Flying the flag

MALTA has long aspired to join the European Union (EU). Since the signing of an Accession Agreement in 1970, Malta has worked hard to achieve this goal. Although it has not been the smoothest of roads, the government of Malta is planning to conclude all negotiations in 2002 and to hold a referendum on the issue with the aim of joining the EU by 2004.

At present, Malta has the fourth largest register in the world in terms of tonnage. This position has been reached after steady growth since the register's inception in 1973. The huge number of vessels registered in Malta attests to its popularity not only with owners but also with those banks involved in ship finance that look to the Maltese flag as a reliable and safe jurisdiction with which to register their security.

Negotiations with the EU on transport and shipping have now been concluded. However, whether Malta enters into the EU or not, the need has long been felt to upgrade maritime standards if Malta wants to maintain a quality flag. In recent years, to comply with certain IMO and ILO conventions, Malta has begun to implement various regulations, which form the basis of that part of the Acquis Communautaire concerning maritime safety.

A number of legislative and organisational measures have already been taken by the Malta Maritime Authority (MMA) in line with its action plan to implement the requirements of the Acquis. It has strengthened its hand in controlling Maltese registered ships, with the number of detained ships already falling. These measures include limitation on registration of vessels aged over twenty five years, the policy that ships that are detained by port state control more than once in any period of twelve months can be struck off the register (but always keeping in mind the mortgagee's interests) and an increase in the number of surveyors appointed by the authority to carry out inspections worldwide.

Amendments to the Merchant Shipping Act (MSA) made in 2000 empower the minister responsible for shipping to make regulations allowing non-Maltese persons to own Malta-flag vessels. It is understood that this new section is aimed at allowing the ownership and chartering of Malta-registered vessels by EU nationals. Regulations in this regard are expected to be published by the end of this year.

A new concept of 'shipping organisations' has also been introduced. Apart from the usual corporate vehicles, shipping organisations may be a trust or foundation, or even a foreign body corporate, in line with EU principles that the register of a member state must be accessible to all kinds of European legal bodies. Most of the existing shipping companies are incorporated under a 1962 law which is expected to be repealed by the end of this year. These companies will then have to choose either to be regulated under the Companies Act of 1995 (which is deemed to be EU-compliant) or to obtain a licence from the MMA to operate as a shipping organisation.

Regulations to be made under the MSA will provide the particular legal regime for shipping organisations. While being EU-compatible, these will not have the onerous requirements imposed by the Companies Act. The present exemption from filing of annual accounts with the Registry of Companies will come to an end. It is understood, however, that the present format of the accounts presently filed by some owners will continue to be acceptable. Furthermore, a vessel - whether registered in the name of a shipping organisation or a body corporate under the Companies Act - will continue to enjoy the same tax benefits as at present if it satisfies the qualifications required under the MSA.

The existing tonnage tax system is considered compatible with EU guidelines on state aid to maritime transport and, therefore, the present tax status of Malta-registered vessels will continue to apply. This is not so in the case of fees payable for engaging non-Maltese crew members, which will be abolished by regulations lined up for the end of this year.

The recent amendments also empower the minister responsible for shipping to authorise organisations to act as ship surveyors and inspectors on behalf of the Malta Maritime Authority, transposing into Maltese law Directive 94/57EC as amended. Malta already recognises all the classification societies authorised under this directive as well as a few others. Before the end of this year, this provision is expected to come into force, together with other regulations concerning the transfer of ships between one EU register and another, the minimum safety and health requirements for improved medical treatment on board vessels, and complete implementation of the port state control directive.

The recent amendments and the planned regulations clearly show the determination of the Maltese government to demolish any perception of the Malta flag as one of convenience and to ensure that Malta has the infrastructure to fulfill its international obligations. Malta has an important future role as, once it joins the EU, the number of ships registered in European registries will explode and once again Europe will become a leading player in the shipping world and have a stronger voice in the maritime field.