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Trends and developments

Trends and developments

Are there any notable trends or recent legal developments in your jurisdiction’s shipping industry?

The Maltese legislature recently introduced changes to the Merchant Shipping Act (Chapter 234 of the Laws of Malta), which came into force on July 1 2016, in order to render more efficient and streamline the registration and bareboat registration of vessels.

The most notable changes introduced by the Merchant Shipping Act are as follows:

  • The ship owner of a vessel under construction now need not produce a bill of sale until the construction or equipping of the vessel is complete or until it has been delivered. Previously, such suspension was allowed only in respect of the survey to be carried on the ship and the submission of the declaration of ownership.
  • Vessels of 500 gross tonnage and over must now obtain a certificate of registry and a renewal certificate for up to five years.
  • The lessee (as the charterer under Section 19A of the act) can now obtain a certificate of registry issued in its own name.
  • The interests of a registered mortgagee or other creditor of a vessel following its judicial sale or pursuant to a sale by a mortgagee pursuant to Article 42(1)(b) will now pass onto the proceeds of the sale, thus no longer encumbering the ship. This was already the position through references in:
    • the Code of Civil Procedure and Organisation (Chapter 12 of the Laws of Malta) in respect of court-approved sales of vessel instruments; and
    • the Merchant Shipping Act where a ship has been sold pursuant to an order or with the approval of the court with jurisdiction over the vessel at the time of the sale. 

However, this provision has now been extended to the mortgagee exercising its rights in terms of law.

Registration

Eligibility

Which ships are eligible for registration in the national shipping register(s) and which parties may register ships?

Ships of at least six metres in length and which are less than 25 years old are eligible for registration under the Maltese flag. Ships of 15 years and over must undergo an inspection before registration by an authorised flag state inspector (at the Merchant Shipping Directorate’s request, this may be carried out in dry dock). Ships of between 10 and 15 years of age must also be inspected by an authorised flag state inspector within one month of registration. Ships may be inspected before registration at the ship owner’s request.

Section 4 of the Merchant Shipping Act clarifies that a vessel must be wholly owned by:

  • a citizen of Malta;
  • a body corporate established under and subject to the laws of Malta, with its principal place of business in Malta or a place of business in Malta and satisfying the shipping minister that it will ensure due observance of the laws of Malta relating to merchant shipping; and
  • other persons as the minister may prescribe by regulation.

In accordance with the Ships Eligible for Registration Regulations 2003 (SL 234.23), an international owner or a citizen of a member state of the European Union, the European Economic Area (EEA) or Switzerland residing in Malta can own a Maltese ship or a share therein. An ‘international owner’ is a foreign corporate body or other entity which enjoys legal personality in terms of the law under which it has been established or constituted, or a citizen of the European Union, EEA or Switzerland not residing in Malta. An international owner must appoint a resident agent in Malta to act as the ship owner’s judicial representative in Malta and as a channel of communication between the international owner and the Maltese authorities.

Maltese law allows a foreign vessel to be bareboat registered under its flag provided that it is chartered to a citizen of Malta or to a Maltese body corporate or other person qualified to own a Maltese ship.

Procedure

What are the procedural and documentary requirements for registration?

Maltese flagged vessels are initially registered on a provisional basis for a period of six months followed by a conversion to a permanent registration, which is subject to the fulfilment of requirements set out in the Merchant Shipping Act.

The initial registration takes place through submission of an application for registration and a declaration of ownership by the owner that the ship is free from registered encumbrances, accompanied by a copy of the international tonnage certificate and a confirmation that the vessel is free from halon. Further, evidence of the vessel's seaworthiness through confirmation issued by an approved classification society must also be submitted.

Operation of a vessel is allowed on submission of:

  • proof of liability insurance cover in accordance with international conventions for the prevention of bunker and oil pollution (as applicable) and environmental damage caused by wrecks;
  • copies of valid safety statutory certificates, safety management certificates and maritime labour certificates; and
  • a copy of the long-range identification and tracking of ships conformance test report.

Applications for a minimum safe-manning certificate and a radio licence must also be submitted to the flag administration.

Permanent registration is obtained through the submission of:

  • the original builder’s certificate (in case of a new build) or a bill of sale, together with the original deletion certificate;
  • the certificate of survey and the international tonnage certificate issued under the authority of Malta; and
  • a duly endorsed carving and marking note.

Grounds for refusal

On what grounds may a registration application be refused?

In accordance with Section 8 of the Merchant Shipping Act, registration of a ship may be refused if:

  • its first construction occurred more than 25 years before the year in which the application for registration was first made (exceptions apply);
  • in the minister’s opinion, registration would be detrimental to Maltese national interests; and
  • the ship has been provisionally registered more than three times in succession in the name of different owners, or more than twice in the name of the same owner.

Advantages

Are there any particular advantages of flying your jurisdiction’s flag?

The following advantages apply:

  • reduced company formation and maintenance costs – no restrictions are imposed on the sale or transfer of shares of a Maltese shipping company owning Maltese ships and no exchange control authorisations are required for company incorporation and the taking of security for loans or other facilities over Maltese vessels owned by Maltese;
  • competitive ship registration and tax costs through a tonnage tax system which incentivises registration of younger vessels through a tax calculation based on the ship's age;
  • no restrictions in terms of the nationality of crew or stakeholders in a Maltese shipping company;
  • high standards applied by the flag administration in terms of safety of life at sea, prevention of pollution at sea and compliance with international maritime conventions;
  • Malta’s membership in the European Union and the Paris Memorandum of Understanding improve marketing opportunities of a Malta-flagged ship owner;
  • ships of 1,000 gross tonnage (GT) and more benefit from exemptions on income tax (and dividends paid to shareholders); duty on transfer or assignment and donation and succession duty, and the same exemption applies to vessels of less than 1,000 GT (except for pleasure yachts) on application;
  • a broad definition of ‘ships’ including oil-rigs, floating decks, pontoons and barges;
  • quick procedures for the registration and deletion of vessels and the registration and discharge of mortgages;
  • the flag administration is available for urgent matters around the clock;
  • many consular offices around the world to provide assistance to ship operators;
  • many double taxation and maritime agreements in force;
  • Maltese vessels are not subject to trading restrictions; and
  • Malta is a stable democracy, thus ensuring a consistent approach towards the regulation of this sector.

Liens and mortgages

Registration

How are encumbrances such as maritime liens and mortgages registered in your jurisdiction and what are the effects of registration?

Section 39 (1) of the Merchant Shipping Act requires mortgages over Maltese vessels to be registered by the registrar general on production of a mortgage for registration. Mortgages are recorded in order of priority and the time when they are produced. It is prohibited to create further mortgages over a vessel without the prior written consent of the mortgagee.

In relation to maritime liens, Sections 50 and 54 of the Merchant Shipping Act refer to special privileges and possessory liens arising by operation of the law.

Securable claims and priority

What claims can be secured by maritime liens and what is the order of priority?

Section 50 of the Merchant Shipping Act lists debts secured by a special privilege on the vessel, any proceeds from an indemnity arising from collisions and other mishaps and any insurance proceeds.

Section 54 of the Merchant Shipping Act grants a possessory lien to ship repairers, shipbuilders or other creditors into whose care and authority a ship has been placed for the execution of works or other purposes. A possessory lien will not be extinguished if the vessel is released pursuant to a court order or following a judicial sale of the vessel.

Sections 51 and 54A of the Merchant Shipping Act contain rules on ranking.

Extinguishment

Under what circumstances are maritime liens extinguished?

Without prejudice to another cause which may legally extinguish an obligation, the special privileges specified in Section 50 are not extinguished by the sale of the vessel, except:

  • in case of a sale made pursuant to an order or with the approval of a competent court made according to the forms prescribed by law;
  • where, subsequent to a voluntary sale, one year has elapsed from the date of the registration, recording or annotation of the voluntary sale in the registry to which the ship belongs;
  • where no such registration, recording or annotation is entered in that registry or on the date of closure of the register of the ship subsequent to the voluntary sale, unless within one year an action for the recovery of the claim secured by such privilege is brought before a competent court.

A possessory lien is extinguished by the voluntary release of the ship from the custody of the creditor.

Foreign liens

Are foreign liens recognised in your jurisdiction?

Yes. In relation to foreign registered mortgages, Section 49 of the Merchant Shipping Act lists the requirements to be fulfilled to the satisfaction of the registrar general in order to recognise such instruments.

Transfer and assignment

Which rules govern the transfer and assignment of liens, mortgages and other encumbrances?

The transfer of the interest of a creditor enjoying a privilege or reservation of ownership rights legally registered over a vessel may, on the production of satisfactory proof, be recorded by the registrar general.

Section 44 of the Merchant Shipping Act states that a registered mortgage of a ship or a share therein may be transferred to any person by a transfer instrument executed by the transferor in the presence of and attested by a witness, and on production of such instrument for registration by the registrar general.

Arrest

Grounds for arrest

Under what circumstances can a ship be arrested in order to secure a claim against it?

Articles 742B(a)-(y) of the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta) lists 25 maritime claims giving rise to in rem jurisdiction. The structure is similar to the approach adopted by the UK Supreme Court Act 1981 and also incorporates the approach of the Arrest Conventions of 1952 and 1999.

An arrest warrant may be issued only for claims worth at least €7,000. When an arrest is made under proceedings taking place in a foreign jurisdiction, the law governing the merits of the claim assumes relevance.

In relation to certain claims, Maltese law allows the arrest of sister and associated ships through an action in rem brought against another vessel, provided that at the time the action is brought, the relevant person is the owner or beneficial owner of all shares.

Claims secured by a special privilege listed under Section 50 of the Merchant Shipping Act outlive a conventional sale of the vessel for one year, thus allowing the arrest of the ship for claims arising from the previous owner, beneficial owner or bareboat charterer.

Can a ship be arrested to secure a non-maritime claim?

Yes, a ship can be arrested as a precautionary measure in relation to a claim in personam against the ship owner or as an executive measure in order to enforce an executive title in personam against the ship owner. 

Can a ship be arrested to secure a claim against a sister ship?

Maltese law allows the arrest of sister and associated ships through an action in rem brought against any other vessel if the relevant person, at the time the action is brought, is the owner or beneficial owner of all the shares.

Procedure

What are the procedural and documentary requirements for seeking arrest of a ship?

The arrest procedure entails an application requesting the court to order the arrest of the vessel on the basis of a claim in rem or in personam. The order is usually given by the court during the course of the same day.

A copy of the arrest warrant will also be served on:

  • the person whose ship or vessel is arrested;
  • the master or other person acting on his or her behalf;
  • in the absence of such persons, the agent of the ship or other vessel; or
  • in the absence of such persons and agent, on curators appointed by the court.

The arrest is precautionary unless the request for arrest is made on the basis of a final judgment or arbitral award.

After the precautionary warrant of arrest has been granted, the creditor must either:

  • commence proceedings on the merits of the case within 20 days from the issuance of the court decree authorising the warrant; or
  • if the arrest is based on a mortgage, file a judicial letter in court and serve it on the vessel in order to render the mortgage executable and enforceable under Maltese law. The mortgage is rendered executable after two days from the day on which the judicial letter is served on the vessel. The arrest can be made an executive arrest if the relevant application is filed with the court within 15 days of filing of the judicial letter.

Security

What security must the arresting party put up in order to secure arrest of a ship and how is this security calculated?

On registration, the arresting party need not put up any form of security. However, the court may be requested by the opponent to provide, within a period fixed by the court, sufficient security to cover the payment of a penalty, damages and interest. The amount (in cash or a local bank guarantee) must be at least €11,600. Failure to provide such security would result in revocation of the arrest warrant.

What security can the arrested party provide for release of an arrested ship?

In order to obtain release of the vessel, the opponent to the arrest can deposit as security an amount equal to that being claimed. This amount will be made available to the arresting party if the court finds in its favour. The security can take the form of either cash or a local bank guarantee.

Judicial sale of ships

Procedure

What is the legal procedure for the judicial sale of ships in your jurisdiction?

An application for the judicial sale of a vessel under arrest (by means of an executive warrant) can be lodged by any person holding in its favour an executive title (ie, a final judgment or a mortgage rendered executable). In a judicial sale bids are made orally and may last between six and eight weeks from the day of filing the application. Following approval by the court, sale proceedings are deposited with the court so that the creditor ranking may be finalised before distribution.

A person holding executive title may also opt for the court-approved private sale of the arrested vessel. This procedure can be adopted by any creditor holding an executive title – that is, a mortgage rendered executable following notice of the judicial letter to the vessel in favour of an identified buyer in consideration for a determined price (for this purpose the applicant should file a signed and undated memorandum of agreement). An applicant must also submit two appraisals by two independent and reputable valuers. The sale price must be deposited with the court within seven days of completion of the sale. As per the judicial sale by auction, following the sale all claims or demands against the vessel may be enforced only against proceeds of the sale. This procedure is usually completed within two months.

Foreign sales

Under what circumstances are foreign sales recognised?

Foreign sales can be recognised on the basis of the instrument to be recognised:

  • In case of a judgment given by an EU member state, Council Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters allows recognition of judgments given within the civil and commercial ambit. Judgments given by a non-EU member state are recognised in Malta on the satisfaction of certain criteria under Article 826 of the Code of Organisation and Civil Procedure.
  • In relation to foreign arbitration awards, the following treaties must be referred to:
    • the Protocol on Arbitration Clauses (Geneva 1923);
    • the Convention on the Execution of Foreign Arbitral Awards (Geneva 1927); and
    • the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958).

Awards granted on the basis of such treaties will be enforced in Malta as if they were delivered in Malta following registration by the Malta Arbitration Centre.

Once registered, these become an executive title in terms of Maltese law and, as such, allow the holder to issue executive acts against the debtor such as executive warrant of arrest and the possibility of obtaining an application for judicial sale of the vessel. 

Limitation of liability

Eligibility

What parties may limit liability for maritime claims?

The limitation of liability in Malta is governed by the Liability of Claims for Maritime Claims Regulations (SL 234.16 of the Laws of Malta), giving effect to the Convention on Limitation of Liability for Maritime Claims (London 1976), as amended by the Protocol to the Convention on Limitation of Liability for Maritime Claims (London 1996).

The parties that can limit liability are listed in Article 1 of the convention.

For what claims can liability be limited? Are any claims explicitly exempt from the limitation of liability?

The claims subject to limitation of liability are those mentioned in Article 2 of the convention. The claims excluded are those mentioned in Article 3 of the convention. In addition, claims for damage within the meaning of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996, or any amendment or protocol to the convention, which arise from occurrences which take place after the coming into force of that convention as part of Maltese law will be excluded from the convention.

Limits

What limits are set for eligible claims?

The limits are those set under the convention. However, for the purpose of Article 15 of the convention, when Article 6 of the convention is applied to a ship with a tonnage of less than 300 tons that article with have effect as if Article 6(1)(a)(i) refers to 1 million units of account and Article 6(1)(b)(i) refers to 500,000 units of account.

Limitation funds

What rules and procedures govern the establishment of limitation funds?

The fund will be constituted before the First Hall of the Civil Court of Malta. When a party claiming limitation makes a payment to the court, it must notify in writing every party making a claim against it, specifying:

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

The party claiming limitation must also give notice in writing to every party making a claim against it of any excess amount paid out.

How are liability funds distributed?

Where liability is alleged to have been incurred by a party in respect of an occurrence where its liability is limited under Maltese law, the party may apply to the First Hall of the Civil Courts of Malta for determination of the amount of liability and, where several claims are made or apprehended in respect of that liability, distribution of that amount among the claimants. In such cases, the civil court may stay any pending proceedings relating to the same matter, and on application and notwithstanding another legal provision, any other court will transfer any such proceedings for trial by the civil court.

In making a distribution the civil court may, if it sees fit, postpone the distribution of any part of the amount to be distributed that it deems appropriate in regard to any claim that may later be established before a non-Maltese court.

No privilege or other right in respect of any ship or property will affect the proportions in which the fund is distributed among several claimants.

Carriage of goods

International conventions

Is your jurisdiction party to any international conventions on the carriage of goods by sea? If so, does the relevant domestic implementing law contain any notable modifications (eg, extensions to the scope of application)?

The Hague Rules are in force in Malta and were implemented through the Carriage of Goods by Sea Act 1954 (Chapter 140 of the Laws of Malta). The implementation excludes bulk cargo, goods landed in Malta for on-carriage or transhipment to another country and live fish from fishing vessels.

The Maltese courts also apply the Hague-Visby Rules when these rules are incorporated in the bill of lading involved in a dispute. The Rotterdam Rules are not in force in Malta.

Carrier’s responsibility

What is the official extent of the carrier’s responsibility for goods?

A ‘carrier’ includes the owner or charterer which enters into a contract of carriage with a shipper.

Cargo delivered without production of the bill of lading is misdelivery. The holder of the bill of lading can sue the carrier for breach of contract and the carrier will be held fully responsible for damages without the possibility to limit its liability.

The limitation of liability is possible since a carrier is free to surrender in whole or in part its rights and immunities or to increase any of its responsibilities and liabilities under the rules contained in the Carriage of Goods by Sea Act, provided that such surrender or increase is embodied in the bill of lading issued to the shipper (Article V of Schedule I of the act).

Contractual limitation of liability

May parties contract out of any legal provisions governing cargo liability?

A carrier is at liberty to surrender in whole or in part all or any of its rights, immunities, responsibilities and liabilities under the rules, provided that such surrender or increase is embodied in the bill of lading issued to the shipper. The rules will not apply to charter parties, but if bills of lading are issued in the case of a ship under a charter party, they must comply with the rules.

Notwithstanding the provisions of the preceding articles, a carrier, master or agent of the carrier and a shipper are, in regard to any particular goods, at liberty to enter into an agreement in any terms as to the responsibility and liability of the carrier.

A carrier, master or agent of the carrier and a shipper are, in regard to particular goods, at liberty to enter into an agreement as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or its obligation as to seaworthiness, so far as this stipulation is not contrary to public policy, or the care or diligence of its servants or agents in regard to the loading, handling, stowage, carriage, custody, care and discharge of the goods carried by sea, provided that in this case no bill of lading has been or will be issued and that the terms agreed will be embodied in a receipt which will be a non-negotiable document and will be marked as such. However, this provision will not apply to ordinary commercial shipments made in the ordinary course of trade, but only to other shipments where the character or condition of the property to be carried or the circumstances, terms and conditions under which the carriage is to be performed are such as to justify a special agreement.

However, a carrier or a shipper can enter into an agreement, stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody, care and handling of goods before the loading and subsequent to the discharge from the ship on which the goods are carried by sea.

The rules do not affect the rights and obligations of the carrier under any statute relating to the limitation of the liability of owners of sea-going vessels.

Title to sue

Who has title to sue on a bill of lading?

The holder or endorsee of a bill of lading has title to sue. It can sue for damages relating to the short delivery or non-delivery of goods covered by the bill of lading.

Time bar

What is the time bar for cargo claims?

The relevant rules can be found in the Civil Code, the Commercial Code and the Carriage of Goods by Sea Act 1954 (Chapter 140 of the Laws of Malta). The general rule establishes that contractual claims are time-barred after five years. Non-criminal claims in tort are time barred after two years from when action could be exercised. Specific prescription periods apply for certain categories of claim.

Maltese law, in particular the Commercial Code, prescribes a one-year time bar for prescription for a number of matters relating to the carriage of goods. A one-year time limit is also provided for by the Carriage of Goods by Sea Act on the discharge of the cargo for the consignee in order to file a claim against the bill of lading issuer. Unless the prescriptive period is of a peremptory nature, it cannot be interrupted.

Maltese law does not allow parties to agree the extension of time limits for bringing forward an action. However, when a precautionary warrant of arrest of a vessel is filed, the arrested party can allow the other party more time to bring forward an action on the merits by including a note in the records of the warrant.

Definition of ‘carrier’ and ‘goods’

How are ‘carrier’ and ‘goods’ defined in respect of cargo claims? Is there any especially pertinent case law on this issue?

As defined under Article 1, Schedule 1 of the Carriage of Goods by Sea Act, a ‘carrier’ includes the owner or the charterer which enters into a contract of carriage with a shipper.

The definition of ‘goods’ includes goods, wares, merchandise and every type of article, except live animals and cargo which the contract of carriage is stated as being carried on deck.

Defences available to carrier

Under what circumstances may the carrier rely on the perils of the sea defence? What other defences are available to the carrier?

Article 2 of the Carriage of Goods by Sea Act lists a number of events under which neither the carrier nor the ship will be responsible for related loss or damage. These are similar to the events set out under the Hague-Visby Rules.

Third parties

What legal protections and defences against cargo claims are available to agents of the carrier and other third parties (eg, Himalaya clauses)?

Under Maltese law ship agents are considered to be mandatory for the carrier and cannot be found liable for any liability of the carrier. The mandatory is personally liable only for fees and expenses relating to suits. In addition, Article 2(a) of the Carriage of Goods by Sea Act states that neither the carrier nor the ship will be responsible for loss or damage arising or resulting from any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier. The burden of proof will be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier, nor the fault or neglect of the agents or servants of the carrier, contributed to the loss or damage.

Deviation from route

Under what circumstances is deviation from the agreed route allowed?

Under Article 4 of the Carriage of Goods by Sea Act, any deviation in saving or attempting to save life or property at sea, or any reasonable deviation, will not be deemed to be an infringement or breach of the rules or the contract of carriage, and the carrier will not be liable for any loss or damage resulting therefrom.

Claims against shipper

What claims can the carrier pursue in respect of the shipper’s failure to meet its obligations?

The carrier and the ship owner are not liable for any act or omission of the shipper or owner of the goods, its agent or representative. In this regard the carrier must take precautionary measures to issue the bill of lading which reflect exactly the cargo being loaded on board by the ship.

Multimodal carriage of goods

How is multimodal carriage regulated in your jurisdiction?

The United Nations Convention on International Multimodal Transport of Goods (Geneva 1980) is not in force in Malta and multimodal transport is not regulated in Malta.

With regard to road transport, the International Carriage of Goods by Road Act (Chapter 486 of the Laws of Malta) applies. Where air transport is concerned, the Carriage by Air (International and non-International) Order (SL 499.24) applies the Warsaw Convention and the Montreal Convention.

Marine accidents

Collision and pollution

What rules and procedures (under both domestic and international law) apply to the prevention of, liability for and remedy of:

(a) Collision?

The prevention of collisions is regulated in Malta through the Merchant Shipping (Prevention of Collisions) Regulations (SL 234.20), which give full effect in Malta to the Convention on the International Regulations for Preventing Collisions at Sea 1972. Such regulations will apply to all Maltese ships and all other ships entering into Maltese waters.

(b) Oil pollution?

Malta has given effect to the International Convention for Pollution from Ships 1973, as amended, through the Merchant Shipping (Prevention of Pollution from Ships) Regulations 2004 (SL 234.32). Moreover, Annexes IV and VI, relating to the prevention of pollution by sewage and air pollution, respectively, have been implemented in Malta through SL 234.47 and SL 234.33, respectively.

The Oil Pollution (Liability and Compensation) Act 1999 (Chapter 412 of the Laws of Malta) gave effect to the International Convention on Civil Liability for Oil Pollution Damage 1969, as amended by the 1992 Protocol, as well as the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971, as amended by the 1992 Protocol.

The Merchant Shipping (Liability for Bunker Oil Pollution Damage) Regulations 2009 (SL 234.46) gave effect to the Bunkers Convention 2001.

(c) Other environmental damage caused by a ship?

Maltese registered vessels and any vessels that enter a Maltese port must comply with anti-fouling legislation in terms of EU law. 

Salvage

What is the legal regime governing salvage and general average?

Although Malta is not a party to the International Convention on Salvage 1989, relevant provisions have been included in the Merchant Shipping Act 1973 (Chapter 234 of the Laws of Malta).

There are no provisions concerning the general average.

Places of refuge

What framework governs access to places of refuge for ships in distress?

This framework is included in the Vessel Traffic Monitoring and Reporting Requirements Regulations (SL 499.34). The competent authority in this respect is the Maritime Pollution Prevention and Control Unit within the Authority for Transport in Malta.

In addition, the EU Operational Guidelines on Places of Refuge and International Maritime Organisation circulars are applied by the Maritime Pollution Prevention and Control Unit.

Wreck removal

What rules and procedures apply to the removal of wrecks in your jurisdiction?

Following ratification of the Nairobi International Convention on the Removal of Wrecks 2007, this has been implemented under Maltese law by virtue of the Merchant Shipping (Wreck Removal Convention) Regulations (SL 234.53). The convention also applies to vessels located within the territorial waters of Malta.

Under what circumstances can the authorities order removal of wreckage?

If a wreck is located on or near the Maltese coast and the shipping minister believes that it is or is likely to become an obstruction or danger to navigation, he or she may take possession of, remove or destroy the wreck, or selling the wreck and any property recovered from it in order to be reimbursed for the expenses related to wreck removal, subject to any surplus of funds being held for the benefit of those persons entitled thereto (Section 339 of the Merchant Shipping Act).

Insurance

Mandatory coverage

What maritime risks must be covered under the law and what is the mandatory level of coverage?

The Merchant Shipping (Insurance For Maritime Claims) Regulations (SL 234.50) adopt measures contained in the EU Directive on the Insurance of Ship Owners for Maritime Claims (2009/20/EC).

These regulations will apply to ships of 300 gross tonnage or more, and do not apply to warships, auxiliary warships or government ships used for non-commercial purposes.

Maritime risks to be covered are all those claims subject to limitation under the Merchant Shipping (Limitation of Liability for Maritime Claims) Regulations.

Insurable risks and ships

What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?

Insurance contracts are generally concluded outside Malta and these are usually entered into with the P&I Club or the Hull Club in accordance with the insured interest. 

Subrogation rights

What is the legal regime governing marine insurers’ subrogation rights?

Subrogation is governed by the Civil Code (Articles 1164-1167, Chapter 16 of the Laws of Malta). Subrogation must be expressly made by agreement or ipso iure by operation of the law.

These two forms of subrogation apply against both sureties and debtors, but will not operate to the prejudice of the creditor when it has been paid only in part. In any case, the creditor may claim the balance due to it in preference to the person from whom it has received part payment.

Jurisdiction and dispute resolution

Competent courts

What courts are empowered to hear maritime cases in your jurisdiction?

Malta does not have a specialised admiralty court, so the ordinary civil courts exercise jurisdiction over maritime disputes. Typically, the competent court is the First Hall of the Civil Court, which is vested with jurisdiction to entertain claims whose monetary value exceeds €15,000. Lesser claims fall under the competence of the Court of Magistrates, but no warrant of arrest may be sued for, and hence no action in rem may be instituted, for any claim of less than €7,000.

The Malta Arbitration Centre also handles international arbitrations, including maritime disputes. 

Exclusive jurisdiction and arbitration clauses

Under what conditions will exclusive jurisdiction and arbitration clauses in shipping contracts be held as valid?

A jurisdiction or arbitration clause will be considered valid if it is included in the agreement. However, the jurisdiction of the Maltese courts is not excluded by the fact that a foreign court is seized with the same cause of action or a connected cause. Further, where a foreign court has concurrent jurisdiction, the Maltese courts have discretion to declare a defendant non-suited or to stay proceedings in Malta on the grounds that if the action were to continue in Malta, it would be vexatious, oppressive or unjust to the defendant.

The jurisdiction of the Maltese courts is not excluded by the existence of an arbitration agreement (whether arbitration proceedings have commenced or not), in which case the courts will stay proceedings without prejudice to the right of any party to the arbitration agreement to petition the courts to issue any precautionary act at law and of the courts to give any order of direction. It is doubtful whether the Maltese courts would give effect to a purported contractual obligation limiting jurisdiction to determine a claim to the courts of another country to the exclusion of the Maltese courts.

Maritime arbitration

What is the general state and prevalence of maritime arbitration in your jurisdiction?

The Malta Arbitration Centre handles maritime arbitration, as well as international arbitration, acting through a panel of maritime arbitrators specialising in maritime arbitration.

Recognition and enforcement

What regimes govern the recognition and enforcement of foreign judgments and arbitral awards?

Foreign sales can be recognised on the basis of the instrument to be recognised:

  • In case of a judgment given by an EU member state, Council Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters allows recognition of judgments given within the civil and commercial ambit. Judgments given by a non-EU member state are recognised in Malta on the satisfaction of certain criteria under Article 826 of the Code of Organisation and Civil Procedure.
  • In relation to foreign arbitration awards, the following treaties must be referred to:
    • the Protocol on Arbitration Clauses (Geneva 1923);
    • the Convention on the Execution of Foreign Arbitral Awards (Geneva 1927); and
    • the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958).

Awards granted on the basis of such treaties will be enforced in Malta as if they were delivered in Malta following registration by the Malta Arbitration Centre.

Once registered, these become an executive title in terms of Maltese law and, as such, allow the holder to issue executive acts against the debtor such as executive warrant of arrest and the possibility of obtaining an application for judicial sale of the vessel.

Law stated date

Correct as of

Please state the date as of which the law stated here is accurate

November 20 2016.

Marine security

Legal regime

What regime governs the imposition of security measures on ships and in port facilities?

Security measures are imposed based on:

  • the Merchant Shipping (Safety Convention) Rules (SL 234.30);
  • the Merchant Shipping (Safe Manning and Watch Keeping) (SL 234.31);
  • the Merchant Shipping (Safety Convention Rules) (SL 234.33);
  • the Merchant Shipping (Safe Operation of Regular Ro-Ro Ferry and High-Speed Passenger Craft Services) Regulations (SL 234.35);
  • the Merchant Shipping (Ship Inspection and Survey Organisations) Regulations (SL 234.37);
  • the Merchant Shipping (Port State Control) Regulations (SL 234.38); and
  • the Merchant Shipping (Accident and Incident Safety Investigation) Regulations (SL 234.49).

Security officers

What rules apply to the qualification and conduct of security officers on ships and in port facilities? Are armed guards allowed on ships?

The qualification and conduct of security officers on board Maltese-flagged ships and in port facilities are regulated through the Merchant Shipping (Safe Manning and Watch Keeping) Regulations (SL 234.351) and the Merchant Shipping (Maritime Labour Convention) Regulations (SL 234.54).

All persons employed or engaged on board a Maltese ship that falls under the International Ship and Port Facility Security Code should have security familiarisation and undergo thorough security awareness training. Seafarers and port facility security officers with designated security duties should have a certificate of proficiency proving such training.

Under the code, armed guards are allowed on ships only if the flag state so allows. In Malta, this is regulated by the General Authorisations (Protective Security Measures on Board Ships) Regulations 2013 (Legal 19 of 2013). These regulations regulate the carriage and use of firearms and ammunition on board of Maltese ships by privately contracted armed security personnel (PCASP). Ship owners wishing to place such personnel on board their ships must seek the flag's prior authorisation. Authorisation should be accompanied by a voyage plan and a crew list for the duration of the stay of the PCASP on board the vessel.

Security information

What rules govern the provision of security information to port authorities?

The provision of security information to port authorities is governed by the Merchant Shipping (Port State Control) Regulations (SL 234.38), which apply to any ship and its crew calling at a port in Malta or anchored off such a port to engage in a ship-port interface.