New provisions for registration of vessels in the Finnish Register of Ships

THE Finnish government has recently passed a bill aimed at bringing the nationality requirements of vessels to be entered in the Finnish register up-to-date with EU law and legal practice. The intention is that the new legislation should be enforced as soon as possible. Since parliament has not yet considered the bill, the date when the new legislation will enter force is not yet known. But there are some important points to consider.

Vessels owned by Finnish nationals or legal persons

Under the new legislation, a vessel is considered to be Finnish and entitled to fly the Finnish flag if more than six-tenths of it is owned by a Finnish national or "legal person". This definition is in essence identical to the definition now in force, except that the expression "corporation or foundation" has been replaced by the words " legal person". The ministry of shipping is obliged also to accept other vessels as Finnish provided that more than six-tenths of such vessels is owned by:

• (a) national of a state belonging to the European Economic Area, or
• (b) a "legal person" established in accordance with the legislation of a state belonging to the European Economic Area, provided the statutory domicile, central management or principal place of business of such a legal person is located within the area.

The rule governing six tenths-ownership, previously applicable only to vessels owned by Finnish nationals and legal persons, will now also apply to vessels owned by nationals and legal persons of other states belonging to the European Economic Area. However, the new provisions do not entitle the authorities to exercise any right of discretion when accepting such vessels as Finnish, whereas this right exists under the provisions still in force.

Once the applicant meets with the requirements prescribed by statute, the authorities will in future be obligated to accept a vessel as Finnish. The most important of these requirements is that the vessel must be managed and operated from Finland and that the owner, unless in charge of the management and operation of the vessel, must appoint a representative responsible for these functions whose legal domicile is in Finland.

Vessels owned by nationals or legal persons in a state outside Europe

The ministry of transport may accept vessels as Finnish if their operation falls decisively under Finnish authority. This provision only concerns owners from states outside the European Economic Area.

Apart from the requirement that the ownership, management, financing and chartering conditions must give sufficient reason to conclude that the operation of the vessel is decisively in the hands of Finnish nationals or legal persons, the most important conditions are that the vessel must meet with the safety regulations applicable to new vessels and that the registration of the vessel as Finnish can be considered beneficial to the Finnish shipping industry and to employment.

When granting permission for registration, the transport ministry may also impose such other conditions as it deems necessary. Permission can be granted for a maximum period of two years at a time.

Registration of a Finnish vessel in another European state

A vessel which is owned by a Finnish national or a Finnish legal person and which would normally have to be entered in the Finnish Register of Ships may be registered in another state of the European Economic Area. The registration will then be made in accordance with the statutory provisions of such other state applicable to the registration of vessels owned by national or legal persons of that state.

The proposed new provisions do not stipulate that the right of a Finnish owner to have its vessel registered in a foreign register is dependant on the consent of the authorities, which is the case under the provisions currently in force.

Registration of a Finnish vessel in a state register outside Europe

The ministry of transport may, in order to promote the Finnish shipbuilding industry and national employment, grant permission for a vessel owned by a Finnish national or legal person to be entered in the register of a state outside the European Economic Area if:

• (a) the vessel is being built in Finland and will, on completion, be entered immediately in the ship register of such a state, and
• (b) genuine links regarding the ownership, possession and use of the vessel exist between the vessel and the intended state of registration. When granting such permission, the ministry may at its discretion prescribe such other conditions as it deems appropriate. Permission is granted for a fixed period of time which may not exceed the term of any charter party involving operation or ownership of the vessel.