ONBOARD Magazine summer 2019

STANDARD
MATTERS
IT’S NOT JUST THE FISCAL ADVANTAGES ONE SHOULD LOOK AT WHEN
DECIDING ON A FLAG STATE, YOU NEED TO CONSIDER THE POLITICAL
STABILITY AND LONG TERM REPUTATION TOO WORDS: CLAIRE GRIFFITHS
So, the owner is in a dreamy mood
just after supper. He and his wife
are sitting on the terrace watching
their children filling in the white blanks of
their new Flag Ship State colouring books.
“Which flag state shall I choose for our new
yacht?” he asks them. “Mozambique!” cries
the boy. “With the AK-47 and bayonet!”
“I like Bhutan with the dragon,” says his
daughter “Look! He’s lovely!” His wife smiles,
“Maybe you should get some sound advice.
It might actually matter quite a bit.”
Wise words from the Mrs. Because the
flag that flutters on the back of a yacht
matters. A lot.
To explain the pros and maybe cons of
various flag states ONBOARD talks to some
flag representatives and law firms dealing
with private and commercial superyacht
activities.
CHOOSING A FLAG STATE
Binta Jallow, from the BVIs says, “A yacht
owner looking to register his yacht has
as many options as anyone wishing to
buy a yacht. Therefore some thought and
research has to be carried out by the owner
or their representatives before he decides
on a flag that would suit him. It is usual
practice to consult a legal professional for
advice.” Some of the questions Jallow hopes
the expert would ask include: Where does
the owner reside? The EU has some very
complex taxation rules. Where would the
owner want to operate the vessel? The US
Coast Guard has rules that are different
from other international requirements.
However, if operating only in the Caribbean
then there are not many challenges. Is the
vessel for pleasure or commercial use?
What nationality are the crew? How is the
boat financed? Will there be a mortgage on
the vessel? Where was the yacht built, by
whom, when and where was it delivered?
It’s important to choose a registry with a
good reputation. Choosing a registry with
a poor reputation or one targeted by Port
States could have a detrimental effect on
the smooth running of the vessel. Dr Silvana
Zammit Partner for Global Property, Yachts
and Jets at Chetcuti Cauchi Advocates
explains, “Yacht owners need to choose
a flag registry that is safe and secure,
both economically and politically. Stability
is key. Just view the MoU White list, you’ll
see that jurisdictions such as Malta and
the UK are two of the most sought after
registries, with Malta being the largest in
Europe. And remember that a poor record
will inevitably affect the decisions of the
future lenders and underwriters.”
“One must consider the political stability
and reputation of the registry. Owners
should find out where disputes can be
settled and under what jurisdiction.”
Advises Jallow, “The choice of the registry
will come to the fore only when the yacht
encounters disputes and problems. Will
the yacht get Consular access in distant
foreign ports? Will the yacht get naval
protection in piracy and strife prone areas?
Will the yacht get security information
from the flag state? These are some of the
questions that a yacht owner must ask
before deciding on a suitable ship register.”
Once the yacht owner decides on what
is important for him/her then the relative
merits of the flags can be compared. Mag.
Virna Ayala echoes this advice: “Choose
a ship registry that offers security,
transparency and rapidity to owners.
Where you would be sure all your rights
will be respected because there is legal
security and a real legal system under
the flag and with courts specialised in
maritime law. This is fundamental in your
flag choice.”
PRIVATE OR COMMERCIAL?
Should it run as a private or commercial
vessel is a simpler question to answer:
Explains Jallow, “There are very strict
112 | SUMMER 2019 | ONBOARD