International News Archives - Page 3 of 8 - Malta Maritime Law Association

MMLA President invited by the Spanish Maritime Law Association

June 18, 2018 Leave a Comment

The President of the Malta Maritime Law Association, Ann Fenech was invited by the Spanish Maritime Law Association to give a presentation on Judicial Sales and the CMI draft convention on the international recognition of judicial sales at a congress in Madrid held on the 14^th and 15^th June.

Dr. Fenech discussed the processes leading to judicial sales, the problems when there is a failure by states to recognise such judicial sales and the importance for states to support the proposal for a discussion on cross border recognition of Judicial Sales at UNCTIRAL on the 29^th June in New York.

The President of the CMI Mr. Stuart Hetherington and Ann Fenech will together be representing the Comite Maritime International at the 51^st Meeting of UNCITRAL in June.

Malta Yachting Industry challenges Notice by EU Commissioner

March 20, 2018 Leave a Comment

The Malta Maritime Law Association, the Malta Maritime Forum, the Yachting Services Trade Section within the Malta Chamber of Commerce, Enterprise and Industry, the Institute of Financial Services Practitioners and the Super Yacht Industry Network Malta denounce the recent Notice sent to Malta by the EU Commissioner in connection with the Maltese VAT rules for pleasure yachts.

In light of the fact that the Maltese system is fully in line with EU law and no similar notice was sent to Member States which apply the same principle under the EU’s VAT Directive the Maltese yachting industry questions why such a notice has been sent at all and why this discriminatory approach is being adopted by the Commissioner.

It is noted that the manner in which Malta has applied the option granted by Article 59a of the European Union’s VAT Directive is exactly the same as that adopted by Italy. Indeed, Malta’s rules on effective use and enjoyment of pleasure yachts within and outside EU territorial waters mirror those adopted by Italy through Circular No 49 of 7 June, 2002 issued by the Agenzia delle Entrate (Italian Revenue authorities).

The actual percentages of deemed use of yachts within EU territorial waters adopted by Malta are identical to those which Italy had drafted in the said Circular. Malta has certainly not re-invented the wheel, but has rather based itself on a similar interpretation given by Italy which the Italian tax authorities confirmed most recently in October 2010 through a “Vademecum del Leasing Nautico” issued with the collaboration of the Italian tax authorities.

Furthermore it is highlighted that France has been recognising since 2005 that it is difficult for lessors of yachts to establish how much a leased yacht is used within EU waters. Article 13 of the Administrative Instruction 3 A-1-05 published by the French tax authorities in Bulletin Officiel des Imports on 24 January, 2005 recognises such difficulty, and then allows yacht lessors to apply a 50% reduction on the total lease amount, irrespective of the category of the yacht. In practice, this means that only 50% of French VAT would be payable as a result of this French rule.

Malta’s system does not exempt yachts from payment of VAT but rather provides guidelines (as allowed for by the EU Directive) regarding deemed use outside and within EU territorial waters such that yachts using such guidelines will always pay VAT at varying degrees.

We believe that both the Italian and French systems do not infringe the EU vat laws. Therefore we cannot understand why Malta’s system should be singled out.

We appeal to the President of the European Commission, Mr Jean Claude Juncker, to intervene in this matter so as to ensure that there is no discrimination against smaller EU States like Malta.

It is also the belief of the local Yachting Industry that it is in the European Union’s collective interest that the Commission protects the European yachting sector in line with the EU’s Integrated Maritime Policy thereby ensuring that Europe does not lose out to competition in the maritime sector by non-EU countries.

Finally, we appeal to all political parties and stakeholders in Malta in a situation where the Maltese system reflects a legitimate application of a principle of EU law which is supported by other EU Member States, to act as a united front in protecting Malta’s yachting industry.

European Commission approves the Maltese tonnage tax system

December 19, 2017 Leave a Comment

The European Commission has conditionally approved under EU State aid rules the Maltese tonnage tax scheme for a period of 10 years. The scheme will ensure a level playing field between Maltese and other European shipping companies, and will encourage ship registration in Europe.

Commissioner Margrethe Vestager, in charge of competition policy, said “Tonnage tax systems are meant to promote the competitiveness of the EU shipping industry in a global market without unduly distorting competition. I am pleased that Malta committed to adapt its tonnage tax system to achieve this. Moreover, by encouraging the registration of ships in the EU, the scheme will enable the European shipping industry to keep up its high social and environmental standards”.

In 2012, the European Commission opened an in-depth investigation into the Maltese tonnage tax scheme to examine its compatibility with EU State aid rules. With today’s decision, the Commission endorses the Maltese scheme, subject to the amendments introduced by Malta.

The Commission’s in-depth investigation found certain features of the original scheme, such as tax exemptions applied to Maltese residents and the broad scope of the scheme extending to vessels not carrying out maritime transport activities, to be in breach of EU State aid rules.

As a result, Malta has committed to introduce a number of changes to its scheme to prevent any discrimination between shipping companies and to avoid undue competition distortions. In particular, Malta agreed to restrict the scope of the scheme to maritime transport and to remove those tax exemptions for shareholders which constitute State aid.

Under the Maltese scheme, a shipping company is taxed on the basis of ship net tonnage (i.e. based on its volume) rather than the actual profits of the company. In particular, tonnage taxation is applied to a shipping company’s:

core revenues from shipping activities, such as cargo and passenger transport; 
certain ancillary revenues that are closely connected to shipping activities (which are, however, capped at a maximum of 50% of a ship’s operating revenues); and 
revenues from towage and dredging subject to certain conditions.

If a shipping company wants to benefit from the scheme, a significant part of its fleet must fly the flag of an European Economic Area (EEA) Member State. In addition, any new entrant to the scheme must have at least 25% of its fleet subject to tonnage tax with an EEA flag.

The Commission assessed the amended measures under EU State aid rules, in particular its Guidelines on State aid to maritime transport. It concluded that the amended Maltese scheme is in line with EU State aid rules, as the tax relief granted is an appropriate instrument to address global competition and will provide the right incentives to maintain maritime jobs within the EU, whilst preserving competition within the EU Single Market.

Background
To address the risk of flagging out and relocating of shipping companies to low-tax countries outside of the EU, the Commission’s 2004 Guidelines on State aid to maritime transport allow Member States to adopt measures that improve the fiscal climate for shipping companies. One of the most important measures is tonnage tax, whereby shipping companies can apply to be taxed based on a notional profit or the tonnage they operate, instead of being taxed under the normal corporate tax system. Only companies that are active in maritime transport are eligible for such measures under the Maritime Guidelines. Shareholders in shipping companies are excluded from preferential tax treatment.

Since 2004, the Commission’s decision-making practice under the Maritime Guidelines has further clarified the eligible transport activities and compatibility conditions to ensure that the main objectives of the Maritime Guidelines are met. The Commission has to ensure that there are no spill-over of the favourable tax treatment of shipping companies into other sectors unrelated to maritime transport and there is no discrimination of other EEA State registries and flags.

The non-confidential version of the decision will be made available under the case number SA.33829 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News

Source: European Commission

Legislative changes: ship sale contracts and charterparties

November 22, 2017 Leave a Comment

Introduction

Act LII/2016 was introduced primarily to amend and update the Aircraft Registration Act and other ancillary-related laws to ensure that local legislation kept abreast of the contemporary challenges and realities of the aviation industry. However, this act also promulgated particular amendments which go beyond aviation law into the realm of shipping.

These recent changes are making Maltese law an ideal legal regime to govern and regulate disputes which may arise under certain types of shipping contract – namely, ship sale and purchase agreements, promise of sale agreements and charterparties.

Choice of law
Most sales of vessels are concluded following the execution of a standard form agreement. The parties normally complete the relevant boxes and strike out those provisions or clauses, if any, which they do not want to include in the agreement. Accordingly, these standard form agreements help to ensure that negotiations are not too lengthy or expensive.

The majority of these standard forms point to English law as the applicable law and English arbitration as the dispute resolution forum. Indeed, standard form contracts have the benefit of being generally tried and tested before the English courts and tribunals, which gives contracting parties peace of mind that the clauses therein will be legally enforceable under English should any dispute arise. It would be imprudent to apply another law without reviewing and scrutinising the whole contract to ensure that all of the provisions therein are legally binding and enforceable under that legal system. However, one of the major setbacks which parties face is that – by default – standard contracts send disputing parties to arbitration in London. Arbitral proceedings in the United Kingdom can be costly, even more so if the parties are not domiciled or resident there.

Changes
Before the new amendments, Maltese law was never advised as a choice of law to regulate these standard form contracts, as it was doubtful whether all of the terms and stipulation of standard form contracts would be enforceable given the existence of a number of archaic provisions contained under Maltese law of contracts. Therefore, more often than not, parties were encouraged to retain the standard applicable law and jurisdiction clauses, even if this meant that any disputes would be costly.

One of the most interesting changes introduced in the Civil Code provides that any ship sale and purchase agreement will now primarily be governed by “the terms and conditions agreed between the parties as well as by the international usages of trade applicable in the context as well the special laws relating to merchant shipping”. Moreover, the law provides that if there is a conflict between the agreed contractual terms and the general provisions of the Civil Code, the former will prevail. The law helps to move away from Malta’s draconian position. It also provides clarity and certainty to parties.
Accordingly, the law now recognises that in these types of agreement, the courts should apply and enforce the contractual will of the parties and this should prevail over any contradictory dispositions found in Maltese civil law. While the matter is yet to be tested, it is arguable that perhaps the only limitation in this regard would be a clear violation of public policy. However, in any event, it is hard to envisage many circumstances in which the content of a ship sale and purchase agreement would be considered in breach of Maltese public policy.

The new act also introduced similar amendments with respect to ship operational leases such as chartering. In terms of ships, the law defines ‘lease’ as “the chartering thereof under terms where possession or control is given to the lessee, including bareboat charters or the equivalent”. Again, with respect to chartering, it is common to use standard form charterparties contracts.

Accordingly, the same rhetoric used in the context of ship sale and purchase agreements will apply to charterparties. Maltese law now gives priority to the privity of the contract, putting contracting parties’ minds at rest that these standard form agreements will be enforceable under Maltese law.

The changes should also act help to promote Malta as a dispute resolution forum. It is likely that the change in choice of applicable law will also bring about a change in the chosen dispute resolution forum. Thus, if parties select Maltese law to govern their contract, it would be sensible and logical to have disputes determined and decided on by arbitration in Malta. International arbitration in Malta has the added advantage of being relatively cheap to conduct, flexible and efficient. Moreover, proceedings can be conducted in English.

Comment
These factors, together with the legal assurances that the agreed terms and conditions will be enforceable under Maltese law, will help Malta to grow as a forum of choice in the context of the aforementioned contracts. The amendments discussed above offer contracting parties a new option when selecting the applicable law and jurisdiction for certain classes of shipping contract.

by Dr Adrian Attard, Fenech & Fenech Advocates

Source: ILO

MMLA President at IMLI

December 1, 2016 Leave a Comment

Dr. Ann Fenech (President of the Malta Maritime Law Association and Managing Partner and Head of the Marine Litigation Department of Fenech & Fenech Advocates in Malta) visited the IMO International Maritime Law Institute (IMLI) on 22 November 2016 and delivered a set of lectures on ‘the Role of the Maritime Law Practitioner: Local and International’ to the IMLI Class of 2016 – 2017.

Dr. Fenech began her lecture with a brief introduction of Malta’s historic location as a maritime nation which attracted many maritime activities, including the construction of a naval dockyard now developed into a commercial dockyard.

On the role of a maritime law practitioner, Dr. Fenech described that such a role may come in various ways and situations across the entire spectrum of maritime activities. Maritime lawyers may be involved in contractual as well as transactional litigious cases such as ship repair contracts or post repair disputes between ship repairers and ship owners. Other areas which maritime lawyers may grapple with in their practice include the privatization of shipyards, industrial relations, and incidents during marine operations. She admitted that works concerning marine accidents could be heartbreaking in situations claiming lives.

Further, Dr. Fenech discussed with the students, the crucial role maritime lawyers play in the registration of vessels. She vividly explained how Malta’s Ship Registry successfully developed from one million tons in 1986 to sixty-five million tons today; from a flag of convenience to a flag of confidence; from a black-list to a white-list, and from a flag used by few to a flag used by many. The students learned that Malta is the 7^th largest Registry in the world.

While assuring the students that IMLI is one of the very few Institutions worldwide where students are introduced to the entire spectrum of maritime practice, Dr. Fenech advised them to have confidence in themselves as maritime lawyers when dealing with clients. She also advised them to be firm with an open mind and flexibility for various options for settlement in the best interest of clients.

Dr. Ann Fenech obtained an LL.D. from the University of Malta in 1986 and joined the international shipping law firm of Holman Fenwick and Willan in London. She obtained her LL.M. Degree in Maritime Law from the University of London in 1989 and worked with the law firm, Chaffe, McCall, Phillips Toler and Sarpy, in New Orleans, the United States of America two years later. In 1992, she joined Fenech and Fenech Advocates (Malta) where she set up the Marine Litigation Department and was appointed Managing Partner in 2008.

She has been involved in the drafting of numerous shipping laws in Malta such as the Pilotage Act and amendments to existing laws including the Merchant Shipping Act and the Code of Organisation and Civil Procedure, where she introduced the rules governing the jurisdiction in rem for the Maltese Courts. She has held several portfolios in her career including Council Member of the European Maritime Law Association; President of the Malta Maritime Law Association, and Maritime Arbitrator, Malta Maritime Arbitration Center, among others. She was awarded Best in Shipping Law at the European Women in Business Awards in 2012 and 2014 respectively. In June 2016, Dr. Fenech was elected to the Executive Council of the Comité Maritime International.

Dr. Ann Fenech lectures extensively on Maritime Law at the University of Malta and abroad.

Source: IMLI Newsletter, December 2016

Member of the Comité Maritime International

MMLA President invited by the Spanish Maritime Law Association

Malta Yachting Industry challenges Notice by EU Commissioner

European Commission approves the Maltese tonnage tax system

Legislative changes: ship sale contracts and charterparties

MMLA President at IMLI

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