Malta Maritime Law Association

Malta Maritime Law Association

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Malta introduces new Passenger Yacht Code

November 15, 2021 Leave a Comment

In response to the needs and realities of the yachting industry and heeding the advice of numerous stakeholders in the business, the Merchant Shipping Directorate has introduced the Passenger Yacht Code (PYC). This code, which entered into force on 25 May 2021, lays out a pragmatic approach to an increased demand for larger yacht operators that wish to carry more than 12 passengers, while simultaneously ensuring that the highest safety standards, which are more suited to these kinds of vessels, are applied and maintained.

Applicability
The scope of the PYC’s applicability is passenger yachts that:
• carry more than 12 and up to 36 passengers, and no more than 200 persons overall (the master, crew or other persons employed on board are excluded from the definition of “passenger”);
• do not carry cargo; and
• are engaged on international voyages.
The PYC exclusively caters for the yachting sector and clearly lists the scenarios that fall outside scope. Pleasure yachts not employed for commercial use are excluded from its scope; however, private and pleasure yachts that carry at least 13 guests are encouraged to voluntarily comply, as far as is practicable, with the standards laid out therein.

Purpose
The PYC was developed with an awareness of the challenges involved in applying certain international convention standards that were originally intended for merchant vessels, to modern passenger yachts or superyachts. Prior to its introduction, yachts carrying more than 12 passengers, and that fell outside of the Malta Commercial Yacht Code’s scope (which caters for yachts engaged in commercial operations that do not carry more than 12 passengers), had to satisfy similar requirements to those applicable to passenger ships. These requirements were often regarded as being too disproportionate and onerous when considering a passenger yacht’s design and general operations. The PYC also aims to better safeguard the protection of life and property at sea, and it strives to continue to promote the prevention of marine pollution from yachts.

Key provisions and acceptable equivalences
The PYC is divided into a number of sections, each containing provisions that address aspects of a passenger yacht’s technical specifics and overall operations, including parts on:

• construction and stability;
• machinery and equipment;
• safety of navigation;
• fire protection, detection and extinction; and
• manning and crew certification.

The PYC outlines several dedicated equivalences to international convention requirements, including those emanating from provisions in the International Load Line Convention, as amended in relation to plimsol markings, sill or coaming heights and glazing. There are also numerous equivalences to requirements in the International Convention for the Safety of Life at Sea (SOLAS), as amended – requirements which, in view of the passenger yachts’ technical specifics, design, size, and operational pattern, may be considered impracticable.

In parallel, and without compromising overall safety or weakening standards, the PYC provides for requirements enhanced beyond several of the SOLAS provisions, as well as additional equipment and requirements that are deemed appropriate and more suitable for these kinds of vessels. For instance, the PYC provides for enhanced safety and survivability requirements in lieu of the carriage of lifeboats, subject to conditions laid out in therein.

As far as the Merchant Shipping (Maritime Labour Convention) Rules 2013 (MLC) are concerned, the PYC dedicates a section to certain acceptable equivalences relating to crew accommodation, stores and recreational facilities that passenger yachts of less than 1,250 gross tonnes may opt to comply with in lieu of the provisions laid out in part IV of the MLC, “Accommodation and Stores”. The PYC also lays down additional requirements in a separate section for personnel protection.

The PYC includes a section on marine pollution prevention and it reiterates the requirements that all PYC compliant vessels are to meet under:
• the International Convention for the Prevention of Pollution from Ships (MARPOL), as amended;
• the International Antifouling System Convention; and
• the Ballast Water Management Convention.

In this regard, passenger yachts will be surveyed and certified in line with the relevant international conventions, and they must carry the relative MARPOL manuals, plans and records (as applicable) on board.

The applicable requirements for surveys, audits and certifications are also covered. Passenger yachts will be classed by a recognised organisation and surveyed, certified, audited and issued with the class and statutory certificates applicable to passenger vessels. Additionally, the recognised organisation will issue a certificate confirming compliance with the PYC.

Another notable addition in the PYC is the set of guidelines for the static chartering of passenger yachts, whereby a passenger yacht that is berthed or anchored at sea is allowed to carry more than 36 passengers. An application must be filed with the Merchant Shipping Directorate – Yachting Section and, if successful, the passenger yacht is issued with a statement from Transport Malta that allows static charters to be held on board. Local port authorities must be kept informed when such a static charter is planned, and the conditions laid out in the guidelines must be upheld. As a growing market trend, this is a welcome addition for passenger yachts flying the Malta flag.

Comment
With the PYC, the Merchant Shipping Directorate has taken a significant step in attracting more yachting tonnage to its fleet and to maintain its status as a quality flag of confidence that is respectful of the demands of this fast-evolving industry. The Merchant Shipping Directorate is committed to the growth of this sector, as has also been seen more recently with the introduction of the Commercial Yacht – Pleasure Yacht Changeover Guidelines on 2 September 2021. These guidelines aim to assist all stakeholders by clarifying the salient features and procedural aspects of the changeover in yacht status from pleasure to commercial and vice-versa under the Malta flag – an option often availed by Malta-flagged yacht owners.

by Stephanie Farrugia, Fenech & Fenech

Source: Lexology

Filed Under: Latest, Malta, Malta Flag, MMLA's Seminar: Key Insights on VAT & Yachting Transactions, Passenger Yacht Code, Yachting

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

Filed Under: MMLA's Seminar: Key Insights on VAT & Yachting Transactions

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

Filed Under: Latest, Malta, Malta Flag, Maltese law, MMLA's Seminar: Key Insights on VAT & Yachting Transactions, Yachting

Malta – Recent Changes to Laws Regulating Shipping Companies

May 13, 2020 Leave a Comment

The Merchant Shipping (Shipping organisations – Private Companies) Regulations (Subsidiary Legislation 234.42 of the Laws of Malta, “the Regulations”) have recently been amended by Legal Notice 31 of 2020 published in the Government Gazette on the 21st of February 2020.

Originally promulgated in 2004, the Regulations address the establishment and corporate workings of what is typically referred to as the Maltese shipping company.

Well known by players in the international shipping industry, shipping companies incorporated under the Regulations are used for the ownership, operation, and management of merchant vessels (both Malta-flagged or flagged elsewhere) as well as other maritime-related activities.

Legal Notice 31 of 2020 has now further improved the legislative and regulatory position in the area.

Continuation of foreign companies in Malta and vice-versa

Continuation (sometimes referred to as re-domiciliation) entails the transfer of a corporate entity’s ‘seat of incorporation’ or registration from one jurisdiction to another, thus ensuring the continuing corporate existence of the migrating entity.

Continuation seeks to ensure the continued existence of the same legal person. Accordingly, the company retains all the assets, rights, liabilities and obligations previously held or due by it.

Re-domiciliation into Malta is a useful and advantageous route for those existing shipping companies or shipping groups wishing to move their corporate seat to Malta. Existing shipping companies incorporated elsewhere may retain their corporate existence, instead of incurring winding up costs or leaving them idle whilst incurring costs to keep them in good standing, combined with the cost of incorporating a new company in Malta.

The continuation of a foreign shipping company into Malta may also be considered in connection with the simultaneous flagging of new tonnage or the re-flagging of existing tonnage under the Malta flag. Indeed, the whole re-domiciliation exercise, combined with the registration of the underlying owned or operated vessels in Malta, may well serve as a point of entry into the Maltese tonnage tax system.

Whilst re-domiciliation laws for non-shipping companies have been enacted in Malta a number of years ago, Legal Notice 31 of 2020 has brought about a novel faculty for Maltese shipping companies. Prior to 21st February 2020, a foreign shipping company wishing to re-domicile to Malta would first need to do so as a non-shipping company and subsequently convert to a shipping company post re-domiciliation.

This time consuming and burdensome procedure has now been removed through the introduction of Legal Notice 31 of 2020.

The Regulations now govern both the continuation in Malta of a foreign corporate entity as well as the continuation of a Maltese company in a country or jurisdiction outside Malta.

Re-domiciliation is only possible if the laws of the concerned jurisdiction (other than Malta) allow so.

Additionally, re-domiciliation may only take place when the foreign jurisdiction is considered as an “approved country or jurisdiction”. In this regard, the Registry relies on the Financial Action Task Force (FATF) country evaluations and treats as an approved jurisdiction a country that is not on the FATF blacklist.

Reporting & filing obligations for shipping companies

Starting from financial year 2020, shipping companies are requested to keep accounting records in accordance with the Regulations and will be subject to the exemptions and disclosure requirements as detailed in the said Regulations. Shipping companies will, therefore, need to prepare financial statements in accordance with the Regulations and the relevant applicable financial reporting standards such as GAPSME or IFRS.

Shipping companies will now submit audited financial statements to the Registrar of Companies. Submission must be made within 42 days from the end of the period for the laying before and approval by the company in general meeting of the annual accounts, that is 10 months after the end of the applicable and relevant accounting reference period.

Simply put, the large majority of shipping companies having their respective year-end in December must make their first filing of their audited accounts for financial year 2020 towards early December 2021.

A “small” shipping company is exempt from the general requirement to prepare a directors’ report. A “small” shipping company is one which, in terms of Regulation 64 of the amended Regulations, does not exceed two of the below thresholds:

  • A balance sheet total of € 6,000,000
  • Turnover of € 12,000,000
  • Not more than fifty employees

At a parent company level, exemptions from the preparation of consolidated accounts are also present. A parent shipping company incorporated under the Regulations can qualify as a “small company” in terms of the foregoing only if the group of which it is parent qualifies as a small group, meaning that, on a consolidation basis, it does not exceed the limits of two of the following criteria:

  • An aggregate balance sheet total of € 6,000,000 net or € 7,200,000 gross
  • An aggregate turnover of € 12,000,000 net or € 14,400,000 gross
  • An aggregate number of fifty employees

The above-described size exemption applicable to the preparation of consolidated accounts does not seem to apply in the event that the parent shipping company, or any of its undertakings to be consolidated, have their securities listed on a regulated market and in the event that none of the group companies are public interest entities.

Other

An additional Schedule – the Tenth Schedule – has been added to the Regulations. This Schedule lists a number of administrative penalties which may be imposed by the Registrar of Companies in the event of a number of defaults concerning failure by a shipping company and its officers to abide by their notification and filing obligations with respect to annual accounts as well as other matters concerning corporate governance.

by Ganado Advocates

Source: Lexology

Filed Under: Malta, Malta Flag, Maltese law, Maritime Registration, MMLA's Seminar: Key Insights on VAT & Yachting Transactions

MMLA President at UNCITRAL Working Group VI first meeting held in New York on the International Recognition of Judicial Sales

May 31, 2019 Leave a Comment

Between the 13th and 17th of May 2019, President of the MMLA, Dr Ann Fenech  was at the first meeting of UNCITRAL Working Group VI which has been tasked with considering the draft convention presented by CMI on the International Recognition of Judicial Sale of Ships.

Dr. Fenech participated in this meeting at  UNCITRAL in her capacity of Vice President of CMI and as CMI co-ordinator for the project at UNICTRAL.

This was the first meeting of the Working Group VI attended by States members of UNICTRAL during which Dr. Beata Czerwenka was appointed Chairman of Working Group VI.

During this first meeting lasting an entire week,  the Swiss Delegate Prof. Alex von Zeigler, a member of the Executive Council of CMI, presented the project since it was on the proposal of Switzerland last July 2018 that the 51 Assembly of UNICTRAL accepted to take on this work as part of its programme.

As CMI co-ordinator for the project Dr. Fenech was tasked with giving a preliminary explanation of each proposed article to the convention.  There was agreement on  the usefulness of the CMI draft to be used as the basis for any future work.  The entire week was taken up with the explanations and answering of questions raised by all the delegations present.  It was concluded at this first meeting that the UNCITRAL secretariat will now work on another draft taking into account the various ideas expressed and that the  next draft will be the subject matter of the next Working Group VI meeting in Vienna in November of this year.

Filed Under: CMI, International Law News, International News, Judicial Sales, Latest, Malta, MMLA, MMLA's Seminar: Key Insights on VAT & Yachting Transactions

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Malta Maritime Law Association

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