Under Act 122/2016, dated July 7 2016 and published in the Official Gazette on July 8 2016, bareboat-in registration in the Italian International Ship Registry was made available to ships registered in EU registries and ships owned by EU persons or entities, to which access was previously denied.
Italian International Ship Registry
In 1998 the government established the Italian International Ship Registry and awarded tax and social security exemptions for ships registered therein, with the aim of attracting new shipowners and strengthening the link between existing Italian shipowners and Italian flag ships.(1)
The registry was divided into the following sections:
- Section 1 – for ships majority owned by Italian or EU persons or entities.
- Section 2 – for ships owned by non-EU persons and entities, provided that they comply with Article 143 of the Code of Navigation – namely, that:
- the non-EU owning entity opens a permanent establishment in Italy to carry out operation of the ship;
- an Italian or EU person or entity is appointed to manage the ship and undertake liabilities vis-à-vis public administration and third parties; and
- Section 3 – which allows bareboat-in registration (ie, the registration of ships under the suspension regime of a different registry – the underlying registry – during the period when such a ship was bareboat chartered in favour of an Italian or EU person or entity).
Section 3 was expressly for ships registered in non-EU registries and ships owned by non-EU persons or entities. Concerns were thus raised among practitioners regarding the subjective restrictions, leading to different opinions about the interpretation of the rule. However, a literal construction of the rule prevailed and it can therefore be stated that Section 3 was then restricted to non-EU ships owned by non-EU entities.
In general, bareboat-in registration or dual registration consists of the second registration of a ship as a result of a bareboat charter agreement. The ship is suspended or temporarily dismissed from the underlying registry or flagging-out registry, and is then registered in the name of the bareboat charterer in the flagging-in state for the duration of the bareboat charter. According to the Italian law on dual registration principles,(2) bareboat-in registration will take effect to the extent of the bareboat charter agreement and in any event for no more than two years. During this time, the ship must comply with Italian safety and security legislation and the international conventions adopted and ratified by Italy in this regard. Finally, mortgages and mortgage law remain recorded in the underlying registry and the applicable law to such in rem rights is that of the underlying registry.
With Act 122/2016, the Italian legislator has clarified the criteria regulating access to the bareboat-in registration in the Italian International Ship Registry by expressly allowing the dual registration of ships registered in EU registries and ships owned by EU entities. The report attached to the first draft of the act expressly stated that the 1998 legislation needed to be changed to avoid the creation of a discrepancy between non-EU ships and EU ships, as the latter were prevented from accessing bareboat-in registration. The report clearly described this restriction as a gap in the legislation, as no valid reason existed for not allowing bareboat-in registration to EU vessels owned by EU entities.
Act 122/2016 has achieved the aim of the 1998 legislation, which was also to favour the registration of foreign vessels as Italian flag vessels by allowing the registration of non-EU vessels registered in non-EU registries under a suspension regime. However, this was not intended to impose a subjective restriction by barring the dual registration of EU ships owned by EU entities. After almost two decades of silence regarding this crucial matter regulating ship registration, the government and legislature are again concentrating their efforts on a strategically important area.
For further information on this topic please contact Marco Manzone at Dardani Studio Legale by telephone (+39 010 576 1816) or email ([email protected]). The Dardani Studio Legale website can be accessed at www.dardani.it.
Endnotes
(1) Act 30 dated February 27 1998, converting with amendments Decree-Law 457 dated December 30 1997, established the Italian International Ship Registry.
(2) Presidential Decree 66 dated February 21 1990.
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