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Commercial Yacht – Pleasure Yacht Changeover Guidelines – 2 September 2021

September 6, 2021 Leave a Comment

On the 2nd of September 2021 the Merchant Shipping Directorate of Transport Malta issued the “Commercial Yacht – Pleasure Yacht Changeover Guidelines” (the Guidelines). The Guidelines serve both to lay down certain important considerations with respect to the change of registration of a Malta flag yacht from pleasure to a commercial (and vice versa) and to set out the procedural steps to be followed when yacht owners intend to carry out this change.

While the change in status of Malta flagged yachts has to date been readily accepted and processed by the Malta Ship Registry, the Guidelines now provide clear guidance on the steps to be followed in achieving the changes, in line with the Malta Commercial Yacht Code. The Guidelines clarify that the Merchant Shipping Directorate at Transport Malta imposes no limits on the number of changes made to the registration status of a Malta flagged yacht. The Guidelines further confirm that there is no limit on the duration of the change of registration, thereby offering yacht owners a considerable degree of flexibility with respect to changing their yacht’s registration.

Whilst this degree of flexibility is offered to the yacht owners, the Guidelines recommend that the same survey and certification regime as required for commercial yachts is retained when changing from a commercial to a pleasure registration. This is intended to facilitate a change back to commercial status. Additionally, the Guidelines specify that an undertaking to be signed by the owner or the manager of the yacht attesting that they will return the current certificate of registry of the yacht is to be filed immediately together with the request to change registration of the yacht.

The Guidelines set out that in the event of multiple changeovers during a single year the fees due to Transport Malta for a change from a pleasure to a commercial registration of the yacht shall be paid only once during the said year and not with each changeover.

The Guidelines are a welcome development since they provide yacht owners, managers and representatives clarity on the salient considerations for yacht registration changeovers and the procedural aspects linked to changeovers under the Maltese flag.

The Guidelines including the procedural steps for the changeover process may be found here.

by Matthew Cassar, Fenech & Fenech Advocates

Source: Lexology

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

Marine environment: pollution, preparedness, response and cooperation

April 25, 2021 Leave a Comment

The ‘International Convention on Oil Pollution Preparedness, Response and Co-Operation 1990 (OPRC 1990)’ and the ‘Protocol on Preparedness, Response and Co-Operation to Pollution Incidents by Hazardous and Noxious Substances (OPRC-HNS 2000), are two international legal instruments drawn by the International Maritime Organisation (IMO). Malta acceded to both in 2003.

Together, these two legal instruments create a regulatory framework on pollution incidents caused by oil (meaning petroleum in any form) or by hazardous and noxious substances other than oil (such as chemicals), likely to cause detrimental affects to human health and marine life once released into the marine environment and which require an immediate response.

The OPRC Convention and the OPRC-HNS Protocol address the handling of marine pollution incidents on a national and international level.

At an international level, State parties may request assistance from any other State party when encountering a major pollution incident. Additionally, State parties are encouraged to establish multilateral or bilateral agreements for pollution preparedness and response and to cooperate in research and development programmes including on combatting pollution incidents.

On a national scale, both the OPRC Convention and the OPRC-HNS Protocol oblige State parties to set up a national system for responding to oil and HNS pollution incidents, including through the appointment of a designated national authority and the drawing up of a national contingency plan, supported by response equipment, communication channels, regular training and exercises.

In this respect, the ‘Oil and Hazardous and Noxious Substances Pollution Preparedness, Response and Co-Operation Regulations’ were recently enacted in Malta through Legal Notice 450 of 2020 (the “Regulations”). The Regulations came into force on 1st January 2021. Transport Malta (“TM”) issued Port Notice No.16 of 2020, which previously notified relevant persons of the eventual application of the Regulations and invited all marine terminals and facilities to evaluate their level of preparedness and carry out a risk assessment to update or draw up new plans as needed.

The Regulations apply, in varying degrees, to the Authority for Transport in Malta, to operators of marine terminals (briefly, places where dangerous cargoes, bunkers and substances are loaded, discharged or handled on board ships) and operators of marine facilities (briefly, places other than a marine terminal where ships obtain services such as tank cleaning and slop/residue removal) based in Malta, to yacht marinas based in Malta, and to ships, including offshore units, whilst in the territorial waters of Malta.

Often, a marine pollution incident extends beyond an operator’s terminal or facility, necessitating a coordinated effort

TM is the ‘National Competent Authority’ responsible to create, implement, maintain, update, and enforce the ‘National Marine Pollution Contingency Plan’ (NMPCP).

The NMPCP is awarded the force of law by the Regulations and is therefore to be considered as part of and enforceable as the laws of Malta.

In its role as ‘National Competent Authority’, TM enjoys several powers and functions. These include approving pollution emergency plans of marine terminals and facilities, assisting such operators in the development of the said plans, monitoring their implementation as well as ordering any changes thereto.

Additionally, TM shall have the power to organise periodical national training and drills in pollution emergency and response with the participation of personnel from local operators.

Operators of marine terminals, facilities and yacht marinas must have a separate marine pollution response emergency plan, subject to approval by TM. Existing operators are to submit theirs by December 31, 2021. Pollution emergency plans must comply with the NMPCP and should be constantly updated to address any changes in the activities or the risks of the operator.

In any event, a pollution emergency plan is to be revised every five years while operators are obliged to inform TM and submit a new plan or amendments to the existing plan within three months from the occurrence of any major changes that affect or could affect the material validity or effectiveness of the emergency pollution plan in question.

Operators are obliged to identify an individual within their organization who shall be responsible for the operator’s pollution emergency plan and who shall be the point of contact between the operator and TM.

Furthermore, the keeping of minimum level first-aid pollution response equipment, training of personnel and the carrying out of drills is expected of all operators.

Often, a marine pollution incident extends beyond an operator’s terminal or facility, necessitating a coordinated effort between operator/s and TM. On this note, the Regulations allow joint pollution emergency plans within the same port area.

Where ports or areas are under the administration and management of TM, pollution emergency plans are to be prepared by TM by 31st December 2021.

Operators of marine terminals, facilities, and yacht marinas as well as masters of vessels navigating within Maltese waters are saddled with the obligation of reporting any marine pollution incident to TM. The duty to report also extends to masters of vessels located within Malta’s contiguous zone – briefly, this is an area extending to 24 nautical miles from Malta’s coasts over which Malta may exercise certain powers, as permitted under international law, including as provided under the United Nations Law of the Sea Convention (1982). This includes the power to exercise the control necessary to prevent any contravention of any law relating to pollution. Extending the right to report marine pollution incidents to vessels within Malta’s contiguous zone acts as an additional safeguard against pollution incidents by creating an added ‘buffer zone’ before any pollution hits Malta’s coasts. The Regulations do not exclude the applicability of any other obligations concerning pollution or on any related matters to the persons concerned. Therefore, for instance, operators of marine terminals and marine facilities are still obliged to adhere to the relevant provisions contained in the Dangerous Cargo Ships, Marine Terminals and Facilities and Bunkering Regulations (Legal Notice 1 of 1996, as amended). In fact, the Regulations specify that the pollution emergency plans of marine terminals and marine facilities are to include the applicable obligations under the ‘Dangerous Cargo Ships, Marine Terminals and Facilities and Bunkering Regulations’. With respect to ships, the ‘Safety Management System’ adopted onboard ships in accordance with the ISM Code remains relevant in so far as pollution prevention in ship operations are concerned.

Failure to comply with the Regulations is an offence and non-compliant operators are subject to a fine upon conviction. Additionally, TM may impose administrative fines.

Earlier this year, TM organised a webinar together with the Malta Maritime Forum to introduce the Regulations. It is understood that TM is presently updating the NMPCP and its port plans. Guidance on the implementation of the Regulations is expected to be published.

by Jan Rossi and Ilias Theocharis of Ganado Advocates

Source: Times of Malta, photo: Shutterstock

Member of the Comité Maritime International

Commercial Yacht – Pleasure Yacht Changeover Guidelines – 2 September 2021

Wrecks – Obligation and legal duties

The new Malta Passenger Yacht Code

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

Marine environment: pollution, preparedness, response and cooperation

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