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Wrecks – Obligation and legal duties

August 25, 2021 Leave a Comment

We sometimes hear of stories of people going out to sea on one boat and returning to port with another boat or part of another in tow. Several years ago, I personally witnessed a small fishing boat towing in a 30-foot plus wooden sailing boat in Mġarr Harbour, which the owner of the fishing boat claimed to have found drifting a couple of miles off Gozo with no one on board.

How does the law regulate such a situation? Can the person who finds a vessel adrift make it his own? What about vessels which have washed up ashore or have sunk? Is it truly a case of ‘finders keepers’? What if the owners turn up?

Unmanned vessels found adrift are generally considered to be items of ‘wreck’ as are vessels found washed ashore, sunken or otherwise stranded. Any object belonging to, or cargo carried on board such a vessel which is stranded, sunken or adrift at sea, are also considered to be part of a wreck. Therefore, the law does not limit a ‘wreck’ to the wrecked vessel itself and seeks to include all associated objects or cargo.

While not an everyday occurrence, finding a wreck at sea sets off a specific process and creates several legal obligations. The subject matter is primarily regulated by the Merchant Shipping Act (chapter 234 Laws of Malta) and the Wreck Removal Convention Regulations (Legal Notice 83 of 2015). The regulations transpose the Nairobi International Convention on the Removal of Wrecks (2007) into Maltese law.

The above body of laws address various aspects of this subject, including what is considered to be a wreck; obligations upon finding one, including reporting its whereabouts to the relevant authorities, marking a wreck considered to be a navigational or environmental hazard; on removing it, who is responsible for the costs involved; and the obligation of owners to insure against wreck-related liability.

The focus here shall be on the rules applicable upon finding a wreck.

These rules apply whenever a wreck is found on Malta’s coasts or elsewhere within Malta’s territorial seas. They also apply when a wreck is found outside Malta’s territorial confines and is brought into Malta’s jurisdiction.

A key figure in this area is that of the ‘receiver of wreck’, which person is appointed on an ad hoc basis by the minister responsible for shipping. There is no permanently appointed ‘receiver of wreck’. The Merchant Shipping Act generally empowers the ‘receiver of wreck’ to administer the findings of any wrecks in Malta, including the preservation of the wreck, cargo and of any persons on board.

Any person who finds or takes possession of any wreck is firstly obliged to notify the ‘receiver of wreck’. The procedure set out at law then varies according to whether the finder is the owner of the wreck or a third party, as follows:

• if it is the owner, then notice to the receiver of wreck must include a description of the wreck, including the marks and other features based on which the owner has recognised the vessel as his own. It is expected that the owner would also need to provide documentary proof of ownership;

• if it is not the owner but a third party, then said third party must deliver the wreck to the ‘receiver’ as soon as possible.

The Merchant Shipping Act generally empowers the ‘receiver of wreck’ to administer the findings of any wrecks in Malta

Cargo from a wrecked vessel appears to be treated slightly differently and must be delivered to the ‘receiver’, irrespective of whether the person finding the wrecked cargo is the owner of the cargo or a third party.

Non-observance of these rules is considered as an offence and any offender shall be liable to a fine (multa). Harsher penalties may be imposed when a wreck or any part thereof (including cargo) found in Malta is delivered to a foreign port and sold there. On such occasions, the offending party may be liable to imprisonment for a period of not less than three years and not more than five.

Salvage also comes into play here. Indeed, a wreck may be considered as an object of salvage.

Salvors of wrecks may, therefore, be entitled to claim salvage fees from the owner of a wreck, provided all the elements of salvage are present.

Failure by a salvor to notify and/or deliver a wreck to the ‘receiver of wreck’ as soon as possible may result in the forfeiting of any claim to salvage. This is a sanction which all potential salvors should be aware of.

Our courts have, however, held that failure to notify the ‘receiver of wreck’ upon finding and taking possession of a wreck may indeed be delayed or not necessary at all should valid reasons be present and that, therefore, the right to salvage is not automatically forfeited (see ‘Charles Grech u Brian Galea v Paul Azzopardi’, Court of Appeal – Superior, 2015).

Once the wreck is in the possession of the ‘receiver’, a description of the wreck is to be published in the Government Gazette. It is suggested that the requirement for publication is not limited to the Government Gazette and is extended to at least two local newspapers and any other place considered adequate by the ‘receiver’.

Within one year from the publication of this notice, a rightful owner is entitled to have the wreck returned in his favour, provided all salvage fees and other expenses due to the ‘receiver’ or the salvor, are paid.

The law also allows the ‘receiver of wreck’ to proceed with the immediate sale of the wreck in those cases when the value of the wreck is insignificant, is substantially damaged, of a perishable nature or is not worth enough to be stored. The proceeds from such a sale shall go towards any expenses incurred by the ‘receiver’ and any excess is thereafter held by the receiver. The excess proceeds remain subject to the same claims, rights and obligations of interested parties, as if the wreck was not sold. It is not clear for how long the ‘receiver’ should hold on to these proceeds, however it is understood that this ought to be for the same period of one year had the wreck not been sold and remained within the receiver’s possession.

Any wreck which remains unclaimed by its owner for more than one (1) year from the notice published in the Government Gazette or which is not sold to a third party, shall be passed unto the Maltese government.

Certain practices which are not directly referred to in the law must also be considered. For instance, the role of the ‘receiver of wreck’ is, in part, carried out by the Ports & Yachting Directorate, Transport Malta. It is suggested that the role of this directorate is provided for through an amendment in the law addressing those instances where the government fails to appoint a ‘receiver’.

Finders of wreck are sometimes permitted to keep wreck objects subject to the approval of Transport Malta.

Transport Malta generally requests such finders to lodge a police report, describe and confirm the discovery of the wreck in an affidavit and submit any other supporting documentation. Additionally, the finding of the wreck is still advertised, adopting the three-month period for lost items before the wreck is released to the finder.

The above practices are generally applied for those wrecks which are of little or insufficient value and which, therefore, do not justify the expenses associated with the formal process of a sale as described above. In effect, such measures are an extension of the power granted to the ‘receiver of wreck’ to proceed with the immediate sale of a wreck.

Discovering a wreck or an object of wreck out at sea leads to a set of procedures and obligations.

Wreck owners, finders, salvors, port authorities and other navigating vessels, among others, each have their own reasons and interests why a wreck should be reported, marked, returned or eventually removed or sold. The law seeks to address all of these interests and it is surely not a case of ‘finders keepers’.

by Jan Rossi, senior associate, Ganado Advocates’ shipping team

Source: Times of Malta

The new Malta Passenger Yacht Code

May 31, 2021 Leave a Comment

On the 24^th May 2021 the Merchant Shipping Directorate of Transport Malta published Merchant Shipping Notice 171 notifying the industry that the Malta Passenger Yacht Code (PYC) will enter into force on the 25^th May 2021. The code was drawn up following consultation with industry stakeholders.

Prior to the entry into force of the PYC, commercial yachts registered under the Malta flag and carrying more than 12 passengers were required to satisfy requirements similar to those for passenger ships since they fall outside the scope of the Malta Commercial Yacht Code. Due to the increasing size of commercial yachts and the onerous requirements applicable to passengers ships, the Merchant Shipping Directorate recognised the need to develop a code which specifically caters for larger commercial yachts carrying more than 12 passengers. The PYC caters for a number of equivalencies specifically designed for passenger yachts which carry more than 12 passengers and up to 36 passengers, do not carry more than 200 persons, do not carry cargo and are engaged on international voyages.

This is a welcome development since it addresses technical issues and concerns faced by whoever wishes to register larger commercial yachts under the Malta flag.

The PYC may be found here: https://www.transport.gov.mt/Passenger-Yacht-Code-PYC.pdf-f6340

By Lara Saguna Axiaq, Fenech & Fenech Advocates

Source: Lexology

Brexit’s impact on Malta as a choice of maritime flag

May 12, 2021 Leave a Comment

The United Kingdom officially left the European Union on 1 January 2021. However, the uncertainty surrounding Brexit led many vessels and yachts to leave the United Kingdom’s shipping registry much earlier than the country’s official departure from the European Union, and even before the implications of Brexit were fully understood. The rationale behind such a decision was that shipowners wanted to adopt a cautious approach and retain an EU flag rather than being faced with the risk of instability which Brexit was expected to create for future commercial arrangements within the European Union. From a Maltese perspective, Brexit has given rise to a new opportunity for the Malta Ship Registry to consolidate its position as the largest flag in Europe and the sixth largest in the world – a position it has consistently held for several years.

Increased popularity of Malta flag

French shipping giant CMA CGM, then the largest owner of container ships under the UK flag, was one of the major shipowning companies which transferred its fleet to other European countries as a consequence of the Brexit referendum, with the vast majority of its fleet reflagged to Malta in 2019. As the world’s fourth largest container shipping line, CMA CGM constitutes one of the more high-profile reflagging cases that the Malta Ship Registry has witnessed as a direct result of Brexit. Several factors influenced the French company’s decision to reflag to the Malta and other EU flags, principal among which was the fact that it had traditionally always used EU flags and complied with the EU regulatory framework. Consequently, CMA CGM viewed an EU flag as an integral part of the dynamics of its business, as well as a means to ensure that it remains competitive.

Other notable reflagging cases during this period involved Norwegian vehicle carrier Wallenius Wilhelmsen, which completed the transfer of its UK-registered vessels to Malta towards the end of 2019. Further, the Naples-based Grimaldi Group staggered the reflagging of its fleet of roll-on, roll-off vessels to the Malta flag over several years, with the most recent reflaggings completed in the first few months of 2021.

The Malta Ship Registry saw an unprecedented increase in the number of new registrations between 2019 and 2020, with Malta’s registered tonnage increasing by 7%, the largest increase in the world at the time.

Benefits of Malta flag

The uncertainties caused by Brexit are not the only reason why Malta is a popular flag choice. Many shipowners view the Malta flag as a strict flag which maintains high standards and quality tonnage and are attracted to its experience, versatility and good reputation. Further, the Malta flag is white listed in the Paris and Tokyo Memoranda of Understanding on Port State Control. This means that Malta-flagged vessels are subjected to fewer port state inspections, which translates to smoother and more time-efficient port operations for shipowners. Moreover, the financing aspect has a contributary affect, since shipowners are a priori often required by their financiers to register their vessels with an EU flag. In such instances, financial conditions in loan documentation typically stipulate that vessels must be registered with an EU flag or even with certain specific flags where the jurisdiction is deemed to be creditor friendly.

Malta is one such jurisdiction which is generally considered as providing additional creditor confidence. This is because Maltese law stipulates that a registered mortgage grants a watertight executive title in favour of the mortgagee. In practical terms, an executive title enables creditors to swiftly enforce their mortgage upon an event of default simply by tendering a notice of default. These facets collectively render the Malta flag an attractive option to financiers and shipowners alike.

Benefits of Brexit

In addition to the immediate impact that Brexit has had on increasing Malta’s registered tonnage, it has also given rise to other opportunities. Principal among them is the potential for attracting UK-based maritime organisations, such as protection and indemnity clubs and ship management companies, which want to set up an outpost to maintain access to the EU financial market. Malta may be considered an attractive jurisdiction for the relocation of UK-based organisations due to its:

cultural connection to Britain;
high availability of English-language proficient individuals specialised in a variety of areas, including:
- shipping;
- finance;
- insurance; and
- law

shipping law that is broadly based on English common law; and
approved tonnage tax and corporate tax system that offers a favourable fiscal environment.

Overall, Brexit may have a lasting positive impact on the growth of the Malta maritime flag and increase the presence of UK shipping organisations in Malta. This bodes well not only for the consolidation of Malta’s impressive maritime flag standing, but also for strengthening its maritime services industry as a whole and its status as a leading maritime hub in the Mediterranean.

by Peter Grima of Fenech & Fenech Advocates

Source: International Law Office

Court affirms scope and effect of Section 37 injunctions where security has been placed

April 22, 2021 Leave a Comment

In the recent case of Dr Ann Fenech as mandatory for and on behalf of Clearlake Shipping Pte Ltd v Global LNG Limited, the creditor obtained a Section 37 order on a provisional basis from the Maltese courts as security for a claim arising from a dispute under a charterparty concluded between the parties regarding the MV Portovyy (for further details please see “Court orders extension of effects of flag injunction to security deposited by debtor“). The purpose of the order was to prohibit the vessel’s sale, transfer or deregistration while the merits of the case were being determined in the appropriate fora – in this case, arbitration in London.

On 18 March 2020 the Maltese courts granted the Section 37 order on a provisional basis. This ex parte application seeking an immediate provisional order was filed, as is customary, together with the statutory sworn application containing the same demands. Such an application is then served on the other party which has 20 days to defend the application. The object of an ex parte application leading to an interim provisional order is to protect the status quo until the request is decided in due course. In this case, the owners eventually opted to file a cash deposit in the amount claimed by the charterers in the court registry, together with a request for the court to order that the Section 37 order be revoked.

By means of a 26 November 2020 decree, which was delivered in open court with the agreement of both parties, the court held that rather than ordering the revocation of the Section 37 injunction, it was, in terms of the law regulating the procedure (ie, Section 37 of the Merchant Shipping Act), ordering that the effects of said order would cease to exist insofar as the vessel itself was concerned, but would continue to apply exclusively to the cash deposit provided by way of security by the owners pending the final determination of the merits or settlement being reached by the parties.

The charterers subsequently filed an application before the Maltese courts requesting that the effects of the order be extended for a further year. This would align with the law, which envisages that any order of this nature granted by the courts expires within one year, unless a request for an extension is made by the creditor on the basis that such order was still required. The court granted this request by means of a decree of 8 February 2021.

Challenge to decrees

Given the above, it was of considerable surprise to the charterers when the owners subsequently filed a further application before the Maltese courts requesting revocation of both the 26 November 2020 and 8 February 2021 decrees.

The owners based their request for the revocation of the 26 November 2020 decree on the argument that, following the cash deposit made by the owners, the courts had never granted a final order and therefore procedures had effectively been extinguished. They further argued that when the law refers to the effects of the order applying to any amount deposited as security by the owners, reference is being made to a final order as opposed to a provisional order as had been granted in this case. The owners argued that there was no legal basis for revocation of either the 26 November 2020 or 8 February 2021 decree. In fact, there was every reason, given the purpose of the procedure provided by Section 37 of the Merchant Shipping Act, to extend:

the validity of the decrees by one year; and
the effects of the order to the cash deposit.

The charterers responded that it was indeed necessary for the court to extend the effects of the 18 March 2020 order to the security deposited by the owners pending the determination of the merits of the case. The charterers noted that when dealing with the extension of the effects of the order to the security deposited by the owners, the law makes no distinction between provisional and final orders. Further, if an order extending the effects of a prohibition from the transfer of the vessel to the free circulation of the security deposited instead of the vessel is not granted when an owner opts to deposit security, not only would such security remain unregulated, but the owners could effectively proceed with the withdrawal of the deposited sum pending the determination of the merits. The charterers argued that this interpretation contravened the scope of the Section 37 injunction, which provides a creditor with the possibility of obtaining security, pending the determination of the merits of the case, for the entire duration of the case.

Decision

By means of a 17 March 2021 decree, the court denied the owners’ requests and agreed with the charterers’ arguments in their entirety. The court held that the law made no distinction between provisional and final orders in allowing the effects of the Section 37 injunction to be extended to security deposited by the owners in the context of a Section 37 action. The court held that any differing interpretation would render Section 37 totally redundant, leading to circumstances where, if an owner deposited a cash security instead of leaving the attachment on the transfer of the vessel, the owners could freely withdraw the cash deposit irrespective of the fact that the action on the merits is ongoing and the security is still required. The court further denied the request for the revocation of the decree, extending the order for one year for the same reasons.

Comment

This case confirms what is already stated clearly in Article 37(4) of the law, which reads as follows:

Where the respondent either deposits in court the amount of the claim… or gives security… where the court has issued the order, it shall revoke the same with respect to the ship or the share therein, and the provisions of this article shall thereupon be applicable with respect to the amount so deposited or the security so given as the case may be.

This decision illustrates the effectiveness of the Section 37 injunction as a tool available to creditors seeking to obtain security for a claim pending the determination of the merits of the case. While the law allows owners to opt to deposit security, thereby removing the effects of the injunction from the vessel itself, the legislature has catered for these instances to ensure that creditors’ rights are not prejudiced.

by Dr Ann Fenech and Dr Alison Vassallo, Fenech & Fenech Advocates

Source: ILO

The Grimaldi Group strengthens its presence in Malta

April 8, 2021 Leave a Comment

Naples, 6th of April 2021: In recent months, the Naples-based Grimaldi Group has proceeded to significantly strengthen its presence in Malta through various initiatives, showing its full commitment in promoting the country’s maritime vocation.

Following the effects of Brexit, Atlantic Container Line (ACL), a Grimaldi Group company, has proceeded to reflag its fleet in the last six months, leaving the Union Jack and opting for the Malta flag. A total of nine vessels of ACL are currently under Maltese flag while another one is due to be added in the next few months. ACL operates the biggest con/ro vessels in the world, offering a liner service between various North European and North American ports for the transport of rolling units and containers.

Moreover, Malta Motorways of the Sea Ltd (MMOS), a Grimaldi Group company, has recently strengthened its fleet with the purchase of two additional vessels: the ro/ro units Eurocargo Catania and Eurocargo Sicilia. Currently, Valletta-based MMOS has a fleet of six modern ro/ro vessels and operates various regular maritime services in the Mediterranean.

Particularly, MMOS runs, in cooperation with the Grimaldi Group, a regular service between mainland Italy (Genoa, Livorno, Salerno and Catania) and Malta, under a Public Service Obligation contract with the Maltese Government, thus guaranteeing the shipment of essential commodities into the country.

With a view of promoting maritime education in Malta, MMOS has a permanent cooperation agreement with MCAST – Maritime Institute for the training of sea cadets onboard its vessels. Hundreds of young Maltese cadets have received training so far, many of whom have also been hired by Grimaldi Group companies.

Finally, in the course of the month, the Grimaldi Group will further strengthen the maritime connections it offers between Italy (Genoa, Livorno, Catania) and Malta. In fact, in the second half of the April, Malta is due to be served with one of the 12 GG5G-class (Grimaldi Green 5th Generation) ro/ro vessels, currently under construction in Asia, four of which already delivered to the Group. A second vessel of the same class will be deployed on the same route at the beginning of June.

C O M U N I C A T O S T A M P A

The GG5G-class vessels are the biggest short sea ro/ro units in the world as well as the most ecofriendly. They have a length of 238 meters, a beam of 34 meters, a gross tonnage of 67,311 tonnes and a service speed of 20.8 knots. Their loading capacity is twice that of the previous class of ro/ro ships deployed by the Grimaldi Group: each vessel can carry over 500 trailers as well as 180 cars. Their quarter stern ramp allows the loading of freight units weighing up to 150 tons.

At the same speed, the GG5G-class vessels consume the same amount of fuel compared to the previous generation vessels and are therefore able to halve CO2 emissions per unit transported: this was made possible through the adoption of several innovative technological solutions that optimize fuel consumption and ship performance. Moreover, they are equipped with an exhaust gas cleaning system for the reduction of sulphur and particulate emissions.

During port stays, the GG5G-class vessels are capable of cutting emissions to zero by using the electricity stored in mega lithium batteries with a total power of 5 MWh, which are recharged during navigation thanks to shaft generators and 350 m2 of solar panels.

“We are very proud to contribute to strengthening our long affiliation with the Maltese Islands, its people and its industry”, states Emanuele Grimaldi, Managing Director of the Grimaldi Group and Vice-President of the Malta International Shipping Council. “Having been present for over half a century in Malta is a demonstration of our commitment to the wellbeing of this nation whom we intend to serve with increasingly modern and ecofriendly vessels”, concludes Emanuele Grimaldi.

Member of the Comité Maritime International

Wrecks – Obligation and legal duties

The new Malta Passenger Yacht Code

Brexit’s impact on Malta as a choice of maritime flag

Court affirms scope and effect of Section 37 injunctions where security has been placed

The Grimaldi Group strengthens its presence in Malta

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