VII International forum
“Marine Industry of Russia”
Hotel complex
«President-Hotel»
Department of affairs of the President of the Russian Federation

Moscow, 24, B.Yakimanka Str
24-25 May 2017
 
Forum bulletin


More on law and financial services in the field of navigation and freight

Law Services

The most popular law services in the marine industry are:

  • support of carrier vehicle purchase and sale;
  • expertise of contractual documents both applicable and prepared for signing;
  • assistance in tax efficiency and disbursement expenses (ship expenses incurred during port riding);
  • consultation on issues of ship and equipment mortgage;
  • assistance in registration of the ship and relative title;
  • analysis of legal action perspective;
  • legal groundwork of confession and execution of judgment of the foreign courts and arbitration boards;
  • representation in the court.

Legal support of carrier vehicle purchase and sale is not limited to competent paper work. Qualified lawyer will help to select variant of possession economically advantageous not only at the time of the transaction, but even in future considering possible adversary circumstances. When one of jointly owned ship owners receives a claim, the ship cannot be arrested. So, the pattern of possession of a vessel should be carefully orchestrated and estimated from the very beginning.

Registration of the company owing the ship in the offshore-zone (for example, in Gibraltar) will help to reduce or eliminate servicing and property taxes as well as taxes for earnings from shipping and from charter operations. The registration in the offshore zone, being essentially less expensive than the domestic one, serves to optimization of expenses.

Legal support helps to define actions requiring compulsory registration in the Russian International Register of Vessels (RIRV) in accordance with the domestic law (construction of a vessel, its mortgage, change of its name, etc.), and actions which do not require such registration (bare board charter agreements (chartering of a vessel without crew) or management agreement).

Representation in the court is another vast field of rendering law services. As a rule, litigations are related to disputes in the sea law. These can be issues of release of arrested carrier vehicle, litigations on freight agreements, ship-owner protection, maritime incidents (crash, stranding, fire and explosion hazard, rescue and towage, pollution), and, at last, various labor disputes (maim, occupational disease, injury to health, fatal case on duty, etc.).

Where qualified specialists are available, legal firms can represent their clients abroad or help with selection of adviser in the foreign state.

Financial Services

The main financial service rendered to the ship owners is credit financing. Bank or another financial institution can grant credit for ship purchase or repair. Possession of one or more ships or income steadiness for a definite time are often conditions of the first type of crediting. To receive a repair credit, evidences of repair need or coming vessel survey by a classification association should be furnished.

The various purpose credit can be granted against security of the ship; such purposes can be related to the ship operation (unscheduled repair, ship maintenance works) or not. In the latter instance, the credit can be granted to any company subject to availability of credit repayment resources which are not related to the ship operation.

Navigation companies can also be granted a ship purchase refinancing loan.

In addition to crediting, financial institutions render such services as:

  • ship valuation (its commercial value and technical state);
  • management (commercial, technical and investment);
  • insurance;
  • legal support of purchase and sale transactions and execution of vehicle mortgage;
  • project finance;
  • international commerce operations financing;
  • standard banking services (settlement services, currency conversion, forward and futures operations, remote account management, payment cards, etc.).

Situation in Russia

Peculiarities of the domestic legislation cover various operations with carrier vehicles. Thus, in accordance with article 130 of the Civil Code of the Russian Federation, vessels are real property, while in the majority of countries all over the world they are movable property. This directly affects vessel registration requirements in Russia.

In accordance with the same Civil Code, at the arrest of the ship the law of the country of its registration is applied. This contradicts the international convention On unification of criminal jurisdiction rules on running down cases and other incidents related to the navigation and the Bustamante code. Their provisions stipulate the vessel is embargoed and arrested in accordance with the law of the country of the vessel position or the country under which flag the vessel was at the moment of arrest, correspondingly.

Unfortunately, unification of the law is not a priority. So, disputable matters are solved mainly due to the expertise and opportunities of legal advisers.

As for financing and crediting of the industry, these spheres have always been of concern. Thus, ship building crediting suppose 70-80% from the total cost of the carrier vehicle. In the light of the recent crisis, banks prefer to grant such credit with the requirement to sign long-term charter agreements which rates ensure ship recoupment. However it is hard to fulfill such a requirement in the present situation at the freight market. Experts say that as a result of such situation more than half of shipbuilding orders have no financial support and can reliably be withdrawn.

Probably, new financing models (leasing) offered by major domestic banks could change the situation for the better. However, we need time to make a cold evaluation.

 
 
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