The maritime industry is grappling with a period of intense volatility, with geopolitical, environmental, and regulatory pressures, trade wars, and kinetic wars, all adding to the usual complexities of operating a global business. Many shipowners want to use technology to help them meet the challenges of this "new normal" but do not want to commit to investing in technologies that are promising, but at an early stage of development or commercialisation. Many start-ups and scale-ups wish to see how their prototypes perform in ocean-going conditions but lack access to commercial vessels. Partnering to conduct a technology trial can help bridge this gap. It allows technology developers to gain real world feedback and gives them access to funding options, whilst allowing potential buyers to explore emerging technologies without a large capex or opex expenditure.
In this article we look at the legal issues arising from onboard technology pilots, and the key issues to consider when agreeing to participate in a pilot to effectively manage regulatory, contractual, and operational risk.
The Regulatory Framework
There is no overarching international framework that governs maritime technology pilot projects. Each project will therefore need to be considered individually, to determine which international and local regulations apply and what exemptions from those regulations might be needed, and what permissions need to be sought from which authorities.
There are some, limited, technology-specific guidelines, most notably for autonomous vessels. In 2019 the IMO issued its "Interim Guidelines for MASS Trials" (MSC.1/Circ.1604). The Guidelines provide a high-level set of principles for the conduct of trials, which is defined as:
"An experiment or series of experiments, conducted over a limited period, in order to evaluate alternative methods of performing specific functions or satisfying regulatory requirements prescribed by various IMO instruments, which would provide at least the same degree of safety, security and protection of the environment as provided by those instruments."
These Guidelines are therefore focussed on the use of trials for the purposes of obtaining certification against IMO regulations and so are more likely to be relevant to trials of technologies that are already at an advanced stage of development.
For trials of autonomous vessels and systems in EU waters, the EU has developed its own "Operational Guidelines for safe, secure and sustainable trials of MASS". These provide recommended actions to be taken by the relevant maritime administrations, including the designation of a test area and the establishment of a "ship safety zone" for the duration of the trial, and mandate the sharing of all relevant information and data with the administration both during and after the trial.
For other kinds of innovation, the regulatory framework is less developed and more ad hoc. For example, in the UK, the Maritime and Coastguard Agency has a specific certification pathway for or vessels using innovative technology (MGN 664), which is supplemental to the IMO's Guidelines for the Approval of Alternatives and Equivalents (MSC.1/Circ. 1455) under conventions such as SOLAS.
Ideally, we would see the introduction of regulatory sandboxes that aim to allow early-stage technology to be tested in a less burdensome regulatory environment, or dedicated simplified pathways for owners and developers to seek exemptions and permissions for early stage technology, that has built in flexibility to reflect the iterative design process that such technology undergoes. Other jurisdictions, such as Korea, have dedicated research vessels which can be used to test technology in real operating environments, but this is yet to be adopted in the UK.
A recent proposal in the UK is for dedicated regulatory sandboxes to be set up to enable trials in controlled environments, with safety guardrails built in, and with a lower cost and certification burden[1].
In the King's Speech earlier this month, the Government announced their intention to introduce the "Regulating for Growth Bill", recognising the lack of "agility and responsiveness to innovation" offered by the current regulatory system. The Bill, if passed, will create "sandboxing powers" to allow business to test new technologies in real world settings, where existing laws may be modified or suspended, with specific reference to autonomous maritime and defence technology and MASS.
This is a positive step in the right direction and a significant win for the industry. However, until the Bill is enacted, ad hoc trials with bespoke contractual and regulatory approvals and exemptions will still be needed.
In addition to regulatory requirements, for certain public funding initiatives for innovation in the UK, such as the Government's Clean Maritime Demonstration Competition, ensuring that the project includes an end user is also a condition of eligibility. This means that partners will need to have in place at least a preliminary collaboration agreement prior to making an application for funding.
Contracting for pilots and collaboration agreements: Core issues
Trials of emerging technology inevitably involve unforeseen risk. That can, to some extent, be mitigated using contractual frameworks, alongside traditional risk assessment and management techniques. We set out a checklist below of the kinds of issues that should be considered when drafting or reviewing contracts for a technology pilot at sea.
Pre-trial issues
- Determine what outcome you are seeking from the pilot – to evaluate the technology to see whether it does what the developer claims? To obtain the crew's feedback on the ease of use and impact of the technology? To assist a technology partner with obtaining training data or regulatory approvals? Make the purpose clear in the contract.
- Obtain sufficient information from the technology developer to determine the product meets minimum requirements of safety and performance, based on objective evidence and third-party certification if available. Include safety and performance warranties in the contract.
- Where the technology is very early-stage, you may wish to consider structuring the trial as a series of milestones. Examples include:
- Proof of concept
- Safety validation
- Limited live vessel deployment
- Voyage specific or port specific trials
- Conduct risk assessments, taking into account interactions between the technology and existing vessel systems, other vessels, ports and crew. Update SMS and PMS as needed, as well as shore-based risk management protocols.
- Certain technologies, such as wind assisted propulsion, will require vessel modifications before they can be installed. Agree who will arrange and pay for these.
- Determine what regulatory bodies need to be informed (Class / Flag / PSC / local harbour authorities), and what exemptions or permissions are needed. Agree in the contract who is responsible for obtaining these, in what timeframe, and allocate costs.
- If the Vessel will be chartered out or laden with cargo during the pilot, consider the impact on charterparty and bill of lading obligations. If necessary, amend contracts to accommodate pilot and seek written consent from counterparties.
- Decide on how liability for loss caused by the technology is to be allocated and clearly articulate this in the contract, with supporting indemnities as needed.
- Assess the impact of the use of technology on current insurance cover and determine whether additional cover is needed. Agree who pays for additional premia, and any deductibles in the event of a claim.
- Novel technology will likely involve some kind of intellectual property. Discuss with the vendor if they require an NDA and agree other IP issues including ownership of trial‑specific innovations.
- Verify that the vendor's cybersecurity standards are aligned with IMO and best industry practice. Include cybersecurity warranties in contract.
During trial
- The contract should address access to the ship for installation of systems, and ongoing access for the monitoring and oversight of the technology being trialled.
- The Vendor should agree to provide crew training and familiarisation, on an ongoing basis if needed.
- Contract and operational documents should include clear limits on the use of the system in particular weather, traffic, or operating conditions. The voyage planning should ensure these limits are not exceeded and provide for a contingency plan if they are.
- Where an autonomous system is used, agree and document in the contract clear guidelines as to human oversight and triggers and timing of intervention, and ensure ability for humans to override system.
- Agree and document in contract:
- Ownership of raw, processed, and derived data
- Rights to use trial data for training algorithms or improving systems
- Sharing protocols (real time feeds, reports, API access)
- Storage requirements, including jurisdictional restrictions
- Agree and allocate costs of additional connectivity requirements.
- Agree and allocate responsibility for operating, monitoring and maintaining technology throughout trial.
- Include early termination provisions.
Post-trial issues
- Agree and document in contract the data retention periods and deletion obligations or data access post-trial.
- Address feedback mechanisms.
- Agree deinstallation procedures and allocate time and costs.
- Agree post‑trial data access rights.
Conclusions
Onboard trials of maritime technology are often mutually beneficially for the shipowner and the technology provider. Trials help improve products, validate their effectiveness and safety, and allow for greater product-market fit by providing a pathway for real-time feedback. They allow shipowners to gain experience of integrating new technology into existing systems and processes and gives them "first-mover advantage". However, pilots are inherently risky and must be carefully managed. Putting in place a robust contractual framework to govern the pilot is a good first step in balancing innovation and risk and creating the conditions for success.
DACB's dedicated Maritime Technology team regularly advises clients on the risks arising from the adoption of new technologies, and how to mitigate these with robust contractual and policy frameworks. If you are considering adding emerging technology to your fleet, please contact Joanne or your usual DAC Beachcroft contact for more information.
If you would like to be added to our mailing list to receive future articles on maritime technology, please email Joanne.
[1] See for example Catapult's report on "Navigating innovation: a regulatory sandbox framework for UK maritime autonomy".
