called “Passenger Name
Telephone: Record” (“PNR”) data, which is a record of each passenger’s air travel requirements that contains
+39066784977 information on bookings made by or on behalf of any person for prevention, detection,
E-mail: investigation and prosecution of terrorist offences and serious crime.
f.dipeio@nctm.it
Insofar as is relevant here, we are going to correlate the content of Directive 2016/681 – on the use
of PNR data – with the GDPR, with a view also to assessing their combined impact.
The “PNR” Directive
Directive 2016/681 on the use of passenger name record (PNR) data for the prevention, detection,
investigation and prosecution of terrorist offences and serious crime, requires air carriers to register
and retain passengers’ data for a sufficiently long period.
More specifically, PNRs are records of passengers’ data, acquired and stored in Computerised
Reservation Systems (“CRS”), developed precisely for exchange of information among air carriers.
PNR data is information provided by passengers and collected by air carriers for enabling
reservations and carrying out the check-in process such as dates of travel, travel itinerary, purpose
of travel, passenger contact details, baggage information, means of payment, specific requests (e.g.
special assistance, special meals).
As is clear, such information is massively collected by air carriers and processed for commercial
purposes. The Directive specifies, however, that processing can extend to the purposes of
prevention, detection and prosecution of terrorist offences and similar crime.
Unlike the previous measures adopted at European level such as the API (Advance Passenger
Information) and SIS II (second generation Schengen Information System) regulations, which did
not allow the authorities to identify suspects unknown to authorities, Directive PNR provides the
systematic collection, use, storage and retention of the PNR data of passengers of international
flights. According to the European Commission, PNR data allows identification, by means of
algorithms, of persons among those unknown by the police who may pose a terroristic threat.
Therefore, the line between lawful processing – in the presence of a concrete risk for national
security – and unlawful processing (potentially identifiable, particularly in the context of preventive
activity, if there is no imminent threat) is pretty thin.
Under the PNR Directive, air carriers shall provide authorities with PNR data relating to extra-EU
flights, with the right for the Member States to collect also PNR data relating to intra-EU flights,
notifying the European Commission thereof in writing. Furthermore, EU countries may decide
whether to also collect PNR data from non-carrier operators, e.g. travel agencies or tour operators,
who likewise provide flight reservation services.
14More specifically, PNR data are transferred by air carriers (or other operators) to a Passenger
Information Unit (PIU) of the Member State concerned, usually no more than 24 hours before the
scheduled flight departure or immediately after boarding or gate closure22 23.
The PIU is responsible for collecting, storing and processing PNR data as well as for transferring such
data to competent authorities and exchanging the same with the PIUs of other Member States and
Europol. The PIU shall also appoint a person in charge of protection, responsible for overseeing PNR
data processing and applying the relevant safeguards; access to the whole mass of PNR data, which
allows direct identification of the party concerned, shall only be allowed under very strict and
limited conditions. Any PNR processing shall be registered or documented; Member States shall
however prohibit any processing of PNR data that could reveal a person's race or ethnic origin,
political opinions, religious or philosophical beliefs, trade union membership, health, sexual life or
sexual orientation of the persons concerned (which is not always possible, especially in respect of
health, suffice it to think to special assistance requests made, for example, by passengers with
restricted mobility).
PNR data shall be retained for five years after being transferred to PIUs. In the six months following
the expiry of such period, the PNR data collected shall be depersonalised and anonymised by
masking certain information such as name, address and contacts, which may be useful to directly
identify a passenger.
Coordination with the GDPR
PNR data are today recognised as among the most sensitive categories of personal data; there is,
therefore, an obvious need to coordinate the provisions of the PNR Directive with those of the GDPR
and, generally, with the statutory rules on personal data protection.
As is known, Article 5 of the GDPR sets out the principles governing personal data processing24.
Concerning PNR data processing, particularly relevant is the principle of transparency, which
involves any data collected having to be processed lawfully and in such a way as to allow the parties
concerned to know how their own data is collected, processed or transferred to third parties.
Accordingly, air carriers (or any other operators concerned) shall comply with the principle of
transparency and for such purpose provide passengers with any useful information on the transfer
of their PNR data to PIUs before the same occurs.
22 A PIU is responsible for storage, analysis and transmission of the data to competent authorities; Member States are
however entitled to obtain PNR data also from PIUs of other States, if useful for a specific investigation.
23 For example, in case of multi-stop flights, the PNR data of all passengers shall be transmitted to the PIUs of the Member
States involved.
24 More specifically, personal data shall be:
a) processed lawfully, fairly and in a transparent manner in relation to the data subject;
b) collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with
those purposes;
c) adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed;
d) accurate and, where necessary, kept up to date; every reasonable step must be taken to ensure that personal data that
are inaccurate, having regard to the purposes for which they are processed, are erased or rectified without delay;
e) kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the
personal data are processed;
f) processed in a manner that ensures appropriate security of the personal data, including protection against unauthorised
or unlawful processing and against accidental loss, destruction or damage, using appropriate technical or organisational
measures.
15Besides the principle of transparency, PNR data processing must be in compliance with the principle
of “accountability”, which requires data processing to be implemented in compliance with the
provisions of the GDPR, with the burden of the proof of such conformity being with the data owner.
This means that air carriers (or the operators concerned), in their capacity as data owners, shall
process PNR data having regard to the provisions of both Directive 2016/681 and the GDPR and
shall ensure that the PNR data collected not exceed what is necessary in relation to booking
purposes (so-called “principle of proportionality”).
In addition, all air carriers, in light of their usual and large-scale processing of personal data such as
PNR, shall appoint a Data Protection Officer (DPO) having the necessary skills to interpret and apply
the GDPR rules. It is not by chance that the International Air Transport Association (“IATA”)
requires all of its members to appoint a DPO and to involve a specialist lawyer when any doubt or
issue arises that needs to be settled through a legal counsel.
Furthermore, given the potentially “sensitive” nature of the data in question, it is necessary verify
from time to time whether processing is prohibited and, if not, on what basis it is allowed and to
handle it in compliance with the GDPR requirements regulating the processing of special categories
of personal data.
Conclusions
The risk that passenger data processing may exceed the purposes of collection and, consequently,
the bounds set by the GDPR principles is very high, especially when the conflicting interest at stake
is prevention and prosecution of serious crime connected to international terrorism.
It is not by chance that the European Privacy Authority expressed some doubt as to the conformity
of the PNR Directive with the provisions of the GDPR25, because of the lack of any “reason and proof
to justify the creation of a database that is unprecedented in Europe”. The question is to what extent
a massive and indiscriminate data collection involving the general population is necessary and how
can this be consistent with the principle of proportionality stipulated by the GDPR. Emphasis is then
shifted to the actual effectiveness of such kind of measures. Indeed, in the words of the European
Data Protection Authority, “the same results could be achieved by taking more limited, less costly
and less privacy-invading measures”.
On the other hand, that would not be the first-time personal data protection is subordinated to
other interests, deemed more relevant after cautious balancing. Suffice it to think that the in-itself-
unlawful disclosure of personal information obtained without the consent of the data subject may
under certain conditions be lawfully used as a probationary element in criminal proceedings.
Now we only have to wait and verify whether the recipients of the PNR Directive will actually be
able to remain within the bounds of the principles governing personal data processing, also
identifying the way in which they can lawfully unbind themselves for the sake of higher interests.
25 See https://www.repubblica.it/tecnologia/2016/04/14/news/privacy_buttarelli-137648874/
16Contributions from Nctm Offices Around the World
Taxation of Ports in Italy
Ports in Italy are fully exempt from corporate income tax. In the Basque region of Spain, ports are
also fully exempt from corporate tax. In the rest of Spain ports are exempt from corporate tax on
their main sources of revenue such as port fees or income from rental or concession contracts. The
selective exemption from having to make a payment, such as a tax, is the same, in legal terms, to
the receipt of a payment from the state.
The EU Commission, which has competence to control the aids states give to enterprises operating
in their territories, considers that this tax exemption can provide ports with a competitive advantage
Bernard O‘Connor to the extent that their activities are commercial. The activities of ports such as maritime traffic
Equity Partner, Bruxelles control or safety or air pollution surveillance are not considered commercial activities.
Telephone: The Commission considers that the tax exemption on the income from commercial activities is
+32 (0) 2 285 4685
E-mail: selective and can be considered a state aid but that the EU state aid rules do not apply to these
b.connor@nctm.it activities.
Contract Professor, In April 2018 the Commission informed both Italy and Spain of their concern that the tax exemption
Statale di Milano were state aids to the ports in Italy and Spain. On 8 January 2019, the Commission has announced
Visiting Professor, that it has taken the preliminary decision that the selective tax exemption (it is selective because it
Bocconi di Milano does not apply to all enterprises in Italy and Spain) is in fact a form of state aid. On that basis the
Commission has invited Italy and Spain to change their tax legislation by 1 January 2020 so as to
remove the exemption. In earlier decisions the Commission had made the same request to the
Netherland, Belgium and France. The Commission is currently examining the situation in other
Member States.
If Italy and Spain do not accept the Commission’s invitation to change their laws, the Commission
may take a further step to open an in-depth investigation and order, at the end of the investigation,
Italy and Spain to actually make the change.
The exemption from corporate taxes for ports pre-dates the formation of the EU and thus it is
considered ‘existing’ aid. Unlike other state aids, recipients of existing aid are not required to pay
back the monies received. Thus, the downside for Italian and Spanish ports is for the future and
does not affect the past. That situation could change if the Commission makes a definitive finding
that the exemptions are in fact state aids.
In its announcement the Commission was keen to point out that its decision does not mean that
ports can no longer receive aids from the state. The Commission press release states:
Removing unjustified tax advantages does not mean that ports can no longer receive State support.
Member States have many possibilities to support ports in line with EU State aid rules, for example
to achieve EU transport objectives or to put in place necessary infrastructure investment which
would not have been possible without public aid. In this regard, in May 2017, the Commission
simplified rules for public investment in ports. As a result of the Commission extending the General
Block Exemption Regulation to non-problematic investment in ports, Member States can now invest
up to €150 million in sea ports and up to €50 million in inland ports with full legal certainty and
without prior verification by the Commission. The Regulation allows public authorities to, for
example, cover the costs of dredging in ports and access waterways. Furthermore, EU rules enable
Member States to compensate ports for the cost of undertaking public service tasks (services of
general economic interest).
17What steps Italy or Spain or the other Member States will now take is not known. What is clear is
that the business model of ports will need to change. It is possible that the Member States could
argue that the fact that all Members give similar tax exemptions competition between Member
States cannot be affected. This argument may well run foul of the fact that the exemptions are not
quite the same in all countries and that the difference might give a competitive advantage.
What is clear is that ports will need to address this problem alongside the state and become involved
in the resolution and plan for the changes (however deep or shallow) that will inevitably follow this
initiative.
Close cooperation between Shippers and Authorities
The European Maritime Safety Agency (EMSA) located in Lisbon but part of the network of EU
agencies for most commercial sectors (medicines, chemicals, transport etc.), has publicized a
training event from October 2018 showing close cooperation between shipping industry and the
agency. EMSA organised a two-day advanced training course on Directive (EU) 2016/802 relating to
a reduction in the sulphur content of certain liquid fuels. As part of the event, EMSA arranged a visit
on board the MSC Seaview which had docked in Lisbon for the first time.
The goal of the visit on board was to provide field training to 30 inspectors from EU member states,
Norway and Canada by way of a mock inspection of the vessel’s compliance with the EU Sulphur
Directive. The inspectors were given the opportunity to verify the required documentation of the
ship, examine the fuel system and take a sample of the fuel. In addition, during the visit a
demonstration of an active exhaust gas cleaning system was provided. EMSA would like to thank
MSC for their support and help in providing this practical training and look forward to furthering
this partnership in the future.
Safeguards on Steel
The EU Commission notified the WTO in early January 2019 that it intends to make definitive the
provisional measures imposing a 25% import duty on the imports into the EU of 26 different steels.
The 25% will only apply when the level of existing trade flows for each exporting country is exceeded.
A vote by the Member States to confirm the EU’s position will take place in mid-January and the
definitive measures are likely to start from the beginning of February. Provisional measures, slightly
different from the definitive measures, have been in place since July 2018 and lapse on 4 February.
These safeguard measures apply to all exports to the EU will operate along-side the existing anti-
dumping and anti-subsidy measures on a number of specific steels from a limited number of specific
countries.
Trade News
In the wake of the ongoing US decision to block the appointment of judges to the main appeal court
of the WTO, thus undermining the function of the institution, the EU has set out an ambitious
proposal to modernise the WTO looking not only at the Appellate Body but also at some of the
substantive trade rules and disciplines that could be improved. The WTO has not seen significant
changes since it came into operation in 1995 (Marrakesh Agreement of April 1994) and many WTO
members consider that the current rules do not reflect economic realities in today’s world. The EU
has been transparent in its ambitions setting out a broad programme for reform and announcing
that it will submit a variety of papers to the WTO over the next months and years.
At the same time the EU continues to promote its ambition to have bilateral (with one country) or
plurilateral (more than one country but not all countries) trade agreements in place as soon as
18possible given the tensions on multilateral (all countries) trade negotiations within the WTO. At the
end of 2018 the EU announced a comprehensive Economic Partnership Agreement with Japan that
will come into effect on 1 February 2019. Like the Canada (CETA) Agreement the Japan agreement
seeks to remove all remaining tariffs on trade between the two entities as well as remove market
access impediments caused by standards behind the frontier. With these agreements the EU hopes
to set the standard for future multilateral trade deals.
19Nctm Events
FEBRUARY
18, Privacy Master DPO
IMQ, Via Marco Fabio Quintiliano, Milano, MI, Italia
Professional training course, made up of four modules, articulated for the main professional figures
identified by the UNI standard in the field of data protection and the new European regulation on
Privacy (GDPR).
The modules are aimed at those who intend to qualify as DPO. Passing the final exam allows access
to the DPO certification as a professional figure, according to the UNI 11697: 2017 standard.
Nctm Pressroom
Nctm in the acquisition of SMRE by SolarEdge
Nctm Studio Legale advised SolarEdge Technologies, Inc. ("SolarEdge"), global leader in the smart
energy sector, listed on NASDAQ, on the acquisition of 51% of SMRE SpA, whose shares are traded
on AIM Italia, for a value of around 77 million dollars.
The closing of the transaction is expected in the coming weeks. The acquisition will entail the
launch of a mandatory takeover bid for the entire capital by SolarEdge.
Nctm team was coordinated by Lukas Plattner, supported by Eleonora Sofia Parrocchetti and
Cesare Saputo, for M&A aspects, and Andrea Iovieno and Antonio Principato, for Capital Markets
aspects.
Nctm with Domino on the joint venture with Napino
Nctm Studio Legale advised Domino S.r.l. ("Domino"), engaged in the design and production of
components in the motorcycle industry for over eighty years, on the agreement for the creation of
a joint venture with the Indian company Napino Auto & Electronics Ltd ("Napino").
Thanks to this joint venture, Domino becomes an active player in the production and distribution
of electronical and electromechanical components for the 2-wheel and 3-wheel Asian market.
Nctm team was coordinated by Vittorio Noseda and Lucia Corradi.
Nctm with Infracapital in the creation of a platform with Enel X dedicated to energy efficiency
projects
Nctm Studio Legale advised Infracapital, European investment fund of M&G Prudential and one of
the most important global financial service providers, on the creation of a platform dedicated to
energy efficiency projects with Enel X, Enel Group's division focused on digitization, sustainability
and innovative services,
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