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13 August 2014
Due to the vital impact which shipping activities have on our everyday lives, the regulation of vessels has become inevitable and is a topic that is constantly reviewed in international forums, primarily to ensure that international safety standards are met. International law consequently requires that vessels plying international waters and in certain cases those navigating local waters be registered in a specific country, referred to as a 'flag state'. A vessel that hoists the flag of a chosen country is considered to be part of the territory of its flag state and, from that moment is regulated and bound by the law of that state. The flag state whose laws govern the operation of a vessel exercises regulatory control over the vessel and is required to inspect it regularly with a view to ensure compliance with certain set standards.
With its centuries-old maritime tradition and as an EU member state, Malta has become the largest European maritime flag and also the seventh largest flag worldwide. Thanks to the unstinting efforts of the government and the maritime industry, Malta has developed into a reputable flag of choice and quality, which offers a wide array of international maritime services and fiscal incentives.
What has led to the unprecedented success of the Maltese maritime flag? Over the past 25 years the authorities have adopted stricter regulatory and legal procedures and ensured that Malta became a party to most of the major international maritime conventions of both the International Maritime Organisation and the International Labour Organisation. Malta flagged ships are strictly bound to adhere to these international conventions and European directives and regulations, and this development has inevitably placed Malta on the White List and Low Risk Ship List of the Paris Memorandum of Understanding. In turn, the most demanding and reputable shipowners and financiers have been attracted to the Malta flag.
The Merchant Shipping Act 1973 (Cap 234, Laws of Malta) regulates the registration and operation of vessels under the Malta flag and provides for the registration of all types of vessel, including those under construction and other marine structures, such as oil rigs and pontoons. The Malta Ship Registry is responsible for the registration of vessels under the Malta flag and all aspects of the day-to-day administration of Malta flagged vessels. Routine safety inspections on board Maltese vessels are carried out on a regular basis by state-appointed inspectors or through the services of inspectors employed by recognised classification societies that are members of the International Association of Classification Societies. This ensures that Malta flagged vessels fully comply with the maritime rules and regulations to which Malta adheres. The general rule is that a vessel will be granted registration under the Malta flag only if evidence of seaworthiness is established by one of the classification societies. Furthermore, generally, vessels cannot be registered in the Malta Ship Registry if they are 25 years of age and over.
One of the major attractions of the Malta maritime flag is that it offers a number of advantages to owners and charterers of Malta-registered vessels, including:
The Malta Ship Registry also offers a 24-hour service, seven days a week in respect of urgent matters. This service is vital to shipowners and is also provided by most local service providers.
Financiers (eg, commercial banks and lending houses) have also been attracted to the Malta flag largely due to the ironclad security provided by the Maltese legislative structure. The Maltese system provides for the registration of mortgages by financiers (also known as mortgagees) over Malta flagged vessels. These enjoy a significantly higher ranking over other privileged claims and rank, in relation to other mortgages, according to the priority in date and time of their registration. A vessel registered under the Malta flag may not be deleted from the registry by its owner without the prior written consent of the mortgagee and, in cases where the registrar of ships may require the vessel to be struck off the register, the registrar must first give one month's notice in writing to the mortgagee and owner. In case of default or breach of any of the conditions agreed between the mortgagee and the owner, Maltese law provides the mortgagee with various options and powers, including the power to take possession of and sell the ship. Under Maltese law, the registration of a mortgage provides the mortgagee with what is known as an 'executive title'. In the event of a breach of the conditions agreed by the owner with the mortgagee, the mortgagee may proceed to take full possession of the vessel without first having to obtain a court judgment. Apart from the possibility of selling a ship by judicial auction, the Maltese system also provides for court-approved private sales through which, on application by a creditor with an executive title (as is the case of the mortgagee as explained above), 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 which grant title to the purchaser free from all privileges and encumbrances.
In recent years, the yachting industry has also expanded significantly. Some of the largest super yachts in the world have been attracted to the Malta flag, mainly due to the flagging, fiscal, financing and chartering advantages applicable to yachts in Malta. The yachting industry is continually making efforts to ensure that yachting enjoys the same level of success experienced in the merchant fleet registration sector.
Apart from efficiency and accessibility, Malta also offers a comprehensive legal and corporate support structure provided by reputable and experienced service providers, together with a comprehensive range of maritime services, including:
These make Malta an attractive one-stop shop for owners, charterers, managers and financiers. Furthermore, government discussions regarding the implementation of an updated National Integrated Maritime Policy, which will seek to reflect national needs in line with EU policies, is clear evidence of the government's continued efforts in the maritime field, both locally and internationally.
For further information on this topic please contact Lara Saguna Axiaq at Fenech & Fenech Advocates by telephone (+356 2124 1232), fax (+356 2599 0645) or email (firstname.lastname@example.org). The Fenech & Fenech Advocates website can be accessed at www.fenechlaw.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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