Flying the flag in Denmark

SET up in 1988 as a supplement to the ordinary Danish register of shipping, DIS is designed to curb the increased flagging out of the country’s commercial fleet. Whereas almost all other second registers are set up as separate entities, DIS is totally integrated within the ordinary register, operated by the same people at the offices of the Danish Maritime Authority (DMA) and covers the whole of Denmark and Greenland. Judging by the tonnage entered with DIS, currently numbering some 500 vessels or 7.5 million dwt, DIS has been a huge success.

From the outset, only ships operating outside Danish waters were eligible to register with DIS. In 1996, however, a major revision of this meant that the no-go zone in Danish waters was abolished for cargo ships, and dual bareboat registrations became possible. In 2000 the rules were relaxed even further, allowing ferries operating between a Danish and foreign port to move from the ordinary register to DIS – something of a sweetener as European Community regulation had recently put an end to duty-free sales within its territory.

The DIS Act enables Danes, whether individuals, partnerships or limited liability companies, to be registered owners of ships flying the Danish flag. Persons and entities from other EU/EEA states can also qualify as long as a Danish legal representative is appointed. Corporate owners from other jurisdictions may, in some cases, also be eligible.

The DIS registry is open to commercial vessels of at least 20 gross tonnes, except fishing vessels. Special rules apply to ferries and other passenger vessels and to marine construction vessels such as dredgers, all of which are only eligible for DIS if they operate mainly outside Danish waters.

When it comes to the technical state of foreign vessels requesting DIS registration, the DMA applies an EU co-ordinated approach for vessels of less than fifteen years of age. Older vessels are subject to a very restrictive admission procedure but, in all cases, if any components of a vessel contain asbestos, the vessel will not be able to enter the register.

The minimum number of crew and officers is determined by the DMA according to the STCW rules issued by IMO. Only the master has to be a Danish citizen, and exemptions are rare. Foreign officers must be able to show that they hold qualifications at a comparable level.

Recently, one of the more radical Danish unions launched a surprise attack on the DIS and managed to persuade the ITF to declare the DIS a flag of convenience. Not a single ITF blockade has been reported despite the FOC status being in force since January 30, 2004, and it is expected that the ITF will remove DIS from its FOC list in the near future.

Registration procedures for title and mortgages differ somewhat from the practice of ‘registration by the clock’ employed in many common law and other jurisdictions, as completion of the registration does not take place on the same day the document is filed. However, when recorded, the document retroactively takes legal effect from the date of filing. To overcome this difficulty the registry is usually quite effective in granting unofficial pre-approval of documentation presented in draft form so that cross-border closings are not hampered.

Mortgages can be recorded in foreign currency, and restrictive covenants, such as negative pledges and bareboat purchase rights, are recordable. There are no difficulties in filing documents in dual Danish/English versions and not all provisions to be recorded need to be in Danish. Provisional registration is possible for title but not in respect of mortgages.

Transcripts of registry and deletion certificates are issued in dual Danish/English versions. Registration stamp fees are payable at filing. For registrations of bills of sale as well as mortgages, an ad valorem fee of 0.1 per cent of the face value is payable.

Dual bareboat charter registrations can be made both ‘in’ and ‘out’ of DIS and are granted for a term of up to five years at a time. For bareboat registration ‘out’, it is a prerequisite that the flag state has adopted all maritime conventions to which Denmark is a party. At present this applies for all EU and EEA countries and for Liberia, Faroe Islands and Isle of Man. Bareboat registrations are not subject to fees.

More information on the DIS, including English translation of the acts and standard version mortgages, can be found at www.shipregistration.dk.