At the beginning of this year, Transport Minister Austin Gatt announced that, for the first time in its maritime history, Malta has become the largest ship register in Europe. Being the seventh largest in the world, Malta has increased its tonnage by 16 per cent last year over 2010.

It seems that in Malta we have found the right ingredients for the maritime industry and for a successful ship register- Geraldine Baldacchino

Apart from the fact that the Maltese islands are at the heart of the Mediterranean sea, a strategic location which makes Malta a popular destination for maritime activities, this success is also attributable to the high level of service offered by Transport Malta with its 24 hours, seven days a week service in respect of urgent matters, and also due to fiscal and legal benefits. With the amalgamation of all these positive factors, the Malta ship register gained a very good reputation on an international basis and for years the ship register has been on the white list.

Every new application is processed by the Malta register once all the specific details within it are thoroughly confirmed and after the officers are satisfied that the application is in compliance with all international standards and regulations. The main concern of the Malta ship register is the condition and the age of the applicant vessel and not all applicant vessels make it into the register. Besides being a highly regulated register, Malta is also a member of a number of international maritime conventions including INMARSAT, TONNAGE 1969, LL 66/88, CLC and FUND 92, STCW 78, MARPOL 73/78, SOLAS, various International Labour Organisation conventions, and adheres to all European legislation issued from time to time.

Registration is open to vessels owned by Maltese and non-Maltese persons and in practice any kind of vessel may be registered, including a vessel under construction. Registration of a vessel under the Malta flag may be effected by any Maltese or other European Union citizen , any company registered in Malta or in the EU, or a non-EU body corporate or entity which is capable of ensuring due observance of the laws of Malta relating to registration.

Where the person under whose name a vessel is registered is not resident in Malta, he is required to appoint a Maltese resident agent. A resident agent is a person who is a habitual resident of Malta and who acts as a communication channel between Transport Malta and other local competent authorities and the vessel owner and managers.

Maltese legislation also provides for bareboat charter registration. In such a case the Maltese register and Maltese law provide the opportunity of having the certificate of registry issued in the name of the vessel’s charterer. Maltese law provides both for bareboat charter registration of foreign ships under the Malta Flag as also for the bareboat charter registration of Maltese ships under a foreign flag.

The main principles adopted at law are the compatibility of the two registries and that matters regarding title over the ship, mortgages and encumbrances are governed by the underlying registry, while the operation of the vessel falls under the jurisdiction of the bareboat charter registry. Within these parameters, ships bareboat charters registered in Malta enjoy the same rights and privileges, and have the same obligations as any other ship registered in Malta.

The Malta ship register is complemented by legislative provisions which make the register a preferred register with financiers as it is quite easy in Malta to enforce rights of mortgagees. A mortgagee wishing to enforce its rights against a mortgaged ship with the assistance of the Maltese courts can file an application for the vessel to be sold in one of two manners: a judicial sale by auction or a court approved sale. With regards to judicial sales, normally they do not take more than six weeks from the date of the vessel’s arrest to the date of sale. Upon an application being filed, the court appoints an auctioneer and sets the date for the judicial auction. A judicial sale by auction ensures that the vessel is sold on a free and unencumbered basis.

On the other hand, in a court approved sale, any creditor with an executive title can file an application requesting the court to approve the private sale of a vessel in favour of an identified buyer and in consideration of a determined price. The mortgagee must, together with the relevant application, file two separate valuations prepared by two independent and reputable valuers, confirming the value of the vessel. Moreover, the mortgagee must also show the court that the private sale is in the interest of all the creditors and that the price offered by the buyer is reasonable in the circumstances.

The law provides for expeditious proceedings, mandating that the application be appointed for hearing within ten days of its filing. If the court approves the private sale, it will nominate a person who will be entitled to transfer the vessel in accordance with terms and conditions approved by the court, as if such person were the registered owner of the vessel. The nominated person must deposit the relevant price in court within seven days from the date of the sale. A court approved sale grants the purchaser title to the vessel which is free and unencumbered.

It seems that in Malta we have found the right ingredients for the maritime industry and for a successful ship register.

Dr Baldacchino is an associate with Fenech Farrugia Fiott Legal.

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