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Web alert: seafarers Protection Act signed into law in Philippines

News & Insights 30 December 2015

This Act seeks to address the reality of compensation claims in this jurisdiction.

On 26 November 2015, the Seafarers Protection Act (Republic Act No. 10706) was signed into law by the President of the Philippines. This Act seeks to address the reality of compensation claims in this jurisdiction. In particular the Act seeks to focus on two specific concerns: the level of so-called ‘ambulance chasing’ by lawyers, and secondly the excessive level of fees payable by seafarers to their lawyers which can be between 30% and 60% of any compensation obtained.

Approximately 25% of the world’s seafarers are Filipino nationals (the largest of any nationality), and the law in the Philippines has developed to ensure that there is adequate protection for their citizens who work overseas, and particularly those who work aboard sea-going vessels around the world. For seafarers, their protection will lie primarily in the terms of the standard Philippines Overseas Employment Administration (“POEA”) contract of employment (or an over-reaching Collective Bargaining Agreement). This provides for specific levels of compensation to be payable in the event of a particular injury or illness, or if there is a determination that a seafarer is permanently unfit for sea service.

Notwithstanding this level of protection for seafarers, there has developed a culture whereby injured or ill seafarers, who have legitimate claims for specified contractual compensation, are required to sign what are effectively ‘contingency agreements’ with their instructed lawyers. These agreements require the seafarer to pay between 30% and 60% of their compensation to the lawyers by way of legal fees.

There is no doubt that the law of the Philippines did not envisage lawyers being able to recover the aforementioned levels of fees from the fixed contractual compensation paid to seafarers. Thus the new law aims to end what is effectively ‘ambulance chasing’ by lawyers and provides real protection for seafarers who bring legitimate claims arising from their employment.

The penalty for lawyers, or any individual, who engages in ‘ambulance chasing’ activities is imprisonment for no less than one year (but no more than two years), or a fine of PHP 50,000 (but not more than PHP 100,000). The new Act also limits the level of fees recoverable by a claimant lawyer to 10% of the total level of compensation awarded to a seafarer.

This new law is likely to become effective in the Philippines in early 2016, and the club will issue an update to confirm when this occurs. In the meantime members are encouraged to liaise with their manning agents in the Philippines, and indeed their Filipino crew to draw the content of this Act to their attention, so as to ensure that seafarers with legitimate claims are fully aware of their rights and remedies under the national law.

The full text of the Act can be found here.

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