The Coastal and Inland Shipping Cabotage (Bareboat Registration) Regulations 2006 set out guidelines and criteria for the registration of bareboat vessels in the Special Register for Vessels and Ship Owning Companies Engaged in Cabotage, pursuant to the minister of transportation's powers under Sections 22(4) and 46 of the Coastal and Inland Shipping (Cabotage) Act 2003.
Under the regulations, a ship that is intended for use in the Nigerian cabotage trade must be registered both in the Nigerian Ship Registry(1) and the special register.(2) While registration in the Ship Registry confers identity on the vessel by entitling it to fly the Nigerian flag, registration in the special register qualifies it to participate in the Nigerian cabotage trade. Failure to register the vessel in the Ship Registry incurs a minimum fine of N10 million,(3) while failure to register it in the special register incurs a minimum fine of N5 million.(4)
The regulations apply to all vessels that are:
- registered under the law of a country other than Nigeria;
- on bareboat charter to a Nigerian citizen for five years or more;
- under the full control and management of Nigerian citizens or a company that is wholly and beneficially owned by Nigerian citizens free from any trust or obligation in favour of non-Nigerian citizens; and
- compliant with all of the requirements for eligibility pertaining to vessel type, licences and permits set forth in the Cabotage Act and the Merchant Shipping Act.(5)
An application for registration should be made to the Registrar of Ships via the prescribed application form. The completed form should be accompanied by:
- evidence of payment of the prescribed fees;
- a declaration of ownership;
- a copy of the certificate of incorporation, Form CAC 2 (statement of share capital) and Form CAC 3 (notice of registered address);
- a copy of the charter party. This document evidences the contract between the shipowner and charterer and contains the terms of hire;
- the certificate of registration or other document issued by the original or primary registry (the registry in the state where the ship was registered by its owner) evidencing such registration; and
- evidence establishing that:
- steps have been taken to suspend registration of the vessel in line with the law of the country of original or primary registration; and
- the vessel owner and competent authority of the original jurisdiction consent to the vessel's registration under the regulations. This requirement was included to prohibit dual registration.
Once registered, a bareboat vessel can fly the Nigerian flag. The primary registry will suspend the vessel's right to fly its flag during the charter period (a vessel cannot engage in domestic trade in Nigerian territorial waters while simultaneously flying the flags of two countries). In flying the Nigerian flag, the bareboat vessel will – for the entire charter period – be a Nigerian vessel that is subject to Nigerian laws as they apply to bareboat chartered-in vessels.
A vessel's registration in the Ship Registry and special register applies until the end of the charter period, unless it is suspended or terminated earlier in accordance with the regulations.(6) A bareboat registration does not amount to de-registration of the shipowner's title; the title and registered mortgages remain intact. Nevertheless, while the vessel is registered under the regulations it must comply with Nigerian laws, which will exclusively govern the manning, crewing, licensing, safety and general operation of the vessel.
The registered vessel's charterer must notify its country of primary registration of the bareboat registration, pursuant to the regulations.(7) Since the primary registry must be notified of and consent to the bareboat registration, it must also be notified once the registration is terminated. Contravention of this provision incurs a minimum fine of N250 million.(8)
The regulations prohibit the application of private law provisions to bareboat vessels.(9) Instead, the private law provisions of the state of original or primary registration will continue to apply to the vessel (ie, those relating to the transfer or transmission of interest in the ship via sale or mortgage). This is reasonable because a bareboat charter is merely a hire; it does not extinguish the shipowner's rights. As such, a vessel's registration as a bareboat vessel should not affect existing provisions relating to its ownership, as this would amount to interference with the shipowner's title and registered interests. Nevertheless, where liability arises from use of the vessel in Nigerian waters while on bareboat charter, such liability will be determined in accordance with Nigerian law – rather than that of the country of primary registration.
The Registrar of Ships reserves the right to refuse bareboat registration of a vessel or terminate such registration if it falls short of the relevant requirements of the Cabotage Act and the Merchant Shipping Act,(10) including those relating to:
- the charterer's ownership structure;
- the condition of the ship or its equipment; or
- the safety, health and welfare of persons employed or engaged by the charterer.
Once all registration requirements have been complied with, a certificate of bareboat charter will be issued by the Registrar of Ships. A ship is not registered until this has been issued.
For further information on this topic please contact Emeka Akabogu or Enare Etim at Akabogu & Associates by telephone (+234 1460 55550) or email (email@example.com or firstname.lastname@example.org). The Akabogu & Associates website can be accessed at www.akabogulaw.com.
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