Ownership and control of ships

Abstract

Who is a shipowner? Why is it important to identify who is a shipowner? These and other-questions are becoming more and more complex to answer. In the past when the shipowner was also the Master of his vessel the answer was quite simple. However, the twentieth century saw the proliferation of the use of the corporate veil in international shipping. Thus, the ocean-going vessel no longer forms part of the patrimony of the physical person, but the corporate entity replaced the physical person. The advantages of operating under a corporate name are several including inter alia, flexibility and the possibility of expanding business operations in more than one jurisdiction. Chapter 1 looks at the shipowner and the shipping market. The market is highly competitive and diversified. Traditionally, maritime transport has been divided into two main sectors liner shipping and tramp shipping. In modem shipping, the so-called 'specialized shipping' (sometimes called 'industrial shipping') forms the third category. Different shipping markets correspond to different shipowning and organizational practices. The shipowner's operations have diversified and specialized along the years. Chapter 2 explores the ownership of ships from a public perspective. Thus, the attribution of nationality to the corporate entity will be analyzed first, followed by that of the ship. The criterion of ownership features in most ship registration regimes. However, different jurisdiction place different emphasis on the requirement of ownership. Those flag State that adhere to the closed-registry system usually impose strict criteria of ownership. On the other hand open-registers are more lax and, as a rule, the appointing of a resident agent serves as the link between the Administration and the foreign owners. Following the coming into force of the ISM Code the Administration is obligated to have all information regarding the mangers and managing owners of vessels flying its flag. Chapter 3 deals with the notion of the group of companies and the one-ship company. Both corporate notions play a fundamental role in international shipping. The group enable the shipowner to benefit from different fiscal regimes. Furthermore, this mode of business organization offers the shipowner the double advantage of flexibility and facilitation of its operations. On the other hand, it may create difficulties for the claimant when seeking reparation or indemnification from the debtor company with whom he has contracted. Shipping finance plays a fundamental role in tonnage acquisition. Chapter 4 seeks first, to analyze different methods of ship finance, primarily, title and security finance, and secondly to study the bankers' dilemma. Banks and financial institutions often find themselves in a dilemma since, on the one hand, they want to keep as much control as possible over the ship and its owner until repayment is effected and, on the other hand, the least thing they want is to be, exposed to legal risks and operational liabilities over and above the economic risks. Chapter 5 deals with liability, both of the shipowner and the ship operator. The aim of Chapter 5 is to explore the various possibilities in which the shipowner's liability may be engaged. The chapter does not seek to give an exhaustive list of shipowner's liability, but is limited to that liability regulated by international conventions. However, criminal liability of the legal person under English law is discussed in order to bring to the fore some of the problems which arise when trying to impute criminal liability on a legal person. Which model best suits this attribution of liability? Furthermore, not all jurisdictions admit of the possibility of prosecuting a legal person. The juridical notion of shipowner has to be analyzed from two perspectives, first, one needs to identify those persons who qualify as shipowners, and thus subject to the rights and obligations, privileges and immunities arising or granted under national and international legal regimes. Once these persons have been identified, the next question is how to attribute a 'mind and will', of a physical shipowner, to a juridical entity within an organizational structure. Departing from this premise, the goal of this thesis is, first, to study the notion of ownership and control of ships as applied in various areas of shipping law. Secondly, the thesis also seeks to highlight some of the problems related to the use of the corporate veil in shipping and to suggest, where opportune, possible solutions.