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Commercial Yacht Code 2020

December 1, 2020 Leave a Comment

We are pleased to announce that the Merchant Shipping Directorate within the Authority of Transport in Malta has rolled out its 4th edition of the Malta Commercial Yacht Code 2020 (Code) which updates and replaces the Commercial Yacht Code 2015 (CYC 2015).

The substantial increase in the number of superyachts which the Malta flag has continued to lure to its Register has seen the Merchant Shipping Directorate being sensitive to the fast-changing technological developments which this particular industry attracts. Drawing on its own experience of an already well established yachting industry and heeding the technical and commercial advice of yacht builders, repair yards, Classification Societies and industry stakeholders at large, the Merchant Shipping Directorate has come up with an improved Code that mirrors the yachting industry’s realities and ensures a greener and safer commercial yacht fleet for the Malta flag.

The Code comes into effect as of the 1st January 2021 however for existing yachts certificated in accordance with the CYC 2015, compliance with the new Code shall be by not later than the yacht’s first periodical survey carried out after the 1st June 2021.

The amendments and additions introduced by the Code are several and varied and largely seek to enhance the safety aspects of commercial yachting as well as to cater for the particular technological market demands of the industry – all this in conformity with safety and international regulations and standards.

The revisions, all of which are conveniently listed in Annex 1 of the Code, provide, inter alia, for improvements on the safety of passengers at sea, the well-being of the seafarers engaged onboard, the enhancement of the structural aspects of yachts, the provision for innovative designs and requirements covering electrically powered and/or hybrid engines and plants. The Code further provides for the improvement of the protection of the marine environment by introducing the requirements of the Ballast Water Management Convention and furthermore dedicates a section of the Code to the design, construction and safety of Helicopter Landing Areas.

More specifically, amendments made relate to the following sections:

• Definitions (Section 2), • Application and Interpretation (Section 3), • Structural Strength and Watertight Integrity (Section 4), • Rigging on Sailing Yachts (Section 5) • Machinery (Section 6), • Electrical Installation (Section 7), • Intact and Damage Stability (Section 8), • Life Saving Appliances (Section 10), • Fire protection (Section 11), • Equipment (Section 12), • Maritime Labour Convention 2006 (Section 13), • Protection of Personnel (Section 14), • Navigation and Communication (Section 15), • Marine Pollution Prevention section (Section 16), • Manning and Crew Certification (Section 17), • Medical Stores (Section 19), • Survey and Certification (Section 20), • Tenders and Ancillary Craft (Section 22), • Static Chartering (Section 23), • Helicopter Landing Areas (Section 24).

By Rowena Grima and Stephanie Farrugia, Fenech & Fenech Advocates

Source: Lexology

Update on yachting procedures

September 2, 2020 Leave a Comment

Malta has always been at the forefront of offering solid, reliable solutions to yacht owners depending on their individual requirements and the intended use of their yacht. The first half of 2020 has seen the introduction of updated rules affecting operating leases and streamlined importation procedures, offering owners the possibility of availing themselves of a number of solutions and procedures catering to their individual requirements. Given the delay in the season due to the COVID-19 pandemic, this article highlights these developments for owners that are taking delivery of or importing their yachts over the coming months.

Improved importation procedures

For many years Malta has offered an efficient and attractive procedure for the importation of commercial yachts that are intended to be brought into free circulation within the European Union so as to enable them to carry out their chartering season in the Mediterranean. The introduction of the following measures earlier in 2020 was intended to further strengthen the procedure governing the importation of commercial yachts in Malta:

Deferment of value added tax (VAT) on the importation of commercial yachts by Maltese owning entities with a Maltese VAT registration without the requirement of the importing entity setting up a bank guarantee as required in the past.
Deferment of VAT on the importation of commercial yachts by EU owning entities with a Maltese VAT registration provided that the company appoints a VAT representative in Malta in terms of Article 66(2)(b) of the VAT Act without the requirement of the importing entity setting up a bank guarantee as required in the past.
Deferent of VAT on the importation of commercial yachts by non-EU owning entities on provision by the importing entity of a bank guarantee in an amount equivalent to VAT on 0.75% of the value of the yacht which would in all cases be subject to a cap of €1 million.

Updated guidelines relating to use and enjoyment by yacht lessees

On 12 March 2020, the commissioner for inland revenue published revised guidelines regarding the place of supply of the hiring of pleasure yachts. The guidelines establish the manner in which the use and enjoyment of such pleasure yachts is to be treated for VAT purposes.

While the general principle is that full taxation in Malta applies where the place of supply of the service is determined to be Malta, the guidelines provide for a method of adjustment based on the actual effective use and enjoyment of a pleasure yacht in and outside EU waters. The revised guidelines establish that this is to be calculated by reference to the period of time when the pleasure yacht is used and enjoyed outside EU territorial waters.

For the purpose of applying the guidelines, the lessee must provide the lessor with documentary or technological data to determine the actual effective use and enjoyment by the lessee of the pleasure yacht in and outside EU territorial waters during the lease period.

The guidelines may be used within the context of operating leases that are set up under Maltese law.

Updated practices in application of operating leases

Malta has built a formidable reputation in catering to owners’ needs while constantly taking into account industry practice and legal developments. This has led to Malta being a go-to jurisdiction for the setting up of operating leases. Such operating leases are formulated in accordance with best practices to ensure compliance with EU interpretations and European Court of Justice judgments and would generally comprise the following principles:

A Maltese shipping organisation would be set up as the owner of the yacht (the lessor), which would lease the yacht to another entity (the lessee).
The place of supply of the yacht would be Malta.
The yacht would be available to a lessee for consideration for a specified period.
General principles relating to intra-community supplies and importations at the time of acquisition of the yacht by the lessor and place of supply rules at the time of the supply of the yacht to the lessee will apply.
The lease period and the consideration paid to the lessor by the lessee for the use of the yacht are commercial decisions that are established contractually between the parties.
Such decisions would be based on an assessment of the type of yacht involved, its specifications and value, together with the prevailing market conditions.
The lessee would pay VAT on a quarterly basis on the monthly lease instalments to the lessor.
Subject to a number of conditions being satisfied, the VAT department would, on a request to that effect, issue a letter confirming that the lessor has declared and is accounting for VAT on the lease of such yacht in Malta.

By Alison Vassallo at Fenech & Fenech Advocates www.fenechlaw.com.

Source: ILO

Malta’s role in ship recycling and its impact on environmental protection

August 24, 2020 Leave a Comment

Ship recycling has recently taken a front seat both from a commercial perspective and a legal perspective. With an increasing number of ship owners choosing to recycle their vessels, recycling regulations continued to receive more attention.

The regulation of ship recycling in Europe has come a long way since the EU brought into force rules and regulations modelled on the Hong Kong Convention,[1]. The Hong Kong Convention[2] and likewise EU legislation is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment.[3] The EU’s rules and regulations specifically tackling ship recycling are contained in the EU Ship Recycling Regulation[4], which came into force only recently in December 2019. With the regulation of ship recycling becoming more complex, ship owners seeking to recycle their vessels should ensure strict compliance with all applicable provisions, given that violations in this legal sphere can lead to severe consequences.

The EU Ship Recycling Regulation has full legal effect in Malta as a member state of the EU. However, it is not the Law alone that makes Malta an ideal location from which to organise and facilitate the recycling of ships. The islands’ geographical location in the centre of the Mediterranean together with the business-friendly, can-do approach of the local authorities also plays an important part. Indeed, some may say that it all starts with geography and not with the Law.

Recycling of ships consists in a “chain of events” starting with the consideration and decision of the owner to scrap a vessel to the final event when the vessel is broken up by the scrapyard and the constituent parts of the ship recycled, disposed, demolished, or reused, according to set rules. Although the Maltese Islands themselves do not provide facilities for the recycling of vessels, Malta nevertheless has a role to play, in that the Islands serve as a platform from where the recycling process can be “launched”.

Two Distinct Scenarios

There are two distinct scenarios, very different from each other, where Malta plays a key role in the recycling process. These scenarios have different legal treatments. One scenario relates to those owners that operate non-EU flagged vessels that are in Maltese waters[5] at the point when the decision is taken to recycle the vessels. The second scenario relates to owners of Malta-flagged vessels, generally, wherever they happen to be, that intend to scrap their vessels.

Non-EU Flagged Vessels situated in Maltese Waters

In the first category of cases, ship owners of non-EU flagged vessels in Malta are to submit a notification to the competent authorities in the vessel’s (last) port of call (Malta), being the port where the decision to recycle takes place. Owners will be subject to the rules established under the Maltese Waste Management (Shipments of Waste) Regulations[6] as well as the Waste Shipment Regulation[7] which is directly applicable in Malta in view of it being an EU Member State. Both Maltese Law and the relative EU legislation adopt or derive inspiration from the Basel Convention[8]. The process of recycling vessels under the waste management rules, sees the vessels change their designation in Malta from seagoing vessels into ‘waste’, to be afterwards shipped to their final destination outside Malta for demolition, reuse, recycling, and disposal.

Exporting waste from Malta in accordance with the said legislation ensures that ships are demolished conscientiously and with high regard to the protection of the environment and this, in turn, serves to safeguard a companies’ international reputation at a time when environmental responsibilities are high on the agenda. The entire process happens under the careful watch of the Maltese environmental authorities who have, along the way, adopted a favourable approach that is very welcome in a somewhat complex cross-border regulatory environment.

The Basel Convention is internationally accepted by the industry and adopted by a large number of states, most notably Turkey, which provides the main breakage facilities in this part of the world, having built, especially in recent years, a reputation for itself based on reliability and environmental protection. Given that, insofar as the legal process is concerned, both Malta and Turkey derive their respective rules from the same source (the Basal Convention), allowing the interfacing necessary between the two countries to be fluid and healthy: this allows the process to take place in a reasonable time and at a reasonable cost.

On Malta’s part, the islands score high with those owners with vessels in Malta’s vicinity not only because the islands offer good anchorage, but more importantly because the competent Maltese authorities have the required expertise to handle the procedures laid down by the applicable international instruments governing the disposal of waste.

Malta Flagged Vessels

Malta plays a role in the second category of cases not because the vessels would be located in Malta when the decision to recycle them is taken, but because they would be flagged here. In other words, owners of Malta flagged vessels aiming to recycle their vessels must abide with the EU Ship Recycling Regulation. In this scenario, the place where the vessels happen to be when the owners take a decision to recycle them is irrelevant. Under the said regulation, owners who decide to scrap their vessels will be required to notify the Malta Flag Administration and obtain prior Flag approval in accordance with Merchant Shipping Notice 147 of December 2018 and Merchant Shipping Notice 154 of 2019.

The applicable EU Ship Recycling Regulations contain important requirements relating to:

the European List of Approved Ship Recycling Facilities which has been recently updated pursuant to Commission Implementing Decision (EU) 2020/95 of 22 January 2020;

the notification that would need to be sent to the Merchant Shipping Directorate regarding the intended recycling operations;

conducting the Inventory of Hazardous Materials (IHM) Report and having onboard an Inventory Certificate or a Ready for Recycling Certificate (depending on the circumstances); and

the development of a Ship Recycling Plan and the surveys that need to be conducted at different intervals prior to the vessels being taken out of service for their eventual recycling.

Conclusion

Gone are the days where vessels are sent to scrap in an unregulated fashion with complete disregard to the environment. True, the procedures are now somewhat complex and occasionally cumbersome but surely that’s a small price to pay when considering the irreparable environmental damage that would otherwise be caused had the industry been permitted to continue to operate in unregulated cocoon.

[1] Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009.

[2] At time of writing, the Hong Kong Convention has not obtained sufficient ratifications to come into force.

[3] The Hong Kong Convention addresses various issues surrounding ship recycling, including the fact that ships sold for scrapping may contain environmentally hazardous substances such as asbestos, heavy metals, hydrocarbons, ozone-depleting substances, and others. It also addresses concerns raised about the working and environmental conditions at many of the world’s ship recycling locations.

[4] EU Regulation No 1257/2013 of the European Parliament and the Council, of 20 November 2013 on ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC.

[5] Within Maltese territorial seas or internal waters, vide the Law of the Sea Convention, UNCLOS III and Territorial Sea and Contiguous Zones Act, Chapter 226 of the Laws of Malta.

[6] Legal Notice 285 of 2011, as amended by Legal Notice 440 of 2011, which is based on the Basel Convention and transposes the provisions of Council Regulation (EC) No 1013/2006 on shipments of waste “in order to establish a system of supervision and control of shipments of waste, so as to guarantee protection of human health and the environment”.

[7] Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste.

By Jotham Scerri-Diacono, Partner, GANADO Advocates and Rachel Genovese, Regulated Industries Advisor, CSB Group

Source: Ship Management International

Picture: Shutterstock

Dispute resolution regulations for bunkering operations

July 1, 2020 Leave a Comment

Introduction

Transport Malta’s Ports and Yachting Directorate recently issued Port Notice Number 07/20 entitled “Dispute Resolution and Procedures in Connection with Bunkering Operations” to remind recipients about the Dispute Resolution (Procedures) Regulation under Subsidiary Legislation 545.30 of the Laws of Malta.

The port notice highlighted that authorised providers and customers can make complaints to the regulator to settle any disputes between them.

In accordance with the port notice, the regulation applies to bunkering operations where a dispute has arisen between the bunkering fuel operator and provider and the receiving vessel. The procedure provides for an alternative dispute resolution (ADR) mechanism that aims to be swift, economical, transparent and simple.

Much of the port notice’s attraction lies in the fact that disputes between authorised providers must be settled within four months, while disputes between an authorised provider and a consumer must be settled within 90 days, with extensions allowed only in exceptional circumstances.

Complaints and supporting documentation may be filed with the regulator online and, subject to certain conditions, the regulator’s decisions are binding on the parties to the dispute with administrative fines imposed for non-compliance. However, this procedure is entirely voluntary and does not affect the parties’ rights to proceed to arbitration or court should they prefer.

Dispute Resolution (Procedures) Regulation

The relevant parties under the Dispute Resolution (Procedures) Regulation are as follows.

Authorised providers
The regulation is not limited to bunkering operations and defines an ‘authorised provider’ as any natural or legal person, whether privately or publicly owned, which is authorised to operate, provide or carry out any activity or operation or provide any service relating to energy and water services.

Consumer
A ‘consumer’ means any person who uses or requests a service or product, the provision of which is regulated by the act, for purposes outside of their trade, business, craft or profession. This definition raises the question as to who can qualify as a consumer; however, the port notice explains that it applies to “bunker operations where a dispute arises between the bunkering fuel operator and provider and the receiving vessel”.

Regulator
The regulator, established under the Regulator for Energy and Water Services Act, is composed of a chair and no fewer than four and no more than six members. Members are appointed by the minister for five or seven-year terms and may be reappointed only once.

Proceedings before regulator
The Dispute Resolution (Procedures) Regulation provides for two scenarios: dispute resolution where the parties are both authorised providers and dispute resolution where the parties are an authorised provider and a customer. The regulation seeks to provide authorised providers and consumers with an ADR mechanism that aims to be simple and transparent, offering binding decisions in a swift and economical manner.

Where a dispute arises between authorised providers, the regulator must initiate an investigation into the dispute as soon as possible and seek to resolve the dispute within four months from the date on which it was notified. This timeframe may be extended by a further two months where additional information is sought and the parties agree to such an extension.

Under the regulation, the regulator has the power to initiate an investigation on its own initiative. However, the regulator’s jurisdiction is not automatic and they may refuse to initiate an investigation where they are satisfied that other means of resolving the dispute in a timely manner are available to the parties.

The regulator may also refuse to initiate an investigation where the dispute is already subject to legal proceedings. Where a decision has been taken to refuse to initiate an investigation, the regulator must inform the parties as soon as possible. However, where the dispute has not been resolved or the party seeking redress has not initiated legal proceedings within four months from such a decision, the regulator may, at the request of a party, initiate an investigation.

Subject to possible appeal, the regulator’s decision will be binding on the parties and failure to abide by the decision will be considered an infringement of the regulation, subject to an administrative fine.

Under the regulation, the regulator will also have jurisdiction in cases where a consumer alleges that an authorised provider has infringed the Regulator for Energy and Water Services Act or subsidiary legislation made thereunder. When referring a dispute, a consumer must show on a prima facie basis that it has been affected by an act or omission of the authorised provider. In resolving the dispute, the regulator may, among other directives, order the authorised provider to effect reimbursement of payments received or to make compensation payments. Such payments may include the whole or part of the costs relating to the engagement of a lawyer or technical adviser engaged in submitting the dispute. Should a party fail to abide by an order given, the regulator may impose an administrative fine of not more than €600 for each day of non-compliance.

Notably, the regulator is not a compulsory dispute settlement mechanism for disputes arising between authorised providers and consumers. In fact, the regulation makes clear that “the provisions of this Regulation shall be without prejudice to the right of a consumer to have recourse to any other body in resolving any such dispute”.

As many other ADR mechanisms, the regulator aims to be expeditious in its investigations, with the regulation setting out a 90-day period within which disputes must be resolved. This timeframe may be extended only in exceptional circumstances. The regulator aims to increase efficiency by allowing complaints and supporting documentation to be submitted online. Official communication may also be made electronically or if applicable, by post.

When faced with a consumer complaint against an authorised provider, the regulator may refuse to deal with complaint in the following circumstances:

Where the consumer did not first attempt to contact the authorised provider in order to discuss their complaint and seek to resolve the matter with the authorised provider directly.
Where the dispute is frivolous or vexatious.
Where the dispute is or has been considered by another dispute resolution entity or a court.
Where the consumer did not submit the complaint to the regulator within one year from the date on which the consumer submitted the complaint to the authorised provider.
Where dealing with the dispute would seriously impair the regulator’s effective operation.
Where the consumer did not submit the complaint to the regulator within two years from the date on which the facts constituting the substance of the complaint first arose.

According to the regulation, decisions are binding on the parties to the dispute. However, where the dispute is between an authorised provider and a consumer, it is only binding on the consumer if they have been informed of the binding nature in advance and have specifically accepted this.

Although decisions are binding, they are not final and decisions taken by the regulator are subject to appeal before the Administrative Review Tribunal within 20 days of the decision. Appeals may be filed on the following grounds:

a material error as to the facts has been made;
there was a material procedural error;
an error of law has been made; or
there was some material illegality, including unreasonableness or lack of proportionality.

Comment

The Dispute Resolution (Procedures) Regulation aims to provide for an ADR mechanism that seeks to increase consumer protection in a timely and cost-effective manner. In times where courts have been forced to close due to COVID-19 containment measures and where there may be significant backlogs as they slowly open up again, authorised providers or consumers looking to settle disputes quickly may consider this mechanism as a valid alternative. Nonetheless, it is advised that disputes involving complex legal issues, including bunkering operations, should continue to be referred before a court so that the parties can make full use of all of the legal mechanisms available therein.

by Dr Martina Farrugia, Fenech & Fenech Advocates

Source: ILO

COVID-19 temporary precautionary measures – Framework of protocol for conducting maritime support services

May 28, 2020 Leave a Comment

On the 23rd May 2020, the Ports and Yachting Directorate within the Authority for Transport in Malta (the Maltese Port Authorities) published Port Notice 09/2020 entitled COVID-19 Temporary Precautionary Measures – Framework of Protocol for Conducting Maritime Support Services. This Notice is further to Port Notice 06/2020, which was previously issued by the Authorities on the 26th March 2020.

Port Notice 09/2020 was issued by the Maltese Port Authorities following consultation with the Port Health Office. It creates a framework of protocols that must be respected when maritime services providers in Malta are engaged to conduct various maritime support services.

Ships, yachts and all other vessels intending to obtain services in Maltese waters or within ports and harbours must seek prior port clearance. If cleared, vessels will be required to follow the protocols established in the said Port Notice.

Interestingly, the previous blanket ban on all yachts from entering Malta has been lifted. Yachts requesting permission to enter Maltese waters for services and ships requesting to enter Malta to carry out maintenance will be considered on a case-by-case basis. If and when approved, protocols and other conditions that must be followed by the vessels will then be communicated to the local agents by the Port Health Office.

The Notice also provides for an exemption to the otherwise applicable travel ban in cases of crew repatriation and likewise in cases of “ship operations”. Requests will be referred to the Superintendent of Public Health for consideration and will be dealt with on a case-by-case basis. If approved, protocols and other conditions that must be followed will be communicated by the Port Health Office.

by Dr Jotham Scerri Diacono and Dr Jan Rossi, Ganado Advocates

Source: Lexology

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Member of the Comité Maritime International

Commercial Yacht Code 2020

Update on yachting procedures

Malta’s role in ship recycling and its impact on environmental protection

Dispute resolution regulations for bunkering operations

COVID-19 temporary precautionary measures – Framework of protocol for conducting maritime support services

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