3.4 COMMERCIAL IMPORTANCE OF CLASSIFICATION SOCIETIES
The vast majority of flag states (including the flag states that are usually regarded as acceptable to mainstream ship finance providers) are party to various maritime conventions promulgated by a United Nations agency called the IMO. These include SOLAS (which requires that a ship must be “in class” with a recognised Classification Society before a SOLAS certificate can be issued to it), MARPOL and the Loadline Convention.
Each flag state will have its list of recognised Classification Societies and it will be a pre-condition to registration of a ship with a particular flag state that the ship is classed with a society that is on the flag state's list of recognised Classification Societies.
Flag states routinely delegate their “statutory” duties to inspect and survey ships flying their flag to recognised Classification Societies which will, if a ship is found to be compliant with the relevant national and international laws and regulations, issue to the ship on behalf of the flag state the relevant “statutory certificates” as well as the ship's class certificates. It should be noted that this delegation is of a functional nature in the sense that each flag state will remain responsible for application of the relevant rules and regulations and is supposed to exercise oversight over the activities of the recognised organisation that carries out statutory surveys on its behalf.
If a Classification Society withdraws or cancels a ship's classification for reasons of non-compliance, then the likely result will be that the ship's international convention certificates will become invalid and the ship will no longer comply with the flag state's “statutory” requirements.
Since it is impractical for underwriters to survey every ship in respect of which insurance cover is sought, when considering whether to accept a ship for insurance and what rate of premium to charge for cover, underwriters will consider the age of the ship, the reputation and operational record of the ship's owners and (if different) the ship's managers, the physical characteristics of the ship, the geographical areas in which she will be trading, and the following “classification” factors:
l the fact of a ship's classification;
l the reputation of the Classification Society with which the ship is entered; and
l the class rating assigned to the ship by the Classification Society.
Most arm's-length voyage, time and bareboat charters include, in the ship's description, a statement about classification status which usually gives the name of the ship's Classification Society and the character symbol or class rating assigned to the ship by the Society. Most arm's-length voyage and time charters expressly require the owner to maintain the class of the ship throughout the term of the charter. Bareboat charters typically allocate this obligation to the charterer.
3.4.4 Ship financing
A ship finance bank will usually require any ship offered to it for security purposes to be:
l classed with a Classification Society approved by the bank;
l maintained in class without any overdue conditions or recommendations; and
l kept under periodical survey for hull and machinery.
These requirements will be included in the loan and security documentation as continuing undertakings and a breach of one or more of these undertakings will in all likelihood constitute an event of default which (subject to any grace period for remedy) will entitle the bank to require repayment of the loan.
Typically a financing bank will also require a written authority from the shipowner (addressed to the Classification Society in question) enabling the bank to inspect class records and to obtain copies of class certificates.
3.5 CLASSIFICATION RECORDS
3.5.1 What will class records reveal?
The class records will show visits of surveyors from the Classification Society with which the ship is entered, defects discovered, major breakdowns and repairs undertaken. The records will also show “conditions” of class (also known as class “recommendations”) recorded in a special reasons list which describe repairs or other actions to be carried out to the satisfaction of the Classification Society within a certain time limit, and “notations” of class (also known as class notes or memoranda) which relate to less important matters which are left to be rectified at the shipowner's convenience.
Lawton LJ explained the position in Varverakis v. Compagnia de Navegacion Artico SA (The Merak) (1976):
“[C]lass records … give a lot of information about the condition of the vessel. If a prospective buyer looked at the [class] records, he might be able to decide whether it was worth going on with the purchase, thereby avoiding the expense of a superficial inspection. On the other hand, if the records showed … that there had been a recent survey, and the surveyors had not found it necessary to make any suggestions as to what should be done by way of repairs, then it might be worthwhile going on and having the kind of inspection which the Saleform envisages.”
在Varverakis v. Compagnia de Navegacion Artico SA (The Merak) (1976) 案， Lawton大法官解释了船级记录的法律地位：
3.5.2 What will class records not reveal?
However, class records will not show breakages, damage or defects which are:
l known to the shipowner but not known to the Classification Society – this could be the position where the owner has failed to report them to Class or has concealed them from Class, or where Class have failed to spot them during a survey;
l notified to Class, or spotted by Class, but repaired before Class make any entry in their records for the ship;
l latent, in the sense that they are not yet apparent to the shipowner or Class or anyone surveying or inspecting the ship; and/or
l outside the scope of Class.
3.5.3 How to exploit class records to best advantage
It will be important for a buyer to use the class records to its best advantage. The following points may be of relevance.
Every five years a ship's hull and machinery will be subjected to a “special survey” by a surveyor of the Classification Society with which the ship is entered. A prospective buyer could go back to the ship's last special survey in order to see what conditions of class were recorded in the special reasons list, and whether any of the defects have not been rectified.
To establish the extent to which the ship is subject to recurring defects, a buyer could go right back to the ship's earliest records, including those relating to the pre-delivery trials made by the shipyard where the ship was built and any entries arising during the post-delivery guarantee period.
For older ships, steel thickness measurement results could be of considerable value, particularly when weighed against steel renewals carried out.
If the classification records disclose potentially serious problems with, for example, the ship's engines, a prospective buyer could give opening-up of the engines a high priority in its negotiations with the shipowner. However, unless the market is unduly weighted in favour of the prospective buyer, usually an owner will be reluctant to allow opening-up or any other detailed inspection (even at the prospective buyer's expense) as part of the superficial inspection afloat.
The final point demonstrates a major challenge for the prospective buyer of a second-hand ship: how can he make an accurate assessment of the physical condition of the ship and her machinery? Regrettably for prospective buyers the standard printed terms of the Saleform, Nipponsale and Singapore Ship Sale Form contracts do not offer much comfort in this regard.
 International Convention for the Safety of Life at sea (“SOLAS”), Chapter II-1, Pt A-1, reg. 3-1.
  2 Lloyd's Rep. 250 at 256 (CA).