The Venezuelan Reform

THE Venezuelan maritime legislative reform process is no doubt unique. Although Venezuela is one of the Latin American nations with most potential to develop a strong shipping industry, given its position as an oil exporter and therefore its need for marine transportation both for domestic and international trade, Venezuela had, until 2001, inadequate maritime legislation.

The structure of this legislation was founded in continental law legislation, that is the French and Spanish Codes of the 18th and 19th Century, which inspired much Latin American legislation. Until the late 1990s, with the exception of perhaps Chile and Argentina, Latin American maritime legislation had not been modernised. Venezuela was no exception.

That is not to say that the local shipping industry and the maritime community in general had not tried to change it. In fact, the different players in the local Venezuelan maritime arena tried unsuccessfully for twenty years to convince the political establishment of the need for modern marine legislation and the to approve the main international maritime conventions.

Then, in the wake of political turmoil after 1998 with the election of Mr Chavez as president, events which gave grounds for deep concern in other legislative areas became an opportunity for the Venezuelan maritime community. The maritime sector was uninterested in purported political changes by Mr Chavez’s government due to its lack of political effect. However, it was included in a group of areas of the economy subject to legislative change by the sole signature of the president, as opposed to approval by a multi-ideological congress, which was required previously. The Venezuelan maritime community pushed strongly for transformation of maritime legislation, and achieved it.

Several sectors of the shipping industry co-operated and presented the new government with seven draft legal instruments covering general law of the sea, administrative maritime matters, private maritime law, port legislation, maritime procedures, coastal legislation and fishing. The seven new legal instruments were all approved by decree with legislative effect between September and November 2001. They are perhaps the most modern and comprehensive marine legislation in Latin America.

Venezuela has adopted most of the international conventions on maritime safety or maritime public law, including SOLAS, MARPOL, COLREG, STWC and those on liability for oil pollution - CLC and the Fund Convention. It has not, however, approved the Convention on the Law of the Sea, nor the so-called private maritime law conventions, such as those on collisions, bills of lading, salvage, limitation of liability and arrest of vessels.

The new legislation does, however, include most of the principles and in many instances the specific provisions of the Convention of the Law of the Sea and the said private maritime law conventions. Indeed, the new provisions on contracts of carriage follow the Hague-Visby structure with certain additions from Hamburg - those on passengers, the 1974 Athens Convention, the provisions on limitations of liability follow the 1976 and 1993 Conventions, and the provisions on salvage follow the 1989 Convention.

The legislative changes implied a wide theoretical opening of the shipping registry, with a view to boosting Venezuela’s potential, allowing for the registration of vessels under Venezuelan flag by foreign interests, as well as registration and bareboat charter. Equally, the legislative changes created a theoretical framework for modernising the maritime authority system. This included a new maritime judicial system with provisions to create specialised maritime courts and a new expeditious, reliable and specialised maritime procedure with oral trials, which is an innovation in itself, given Venezuela’s condition as a continental law country.

Venezuela now has a new maritime legal framework which perhaps no other Latin American nation has. The question is whether the theory has been effectively put into practice to create the potential for further development of the shipping industry and more healthy, sound and modern administration of the maritime sector generally. The answer, unfortunately, is negative, for three reasons:

(a) The maritime authority structure has improved only slightly from what it was prior to the legislative changes. Although the legal framework allows for more modern administration of the sector, political factors have prevented this. Decisions by the maritime authorities continue to be taken under the same philosophy that was used prior to the changes. Generally, although there have been slight improvements - mainly due to the goodwill of those administrating the system - the maritime authorities continue to lack the degree of modernisation that the legal framework permits and that the nation requires to further develop its shipping industry in a proper way.

(b) The Naval Registry, which was created to attract foreign investment in the shipping sector by increasing registered tonnage under the Venezuelan flag, has failed in that objective. While the provisions of the legislation allow for a convenient registry that could permit a fast, speedy and non-bureaucratic registration, the process is in many instances slower than it used to be before the changes. Hence, the view of the international community as to the convenience of the Venezuelan flag has not changed. Owners feel that the Venezuelan flag is an alternative only if it is strictly necessary on the basis that charter parties require it. These charter parties usually involve the oil industry and vessels that are to perform domestic trade reserved for Venezuelan flag vessels.

(c) Finally, despite the fact that they should have been established three years ago, the maritime courts have not been created. As a result, the expeditious, technical and reliable maritime procedure does not exist. Maritime procedures continue to be tried by commercial courts with heavily loaded dockets and managed by staff unfamiliar with the maritime industry. The lack of maritime courts and of the possibility of developing an expeditious, technical and reliable procedure, does away with the effectiveness of the legislative changes and substance. Nothing is achieved by having a modern legal instrument providing, for example, the possibility of an expeditious arrest of a vessel or its release or a sound interpretation of the distribution of fault and liability in a collision if there is no practical possibility of enforcement. Equally, nothing is gained from having a theoretically open ship registry if there are no vessels flying the country’s flag.

The Venezuelan situation is a clear example of a strong and intense effort by the shipping community over many years to adapt the nation’s legal framework to modern times. At the same time, it is an example of failed implementation due to political factors. Venezuela needs to effectively implement the changes by converting positive theory into convenient practice.