Brexit has given rise to a new opportunity for the Malta Ship Registry to consolidate its prominent global maritime flag position and may have a lasting positive impact in this respect. However, the uncertainties caused by Brexit are not the only reason why Malta is a popular flag choice; this article outlines some of the additional benefits.
The Malta maritime flag is chosen by corporate entities and individual owners alike for both commercial and pleasure crafts of all types and sizes. Owners have various options when it comes to deciding the ownership structure for a vessel that is to be registered under the Malta flag. However, non-Maltese owners must appoint a resident agent that is habitually resident in Malta for the purposes of acting as a channel of communication between the Maltese authorities and the non-Maltese owner.
A creditor recently obtained a Section 37 order on a provisional basis from the Maltese courts as security for a claim arising from a dispute under a charterparty. The purpose of the order was to prohibit the sale, transfer or deregistration of the vessel while the merits of the case were being determined. While the law allows owners to opt to deposit security, the legislature has catered for these instances to ensure that creditors' rights are not prejudiced.
The Malta flag is often considered a flag of choice for shipowners, charterers and financiers alike. Among the various aspects which make the Malta flag an attractive option are the Tonnage Tax Rules. Legal Notice 128/2018 has significantly contributed to the further enhancement of the Maltese legal framework, and the response by management companies to this new scheme has been positive.
A Section 37 injunction allows creditors, in circumstances which give rise to a maritime claim attracting the jurisdiction of the Maltese courts in rem, to obtain a court order which prohibits the vessel from being sold or entering any further mortgages until the merits of the case have been decided in the appropriate jurisdiction. This has proven to be a useful and effective tool for protecting maritime claims.
Malta recently implemented the amendments to the Maritime Labour Convention 2006 into domestic law. As one of the largest ship registries in the world, these changes will have a significant impact on the world's shipping workforce. The new amendments can be divided into two parts introduced in the form of standards: one on seafarers' employment agreements and one on wages. A third amendment, which refers to specific entitlements, was introduced in the form of a guideline.
COVID-19 lockdown measures have significantly disrupted cruise ship operations and the financing arrangements in place between financiers and cruise liner companies. Anxious to maintain the good standing of cruise liner companies during the suspension of operations, financiers have been quick to offer debt restructuring solutions to borrowers to fill the liquidity void. At the local level, the most common refinancing exercise involving Malta-flagged vessels is the renegotiation of debt holidays.
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.
Transport Malta's Ports and Yachting Directorate recently issued a port notice to remind recipients about the Dispute Resolution (Procedures) Regulation. 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 mechanism that aims to be swift, economical, transparent and simple.
Faced with the threat of the COVID-19 pandemic, many EU states are increasingly adopting stringent measures to ensure that the spread of COVID-19 is, to the extent possible, contained. Malta is no exception in this regard, with most sectors having been affected to some extent. The local shipping industry has also been hit with several restrictions in recent weeks.
Maltese law is straightforward in terms of who has a right to arrest and which claims can be secured by means of an arrest. However, while ship arrests are a powerful legal remedy for creditors, they have one major limitation: they are possible only where the targeted vessel actually enters Maltese waters. As such, the legal system has introduced the Section 37 injunction, which provides creditors with an interesting, cost-efficient remedy where a ship arrest is not possible.
If an event of default occurs, a power of attorney executed by the mortgagor will allow the mortgagee to apply for the immediate closure of the vessel's Maltese register on the mortgagor's behalf and to pay all fees, make all declarations and receive all certificates, including the deletion certificate. While not essential for enforcement, registration of the irrevocable power of attorney is nevertheless an option for mortgagees and provides the added benefit of allowing for swifter enforcement in cases of default.
Asset-backed securitisation in the shipping sphere has recently come to prominence in light of traditional financiers' reluctance to finance shipping activities. The amalgamation of Malta's securitisation framework and merchant shipping laws makes up for a sui generis alternative corporate vehicle to facilitate such transactions and provide the stability and security for which investors yearn.
The practice of inserting a reference to a physical supplier's applicable terms and conditions in a bunker delivery note is rife within the local bunkering community. Historically, case law on the subject has been sparse. However, a recent court judgment supports the view that bunker suppliers cannot pursue a vessel or its owners for unpaid bunkers unless that claim is privileged or the order came directly from the vessel, its owner or its agent.
A mortgage over a Malta-flagged vessel may be drawn up to secure the payment of a principal sum and interest, an account current or the performance of any other obligation – including a future obligation – due to a creditor by the debtor. The parties to an underlying security document may enter into negotiations resulting in changes to the terms set out in the security document. The question that therefore arises is whether a mortgage amendment should be registered to reflect the new terms.
The registration of a mortgage over a Malta-flagged vessel in favour of an individual, corporate lender or security trustee (the mortgagee) requires the filing of a statutory mortgage instrument (the deed) at the Maltese Ship Registry. However, what happens if the original mortgage instrument is misplaced? Maltese law affords two remedies in such instances; the chosen remedy will depend on the remaining duration of the registered security.
The June 2018 sale of the Indian Empress has attracted the attention of the superyacht community worldwide and international brokers, the international yachting media and potential owners and creditors of the yacht are watching this space very closely. This was the first time that a Maltese court ordered bidders in a judicial sale by auction of vessels to make a cash deposit in court prior to the sale taking place and the first time that a bidder was held liable for the payment of the difference.
Following the collapse of OW Bunkers, physical bunker suppliers worldwide have had to rethink their business model with respect to the potential debt exposures that they face when conducting business through bunker traders. The matter is further complicated due to the fact that in many cases, there is not just one bunker trader involved, but rather a series of intermediaries, brokers and intermediary traders.
While primarily introduced to amend and update the Aircraft Registration Act and other ancillary-related laws, Act LII/2016 also promulgated particular amendments which go beyond aviation law into the realm of shipping. These recent changes are making Maltese law an ideal legal regime to govern and regulate disputes which may arise under certain types of shipping contract – namely, ship sale and purchase agreements, promise of sale agreements and charterparties.
At the start of 2017 Transport Malta, the authority responsible for the administration of the Malta flag, introduced new guidelines that allow more than 12 persons on board privately registered yachts. The new guidelines stem both from a recognition that there is a gap in the superyacht market and the administration's continued effort to remain at the forefront as a leading yachting flag.