registrations which can imply two nationalities; this is prohibited by law.
39 In
essence, in the bareboat charter registration system, the public side of the registry
is suspended and moved to the new flag, but the private side remains in the original
registry. The shipowner collects charter revenue without incurring any operating
expenses; the charterer gains from the use of a ship without owning it; and the flag-in
state benefits from increase in its national fleet size. It is a win-win for all.
Some states have legislation providing for bareboat charter flag-in, but are mute
on the issue of flagging-out. The Australian view is that bareboat chartering in or out
constitutes a new registration altogether. It therefore requires cancellation of the
previous registration. Other states are more relaxed, permitting the original registration to stay open for registration of ownership and mortgages but require them to be
“recorded” in the flag-in registry, which does not have any legal effect.
40
2.3 Ownership and Registration
Ownership of a ship is intimately connected to its registration. As stated earlier,
typically in the closed registry system, registration of a ship is only permissible
where the owner is a national of the flag state or if the owner is a company, it is
incorporated in the flag state with its principal place of business located there. Of
significant importance also is that registration of the owner’s name in the ship’s
registry is prima facie evidence of title or ownership. Registration of ownership is a
matter of domestic law and procedure. In UK law, the requirements for ownership of
a British ship are set out in principal and subordinate legislation.
41 In most common
law jurisdictions, as in the UK, a ship is divided into 64 shares, each of which may be
owned individually or jointly. The concept of shares in a ship is based on
co-ownership or the property law principle of tenancies-in-common.
42 Other jurisdictions have laws under which a ship may be divided into, for example, 24 shares in
Italy and 100 shares such as in Cyprus and Liberia.
43
The link between the registration and ownership of ships is a test of a vessel's
tenacity for claiming nationality. In the opinion of one author, there is wide support
for the notion that registration is the universal test for determining a ship’s nationality.
44 Hence, ownership plays a significant role in the outcome of this test.
39 See UNCLOS Article 92. See also Ademuni-Odeki (1998), p. 129.
40 See Mukherjee (1993), pp. 36–37. It seems civil law jurisdictions are generally more amenable to
parallel registrations of bareboat chartered ships than are common law jurisdictions. Examples are
those of Spain, Italy, Panama. Notably, Liberia and Cyprus also allow such registrations.
41 Merchant Shipping Act 1995, s.1 sets out the prerequisites for registration of a British ship. They
incorporate the revisions made in Part l of the Merchant Shipping Act 1988.
42 Merchant Shipping (Registration of Ships) Regulations 1993, regulation 2(3). See Hill
(1995), p. 2.
43 Gold et al. (2003), p. 154; Coles and Ready (2002), p. 7.
44 Ready (1998), p. 4.
Ship Nationality, Flag States and the Eradication of Substandard Ships:. . .
589
39 In
essence, in the bareboat charter registration system, the public side of the registry
is suspended and moved to the new flag, but the private side remains in the original
registry. The shipowner collects charter revenue without incurring any operating
expenses; the charterer gains from the use of a ship without owning it; and the flag-in
state benefits from increase in its national fleet size. It is a win-win for all.
Some states have legislation providing for bareboat charter flag-in, but are mute
on the issue of flagging-out. The Australian view is that bareboat chartering in or out
constitutes a new registration altogether. It therefore requires cancellation of the
previous registration. Other states are more relaxed, permitting the original registration to stay open for registration of ownership and mortgages but require them to be
“recorded” in the flag-in registry, which does not have any legal effect.
40
2.3 Ownership and Registration
Ownership of a ship is intimately connected to its registration. As stated earlier,
typically in the closed registry system, registration of a ship is only permissible
where the owner is a national of the flag state or if the owner is a company, it is
incorporated in the flag state with its principal place of business located there. Of
significant importance also is that registration of the owner’s name in the ship’s
registry is prima facie evidence of title or ownership. Registration of ownership is a
matter of domestic law and procedure. In UK law, the requirements for ownership of
a British ship are set out in principal and subordinate legislation.
41 In most common
law jurisdictions, as in the UK, a ship is divided into 64 shares, each of which may be
owned individually or jointly. The concept of shares in a ship is based on
co-ownership or the property law principle of tenancies-in-common.
42 Other jurisdictions have laws under which a ship may be divided into, for example, 24 shares in
Italy and 100 shares such as in Cyprus and Liberia.
43
The link between the registration and ownership of ships is a test of a vessel's
tenacity for claiming nationality. In the opinion of one author, there is wide support
for the notion that registration is the universal test for determining a ship’s nationality.
44 Hence, ownership plays a significant role in the outcome of this test.
39 See UNCLOS Article 92. See also Ademuni-Odeki (1998), p. 129.
40 See Mukherjee (1993), pp. 36–37. It seems civil law jurisdictions are generally more amenable to
parallel registrations of bareboat chartered ships than are common law jurisdictions. Examples are
those of Spain, Italy, Panama. Notably, Liberia and Cyprus also allow such registrations.
41 Merchant Shipping Act 1995, s.1 sets out the prerequisites for registration of a British ship. They
incorporate the revisions made in Part l of the Merchant Shipping Act 1988.
42 Merchant Shipping (Registration of Ships) Regulations 1993, regulation 2(3). See Hill
(1995), p. 2.
43 Gold et al. (2003), p. 154; Coles and Ready (2002), p. 7.
44 Ready (1998), p. 4.
Ship Nationality, Flag States and the Eradication of Substandard Ships:. . .
589