Venezuela sets the pace

VENEZUELA is in the process of a profound modernisation of its maritime legislation. Although gifted with a number of qualities that should have made it the Latin American nation with the strongest maritime sector, its shipping industry experienced a decline from the late 1980s which virtually did away with its fleet. Exaggerated protectionism and wrong policies weakened the competitiveness of local interests and scared away foreign investors. Overwhelmed by the crisis some three years ago, different sectors of the industry started to promote an extensive change in the legislation to attract investment, to allow the inflow of foreign interests, and to put in place the rules needed for the modernisation of the marine industry.

Exaggerated protectionism and wrong policies weakened the competitiveness of local interests and scared away foreign investors.

The process began in 1998 with the opening of the ship registry. Previously restricted to Venezuelan owners, the use of the Venezuelan flag is now open to foreign interests and bareboat charter registration. In June 2000, further incentives were added through elimination of all import taxes on vessels and the creation of a tax rebate of 75 per cent of the ship´s value or hire, which effectively renders shipowners' and charterers' activities tax-free. The ship register can now be considered a quasi-open register, with restrictions remaining only on crewing rules requiring the master and fifty per cent of the crew to be Venezuelan.

Together with the opening of the ship registry, a process which has involved wide sectors of the shipping community, including owners, agents, consultants, unions, shippers and government, has now led to the preparation of draft legislation in a number of maritime-related areas.

The widest legislative change is embodied in six draft legal instruments that should be enacted within the next year. A so-called Organic Law of Aquatic Areas will serve as the statutory framework, including provisions on Law of the Sea. A so-called Law on Coasts will deal with coastal-related issues. A Fishing Law will govern this important activity. A Port Law will organise and regulate the decentralised port system, focusing on privatised operations. A new Merchant Marine Law will deal with the modernised ship registry, privatised pilotage, certification, crewing and related matters. Finally, private marine law, currently governed by the commercial code with provisions dating back to the 1680 French Colbert Ordinance, will be updated in a new Maritime Commerce Law.

The process will eventually include the adoption by Venezuela of a number of international private maritime law conventions. But the draft Maritime Commercial Law adopts many of the essential principles followed by international conventions in relevant issues of private maritime law.

Indeed, the provisions of the draft law on carriage of goods by sea combine elements of the Hague Visby and Hamburg Rules, seeking a balance between cargo interests and those of carriers. They maintain a one-year time bar but override the validity of jurisdiction and arbitration clauses in bills of lading. Accordingly, cargo interests will be entitled in every case to follow suit against the carrier and the vessel in Venezuela. The new legal instrument also contains provisions on charter parties in three chapters dealing with bareboat time and voyage charters.

The draft law provides that general average will be governed by York Antwerp and its latest version, as the case may be. On salvage it follows the principles of the 1989 convention while at the same time including provisions to guarantee the rights of salvors acting on a local basis where a formal salvage contract has not been executed. The draft also simplifies to a great extent the provisions on maritime liens, clarifying a number of issues related to naval mortgages.

Because it follows essentially a written procedure, litigation in Venezuela has been traditionally slow. As a development of essential importance the draft statute creates a new procedure for the arrest and release of vessels as well as for maritime trials. Maritime proceedings will be conducted orally, which should speed up procedures.

Finally, and very importantly, the draft legislation provides for the creation of a so-called Maritime Superior Tribunal, with jurisdiction on maritime- related matters of over a certain amount. The tribunal will also function as an appeal court in respect to litigation of under a certain amount (yet to be determined), conducted at the trial level by a maritime division of commercial courts based in certain ports of Venezuela.

This extensive transformation of Venezuelan maritime law, which is the product of an exhaustive process of consultations, contribution of ideas and points of view from all those related to maritime activity, should yield a structure and system of maritime law which may well become the most modern in Latin America.