Arresting Development?

On 9 August 2019, the Nunavut sheriff’s office, acting on a statement of claim and warrant from the Federal Court in Halifax, “arrested” the Royal Canadian Geographic Society (RCGS) Resolute — a cruise ship operated by One Ocean Expeditions (OOE).

The incident was made public on August 19, by CBC North reporter Angela Hill.

RCGS Resolute in Aberdeen, Scotland. (Photo by Rab,Driver of P300NJB @Grampian Continental, CC BY 2.0, via Wikimedia Commons.)

Hill explained that the claim — for almost $100,000 — was filed in the Federal Court in Halifax by Atship Services Ltd, “Atlantic Canada’s leading ship agency,” which has offices in Halifax, Canso and Sydney.

According to the CBC, the Nunavut sherriff’s office was contacted on August 8, filed the appropriate paperwork, then visited the RCGS Resolute on August 9.  Thomas Peyton, acting manager of sheriffs for the Nunavut Court of Justice, told Hill they were ferried to the vessel by zodiac and met by the captain upon arrival:

“We served him the documents that placed the vessel under arrest,” Peyton said. The arrest meant the ship couldn’t move until a further court order arrived.

“It’s not like we can tie a rope to it and have the vessel actually not move. It’s under the understanding that the captain is aware of it, he contacts his superiors and the boat doesn’t move until further notice,” Peyton said.

(The documents filed with the Federal Court note that the sherriff’s office served the statement of claim, the affidavit leading to the warrant and the warrant itself by “affixing a certified copy of each to the wheelhouse of the RCGS Resolute.”)

The drama, such as it was, was short-lived: on that same day (August 9), according to Andrew Baumberg, Federal Court legal council in Vancouver:

A consent was filed by the Plaintiff, following which a Release was issued by the Registry.

Within a few hours of being “arrested,” the RCGS Resolute was free and as of 7:00 AM Wednesday morning, it was on its way to Ilulissat Icefjord in Greenland.

The court documents don’t explain what happened, but presumably Atship was either paid or promised payment.

Reading this story reminded me that this is not the first time OOE, the company founded by Westmount native Andrew Prossin (and that is supposedly looking to make Sydney its home port), has been accused of failing to pay its bills.

 

Blame Russia

Until this cruise season, the company had leased two vessels — the Akademik Ioffe (since 2011) and the Akademik Sergey Vavilov (since 2012) — from Russia’s P.P. Shirshov Institute of Oceanography at the Russian Academy of Sciences (IO RAS).

The Wikimedia caption for this 2012 photo of the Akademik Sergey Vavilov in the South Shetland Islands of Antarctica describes it as an “ancient research vessel.” (Photo by LBM1948, CC BY-SA 4.0).

What happened to end this arrangement is the subject of some dispute, so I’m going to lay out the facts as presented by each side and let you decide.

In a press release dated 21 May 2019, OOE general manager Catherine Lawton said:

In recent days OOE was informed that the owners of the loffe and Vavilov have suddenly and unexpectedly withdrawn the vessels from passenger service. Their decision comes as a complete surprise to OOE and is out of our control. The withdrawal of the vessels for the 2019-20 season is a breach of the owners’ contract with OOE and is now the subject of legal action.

Media outlets (including the Spectator) went along with this version of events, albeit some more enthusiastically than others. The UK-based Express, for example, really got into the spirit of things writing:

Cruise ships due to take passengers on once-in-a-lifetime trips to the Arctic have been seized by Russian authorities following a dispute between the Kremlin [emphasis mine] and a cruise ship operator.

The owner of vessels — the P.P. Shirshov Institute or IO RAS — however, begged to differ and on 29 May 2019, issued its own statement:

It is worth emphasizing that the IO RAS has no contractual relationships with and, consequently, not liable to the One Ocean Expeditions. Akademik Ioffe and Akademik Sergey Vavilov R/V are time-chartered by Terragelida Ship Management Ltd. till autumn 2019 under the direct chartering contract with IO RAS. Presently the vessels being at the disposal of Terragelida Ship Management Ltd. have been properly maintained and are available in Kaliningrad home port. Terragelida Ship Management Ltd. duly fulfils its commitments assumed within the framework of the contract with IO RAS.

Around this time (and as a consequence of the story I’d written about OOE), I heard from a former employee of the cruise line. Adam Hammond explained he’d worked as an assistant expedition leader and safety officer on the Ioffe for a brief period in 2018. (He says he boarded the vessel in Gdansk, Poland on 6 June 2018 and set sail a week later for Sydney, N.S., arriving on 25 June 2018. Two days later, passengers were boarded in Louisbourg for the OOE’s 8-day, east coast golf tour. On 4 July 2018, Hammond says he was told to leave the ship.)

Hammond’s version of events is that he was fired for raising concerns about passenger safety, crew qualifications and rubbish disposal. He filed an official complaint with Transport Canada outlining his concerns on 15 July 2018. The agency sent an officer to inspect the Akademik Ioffe while it was in Port Hawkesbury on 24 July 2018 but told Hammond in a letter (which I’ve seen) that:

…no deficiencies were noted except one…under STCW for crew training. This was rectified prior to departure of the Port State Control Officer.

Hammond suggested I get in touch with Ivan Budarin of Terragelida, whose email address he gave me and whom he seemed to know. (It quickly became apparent, after I did reach out to Budarin, that he and Hammond were in contact with one another.)

I emailed Budarin, who is listed as the only director of Cyprus-based Terragelida, and he responded immediately. He began contradicting OOE’s version of events almost immediately, telling me that Terragelida had sent OOE a letter terminating its lease of Akademik Sergey Vavilov on 28 May 2019 (that is, six days after OOE announced that both vessels had been withdrawn from service).

Furthermore, Budarin said that as of the time of writing (24 June 2019), the contract for the Ioffe was still in place.

Budarin went on to state that the Vavilov had been withdrawn due to “significant breaches of contractual obligations by One Ocean Expedition[s].” In a subsequent email, he went into greater detail, stating that the breaches included “non-payment of hire debts for the Antarctic season, 2019 and default in supply of bunker fuel.”

Budarin claimed Terragelida’s losses amounted to millions of dollars.

By the time of this second email (6 July 2019), Budarin said Terragelida was about to terminate the contract for the Ioffe for the same reasons (failure to pay for its hire and bunker fuel.)

 

Cone of silence

I can find no record of OOE CEO Andrew Prossin answering questions about the situation.

A number of accounts (including the CBC’s) note that the reporter attempted to reach OOE for comment but was unsuccessful. I personally have emailed OOE’s media contact twice asking the company to respond to Budarin’s allegations, but as of press time, have received no response.

OOE’s version of events seems to come from two sources: the May 21 press release and a letter Prossin sent to booking agents in June, in which he claimed the ships’ owners had taken the vessels to Kaliningrad (their home port) for “modernization.” Wrote Prossin:

The owners’ refusal to provide the vessels is a breach of their contract with OOE. OOE has done everything in its power to compel the owners to abide by their contractual obligations.

The vessel owners unexpectedly decided to return the vessels to Kaliningrad, Russia, for purported repairs. This was not communicated to OOE in advance.

As such, legal action has been commenced by OOE, including the filing of an urgent application for arbitration proceedings. Unfortunately, it is now clear no matter what OOE does the vessels will not be provided for the upcoming 2019-20 cruising seasons, despite our contract.

Given that the legal proceedings initiated by OOE following the contract breach could lead to the arrest of the vessels should they leave Russia, OOE has undertaken to share a full account of what has transpired with our agents and partners.

Budarin disputes pretty much all of this (as do the ships’ owners, as noted above).

Budarin says the only arbitration application filed in the case was filed by Terragelida, which has turned to the London Maritime Arbitrators Association to ask that OOE be ordered to pay its debts.

Budarin gave me the names of the lawyers representing Terragelida and I contacted one of them to ask him to confirm he was indeed representing the company but he told me (very politely) that he couldn’t tell me anything because the essence of arbitration proceedings under English law is that they are “strictly confidential.” English arbitration awards are not even published unless the losing party gets permission to appeal.

The bottom line, then, is that  OOE and Terragelida are basically free to claim whatever they want to claim about arbitration proceedings, there is no way for me to verify who is pursuing whom.

 

Late pay

The final example of OOE being slow to pay bills comes from the Glass Door website and must, of course, be taken with a grain of (sea) salt.

I know all the problems with anonymous employer review sites and recognize that it is possible that all eight of these reviews were posted by one person and that that one person never actually worked for OOE. Or that all eight were posted by disgruntled employees and don’t reflect the experience of most OOE staffers.

But here’s the thing: the eight reviews are uniformly positive about working for OOE. The pros they list include “Paid to go to Antarctica/Arctic learn from many experts as coworkers and special guests decent in house training” and “Ship life is great – enjoyable work in amazing locations, everyone is treated with respect and the food, pay, accommodation are all decent.”

And yet, five of the reviewers who were otherwise positive about OOE registered the same complaint: late pay.

In fact, the reviewer who, in May 2019, declared ship life “great” and pay “decent” also said this:

Contractors are only paid 50% up front and the remaining 50% months after completing a contract Invoices are NEVER paid on time Communication from head office regarding scheduling is poor Delayed pay and communication lead to staff frustration and turnover which leads to gaps in onboard staffing.

Obviously, I cannot verify the accuracy of the comment and I provide it with all the caveats noted above, but OOE could respond to these criticisms — the way, say, Cabot Links responds to comments on the Indeed job site — and yet, for whatever reason, it chooses not to.

 

Miscellany

There’s one other piece of information I discovered about the RCGS Resolute that doesn’t really fit into a story about overdue bills but which I think is worth including.

Whereas the Ioffe and the Vavilov sail under the Russian flag — that is, the flag of their home country — the ship bearing the name of the Royal Canadian Geographic Society is registered in Madeira, a jurisdiction the International Transport Workers’ Federation (ITWF) has declared a Flag of Convenience (FOC).

The ITWF says that, for workers, sailing under a Flag of Convenience can mean:

 

  • very low wages
  • poor on-board conditions
  • inadequate food and clean drinking water
  • long periods of work without proper rest, leading to stress and fatigue

 

For vessel operators, “flagging out,” as it’s called, can allow them to take advantage of:

  • minimal regulation
  • cheap registration fees
  • low or no taxes
  • freedom to employ cheap labour from the global labour market

It’s certainly a common practice in the cruise industry, but it’s not a great look for the RCGS.

 

Final word

The Cape Breton Post didn’t pick up the story of the Resolute’s misadventure but the Chronicle Herald did on Wednesday in Peter Ziobrowski’s Shipping News column.

OOE’s woes are tacked onto Ziobrowski’s discussion of the “dirty underbelly” of the cruise industry — its record of polluting the oceans.

But that’s a subject for another day…

 

Featured image: RCGS Resolute off Percé, QC. Photo by Jeangagnon, CC BY-SA 4.0, via Wikimedia Commons.