The Convenience of a Flag of Convenience – registering your vessels in Vanuatu
By Damian Kelly and Brad Phillips
Key Points
Vanuatu’s shipping registry enables ship owners and financial organisations (such as banks and lenders) to register their vessels or mortgages against registered ships.
The Vanuatu shipping registry functions as a completely open maritime registry.
The registration process is simple and there are a host of benefits that come with registering in Vanuatu
Introduction
Vanuatu is convenient for many reasons: it’s a convenient holiday destination being home to 83 island paradises; it’s a convenient business location having a wide variety of modern corporate and security laws, while lacking any form of income tax; and it’s a convenient flag (for maritime registration), having a fully open shipping registry.
The Vanuatu shipping registry (Registry) has been operating since 1981, having been established by the Maritimes Act (Cap 131) (Act). The registry is maintained in New York by Vanuatu Maritime Services Limited (VMSL), a company operating under contract with the Vanuatu Government as the Maritime Administrator.
The Registry enables ship owners and financial organisations (such as banks and lenders) to register their vessels or mortgages against registered ships.
How do I register my ship?
A variety of ships are eligible for registration, including:
(a) any sea-going vessel of more than 500 net tons engaged in foreign trade;
(b) any yacht or other vessel used exclusively for pleasure, of 50 net tons or over;
(c) vessels on bareboat charter.[1]
While a strict reading of the Act requires vessels to be less than 20 years of age, and owned by citizens of and companies having their registered office in Vanuatu, these requirements are generally waived upon application.[2] Meaning, the Registry functions as a completely open maritime registry.
When making an application for registration, the Registry office requires documents detailing:
(a) the ownership of the vessel;
(b) the surrender or cancellation of any foreign registrations;
(c) the seaworthiness of the vessel;
(d) the Vessel’s name, official number, net tonnage or tonnages and home port; and
(e) the measurements of the Vessel.[3]
Other documents may be required including an oath.[4] Provisional registrations for a period of 1 year may also available in some circumstances.[5]
How do I register/record a mortgage?
The Registry also allows for the recording of a range of security interests attaching to registered vessels. Importantly – a sale, conveyance, hypothecation, mortgage or assignment may not be validly attach against a vessel until the instrument evidencing the transaction is recorded with the Registry.[6] Recordation also gives notice to other parties regarding the legal rights and interests attached to registered vessels.
Interested parties need to be aware that, mortgages must be notarised by a notary public or other officer authorised by law in order to be registered.[7]
A valid mortgage which complies with the requirements of the Act may be designated as a preferred mortgage which constitutes a maritime lien upon the mortgaged vessel in the amount of the outstanding mortgage indebtedness secured.[8] As the name may suggest, a preferred mortgage is afforded priority over competing liens and interests that may arise in relation to the vessel.
Why register in Vanuatu?
Registering a ship or mortgage with the Registry is a simple process, but there a slew of other factors making the Vanuatu Registry convenient, including:
the Registry is open to everyone, and accessible from anywhere in the world;
the Vanuatu flag is positively received globally;
the Registry operates out of New York and the staff are available 24 hours a day, 7 days a week;
the Registry is contracted with several major shipping classification organisations;
the Registry also has deputy commissioners and special agents located in a variety of countries, offering localised assistance;
the Act adopts the general maritime law of the United States, meaning the laws governing registered vessels are clear and aligned with international standards;[9]
Vanuatu is a member state of the International Maritime Organisation (IMO), the United Nations organisation responsible for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships;
Vanuatu law and ships comply with international legal requirements, having also ratified a series of other conventions, including the Safety of Life at Sea Convention, the International Convention for the Prevention of Pollution of Ships, the International Convention on Load Lines, the International Convention on Standards of Training Certification and Watchkeeping for Seafarers and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage;[10] and
most importantly, Registry fees are affordable and registration is time-sensitive.
Conclusion
With the continued growth of international trade throughout the Pacific, Vanuatu’s international shipping registry serves an ever-expanding fleet of ships whilst maintaining high standards for safety. An easy registration process and a host of benefits that come with registering in Vanuatu, means a more convenient flag may be hard to come by.
Stateless ships are afforded no protection in the open seas as freedom of navigation is only afforded to ships who fly under a State’s flag, leading to extensive legal, economical and safety risks for crew and owners. A lender in possession of an unregistered mortgage attached to a ship has no claim of priority against a registered mortgage, maritime lien or previously unregistered mortgage.
For more information on how to register your ship or record your security interest, please do not hesitate to contact us.
[1] Ibid s 17(a) – (c). [2] Ibid s 17(2). [3] Ibid s 20. [4] Ibid s 21. [5] Ibid s 30. [6] Ibid s 50. [7] Ibid s 53 and 55. [8] Ibid s 57. [9]Maritime Act (Cap 131) s 11. [10] http://www.ics-shipping.org/wp-content/uploads/2021/01/Flag-State-Table-2021.pdf
