News - Malta Maritime Law Association

Best in Shipping & Maritime Award

July 5, 2015 Leave a Comment

Ann Fenech, managing partner and head of the Marine Litigation Department at Fenech and Fenech Advocates, has won Best in Shipping and Maritime at the fifth annual European Women in Business Law Awards 2015, organised by Euromoney Legal Media Group Europe at The Grosvenor in London. This is the third time she has won this award.

Other nominees were: Elizabeth Blackburn from Stone Chambers, London; Siobhan Healey, from 7 King’s Bench Walk, London; Marie Kelly from Norton Rose Fulbright, Athens; Vivien Pitroff from Holman Fenwick Willan, London; and Vasanti Selvaratnam from Stone Chambers, London. Fenech & Fenech Advocates also won Best Law Firm in Malta. The Right Honourable Lady Justice Hallett attended to receive the Lifetime Achievement Award. In February 2013, she was assessed as the eighth most powerful woman in Britain by Woman’s Hour on BBC Radio. Judith Gill from Allen & Overy, London was presented the Outstanding Practitioner award.

The keynote speaker for the evening was Nicky Moffat, who was in the British Army for 27 years and was the most senior serving woman in the force when she left in 2012. Ann Fenech is currently president of the Malta Maritime Law Association and in June last year she was elected to serve on the executive council of the Comité Maritime International. The CMI is the international organisation which has, over the last 100 years, been responsible for the drafting of the vast majority of international maritime conventions. She is the first Maltese person to have been elected to serve on the council.

Source: Times of Malta, 5 July 2015

Malta For Maritime Registration in Shipping Law

June 20, 2015 Leave a Comment

If you have a sea-going vessel/ship, or even a fleet of them, you will need to make a decision about where you want your maritime registration to be held. There are a number of different flags from all over the world offering the opportunity to be registered; each will provide its own specific advantages and rules which must be adhered to.

Opting for Malta means joining the largest and arguably most established shipping community in Europe, and having access to a port which is perfectly placed between Europe and Africa. Malta is no longer to be a flag of convenience. In fact Maltese authorities in particular Transport Malta (ex Malta Maritime Authority) refers to the flag as a flag of confidence. Here’s a closer look at what ship registration in Malta brings and the benefit you can expect.

The legacy of Malta’s maritime history

Long history Lying in the Mediterranean beneath Italy but above the continent of Africa means that Malta occupies the perfect strategic position. Historically, the country has been one of the most important in maritime trade thanks to both its location and the abundance of natural harbours. Over the decades Malta has built an impressive array of maritime services such as towage, ship supplies, specialised repair plus Freeport facilities. This has helped the tiny nation to remain one of the giants on the global shipping stage, the 6th biggest in the world and the 2nd largest across Europe. This history of maritime excellence has earned the Maltese shipping flag real respect and worldwide confidence in their quality and monitoring.

Maritime monitoring Transport Malta holds responsibility for the registration of ships under the Maltese flag and also oversees the ongoing monitoring and administration of all those in the ship registry. Transport Malta has taken huge steps to protect the integrity of the Maltese shipping flag and has launched a number of different initiatives. Included in these was the appointment of inspectors all over the world to carry out regular safety inspections and to ensure ships comply with Maltese regulations. This rigorous approach to safety and monitoring combined with Malta’s status as a member of the EU means that it has been placed on the Paris MOU White List. This provides ships and vessels with advantages such as fewer port inspections.

The benefits
It’s clear that Malta has a very well-structured maritime/shipping industry and that it takes its responsibilities under its shipping flag very seriously. However, what benefits does registering with Malta provide to the owner of either a vessel or a fleet? There are a number of different benefits to being registered with the Maltese flag, some of which are financial.

Maltese registered ships enjoy the following tax benefits:

Income tax exemption: no income tax on revenue earned from shipping activities (international carriage of goods and passengers for reward).
Exempt from stamp duty on the sale of such a vessel exemption from donation and succession duty on the capital
No trading restrictions.
Double taxation agreements in place.
Possibility of registering ships in the name of non-resident entities.
Access to decision-makers within relevant authorities plus technical back-up.
Simplified procedure for the purchase and sale of shares/equity held in a Maltese shipping company.
Simplified process for the registration and deletion of all vessels.

In addition, the Maltese flag doesn’t pose any restrictions on the nationality of any of the crew serving on the vessel, nor the officers or the master. The nationality of any shareholders or directors is also unrestricted. Other vessels which wouldn’t normally be considered as a ship, such as an oil rig or a platform can be registered.

Malta has taken every possible step to ensure that its maritime regulations offer a real advantage to the ships that register under its flag and have in place responsible, efficient and useful legislation and procedures.

Source: Mamo TCV Advocates

Wrongful Arrest of Ships (1)

May 6, 2015 Leave a Comment

The arrest of vessels is an important and powerful weapon. In Malta, vessels can be arrested in order to achieve two objectives. The first is through a precautionary arrest warrant in order to secure a claim which has not yet been decided. The other is through an executive arrest warrant, which seeks to enforce a favourable judgment already obtained where the creditor refuses to pay the debt. The arrest of a vessel can eventually lead to the sale of the vessel in order to satisfy a judgment debt. In the meantime, the vessel is taken away from the owner and thus the owner can no longer earn an income from the vessel.

As a result, arrests usually have serious financial consequences for owners. Arrests are typically unannounced, often when a vessel is trading under charter and loaded with cargo. Having a vessel arrested puts an immediate stop to this activity, opening the owner up to other claims and losses. Therefore, the arresting party must be on the right side of the law and it is crucial that when arresting a vessel, the criteria permitting the arrest and the safeguards provided by the law are followed meticulously. If they are not – or if the law allows for a trigger-happy arresting party to proceed despite having no real grounds for arrest – there could be an increase in lawlessness. For example, it would give rise to an attitude of ‘might is right’ and increase the number of unscrupulous persons with suspect claims arresting vessels erroneously in the hope that the arrest will cause such chaos that the owner will simply give in to pressure and pay up. This would be wrong and illegal.

Facts
A recent case highlighted both the importance of this subject and a loophole in the law. Cassar Fuel Ltd v the MV K Dadayli was decided on February 12 2015 by Jacqueline Padovani Grima. Cassar arrested the MV K Dadayli for unpaid bunkers. The vessel was arrested long after it had been sold and the persons responsible for the payment no longer owned vessel. This was in breach of Article 742(D) of the Code of Organisation and Civil Procedure. Under Article 724(D), which was introduced into law in 2006, vessels may be arrested in rem only when the party that is liable for the claim in personam is the owner or bareboat charterer of the vessel when the action is brought or, in case of arrest, when the arrest is affected. This amendment was based on principles of equity and justice because it is neither equitable nor just to allow a vessel belonging to X to be sold in order to satisfy a judgment for a claim for which A (the previous owner of the vessel) is responsible.

The vessel owners filed an application primarily requesting that the court revoke the arrest warrant on the basis that the criteria stipulated in Article 742(D) were not satisfied. The vessel owners also requested the court to order the plaintiffs to pay for the expenses and damages that they suffered as a result of the illegal arrest (eg, extra bunkers consumed during the arrest, agency fees, port dues, pilotage fees, mooring costs during the arrest and a loss of time in relation to its chartering activities (by virtue of Article 836 (9)). Finally, the vessel owners requested that the court impose a penalty on the plaintiffs on the basis that the arrest was malicious, frivolous and vexatious in relation to Articles 836(8) and 861 of the Code of Organisation and Civil Procedure.

Decision
The court clearly stated that the criteria established in Article 742(D) must be followed religiously; therefore, a vessel cannot be arrested in support of an action in rem if the party that is liable for the claim in personam when the cause of action arose is no longer the owner or bareboat charterer of the vessel on arrested. Therefore, in this case, the arrest was illegal and the arrest warrant was revoked.

Comment
The judgment stopped short of making reparations to the vessel and its owners, which suffered damages as a result of the abusive arrest. This is because in the court held that the arrest of the vessel notwithstanding, the defendants’ failure to satisfy the criteria established by Article 742(D) was not malicious, frivolous or vexatious. Given that the court came to this conclusion, no penalty was applied and no award for damages could be sought as, according to Article 836(9), damages can be awarded only in cases which attract a penalty.

It could be argued that the court was incorrect in finding that the arresting parties’ actions were not malicious, frivolous or vexatious. Regardless, this case has highlighted a weakness in Maltese law, insofar as the right to damages resulting from an illegal arrest appears to be inextricably linked to the vessel owners proving that the arresting party should be ordered to pay a penalty.

In fact, the two should be separate and distinct. Vessel owners should be entitled to damages arising out of an illegal arrest as a natural and automatic consequence of a declaration that the arrest was illegal or wrongful because the necessary criteria were not followed. This right to damages once an arrest is declared illegal should have nothing to do with the court’s right to impose a penalty on an arresting party where Article 836(8) applies.

The fact that a party may arrest a vessel without satisfying the criteria for arrest and without paying for damages resulting from the illegal arrest merely because the court is unconvinced that the circumstances fit the criteria for which it could impose a penalty on the arresting party is not good news. It is something which the next round of amendments to the Code of Organisation and Civil Procedure must address.

Contributed by Fenech & Fenech Advocates,

Published in ILO, 6 May 2015

Malta – Logical Choice for Superyacht Owners

April 15, 2015 Leave a Comment

The third annual Opportunities in Superyachts Conference was held at the Westin Dragonara in Malta on March 26 2015. As in previous years, the conference attracted a substantial number of local and foreign lawyers, marina and yard representatives, yacht and insurance brokers and financiers and audit firms.

Over the past eight years Malta has enjoyed success within the superyacht sector, steadily increasing the volume of its registered fleet and the number of yachts which are not necessarily registered in Malta but which have otherwise benefited from the solutions offered by the jurisdiction. As such, it is unsurprising that the presentations and panel discussions largely focused on what Malta offers owners and operators of private and commercial yachts.

Conference overview
During the conference, José Herrera – Parliamentary Secretary for Competitiveness and Economic Growth – referred to an announcement made in February 2015 by Transport Malta (the Maltese regulatory body in charge of shipping matters), which revealed a 13.6% increase in the registration of commercial yachts over 2014. The conference also coincided with the launch of Yachting Malta Ltd – a partnership between the government and the Royal Malta Yacht Club – which has the sole objective of promoting Malta as a leading destination for high-profile yachting events.

While undoubtedly representing the cornerstone of a maritime nation’s portfolio, success is not measured solely by the amount of registered tonnage or size of a jurisdiction’s flag – although Malta is the largest European flag and the sixth largest in the world, with latest published figures indicating that Malta has 292 privately registered yachts over 24 metres and 160 commercially registered yachts over 24 metres as of December 2014.

James Lawson – who chaired the conference – spoke of Malta as the “neatest and safest” option, not only with regard to registration requirements (leaving aside temporary importation scenarios where a non-EU flag would be mandatory), but also with regard to its corporate services, tax planning, general efficiency and consistently high-level service. The third session of the conference focused on tax, value added tax (VAT), corporate ownership and registration, which were exhaustively covered by means of an excellent presentation delivered by Janet Xanthopoulos, head of the yacht division of Monaco-based Monoeci Management.

Panel discussion
A panel discussion after the main presentation identified and discussed key topics, including: the impact of the application of VAT on charters in Malta; the accounting of VAT on imports of commercial yachts in Malta; and the security that Maltese law offers financiers. Other significant topics of discussion were the increases in owners registering their yachts under EU flags – which is seen as one of the factors contributing to Malta’s success – and various instances of owners choosing to switch their yachts from commercial use to private use. The panel’s concluding comments identified Malta as a leading example of the importance of EU member states maintaining tax regimes that are beneficial (as opposed to punitive) to owners in order for the sector to thrive.

For further information on this topic please contact Alison Vassallo at Fenech & Fenech Advocates on t. +356 2124 1232 or email alison.vassallo@fenlex.com. See also the Fenech & Fenech website.

Contributed by Fenech & Fenech Advocates ILO

Malta: Sixth Largest Maritime Flag Worldwide

April 6, 2015 Leave a Comment

The Legal Aspects Which Have Contributed to the Success Story in Shipping Law

Latest statistics for 2014 indicate that the Malta maritime flag has reached yet another milestone: the Malta Ships Register has become the sixth largest maritime flag in the world. It has moved up from seventh place in 2013 and has retained its position as the largest in Europsope. The Maltese register has not only registered an increase in gross tonnage but has also continued to attract younger vessels to its fleet whilst retaining high standards.

This success story is supported by a legislative structure which, through the years, has adapted to the needs of the maritime industry and at the same time has provided the certainty and security which is required by owners, operators, managers and financiers alike. The Merchant Shipping Act (Chapter 234 of the Laws of Malta) (the “Act”), as the primary instrument regulating the registration of ships under the Malta flag, widely defines the term “ship” as all types of ships, including those under construction, as well as other marine structures such as oil-rigs and pontoons, all of which may be registered under the Malta flag. This definition also means that pleasure boats, commercial yachts, tankers, container and other commercial ships, pontoons, barges, floating production storage and offloading vessels (FPSOs), installations and structures and offshore oil rigs/drilling units are all eligible for registration under the Malta flag.

The Act requires all ships exceeding six (6) metres in length which are not employed solely in navigation on the coasts of Malta to be registered in the Ships Register of Transport Malta. In addition to full registration, the Act allows for bareboat charter registration of ships, in other words, the registration of a ship in two jurisdictions which are legally considered to be compatible. Maltese flag compatibility has currently been established with various ship registries including with that of Antigua and Barbuda, the Bahamas, Cyprus, the Isle of Man, Italy, Liberia, the Marshall Islands, Panama, Turkey, Spain and several others. This provides owners and charterers with flexibility for their contractual arrangements and operation of ships.

As far as the age of ships is concerned, restrictions are also applicable and ships which are 15 years and over but less than 20 years must be inspected within the first month from the date of the provisional registration under the Malta flag while ships of 20 years and over are subjected to a flag state inspection prior to being accepted for registration. Ships of 25 years and over are, generally speaking, not accepted for registration and this prohibition has assisted in significantly reducing the average age of ships registered under the Malta flag.

A Malta flagged ship may be registered in the ownership of (i) a Maltese individual or company or (ii) in the ownership of a citizen of a Member State of the European Union (EU), the European Economic Area (EEA) or Switzerland who resides in Malta or (iii) in the ownership of an international owner, being a citizen of a Member State of the EU, EEA or Switzerland not residing in Malta or a non-Maltese corporate body or entity which enjoys legal personality in terms of the law under which it has been established or constituted.

In the light of the fact that Malta is a party to most of the major International Maritime Conventions of the International Maritime Organisation (IMO) and the International Labour Organisation (ILO), Malta flag ships are obliged to adhere strictly to the provisions of such international conventions. Among the latest conventions affecting the maritime industry are the Maritime Labour Convention which entered into force in 2013 and the Nairobi International Convention on the Removal of Wrecks which was ratified by Malta in January this year and enters into force in April 2015.

A shipowner’s choice of flag is very often not only determined by the requirements and advantages of a flag with respect to the registration and operation of a ship but also by requirements imposed by any financiers who may be involved in assisting a shipowner with its financial needs. Since financiers (also known as mortgagees) usually require as collateral the registration of a mortgage in their favour over a shipowner’s ship, financiers frequently request the submission of updated reports on the law of the flag state being considered by a shipowner before agreeing to provide requested financing, and this in order to determine the adequacy of the level of protection provided to secure their interests, particularly when registering and enforcing mortgages registered over ships.

This in fact is one of the primary areas where Maltese law has developed significantly over the last decades with a view to provide mortgagees with iron-clad security whilst keeping the flag accessible to shipowners. The rights of a mortgagee (which has the benefit of a registered ship mortgage registered in its favour) are regulated by the Act. Whilst ships are invariably initially registered on a provisional basis until certain original documentation required for permanent registration is filed with the Registrar of Ships, once a ship is provisionally registered under the Malta flag, a mortgage can legally be registered thereon and the mortgagee’s rights will immediately be fully secured and enforceable irrespective of whether the ship is provisionally or permanently registered. The law provides for a statutory form which is executed by the shipowner and filed and registered at Transport Malta in the presence of the Registrar of Ships.

Upon the registration of a mortgage, the Registrar of Ships is legally bound to indicate the date and time of registration on the face of the mortgage deed and records the document on the ship’s register book, which is available for public inspection. Mortgage deeds, which may be drawn up to secure the payment of a principal sum and interest, an account current as well as the performance of any other obligation including a future obligation, enjoy a significantly higher ranking over other privileged claims specified in the Act and rank, in relation to other registered mortgages, according to the priority in date and time of their registration.

The law does not allow an owner to delete a ship registered under the Malta flag without the prior written consent of a mortgagee. In those cases (specified in the Act) where the Registrar of Ships has the discretion to strike off a ship from the Register, the Registrar must first submit a one month notice in writing to the mortgagee and to the owner. A mortgagee has the power to prohibit the creation of any further mortgages and may likewise prohibit the transfer of ownership of the ship without a mortgagee’s prior written consent.

Of significant importance is the executive title which Maltese law grants a mortgagee of a Malta flagged ship, such that in the event of a breach of any of the conditions agreed upon, the mortgagee may proceed to take full possession of the ship without first having to obtain a Court judgement. Among the powers granted to a mortgagee in case of a default, the mortgagee is granted the absolute power to sell the ship although, where there are several mortgagees, a subsequent mortgagee can only commence sale proceedings with the concurrence of prior mortgagees, unless the sale takes place following the order of a court of competent jurisdiction.

In addition, the mortgagee has the power to do all such things in the name of the owner as may be required in order to maintain the status and validity of the registration of the ship. On the strength of a relatively recent amendment to Maltese law, creditors who hold an executive title (such as mortgagees) and who seek to enforce their rights, not only have the option to sell a ship by private sale or judicial auction, but may also avail themselves of socalled “court approved private sales” wherein the court may approve a private sale of a ship in favour of an identified buyer and in consideration of a determined price.

Such court approved private sales have the same effect as judicial sales with respect to the granting of title to the purchaser free from all privileges and encumbrances. It is clear that Malta’s ability to keep legislatively abreast with the ever-evolving needs of the maritime industry has been a major contributing factor in attracting among the most demanding and reputable ship owners and financiers to Malta.

This, together with the efficiency and accessibility of the Maltese maritime administration, the comprehensive support structure provided by reputable and experienced service providers and the wide range of maritime services available, have rendered the Malta maritime flag the leading flag of choice it is today.

Source: Fenech & Fenech Advocates

Member of the Comité Maritime International

Best in Shipping & Maritime Award

Malta For Maritime Registration in Shipping Law

Wrongful Arrest of Ships (1)

Malta – Logical Choice for Superyacht Owners

Malta: Sixth Largest Maritime Flag Worldwide

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