Insights

Please introduce yourself and your firm.

Ganado Advocates has a long heritage. Founded originally in Valletta, it traces its roots back to the early 1900′s. Today, we are one of Malta’s foremost law practices. Having contributed directly over several decades towards creating and enhancing Malta’s hard-won reputation as a reliable and effective international centre for maritime and financial services, the firm makes it its business to provide high standards of legal advisory services in a wide spectrum of international commercial and corporate activities not least to the shipping industry. I joined the firm in 1994 following the completion of my post graduate degree in maritime law at the IMO International Maritime Law Institute. I immediately started my working career in ship registration, shipping litigation and maritime law generally and have been doing so ever since.

How complex is the process of registering a ship in your country?

The procedure for the registration of a vessel per se can be affected relatively swiftly, assuming that all related documentation is made available by the owner. Procedures for the deletion of vessels as well as for the registration and discharge of mortgages are likewise user-friendly and uncomplicated.

If the owner desires to register the vessel in the ownership of a corporate entity, Maltese law will afford the owner the flexibility of selecting from a variety of corporate vehicles (including foundations and trusts) and in any jurisdiction.

The procedure for ship registration is flexible in that, for example, it permits owners to produce evidence of ownership and of cancellation of former registry at a stage that is subsequent to initial registration. This means that owners are at liberty to make arrangements to have such documents submitted to the Flag Administration after “taking delivery” of a vessel, when stress levels have abated. Authority to operate the vessel, however, remains dependant on prior conformity with the relative manning, safety and pollution prevention international standards. This is where it is true to say that a degree of complexity is evident and unavoidable.

It is true to say that the procedure to register ships has, over the years, become a more complex affair; and this is true not only of Malta but of other like jurisdictions. The complexity reflects the more sophisticated international legal regime that has developed over recent years and that applies to shipping generally. The focus today is no longer restricted to basic questions concerning safety at sea: instead, the legal spectrum extends to technical management, the environment and pollution at sea, seafarers’ rights and more recently to matters concerning security.

The achievement of the Malta Flag Administration lies in managing to strike a balance between observance of the law and industry requirements: while the Administration has put in place procedures that ensure that the applicable legal requirements are met, it has taken steps to ensure that those procedures are managed in a way that is not overly cumbersome to the industry. The Flag Administration listens and gives due consideration to the realities of the industry. To tamper delays that are sometimes unavoidable given the augmented legal duties facing the industry, the Administration, amongst other things, delegates its authority to classification societies and to a network of consuls outside Malta enabling seamless services to owners across borders.

What recent legislative developments have affected ship registration?

On 18th January 2013, the Government of Malta deposited with the International Labour Office the instrument of ratification of the Maritime Labour Convention, 2006 (MLC, 2006). Malta becomes the 34th ILO Member State and the 12th EU Member State to ratify this landmark Convention, which sets out decent working and living conditions for seafarers while creating conditions of fair competition for ship-owners.

In transmitting the instrument of ratification, Malta’s representative stated that Malta, being a small archipelagic State in the Mediterranean, has traditionally regarded the shipping sector as vital for its economic development and is proud to have the largest ship register in the EU and the 7th largest register among the States parties to the Maritime Labour Convention. As a major player in the global shipping industry constantly seeking to improve the efficiency of its shipping services in a highly competitive environment, Malta hails the forthcoming entry into force of the Convention and stands confidently ready to implement its provisions in the interest of the Maltese flag, responsible operators and above all the men and women working on board Maltese vessels.

In receiving the instrument of ratification, the Director General of ILO, Mr. Guy Ryder welcomed Malta among the States parties to the MLC, 2006 and expressed his satisfaction that with Malta’s ratification, two-thirds of the world’s merchant fleet are now formally bound by the Convention, an extraordinary coverage some seven months before the entry into force of the Convention in August of this year.

What are the key advantages of the Malta Flag?

The Malta Flag presents owners with a number of attractions. Firstly, I must point out that all types of ships, from super yachts to tankers, including ships under construction are eligible to be registered in Malta. It is also possible to register vessels which do not fall within the strict definition of “ships”, such as oil-rigs, floating docks, pontoons and barges. Different tax regimes will apply depending on the type of vessel. For cargo or passenger ships engaged in international trade, the now familiar “tonnage tax regime” will apply. This legal regime is based on the EU’s Community Guidelines on State Aid to Maritime Transport. Ships qualifying under the regime will pay tonnage tax and will then be eligible for exemptions from income tax and other taxes. Exemption from income tax extends to the dividends paid by the owning company to its shareholders. Also, no exchange control authorisation is required for the purpose of incorporating or operating a shipping company; this also applies to the taking of security for loans or other facilities over Maltese registered vessels.

An important factor that ship owners will surely consider when deciding where to flag their vessels, is the question as to whether a given flag is included in the “white lists” of the various “memoranda of understandings” that apply in the various maritime regions around the globe. Malta is not only a member of the European Union but also a member, amongst others, of the Paris Memorandum of Understanding (MOU) and is well placed on the White List of that MOU. That, of course, will have a relevant bearing on how frequent vessels flying the Malta flag will be subject to port state inspections.

Another advantage that owners will enjoy should they choose to flag their vessels in Malta is the flexibility that is afforded to them when it comes to employing crew: there are no restrictions on the nationality of the master, officers and crew serving on board Malta flagged vessels.

The Flag Administration also allows operators direct access to decision makers within the administration: users will find there a qualified and efficient team of technical officers, available for urgent matters on a 24 hour basis.

This article was published in the June 2013 edition of the Lawyer Monthly.