Shipping

Malta’s proactive approach to its national legislation has created an ideal environment to support the growth and development of the shipping industry, which provides significant economic value to the Maltese islands. The primary legislation sets out the overarching general legal framework; while the subsidiary legislation governs the particularities of specific sectors in support of the primary legislation.

The principal laws governing shipping in Malta are:

• the Merchant Shipping Act (Chapter 234 of the Laws of Malta);
• the Authority for Transport in Malta Act (Chapter 499 of the Laws of Malta); and
• the Carriage of Goods by Sea Act (Chapter 140 of the Laws of Malta);

The shipping industry is also regulated by various international conventions to which Malta is a signatory or which have been incorporated into Maltese law.

Malta is a member state of the European Union, meaning that EU regulations are directly applicable to it.

Several multilateral instruments establish common international standards for various aspects of shipping, a few of which are mentioned below.

With regard to the international law of the sea, Malta has ratified the following conventions:

• the Convention on the Territorial Sea and the Contiguous Zone, 1958;
• the Convention on the Continental Shelf, 1958; and
• the United Nations Convention on the Law of the Sea, 1982.

With regard to international marine environmental law, Malta has ratified various instruments, including:

• the International Convention for Pollution from Ships, 1973 (Annexes I–VI);
• the International Convention on Civil Liability for Bunker Oil Pollution Damage; and
• the International Convention on Civil Liability for Oil Pollution Damage.

With regard to international maritime security law, Malta has ratified various instruments, including:

• the International Convention for the Suppression of Acts of Nuclear Terrorism, 2005;
• the International Ship and Port Facility Security Code; and
• the Convention on Facilitation of International Maritime Traffic 1965.

With regard to maritime safety law, Malta has ratified various conventions and codes, including:

• the International Convention for the Safety of Life at Sea 1974 (as amended);
• the International Convention on Load Lines 1966;
• the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 (as amended);
• the Code of Safe Practice for Cargo Stowage and Securing (1,2 and 3);
• the International Maritime Dangerous Goods Code; and
• the International Safety Management Code.

With regard to shipping law, Malta has ratified various instruments, including:

• the Maritime Labour Convention 2006 (as amended); and
• the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol.

The transport authority, Transport Malta, has established three main directorates to regulate shipping in Malta:

• The Enforcement Directorate is responsible for the overall enforcement of the laws and regulations regulating sea transport;
• The Merchant Shipping Directorate is invested with the power to ensure that any vessel flying the Malta flag complies with all international rules and standards, through its port state and flag state inspectors; and
• The Ports and Yachting Directorate has within its remit the Ports Inspection Unit, which is responsible for overseeing all affairs pertaining to regulation in the Maltese territorial waters, such as the payment of port fees.

The Maltese government continues to dedicate substantial resources to the shipping industry in order to support the development of the sector. This growth is vital for the Maltese islands, given their beneficial geographical location, which connects Europe with Africa and the Middle East.

Over the years, Malta has established itself as one of the leading maritime hubs and service centres in the Mediterranean region. Furthermore, through its robust legal framework and strong regulatory platform, Malta has established a reputable international ship register which is now one of the largest in the world. As a regulator, Malta strives to protect all parties involved in the industry, including shipowners, financiers, crew and others.

2. Registration

2.1 What types of vessels may be registered in your jurisdiction? What requirements and restrictions apply in this regard? Is dual registration permitted?

All types of vessels – from pleasure yachts to oil rigs, including vessels under construction – may be registered, as long as (among other things) they are wholly owned by legally constituted corporate bodies or entities, irrespective of nationality, or by EU citizens. The formation of a Maltese company is a straightforward operation; there are no nationality requirements regarding either shareholders or directors.

As a rule, trading ships of 25 years and over are not registered, although in certain circumstances this may be considered. Ships of 15 years and over must successfully undergo an authorised flag state inspection prior to provisional registration. Ships of between 10 and 15 years must successfully undergo an inspection by an authorised flag state inspector before or within one month of provisional registration.

The bareboat charter registration of foreign ships under the Malta flag (bareboat charter in) and the bareboat charter registration of Maltese ships under a foreign flag (bareboat charter out) are both allowed under Maltese law. 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 that are bareboat chartered with registration in Malta enjoy the same rights and privileges, and have the same obligations, as any other ship that is fully registered in Malta. A bareboat charter registration should be for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter, but in no case for a period exceeding two years. Registration may be extended.

The Merchant Shipping Act also allows for dual registration, whereby the owner registers the ship with the Malta Ship Registry while the charterer operates the ship under the Malta flag. It is possible for the charterer to obtain the ship’s certificate of registration in its name, provided that the owner and any mortgagees give their written consent. Registration fees due by the charterer shall be equal to those paid by the owner.

Any legally constituted corporate body or entity, irrespective of nationality, or any citizen of a member state of the European Union or the European Economic Area, the United Kingdom or Switzerland may register a vessel in Malta. If the aforementioned entities or individuals are not registered/resident in Malta, Maltese law requires that such non-resident appoint a local resident agent.

The Authority for Transport in Malta Act established the Merchant Shipping Directorate, which is responsible for the registration of ships and the provision of all ancillary services.

The Maltese shipping register contains detailed information on each vessel. This information includes, among other things:

• the descriptive particulars;
• the registered ownership; and
• any encumbrances attached to the vessel.

This information is publicly available and can be accessed free of charge through the system at the Transport Malta offices. If a certified transcript of the register is required, this will be provided by the Malta Shipping Registry for a fee.

A vessel is first registered provisionally under the Malta flag for six months (which may be extended for a further period or periods not exceeding six months in aggregate), during which period all documentation must be finalised.

The requirements for provisional registration are as follows:

• an application for registration by the owner or an authorised representative, including, if required, an application for a change of name of the ship;
• proof of qualification to own a Maltese ship and, in the case of a body corporate, the document of incorporation;
• in the case of a non-Maltese owner, the appointment of a resident agent;
• where applicable, a copy of the current ship’s international tonnage certificate;
• a declaration of ownership made in front of the registrar by the owner or an authorised representative;
• evidence of seaworthiness and, in the case of trading ships:
• • confirmation of class with a recognised organisation; and
  • information of the ship’s statutory certification, including International Safety Management Code compliance;
• where applicable, a request for the administration to authorise the appropriate recognised classification society to issue the ship’s and the company’s statutory certificates;
• a declaration of Maritime Labour Compliance – Part 1;
• where applicable, an application for a minimum safe manning certificate;
• payment of initial registration fees and annual tonnage tax; and
• an application for a ship radio station licence.

The following documents must be submitted during provisional registration:

• where there was previous ownership, a bill of sale or any other document by which the vessel was transferred to the applicant for registry; otherwise, a builder’s certificate in the name of the applicant;
• where applicable, a cancellation of registry certificate issued by the administration where the vessel was last documented;
• in the case of International Convention for the Safety of Life at Sea ships, a copy of the last updated continuous synopsis record issued by the administration where the ship was last documented;
• a certificate of survey and a copy of the international tonnage certificate issued by an approved surveyor of ships; and
• evidence that the vessel has been marked in accordance with law.

Where valid appropriate convention certificates are not in place, the ship will be issued with a non-operational certificate of registry. A certificate of Malta registry is subject to renewal on the anniversary of the Maltese registration.

Once a vessel is successfully registered under the Malta flag, it is entitled to fly the Malta flag and is deemed to have Maltese ‘nationality’; therefore, the vessel and those onboard must abide by Maltese law. Upon de-registration of a vessel from the Maltese Shipping Registry, it will no longer be entitled to fly the Malta flag and will no longer be deemed to fall under the responsibility of the relevant Maltese authorities.

The registration, transfer, amendment and discharge of mortgages may be effected immediately on presentation of the relative documents to the Malta Ship Registry within the Merchant Shipping Directorate, which is the responsible body for such affairs. The registration of a mortgage over a Malta-flagged vessel is carried out by presenting a mortgage deed to the registrar. All documents that must be presented will be accepted by the registry in English, which is an official language of Malta.

A ship registered in Malta, together with its equipment, machinery and other accessories, or any share therein, may be made a security by way of mortgage. A mortgage over a Maltese ship shall have effect vis-à-vis third parties once it is duly recorded in the register. The priority of mortgages over the ship is determined by the date and time of their record in the register.

The 1990, 1988, 1986 and 2000 amendments introduced important safeguards in respect of registered mortgages, which include the following:

• They enjoy a high priority in an eventual ranking of claims against a Maltese ship.
• Mortgages constitute executive title and may be enforced immediately without the need to institute lengthy court proceedings.
• They attach to any proceeds from any indemnity as well as any insurance proceeds.
• A mortgagee may prohibit the registration, without its prior written consent, of subsequent mortgages in favour of other creditors, unless such further mortgage is executed in favour of an existing mortgagee.
• The Registrar of Ships is bound to notify the mortgagee upon the transfer of a registered ship to a new Maltese owner.
• The sale of a Maltese ship to a foreign owner requires the prior written consent of all registered mortgagees.
• A mortgagee may apply for any extensions, pay fees and do all such things in the owner’s name in order to maintain the status and validity of the ship’s registration.

Upon the discharge of a mortgage, such mortgage shall be deemed to be cancelled, and therefore it loses its effect at law and thus no longer holds its priority in ranking.

Each nation has the sovereign right to exercise control over foreign flag ships operating within areas under its territorial jurisdiction. Port state control is codified in Articles 211, 220 and 226 of the United Nations Convention on the Law of the Sea. This right is also enshrined in a number of international maritime conventions adopted by the International Maritime Organization and the International Labour Organization; these provide states with the power to conduct port state control inspections of foreign ships visiting their ports.

Building on the foundations of the United Nations Convention on the Law of the Sea, Transport Malta, through its Merchant Shipping Directorate, has – together with other Mediterranean maritime administrations and with the assistance of the International Maritime Organization, the International Labour Organization and the European Commission, among others – strived towards the conclusion of a memorandum of understanding for the Mediterranean region, which was eventually signed in Malta in 1997. Malta also continued its active participation in the Paris Memorandum of Understanding on port state control, of which Transport Malta has been a member since July 2006.

If found in breach, a vessel may be prohibited from sailing until a further inspection is carried out and certification is obtained that the vessel is in accordance with the applicable rules and standards. In line with the appropriate laws, fines may also be issued. Furthermore, if deemed necessary, the Merchant Shipping Directorate may also cancel the vessel’s registration.

An appeal against a decision for detention or refusal of access may be made before the Courts of Justice, in accordance with the Code of Organization and Civil Procedure.

(a) Collisions

When determining fault, the Convention on the International Regulations for Preventing Collisions at Sea applies, which has been implemented in Maltese law through the Merchant Shipping Prevention of Collisions Regulations – Subsidiary Legislation 234.20.

(b) Pollution

Malta is a signatory to the International Convention for Pollution from Ships, 1973 (MARPOL), as amended by the 1978 Protocol. This has been transposed into Maltese law through the Merchant Shipping Prevention of Pollution from Ships Regulations – Subsidiary Legislation 234.32. MARPOL Annex IV relating to the prevention of pollution by sewage and MARPOL Annex VI relation to the prevention of air pollution have been implemented in Malta through Subsidiary Legislation 234.47 and Subsidiary Legislation 234.33.

Moreover, the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended by the 1992 Protocol, as well as the International Fund for Compensation for Oil Pollution Damage, 1971, as amended by the 1992 Protocol, have been transposed into Maltese law by virtue of the enactment of the Oil Pollution (Liability and Compensation) Act, 1999 (Chapter 412).

Malta has also acceded to the Bunkers Convention, which has been implemented through the Merchant Shipping Liability for Bunker Oil Pollution Damage Regulations – Subsidiary Legislation 234.46.

(c) Wreck removal

The Nairobi International Convention on the Removal of Wrecks has been transposed into Maltese law by virtue of the Merchant Shipping Wreck Removal Convention Regulations – Subsidiary Legislation 234.53. Moreover, Article 339 of the Merchant Shipping Act empowers the minister responsible for shipping to give authority for the removal of any vessel which is sunk, stranded or abandoned on or near the coast within the territorial jurisdiction of Malta if it is the opinion of the minister that the vessel is, or is likely to become, an obstruction or danger to navigation.

(d) Salvage

Malta is not a signatory to any of the salvage conventions; thus, salvage under Maltese law is governed by Articles 342–346 of the Merchant Shipping Act and by the Commercial Code (Chapter 13 of the Laws of Malta).

The parties that may bring a marine casualty claim in Malta are the injured victims or, if death ensues, the heirs of the deceased victim, as well as any other third party that may claim damages as a result of the incident. Such claims are normally made in rem against the vessel itself or in personam against the shipowner.

The regime for limitation of liability for marine casualty claims applicable in Malta is the Limitation of Liability for Maritime Claims (LLMC) Convention, as amended by the 1996 Protocol. This has been transposed into the Merchant Shipping Limitation of Liability for Maritime Claims Regulations – Subsidiary Legislation 234.16.

As listed in Article 2 of the LLMC Convention, subject to Articles 3 and 4 mentioned in question 4.5, the claims subject to limitation are as follows:

• claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation) occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
• claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
• claims in respect of other loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations;
• claims in respect of the raising, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship;
• claims in respect of the removal, destruction or rendering harmless of the cargo of the ship; and
• claims of a person other than the person liable in respect of measures taken in order to avert or minimise loss for which the person liable may limit its liability in accordance with the convention, and further loss caused by such measures.

These will be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, claims set out under the fourth, fifth and sixth points listed above will not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.

The limitation fund is established under Maltese law in terms of the Merchant Shipping Limitation of Liability for Maritime Claims Regulations – Subsidiary Legislation 234.16. The latter stipulates that the limitation funds are to be constituted with the First Hall of the Civil Court.

In constituting a limitation fund, one must pay into court the equivalent in euros of the number of Special Drawing Rights to which one claims to be entitled to limit one’s liability, in terms of the regulations. This is in addition to the rate of 8% interest accrued from the date of occurrence which gave rise to the liability, up to the date of payment into court. The figure may be adjusted, either by adding to the funds if these were insufficient or by requesting a refund if there was overpayment. Furthermore, the funds may be constituted:

• by a sum of money deposited into court; or
• by furnishing a bank guarantee issued by a local bank.

The person constituting the limitation fund must give notice in writing to every claimant. This notice must include:

• the date of payment in;
• the amount paid in;
• the amount of interest included therein; and
• the period to which it relates.

Article 3 of the LLMC Convention sets out the claims that are excepted from limitation of liability, as follows:

• claims for salvage, including, if applicable, any claim for special compensation under Article 14 of the International Convention on Salvage, 1989, as amended, or contribution in general average;
• claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage, dated 29 November 1969 or of any amendment or protocol thereto which is in force;
• claims that are subject to any international convention or national legislation governing or prohibiting limitation of liability for nuclear damage;
• claims against the owner of a nuclear ship for nuclear damage; and
• claims by servants of the shipowner or salvor whose duties are connected with the ship or the salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner or salvor and such servants:
• • the shipowner or salvor is not entitled to limit its liability in respect of such claims; or
  • it is by such law permitted to limit its liability only to an amount greater than that provided for in Article 6.

Moreover, Article 4 of the LLMC Convention specifies what conduct bars limitation. A person liable will not be entitled to limit its liability if it is proved that the loss resulted from its personal act or omission, committed with the intent to cause such loss or recklessly and with knowledge that such loss would probably result.

The defences available to marine operators may be considered to be the safety measures and precautions put in place by those marine operators in accordance with the relative local and international regulations. By way of example, these may include measures to prevent loss of life, cargo and environmental damage, among other things.

In case of marine casualties, the procedure in Malta is that a magisterial inquiry is launched to investigate the incident, which may result in criminal sanctions brought against the alleged offender or offenders, as the case may be.

Article 4 of Regulation 234.11 stipulates that when an investigation has been ordered, the inquiring officer may cause a notice of investigation to be served upon the owner, master and officers of the ship; as well as on any person who, in his or her opinion, ought to be served with such notice. The notice must contain a statement of the questions which, on the information then in possession of the inquiring officer, he or she intends to raise during the hearing of the investigation.

Article 313(4) of the Merchant Shipping Act warns that the following persons shall be subject to a fine:

• any person summoned who refuses or fails without reasonable cause to attend or to reply to any questions put to him or her at the inquiry;
• any person who refuses or fails without reasonable cause to produce any book or document which it may be in his or her power to produce and which he or she has been required to produce as aforesaid; and
• any person who wilfully impedes the person holding the inquiry or fails to comply with any requisition made by him or her.

Article 339 of the Merchant Shipping Act empowers the minister responsible to authorise the removal of any vessel which is sunk, stranded or abandoned on or near the coast within the territorial jurisdiction of Malta, if it is the opinion of the minister that the vessel is, or is likely to become, an obstruction or danger to navigation.

Anyone that performs salvage services is deemed to be a salvor for the purposes of the salvage rules under the Merchant Shipping Act. Under the act, ‘salvage’ includes all expenses properly incurred by the salvor in the performance of salvage services. Salvage in respect of preservation of life, when payable by the owner of the vessel, shall be payable as a priority over all other claims for salvage. Where the vessel, cargo and apparel are destroyed or the value thereof is insufficient, after payment of the actual expenses incurred, to pay the amount of salvage payable in respect of the preservation of life, the minister may, at his or her discretion, award to the salvor, out of the Consolidated Fund, such sum as he or she thinks sufficient to satisfy, in whole or in part, any amount of salvage so left unpaid.

Malta is not a signatory to the Hague Rules, the Hague-Visby Rules, the Hamburg Rules or the Rotterdam Rules. However, Malta has incorporated verbatim the 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading through the Carriage of Goods by Sea Act. The Maltese courts also apply the Hague-Visby Rules when they are incorporated into a bill of lading that is the subject of a dispute.

The parties to the bill or any other party that may be involved in the shipment and that may be prejudiced as a result of any incident relating to that cargo may bring a claim against:

• the shipper;
• the consignee;
• a subsequent endorsee that is a subsequent holder of the bill of lading; and
• anyone that may have led to cargo loss, damage to cargo or late arrival of cargo.

Malta is not a signatory to the Hague Rules, the Hague-Visby Rules, the Hamburg Rules or the Rotterdam Rules. However, Malta has incorporated verbatim the 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading through the Carriage of Goods by Sea Act. The Maltese courts also apply the Hague-Visby Rules when they are incorporated into a bill of lading that is the subject of a dispute.

Article IV of the schedule of the Carriage of Good by Sea Act (Chapter 140 of the Laws of Malta) sets out ‘rights and immunities’. The six sub-paragraphs include scenarios in which liability may be applied, exempted, unavailable or limited. Specifically, paragraph 5 explains that a limit is set on the amount per package or unit for which neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods exceeding that set amount. This amount is set at €232.94 per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, will be prima facie evidence, but will not be binding or conclusive on the carrier. By agreement between the carrier, master or agent of the carrier and the shipper, a maximum amount other than that mentioned in paragraph 5 may be fixed, provided that this maximum is not less than the figure above named.

Neither the carrier nor the ship will be responsible in any event for loss or damage to, or in connection with, goods if the nature or value thereof has been knowingly misstated by the shipper in the bill of lading.

The procedure for limiting liability will be that set out in the bill of lading agreed to between the parties involved. The carrier and the ship will be discharged from all liability in respect of loss or damage unless suit is brought within one year of delivery of the goods or the date on which the goods should have been delivered.

Article IV, paragraph 1 of the schedule of the Carriage of Good by Sea Act (Chapter 140 of the Laws of Malta) states that there will be liability in cases where the unseaworthiness was caused by a lack of due diligence on the part of the carrier:

• to make the ship seaworthy;
• to ensure that the ship was properly manned, equipped and supplied; or
• to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of Article III, paragraph 1.

If loss or damage resulted from the unseaworthiness, the burden of proving the exercise of due diligence will rest with the carrier or other person claiming exemption under this section. However, where loss or damage arose or resulted from unseaworthiness which was not the result of a lack of due diligence, then neither the carrier nor the ship will be found liable.

The defences available to carriers and shipowners mainly depend on the contractual clauses agreed between the parties. Nonetheless, there are other defences which may be used, such as in the case of unseaworthiness of the vessel or if the action is brought after the lapse of one year after the date of delivery of goods, in which case the action will be time barred; as well as all other exemptions and limitations found in the law.

Malta is a party to the Athens Convention on the Carriage of Passengers and their Luggage by Sea, which has been incorporated into Maltese law by virtue of the Merchant Shipping Carriage of Passengers by Sea Regulation – Subsidiary Legislation 234.52. Malta is also bound by:

• EU Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents, which incorporated the 2002 Protocol to the Athens Convention; and
• EU Regulation 1177/2010 on the rights of passengers when travelling by sea and inland waterway.

The limitation of liability regime applicable to passenger claims is that outlined in the Athens Convention. In respect of claims arising on any distinct occasion for loss of life or personal injury to passengers of a ship, the limit of liability of the shipowner thereof shall be an amount of 175,000 Units of Account multiplied by the number of passengers which the ship is authorised to carry according to the ship’s certificate. For this purpose, claims for loss of life or personal injury to passengers of a ship shall mean any such claims brought by or on behalf of any person carried in that ship:

• under a contract of passenger carriage; or
• who, with the consent of the carrier, is accompanying a vehicle or live animals which are covered by a contract for the carriage of goods.

Moreover, any action for damages arising from the death of or personal injury to a passenger, or for loss or damage to luggage, shall be time barred by the lapse of two years. This two-year prescriptive period applies as indicated below:

• in the event of personal injury, from the date of disembarkation;
• in the event of death, from the date on which the passenger should have disembarked;
• in the event of a personal injury resulting in death, from the date of death, if occurring within three years from disembarkation; and
• in the event of loss or damage to luggage, from the date of disembarkation or the date on which disembarkation should have occurred, whichever is the later.

Article 13 of the Athens Convention sets out the specific circumstances upon the occurrence of which the limitations of liability (mentioned in question 6.2) will no longer be available to the carrier and/or the servant or agent of the carrier, as follows:

• if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result; or
• if it is proved that the damage resulted from an act or omission of that servant or agent done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.

Ship arrest is governed solely by domestic law, since Malta is not a signatory to the 1952 and 1999 Arrest Conventions. A warrant of arrest may be issued against a ship on any of the grounds listed in Article 742B of the Code of Organisation and Civil Procedure, which in turn gives rise to the in rem jurisdiction of the Maltese courts.

In Malta, ships may be arrested in case of:

• a security of maritime in rem claims (where the ship is located within the territorial jurisdiction of the Maltese courts); or
• a security of in personam claims (where the shipowner is personally subject to the ordinary jurisdiction of the Maltese courts).

Article 742B of the Code of Organisation and Civil Procedure provides an exhaustive list of 25 maritime claims that give rise to in rem jurisdiction, as follows:

• any claim to the possession, ownership or title to or of a ship, or to the ownership of any share therein;
• any question arising between the co-owners of a ship as to the ownership, possession, employment or earnings of that ship;
• any claim in respect of a mortgage, hypothec or charge on a ship or on any share therein;
• any claim arising from a contract for the sale of the ship;
• any claim for damage caused to a ship;
• any claim for damage done or caused by a ship, either in collision or otherwise;
• any claim for loss of life or personal injury caused, whether on land or on water, by any ship or occurring in connection with the operation of any ship or sustained in consequence of any defect in a ship or in its apparel or equipment or in consequence of the wrongful act, neglect or default of:
• • the owner, charterer or persons in possession or control of a ship; or
  • the master or crew of a ship, or any other person for whose wrongful acts, neglects or defaults the owner, charterer or persons in possession or control of a ship are responsible, being an act, neglect or default in the navigation or management of the ship; in the loading, carriage or discharge of goods on, in or from the ship; or in the embarkation, carriage or disembarkation of persons on, in or from the ship;
• any claim for loss of or damage to goods, including baggage, carried in a ship;
• any claim arising from any agreement relating to the carriage of goods in a ship or to the use or hire of a ship, whether by charter party or otherwise;
• any claim in the nature of salvage operations or any salvage agreement including, if applicable, special compensation relating to salvage operations in respect of a ship which by itself or its cargo threatened damage to the environment;
• any claim for:
• • damage or threat of damage caused by the ship to the environment, coastline or related interests;
  • measures taken to prevent, minimise or remove such damage, and compensation for such damage;
  • costs of reasonable measures of reinstatement to the environment actually undertaken or to be undertaken;
  • loss incurred or likely to be incurred by third parties in connection with such damage; or
  • damage, costs or loss of a similar nature to those listed above;
• any claims regarding costs or expenses relating to the raising, removal, recovery, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been onboard such ship, and costs or expenses relating to the preservation of an abandoned ship and maintenance of its crew;
• any claim in the nature of towage in respect of a ship;
• any claim in the nature of pilotage in respect of a ship;
• any claim in respect of goods, materials, provisions, bunkers, supplies and necessaries supplied or services rendered to a ship for its operation, management, preservation or maintenance;
• any claim in respect of the construction, reconstruction, repair, conversion or equipping of a ship;
• any claim in respect of port, dock or harbour dues and charges;
• any claim by the master, officers or member of the crew, or complement of a ship, for wages and other sums due to them in respect of their employment on the ship, including costs of repatriation and social security contributions payable on their behalf;
• any claim by a master, shipper, charterer or agent in respect of disbursements made by them on account of a ship or its owners;
• any claim for commissions, brokerages or agency fees payable in respect of the ship, by or on behalf of the shipowner or demise charterer;
• any claim arising from an act which is or is claimed to be a general average act;
• any claim arising from bottomry;
• any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried or have been attempted to be carried in a ship, or for the restoration of a ship or any such goods after seizure;
• any claim for insurance premiums, including mutual insurance calls, in respect of the ship payable by or on behalf of the shipowner or demise charterer; and
• any claim for fees and other charges due to the Registrar-General of Shipping and Seamen arising under the provisions of the Merchant Shipping Act, and any claim for tonnage dues.

With regard to in personam claims, Article 742(1) of the Code of Organisation and Civil Procedure provides the grounds of jurisdiction, which require a direct connection or proximity to the territory of Malta or Maltese persons.

In principle, maritime liens are a common law concept and as Malta is a civil jurisdiction, this concept is alien to the Maltese juridical system. This notwithstanding, Article 50 of the Merchant Shipping Act provides for a concept which is very similar in nature to maritime liens: special maritime privileges. There are 16 special maritime privileges, which are listed in the law in hierarchal order. This list also serves as a point of reference for creditors to establish their ranking. The list is as follows:

• judicial costs incurred in respect of the sale of the ship and the distribution of the proceeds thereof;
• fees and other charges due to the Registrar of Maltese ships arising under the act;
• tonnage dues;
• wages and expenses for assistance, recovery of salvage and pilotage;
• the wages of watchmen and the expenses of watching the ship from the time of its entry into port up to the time of sale;
• rent of the warehouses in which the ship’s tackle and apparel are stored;
• expenses incurred for the preservation of the ship and of its tackle, including supplies and provisions to its crew incurred after its last entry into port;
• wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
• damages and interest due to any seaman for death or personal injury and expenses attendant on the illness, hurt or injury of any seaman; and
• moneys due to creditors for labour, work and repairs previously to the departure of the ship on its last voyage; however, this privilege will not be competent where the debt has not been contracted directly by the owner of the ship, by the master or by an authorised agent of the owner;
• ship agency fees due for the ship after its last entry into port, in accordance with port tariffs, and any disbursements incurred during such period not enjoying a privilege in the first to ninth bullets above, though in any case for a sum in the aggregate not in excess of 4,000 units;
• moneys lent to the master for the necessary expenses of the vessel during its last voyage, and the reimbursement of the price of goods sold by him or her for the same purpose;
• moneys due to creditors for provisions, victuals, outfit and apparel, previously to the departure of the ship on its last voyage; however, this privilege will not be competent where the debt has not been contracted directly by the owner of the ship, by the master or by an authorised agent of the owner;
• damages and interest due to the freighters for non-delivery of the goods shipped and for injuries sustained by such goods through the fault of the master or the crew;
• damages and interest due to another vessel or to its cargo in case of collision of vessels; and
• the debt specified in Article 2009(d) of the Civil Code for the balance of the price from the sale of a ship.

Under Maltese law, the main differences between ordinary maritime claims and special maritime claims are as follows:

• A special maritime privilege attaches to a vessel and will survive any voluntary sale of a vessel for up to a year; while an ordinary maritime claim does not follow the vessel and an arrest in rem will be possible only where such claims satisfy the ‘relevant person’ test; and
• All the special maritime privileges rank higher than all ordinary maritime claims.

Article 742D of the Code of Organisation and Civil Procedure permits the arrest of a sister ship. It provides that where a creditor has a claim in rem (a maritime claim listed in Article 742B of the code) in relation to a particular ship, it may arrest any other ship that is owned or beneficially owned by the party that is liable in personam for the claim.

The arrest of a vessel may be allowed by way of exception. If the claim is a special maritime privilege other than those listed in Article 50 of the Merchant Shipping Act, then the creditor may arrest the vessel irrespective of who incurred the debt; thus, there is no need to satisfy the relevant person test.

The requirements for arresting a vessel will depend on the nature of the respective warrant of arrest, which can be of either a precautionary or an executive nature. If the warrant of arrest has a precautionary title, this means that:

• there is a claim which has not yet been determined by a court of law; or
• the claim itself does not constitute an executive title.

A warrant of arrest which has an executive title means that the creditor already holds an executive title by having either:

• a non-appealable court judgment in its favour; or
• any other instrument upon which this same nature is conferred upon by law, such as a registered mortgage.

Subsequently, all of the formal and documentary requirements that support the grounds being claimed for the arrest must be filed accordingly. By way of example, if the basis of the warrant of arrest is an unsatisfied payment which is secured by a mortgage, the mortgage instrument or an authenticated copy thereof must be attached. Countersecurity is not a requirement, but may be requested. Nonetheless, where a request for countersecurity is made, the court has the discretion to accept or decline this request, taking into consideration several elements at face value. If the arrest is presented correctly with all formalities and supporting documents, the arrest will be granted by the court very efficiently, in a matter of hours. In the case of a warrant of arrest with an executive title, either:

• the ship will be sold immediately through a judicial sale; or
• the debtor will be given two days to pay the creditor and should it fail to do so, the ship will then be sold through judicial sale.

In a warrant of arrest with a precautionary title, the debtor may present a letter from the protection and indemnity insurance (P&I) club stating that if the claim is proven, the P&I club will pay; in which case the court will be satisfied that there is an adequate guarantee.

To secure the immediate release of an arrested ship, the owner or any interested party must either deposit in court a sum of money or furnish a bank guarantee issued by a local bank covering the amount of the alleged claim. Moreover, in the case of a precautionary warrant of arrest, the debtor may present a letter from the P&I club with confirmation of payment.

Various formalities and documentary requirements must be followed for a warrant of arrest to be granted. An arrest will thus be deemed wrongful if:

• the procedure for securing a warrant of arrest was irregular; or
• it is sufficiently proven that the arrest was sought on the basis of frivolous and vexatious actions, or as a result of fraudulent activity.

In such cases, the debtor may sue the creditor that secured the wrongful arrest for damages.

Article 37 of the Merchant Shipping Act offers another alternative to ship arrest: the application of a flag injunction. This will prohibit the ship from being sold, transferred or deregistered from the Maltese Ship Registry. In addition, such an injunction prohibits the affected shipowner from registering any further mortgages over the ship in question.

There are other warrants which may be issued, such as garnishee orders and a warrant for the seizure of cargo; but for maritime claims, these are not as effective as ship arrest.

Article 864 of the Code of Organisation and Civil Procedure provides for the judicial sale of vessels. Upon the application of a creditor, the court may order the sale of an arrested ship or vessel pendente lite if it appears to the court that the debtor is insolvent or otherwise unlikely to be able to continue trading and maintaining the asset. In its assessment, the court will consider all the circumstances connected therewith, including:

• the nature of the plaintiff’s claim;
• the defence raised against such claim, if any; and
• such other steps which the debtor has taken to secure the claim or otherwise to preserve the asset.

The creditor must present an application to the court requesting it to schedule an auction date and to appoint an auctioneer to preside over the auction. Bidders can register to bid on the day of the auction itself by completing a registration form and presenting all the necessary bidding documentation. The auction is open to the public and the ship will be sold to the bidder with the highest bid. The winning bidder must then deposit the purchase price in court within seven days of the auction date. There is no minimum reserve, which means that a creditor cannot determine the minimum sale price of the vessel before the auction.

Nonetheless, a creditor has the option of enforcing its claim by applying for a court-approved private sale. In this case the creditor may ascertain the sale of the vessel at a more advantageous price point. However, at least two independent appraisals of the vessels must be submitted along with the application to the court. Once the creditor chooses the most appropriate buyer, a memorandum of agreement is concluded with the buyer, which is conditional on the final approval of the court. A court application must then be filed with the court, through which the creditor requests the court to approve the private sale.

Once the bidder has deposited the money in court, creditors may come forward to participate in the distribution proceedings in order to establish their ranking. Article 54A of the Merchant Shipping Act establishes the ranking of all maritime claims in hierarchal order.

By way of judicial sale, a vessel is sold free from any registered encumbrances.

Malta is a party to the major conventions regulating sea and air pollution, such as the International Convention for Pollution from Ships, 1973 (MARPOL). To strengthen its position in this regard, Malta has enacted the Oil and Hazardous and Noxious Substances Pollution Preparedness, Response and Co-Operation Regulations, 2020 (Legal Notice 450/2020).

Malta is also a member of:

• the European Maritime Safety Agency;
• the European Seaports Organisation; and
• the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea.

Together with these regional authorities – as well as the International Maritime Organization (IMO), among others – Malta enforces international, regional and EU instruments which either have been ratified by Malta or directly form part of domestic law.

Under Regulation 14.1.3 of MARPOL Annex VI (which entered into force on 1 January 2020), as affirmed by IMO Resolution MEPC.280 (70), it is stipulated that the global limit for sulphur in fuel oil used on board ships is 0.50% mass by mass. This regulation limits sulphur in fuel oil to 0.50%, except for ships that use ‘equivalent’ compliance mechanisms, when operating outside of designated emission control areas. Meanwhile, as from 1 March 2020, IMO Resolution MEPC.305 (73) on the Prohibition on the Carriage of Non-Compliant Fuel Oil for Combustion Purposes for Propulsion or Operation on board a Ship prohibits the carriage of fuel with a sulphur content above 0.50%.

The EU Sulphur Directive has also introduced stricter regulations for ships at berth in EU ports, including ships moored and anchored, as well as during the time spent not engaged in operations, which must use marine fuels with a sulphur content that does not exceed 0.10%.

The above rules have been transposed into Maltese law through the Quality of Fuels Regulations – Subsidiary Regulation 545.18.

In May 2019, Malta acceded to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships of 2009, which is not yet in force. However, the European Union has introduced rules and regulations modelled on this convention. For example, in December 2019 the EU Ship Recycling Regulation came into force, with the aim of ensuring that there are no unnecessary risks to safety, the environment or human health when ships are recycled after reaching the end of their operational lives.

A sulphur emission control area has been established in the North Sea and the Baltic Sea, which has resulted in significant improvements to air quality. The Mediterranean Sea experiences dense maritime traffic, making shipping the principal source of air pollution in port cities. To address this, a sulphur emission control area is being considered for the Mediterranean Sea. The Barcelona Convention met in December 2019 and agreed that a Mediterranean Sulphur Emission Control Area (Med SECA) should be created by 2024. As an island in the middle of the Mediterranean Sea, Malta understands the importance of protecting the environment and is thus a firm supporter of the Med SECA. This would effectively result in stricter regulations regarding the percentage of sulphur content in the fuel used by ships.

In 2013, Malta ratified the Maritime Labour Convention, which was transposed into domestic law through the Merchant Shipping Maritime Labour Convention Rules – Subsidiary Legislation 234.51. Moreover, Part IV of the Merchant Shipping Act regulates various aspects in relation to masters and seamen, including:

• certification;
• the conditions for admission to employment;
• the form, period and conditions of agreements with crew;
• the conditions of service regulations;
• the discharge of seafarers;
• the repatriation of seafarers;
• rights to wages and payment of seafarers; and
• the power of the court to rescind a contract between owner or master and seafarer.

Malta has also acceded to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (as amended), which was transposed into domestic law by the Merchant Shipping Training and Certification Regulations – Subsidiary Legislation 234.17. These regulations subject officers and seafarers to certification issued by the Registrar General of Shipping and Seamen, who is responsible for this task. Following the completion of approved training courses and examinations in Malta, certificates of competence are issued by the registrar.

Advantageously, Malta has entered into bilateral agreements with foreign maritime administrations for the recognition of certificates of competence issued to seafarers, which allows them to utilise certificates of competence obtained abroad.

Domestic employment laws which are relevant in this context include:

• the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta) and the various subsidiary legislation issued thereunder; and
• the Occupational Health and Safety Authority Act (Chapter 424 of the Laws of Malta).

Interestingly, in 2018, the Merchant Shipping Directorate issued the Non-Convention Vessel (NCV) Code. The NCV Code has been developed and is applicable to all non-convention vessels of at least 15 metres (m) length overall (LoA), including commercial vessels of at least 15m LoA which are certified and operating in domestic navigation, including vessels that operate exclusively within Maltese waters and that are engaged in or intended for use in:

• any trade, business or calling or operating for hire or reward;
• the carriage of cargo/supplies/passengers; or
• the provision of port services or services to other vessels.

Section 21 of the NCV Code regulates the manning and seafarer certifications which will be issued accordingly by the Malta flag registry.

Advantageously, Malta has entered into bilateral agreements with foreign maritime administrations for the recognition of certificates of competence issued to seafarers, which allows them to utilise certificates of competence obtained abroad.

Shipping disputes in Malta are normally heard before the First Hall of the Civil Court.

Such issues include, among other things:

• crew issues;
• cargo claims;
• insurance;
• collisions;
• environmental damage;
• third-party liability; and
• unpaid creditors.

These disputes are resolved either by a court judgment or by an out-of-court settlement.

One case worth mentioning is the 2019 suit of Dr Marlon Borg noe v MV Bright Star (IMO -9481960) – the first case of its kind on the international scene. The Jamaican courts had approved the judicial sale of the vessel in Jamaica and deemed it free from any encumbrances, even though Jebmed SRL was a first-ranking creditor by virtue of a mortgage registered in Malta. The Jamaican courts did not recognise the mortgagee’s first ranking and instead reserved a sum of money for Jembed to be able to advance its judicial claim in Jamaica.

The MV Bright Star was consequently arrested by Jebmed while bunkering in Maltese territorial waters. On appeal, the Superior Court in Malta decided that the request for arrest of the vessel was valid, and that the judicial sale in Jamaica was not free from encumbrances. Thus, the court ruled that it could not accept the Jamaican court’s ruling which did not give effect to a Maltese registered mortgage.

This case proves that in Malta, the rights of a mortgage holder are protected and safeguarded to the highest extent, and that judicial sales will not be recognised in Malta if the mortgagee’s rights are ignored during the proceedings of the sale.

As a European flag with a long maritime tradition, Malta has become well known for its organised and highly responsive flag administration, with one of the largest ship registers in the world. Malta is an active participant in discussions on shipping issues within the European Union and international organisations. In the past year, the Maltese shipping industry has been significantly affected by two key issues: Brexit and the COVID-19 pandemic.

Brexit: Prior to Brexit, non-Maltese individuals could register a vessel under the Malta flag in their own name if they were in possession of either an EU, a European Economic Area or a Swiss passport. With Brexit coming into force, Maltese law was amended accordingly to include UK passport holders in this list. The inclusion of UK passport holders is a positive measure with respect to UK citizens who already own a vessel registered under the Malta flag, as well as for those UK citizens who are looking to reflag their vessels to a European flag.

COVID-19 pandemic: The unprecedented outbreak of the COVID-19 pandemic in 2020 presented an additional burden for the global shipping industry. Malta is no exception and the effects of this pandemic have been felt on the local scene. Since the outbreak of the pandemic, numerous restrictive measures have been put in place by many governments around the world which have affected the modus operandi of the shipping industry as we know it. In Malta, measures have been adopted cautiously, always taking into consideration the exigencies and the current COVID-19 situation. Several legal notices have been issued by the Maltese authorities, together with port notices issued by the Ports & Yachting Directorate, with the aim of controlling the spread of COVID-19 and regulating the new challenges that the pandemic has presented. In fact, a COVID-19 protocol for crew change is also in place, which sets out rules that must be followed to ensure the safety of seafarers. This is due to the ongoing COVID-19 restrictions, which have meant that a large number of seafarers have had to extend their service on board ships after many months at sea, unable to be replaced after long tours of duty or to be repatriated via air to their home countries.

Given this unprecedented scenario, it is not possible to state with certainty what is in store for the shipping industry in the long term. The situation calls for a prudent approach in balancing the general public health interest in containing the virus with the interests of all stakeholders in the shipping industry. Along with its many challenges, the pandemic has also driven improvements and progress by both industry players and the respective authorities in taking measures that will help the shipping industry to adapt to one of the most unprecedented scenarios the world has ever faced. For instance, there has been increased uptake of remote technologies and the use of automation.

Malta has always been committed to keeping up to date with the needs of the industry and has a proven track record in this regard, as reflected in its legislative reforms. It is understood that Malta will continue to pursue this proactive approach and in the next 12 months there will be vital legislative reforms with a direct impact on the shipping industry. These include:

• new regulations on ship agencies;
• the incorporation of EU Directive 2019/883 on port reception facilities for the delivery of waste from ships (amending Directive 2010/65/EU and repealing Directive 2000/59/EC on port reception facilities); and
• amendments to the provisions on warrants of arrest in the Code of Organisation and Civil Procedure.

Malta offers a legal framework which regulates good practice standards and operational conditions, with the aim of safeguarding all aspects and interests involved in the shipping industry. Today more than ever, Malta recognises as matters of fundamental importance the safety of life at sea and the prevention of pollution from ships, as well as compliance with international maritime conventions. This also means that for the laws and regulations to bear their full effect, the full cooperation of shipowners and operators that choose the Malta flag is imperative; these players must therefore abide by all applicable laws when conducting shipping activities.

The Malta flag is a natural choice for anyone who is looking to register a vessel under a reliable flag in a jurisdiction that offers serious and efficient maritime administration, along with 24/7 week services in respect of urgent matters. Moreover, and most importantly, Malta has sound multilateral and bilateral relations, and is an active participant in international shipping forums, which ensures high standards within the Maltese shipping industry.