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Which ships are eligible for registration in the national shipping register(s) and which parties may register ships?
Shipowners that do not satisfy the nationality requirements set out in Section 1 of the Merchant Shipping Act, including shipowners that do not constitute a Danish state entity or municipality, non-Danish citizens or legal persons that are not incorporated under Danish law or registered as a Danish company in Denmark, must satisfy establishment as well as activity criteria.
Under the previous legislative framework, a general distinction regarding non-Danish shipowners was drawn between merchant ships owned by non-EU or non-EEA shipowners (third country shipowners) and merchant ships owned by EU or EEA natural or legal persons within the scope of EU regulations on the freedom of movement. Non-EU or non-EEA legal persons had to satisfy the establishment criterion by:
- primary establishment (ie, a domicile or principal place of business in Denmark); or
- secondary establishment (ie, a subsidiary, branch office or agency in Denmark (Sections 2(2)(b) and 8(1) of the executive order).
The Danish government recently enacted a new bill to amend the rules on ship registration, under which shipowners from third countries are no longer required to satisfy the establishment criterion by primary or secondary establishment. The bill entered into force on 1 January 2018 and aims to increase transparency for shipowners seeking to enter ships into the Danish Ship Register.
Following the amendments of the Merchant Shipping Act, it is sufficient for a shipowner from a third country to appoint a natural or legal person in Denmark with whom the authorities can confer in order to exercise control and, if necessary, serve a writ of summons (ie, shipowners outside the European Union or European Economic Area are subject to the same establishment requirements as EU and EEA shipowners).
However, the explanatory note to the amendments emphasises that the Danish flag shall not evolve into an open registry. The activity requirement – which includes economic activities – is therefore maintained as a precondition for entering a foreign ship into the Danish Ship Register.
It is therefore insufficient to have only a Danish-based mailbox or agents appointed without actual duties relating to the ship's operation. In order to facilitate a clearer and more transparent system, the activity criterion may be satisfied in a variety of ways.
To satisfy the activity criterion, the shipowner will be required to document that some degree of economic activity takes place in Denmark, including (for example):
- a declaration that the technical or commercial management of the ship is exercised out of Denmark;
- proof that the operator of the ship falls within the scope of the Tonnage Tax Act; or
- that a shipowner established in Denmark holds a compliance document pursuant to the International Safety Management Code or proof of an application therefor.
It is further suggested in the explanatory note that the activity criterion can be satisfied through a combination of several individual factors, provided that the shipowner documents actual activities in Denmark that are carried out by employees.
This now follows from Section 3(2) of Executive Order 1654/2017. The minister has been empowered to define such individual factors in more detail by way of an executive order, in which factors are set out in detail and, ideally, with clear and transparent requirements for a non-Danish ship to register with the Danish Ship Register (Executive Order 1654/2017).
The amendments do not apply to fishing or recreational vessels.
What are the procedural and documentary requirements for registration?
Pursuant to Section 4 of the Executive Order 1654/2017, a request to register a ship in the Ship Register or the Boat Register must be made to the Danish Maritime Authority on a special form (available online on the Danish Maritime Authority’s website: www.soefartsstyrelsen.dk or www.virk.dk). The request must include information on the vessel and its owner. Pursuant to Section 14 of the Merchant Shipping Act, the request must evidence:
- the applicant’s ownership of the vessel; and
- that the nationality requirement or the establishment and activity requirements are met (cf Sections 1 and 2 of the Merchant Shipping Act, respectively).
The requirement to provide evidence of ownership with regard to newbuildings completed at a foreign shipyard is usually satisfied in the form of a builders’ certificate confirming the passage of title to the shipowner. Apart from newbuildings, a bill of sale may be used. The Maritime Authority requires all foreign documents to be certified by a notary.
Grounds for refusal
On what grounds may a registration application be refused?
The national authority may refuse an application which does not meet the formal requirements set out in the law, including especially the Danish Merchant Shipping Act and the Executive Order 1654/2017.
Are there any particular advantages of flying your jurisdiction’s flag?
Denmark has one of the world’s leading shipping industries, despite the country’s relatively small population. The Danish flag is characterised by high quality standards and can provide many competitive advantages compared to other flag states. Denmark is on the Paris Memorandum of Understanding White List, the Tokyo Memorandum of Understanding White List and the United States Coast Guard Qualship 21. Flying the Danish flag thus entails fewer port state controls.
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