Overview of Recent Amendments in the Maritime Industry
By virtue of Act 1 of 2025, amendments (hereinafter referred to as the “Amendments”) have been made to the Merchant Shipping Act, Chapter 234 of the laws of Malta (hereinafter referred to as the “MSA”). These amendments have brought into effect several new changes, including the following:
On the Bareboat Charterer
The Amendments introduce the definition of a bareboat charterer as “a person who leases or sub-leases a ship by means of a contract for a stipulated period of time, during which period such person shall acquire full control and complete possession of the ship, including the right to appoint her master and crew for the duration of the charter, but excluding the right to sell or mortgage the ship.”
Multiple amendments have been made within the MSA, incorporating the bareboat charterer’s obligations into the relevant provisions, especially in connection with provisions on the Safety of Life at Sea and on Masters and Seamen.
On the Ship Finance Charter
Articles 49B and 49C have been added in connection with the finance charter. Rights arising in favor of a lessor of a ship in a finance charter interest may now be secured through registration in that ship’s register, as executed by the finance charterer in favor of the lessor, in accordance with the new Article 49B of the MSA. The written consent of any registered mortgagee is required for the registration of a finance charter instrument. The registration of any finance charter instrument should not affect any mortgage registered over that ship or any share therein, irrespective of whether such mortgage registration is affected prior to or after the registration of a finance charter instrument. Rights of the mortgagee should, in no way, be prejudiced by the registration of a finance charter instrument. It is further clarified that the registration of a finance charter instrument over a ship should not prohibit the registration, amendment, or discharge of any mortgage over that ship.
The term “finance charter” is defined within the Amendments as the “chartering or lease of a ship under terms whereby possession, operation, or control of that ship is given to a bareboat charterer or to a lessee including through a demise or bareboat charter or a similar agreement, the principal purpose and intention of which is to finance the acquisition, operation, administration, or management of that ship.”
Should a finance charterer go bankrupt, the finance charter instrument to which a vessel is subject should not be affected by such bankruptcy if it occurs after the registration date of the finance charter interest. Notwithstanding the fact that the finance charterer, at the commencement of the bankruptcy, may have had the ship in their possession, order, or disposition.
Such finance charter interest should have preference over all other debts, claims, or interests on the said vessel of any other creditor of the bankrupt, or of any curator, trustee, or receiver acting on behalf of any other creditors, save for those claims which would rank in preference to a finance charter interest in accordance with the relevant provisions of the MSA.
The Amendments also provide details regarding the manner in which a finance charter instrument can be amended and for which purpose, as outlined in Article 49C. The purposes listed allow for amendments to increase the amount of capital secured by the finance charter instrument and to extend the finance charter instrument to secure any other obligation that the finance charterer may have in favor of the lessor.
This new finance charter instrument will allow for a financier to be recognized and protected. Once recorded, it should be enforceable erga omnes; however, it will only rank after a debt secured by a registered mortgage.
Mortgage Registration
According to the Amendments, upon the registrar being provided with a mortgage for registration, the registrar should record it in the register and assign an index number of registration to such mortgage.
Additionally, the mortgage or assignment of a mortgage of a Malta-registered ship will only be valid, in respect of such ship, against the mortgagor, their successors and/or assignees, and persons having actual notice thereof until the instrument evidencing such transaction is registered in accordance with the relevant provisions of the MSA.
Moreover, a new Article 45B has been added to the MSA by virtue of the Amendments, stating that the registered details relating to a mortgage may be amended when a change in the name or address of the mortgagor or mortgagee occurs. Such amendments should be carried out by the registrar in the registry of the ship concerned upon a request from the mortgagee, along with evidence supporting the changes to be made.
On the Registration of Mortgages over Ships under Construction
The new provisions include an article specifically on the registration of mortgages over ships under construction, which will operate in all respects as a mortgage. It may be registered jointly by the owners, where ownership vests in more than one owner, together with an indication of their respective proportion of shares in the ship. Such proportions of shares may be amended accordingly in case of changes.
On Digitalisation
Provisions aimed at enhancing digitalisation have also been included, allowing for certain required documents or declarations to be substituted by digital copies.
On the Age of Ships to be Registered
A ship cannot be registered without express permission from the Registrar General if her construction was completed more than twenty (20) years before the commencement of the year in which the application for registration is first made—a decrease of five (5) years from the Act prior to the Amendments taking effect.
On Seafarers’ Rights
The Amendments also provide for additional protection of seafarers in accordance with recent amendments to the Maritime Labour Convention of 2006.
The Amendments cater to certain expenses to be borne by the owner of a Malta-registered ship, such as those arising from an injury sustained in the service of the ship by a seafarer, or in the case of an illness (which did not develop due to their own willful acts or misbehavior). This includes providing the necessary surgical and medical advice, attendance, and medicine, as well as the expenses of the maintenance of the master, seaman, or apprentice until they are cured, die, or are returned to a proper return port. It also includes any period during which the seafarer is unemployed after being cured and before returning to a proper return port, as well as their conveyance to the port. In the case of a seafarer’s death, this will also include expenses, if any, related to the repatriation of the deceased along with burial expenses.
Furthermore, these Amendments ensure the accrual of wages in favor of the seafarers where a judicial sale is to take place, so long as they continue to carry out their duties onboard, until they leave the ship or until the sale is completed.
In Conclusion
In view of the above, it is evident that Malta has long appreciated the maritime industry as one of its economic pillars. Continuous efforts are being made to ensure the industry remains competitive and robust.
Gauci – Maistre Xynou (Legal | Assurance)
147/8 St. Lucia Street, Valletta, VLT 1185, Malta
email:info@gmxlaw.com | website: www.gmxlaw.com
