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CHAPTER 5 Bareboat charter registration

Ship Registration: Law and Practice


Page 62

CHAPTER 5

Bareboat charter registration

Development of the system

5.1 It may seem counterintuitive that, amid fierce competition among flag States for the business of owners to register their vessels in a marketplace effectively unrestrained by nationality requirements, one register might permit and actively promote the subsequent registration of a vessel elsewhere. One of the noteworthy developments in ship registration practice in recent years has been the continued and increasingly widespread use of such a structure – whereby a vessel registered in one State is permitted to fly the flag of a second State for a determinate period under certain conditions. Legitimate objections to such a system include the risk of confusion or legal ambiguity as to the rights of the owner and the charterer at any given time; the possibility of an overlapping jurisdiction by two States; or the risk that registration of the vessel may lapse altogether as a result of the particular rules of one flag State or the other.1 These issues are most stark at the commencement and termination of the arrangement, a moment which is determined by a private contract. This situation generally arises as a result of a bareboat charterparty in terms of which a vessel registered in State A is leased for a fixed period to nationals or corporations of State B who, during the charter period, re-register and operate the vessel under the flag of the latter State.

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