Flag and Registration of Vessels and Mortgages on Vessels

Transcription

1 Part II. Flag and Registration of Vessels and Mortgages on Vessels A. Flag and registration of vessels 1. SOURCES OF LAW AND THE PRINCIPAL RULES 1.1. Restrictions as to nationality and domicile of owners The law of Portugal on the flag vessels and mortgages, is contained in the Commercial Code ( Co digo Comercial ). The law relating to registration is found in the Registration Commercial Act (Decree law , dated 14 November 1959) and the ( Regulamento Geral das Capitanias ) (a maritime registration act contained in Decree law 265/72 dated 31 July 1972). Particular reference is made in Part E below to the Madeira International Register ( Registo Internacional de Navios da Madeira known as MAR ), which is an international dual-registration system organised in the Madeira Islands. As a general rule, only Portuguese owned vessels may be registered in Portugal. This contribution deals only with vessels registered in Portugal and not with small vessels or fishing vessels to which different rules apply. Portuguese law is required to be applied to Portuguese flag vessels and, as a matter of conflict of laws, this extends to Portuguese law on such matters as ownership, liens and mortgages, crew, environmental protection, salvage and assistance, general average and so on. It would be contrary to EC Law for Portugal to discriminate against other EC vessels and, accordingly, there is no such discrimination under Portuguese law Links between registration and flag As mentioned above, there is a direct link between registration and flag namely, that a vessel registered in Portugal must fly the Portuguese flag. There is only one exception, which is that it is permitted to register a vessel in Portugal on a bareboat-charter basis in cases where the ownership is registered abroad and so only the charterer is connected with Portuguese jurisdiction. In such a case, where the bareboat-charter is registered with the Portuguese Registrar of Ships the vessel may also fly the Portuguese flag in spite of the fact that her ownership is registered abroad. In such cases, the system of dual nationality is permitted. It is not possible to exclude any part of the vessel from registration since the vessel is regarded as a unit even when she is only bareboat-chartered or waiting to Suppl. 35 (December 2009) Portugal Part II 1

2 MANUEL P. BARROCAS be built or still under construction. However, a Portuguese flag vessel may be owned by a foreign owner in the same way as a foreign flag vessel may be owned by a Portuguese shipowner Entitlement to flag in and flag out A Portuguese shipowner is no longer obliged to register a vessel under Portuguese flag. As stated above, bareboat-charter registration is permitted under Portuguese law in relation to foreign owned, vessels. The inverse situation (namely the registration of the ownership in Portugal and the bareboat-charter abroad), is a matter on which Portuguese law is irrelevant. Portuguese law does not apply on such a point and ignores the registration of the bareboat-charter abroad. MAR provides a special legal regime, which is dealt with below. Every vessel registered with MAR must fly the Portuguese flag. MAR will accept applications from foreign shipowners registered with the Madeira Free-Trade Zone and from shipowners located outside the Zone. 2. MAIN FEATURES OF THE REGISTER 2.1. Location and type of register The registration of a merchant vessel in Portugal requires two steps: (i) registration with the Harbour Master ( Capitania ); (ii) registration with the Registrar ( Conservato ria do Registo Comercia ) in the same area as the Harbour Master is located. Registration with the Harbour Master relates to title. Besides the identification of the applicant and the description of the vessel s particulars, as mentioned below, it is required that a technical certificate is first issued by the regulatory authority, namely the General Inspection of Vessels Authority ( Inspecçao-Geral de Navios ). A certificate of survey is needed both for a new building (first registration) and for a second-hand vessel seeking registration in Portugal. The main steps required to register a vessel in Portugal are therefore: (i) performance of survey ( vistoria de registo ) by the General Inspection of Vessels Authority); (ii) registration with the Harbour Master; (iii) completion of the commercial registration with the Registrar. Portugal Part II 2 Suppl. 35 (December 2009)

3 PORTUGAL Registration may be permanent or provisional. Registration on the permanent register is the normal registration and a vessel is treated as permanently registered only after all formal requirements have been completed. Provisional registration, on the other hand, constitutes an incomplete form of registration which is effected if any requirement for permanent registration has not been fulfilled or the procedure for permanent registration has not been properly complied with, (for example, if a document submitted is not sufficiently clear about the identification of the applicant or the vessel). Since registration is a very important formality, the law is not intended to jeopardise the interests of the applicant and so it allows registration and treats it as correct and complete, but only for a period of six months as from the issue of the provisional registration certificate, on the condition that the applicant completes the registration within the six month period. If this is not done, the registration is automatically terminated. In any circumstances, permanent registration is treated valid and effective as from the date and time at which the application for registration is submitted to the Commercial Registrar. Therefore, once registration is completed and permanent, it is effective form the date and time that the application was filed. Another important procedure that can be used (but is not mandatory) concerns the entitlement of a future owner of a vessel to secure priority of right of registration of the vessel by applying for provisional registration based only on a statement issued by the existing owner authorizing registration in such circumstances in the expectation of transfer of title. As a result of this type of provisional registration, which is also valid for six months, the future owner is sure, before having to take any risk resulting from the transfer of title, that no other permanent registration by a third party will be entered on the register before his application for the permanent registration of the vessel. If this procedure is followed, the future owner who has submitted an application for provisional registration is preferred to any other third party whose title is not previously registered. During that six month period and whilst the title has not been transferred there are no substantive effects. The only legal effect produced is the priority right of registration if and when the permanent registration is completed Legal effects of registration are dealt with below in Chapter Types of vessels eligible for registration The law provides for the categories of vessels as follows: (i) merchant vessels; (ii) fishing vessels; (iii) pleasure craft; Suppl. 35 (December 2009) Portugal Part II 3

4 MANUEL P. BARROCAS (iv) tugs; (v) auxiliary vessels. A vessel is defined as a floating unit which is or can be used for transportation or other activity on water. The definition of a merchant vessel is limited to vessels suitable for a commercial sea-going or inland transport of people and goods. Only merchant vessels are eligible to be registered with the Registrar. Vessels which do not come within that definition are therefore not subject to registration with the Registrar and nor are floating units such as dumb-barges, pile laying barges, crane barges, floating docks, and other similar vessels. Merchant vessels may be sub-divided as follows: (i) vessels engaged in local traffic; (ii) vessels engaged in domestic or international coastal navigation; (iii) vessels engaged in cabotage; (iv) sea-going vessels Types of owners eligible for registration The categories of persons qualified to be owners of a Portuguese vessel comprise individuals, companies or other legal entities. The latter category comprises both companies and other legal entities set up in Portugal or abroad. A vessel cannot be registered in such a way that different parts of the vessel are owned by different people. The vessel is identified and described in the register as a unit. More than one individual company or other legal entity may own a vessel but all are co-owners of the whole ship, not of distinct shares Particulars recorded There are no special requirements to take into account as regards the different categories of merchant vessels which are capable of registration. Although non-merchant vessels do not have to be registered with the Registrar they must be registered with the Harbour Master, unless (as previously mentioned) they are small fishing vessels, auxiliary vessels already kept on board a registrable vessel or small vessels which are not self-propelled for sporting use or based on beaches for leisure activities and the like. They are subject to licensing by the Harbour Master despite not being registered with him The following merchant vessels are registrable with the Registrar: (i) new buildings vessels which were built in Portugal; (ii) new buildings vessels built abroad or second-hand vessels previously registered abroad which the owner decides to register in Portugal; (iii) vessels under construction or to be built in Portugal. Portugal Part II 4 Suppl. 35 (December 2009)

5 PORTUGAL The Particulars of a merchant vessel which are registered with the Registrar are: (i) particulars concerning the acquisition of title; and the following facts in relation to vessels already registered in Portugal: (ii) concerning the acquisition, modification or termination of the usufruct over a vessel; (iii) contracts for construction of a vessel to be registered in Portugal or contracts for substantial repair of a vessel registered in Portugal; (iv) mortgages and their modification and termination as well as their assignment or the assignment of their priority; (v) pledge over a mortgage (as a matter of fact, under Portuguese law any material right may be subject to pledge. A mortgage right is, therefore, able to be pledged); (vi) attachment through a court order of a vessel and arrest by a mortgagee; (vii) assignment of claims secured by a mortgage and the subrogation of such claims; (viii) court actions intended to vest, modify or terminate any of the rights mentioned above The sanctions for lack of registration of the particulars above are: (i) the vessel may not initiate any voyage; (ii) rights and any other beneficial interests cannot be registered, even though they are valid between the parties directly involved (for instance between the buyer and the seller of a vessel in a bill of sale or the shipbuilder and the employer of a vessel in a construction contract of a vessel), may not be enforceable as against third parties. Therefore, the transfer of title resulting from a bill of sale of a vessel, though valid between the seller and the buyer, may not be enforceable as against third parties; (iii) a mortgage is not valid even between the parties (the mortgagor and the mortgagee) if the vessel is not registered. A fortiori, it is also not valid as against third parties The Registry of Vessels covers all Portuguese territories, including Madeira and the Azores. A merchant vessel subject to registration with the Registrar must have been registered already with the Harbour Master. The local Registrar with whom the vessel must be registered is the one corresponding to the Harbour Master with which the vessel is enrolled. The Harbour Masters currently correspond to specific jurisdiction of the largest Portuguese ports. Suppl. 35 (December 2009) Portugal Part II 5

6 MANUEL P. BARROCAS 2.5. Errors and changes in the register An invalid registration may be of two types: (i) null and void; or (ii) voidable. A registration (although it may have been recorded in the books of a Registrar) is null and void where it has been made through a Registrar different from that corresponding to the territorial jurisdiction where the vessel is registered with the Harbour Master. In other words, a vessel must be registered, first of all, with a Harbour Master and, after such registration is completed, with the Registrar corresponding to the territorial jurisdiction where the Harbour Master is located. If the registration is made through a different Registrar it does not exist for legal purposes and it is considered null and void. Another cause of nullity of registration is where the registration is not signed by the Registrar even though it has been recorded in the books. By contrast, registration is only voidable inter alia: (i) where it has been made but was supported by false documents or based on documents which are not sufficient proof of the facts subject to registration; (ii) where it has omissions and other defects that render uncertain the persons benefiting from the registration and the object of registration. A voidable registration operates as a valid registration and accomplishes the purpose for which the register as organised until the invalidity has been judicially ascertained and declared. Once judicially declared, the nullity operates retrospectively except as concerns parties who have acquired in good faith and for value rights based on the registration and have registered such rights before the action to declare the registration void has been filed and registered. (An action with the intention of obtaining a declaration of nullity of registration must be registered). Other small errors do not affect registration and do not produce important effects. They are corrected ex officio or upon request of the interested parties. 3. DOCUMENTATION REQUIRED TO EFFECT REGISTRATION 3.1. Generally There is a distinction between the documents required for registration with the Harbour Master and the Registrar. Portugal Part II 6 Suppl. 35 (December 2009)

7 PORTUGAL Documents required for registration with the Harbour Master The following are required for registration with the Harbour Master: (i) permission by governmental authority (whenever legally required) for the building or acquisition of the vessel; (ii) original document of title (the building contract for a new building or the bill of sale for a second-half vessel) or a notarised copy; (iii) licensing document (if required) issued by the Harbour Master for the construction of the vessel; (iv) tonnage certificate; (v) certificate evidencing call sign; (vi) certificate issued by the General Inspection of Vessels Authority) concerning approval of technical and safety requirements of the vessel; (vii) copy of the by-laws of the applicant (if it is a company); (viii) certificate evidencing the payment of customs duties and VAT if the vessel has been imported from abroad. The principal facts which must be supplied for registration with the Harbour Master are: (i) name of the owner in accordance with the document evidencing title; (ii) the document evidencing title; (iii) name of the vessel, classification, place and date of construction, tonnage measurement, method of propulsion; (iv) date of survey ( vistoria de registo ) by the General Inspection of Vessels Authority which certifies that the vessel meets all the technical and safety requirements including anti-pollution measures Documents required for registration with the Registrar Documents required for registration with the Registrar are as follows: (i) Documents relating to the registration of the vessel ( matricula ): a) new building (first registration): (1) document evidencing acquisition (bill of sale) or construction (the building contract); (2) document issued by the General Inspection of Vessels Authority relating to the technical survey; (3) document evidencing title registration with the Harbour Master; and (4) application comprising the vessel s name and official number, tonnage measurement and other principal measurements, the main characteristics of the engine, place and date of construction of the engine and the hull, the identification signs in Suppl. 35 (December 2009) Portugal Part II 7

8 MANUEL P. BARROCAS (ii) accordance with the international conventions, name and domicile of the owner together with the insurance certificate and classification certificate (in both cases, if any). b) in the case of vessels under construction or to be built, the building contract. Once construction is completed the vessel is registered following the procedure and based on the documentation mentioned above for a new building. c) ex officio registration of a vessel: whenever an applicant intends to register a mortgage, attachment or arrest ordered by a court over an unregistered vessel, the Registrar promotes an ex officio registration based on a certificate as to registration of title issued by the Harbour Master and the document evidencing the mortgage or the court attachment or arrest order. in the case of a vessel previously registered in another country, whether title results from acquisition under a bill of sale or, on construction, a building contract, or in the case of a mortgage taken abroad, registration is effected by presenting the same documentation as mentioned in (i) above. Usually these applications are presented to a Portuguese consulate abroad who directs the documentation concerned to the Registrar in Portugal. Portuguese law does not require a deletion certificate in respect of registration in another country New buildings The major differences between the registration of a new vessel and a secondhand vessel previously registered in another country concern the document evidencing the tide. As to a new building vessel, the document evidencing tide is a till of sale or the building contract and a certificate showing that the vessel and her owner have previously been registered with the Harbour Master who is normally die Harbour Master of the area where the owner is based. In the case of purchase of a vessel from a foreign owner, it will be in the form of a certificate evidencing the registration of the vessel with die Harbour Master and the bill of sale. In both cases (registration of a new building and a second-hand vessel) die Harbour Master may not issue the certificate of registration unless the owner has been shown to have obtained from the General Inspection of Vessels Authority a certificate showing that the vessel meets all die technical requirements to be registered as a Portuguese vessel including safety, environmental protection and suitable conditions for the crew After a court sale First of all, the judgment must be tested by a Portuguese Court of Appeal and only after having obtained the exequatur may the vessel be registered with the Portugal Part II 8 Suppl. 35 (December 2009)

9 PORTUGAL Portuguese Registrar, having supplied the other documentation mentioned in (i) above. However, the EC Regulation 44/2001 should be taken into account where applicable. 4. DEREGISTRATION 4.1. After a private sale Deregistration is required when a sale results in a change of flag, namely whenever die vessel ceases to fly the Portuguese flag. The Registrar may not deregister a vessel if the Harbour Master concerned does not first issue a deletion certificate regarding the registration of the vessel with the Harbour Master s office. As a matter of fact and as indicated above, a vessel in Portugal is subject to a dual registration system, with both the Harbour Master and the Registrar. The bill of sale representing the change of flag must be presented at the Harbour Master s office or at a Portuguese consulate abroad where an official document (so-called auto de perda de nacionalidade) is produced in which is stated the date of termination of Portuguese registration. After that, the Harbour Master issues a deletion certificate which must be submitted with an application to the Registrar where the vessel is registered. Only after this procedure is completed, through the issue by the Registrar of a second deletion certificate (the first one having been given by the Harbour Master), is the procedure for the deregistration completed and the date of termination of Portuguese flag indicated in the auto de perda de nacionalidade mentioned above effective as against third parties After a total loss The law considers a total loss to have occurred for the purposes of deregistration in the following situations: (i) demolition of the vessel instituted by the owner and approved by the Harbour Master; (ii) dismantling ordered by the Harbour Master due to unseaworthiness which cannot be made good or if the vessel represents a peril or hindrance to navigation; (iii) any event that implies an actual total loss of the vessel; (iv) constructive total loss due to disappearance more than two years as from the date the vessel left the port where she is registered Demolition can only be effected once prior authorization has been given by the Harbour Master where the vessel is registered. The request should be directly submitted to him or through a Portuguese consulate abroad. The authorization for demolition is only given after the vessel has been inspected Suppl. 35 (December 2009) Portugal Part II 9

10 MANUEL P. BARROCAS and the registered mortgagees and unknown claimants having a lien or other claims which may be enforced over the vessel under Portuguese law have been notified to show and prove their rights within a stated time. Unknown claimants are notified by public advertisement. If any claimant opposes the application for demolition presented by the owner, the Harbour Master must decide if the authorization for demolition should be given or refused. In cases where authorization is given, the Harbour Master evaluates the vessel and notifies the shipowner to deposit an amount equal to the valuation in a bank. Afterwards, the Harbour Master s file is sent to the court where a judge decides the claims and their priority to be paid out of the deposit. The procedure concerning protection of claimants in case of dismantling is similar to that explained above Consent of mortgagees Mortgages are only registered with the Registrar and not with the Harbour Master. The deregistration of the vessel with the Registar is never effected without all the mortgagees having authorized the deregistration. If the vessel is demolished or dismantled as set out in 4.2. the mortgages are always notified by the Harbour Master to demonstrate their entitlement and, if applicable, the rights of the mortgagees are enforced in court as set out in 4.2. above Governmental consents In principle, there is no need to obtain governmental consent to deregister a vessel. However, in cases where the government has granted special facilities (financial subsidies, for example) to the shipowner to build or buy the vessel the deregistration may not be effected without prior permission from the government. 5. LEGAL EFFECT OF REGISTRATION 5.1. Generally The registration of a vessel with the Registrar creates a public record of the qualification of a vessel as a merchant vessel, the owner, registrable charges and encumbrances, the vessel s name and her principal characteristics. Registration with the Harbour Master is an essential prerequisite for the commercial registration with the Registrar and concerns technical matters relating to the vessel and her legal ability to operate as regards commercial and navigational qualifications. As mentioned above, registration with the Harbour Master does Portugal Part II 10 Suppl. 35 (December 2009)

11 PORTUGAL not include registration of mortgages or other charges. Therefore, only the legal nature and effects of registration with the Registrar are covered here The following legal effects of registration aspects should be noted: (i) acts legally subject to registration are valid and effective between the parties concerned irrespective of registration (for instance, the transfer of tide pursuant to a bill of sale is effective between the seller and the buyer whenever the bill of sale is completed). Registration is not required to show the transfer of title from one party to the other. An exception to this rule is that mortgages are not effective even between the mortgagor and the mortgagee if not duly registered see below paragraph (ii) such acts are not effective as against third parties if and whilst they are not registered, namely in the example above, the bill of sale of a vessel is effective between the parties, but the buyer may not prove as against third parties that he is the new owner and the seller may not prove against third parties that he is no longer the owner unless the bill of sale has been registered Mortgages benefit from a special regime in relation to transfer of title resulting from a bill of sale or other registrable act, as a mortgage is not effective (even between the mortgagor and the mortgagee) if and whilst registration has not been completed. As mentioned above, the presentation of an application for registration of a mortgage to the Registrar is the relevant act to make effective and establish the time when the mortgage becomes effective Liens other than mortgages are not registrable. 6. INTERNATIONAL CONVENTIONS The Conventions for the Unification of Certain Rules Relating to Maritime Liens and Mortgages signed in Brussels on 10 April 1926 was signed by Portugal in 1931 and the right provided in the last paragraph of Article 9 was not reserved. Maritime claims not governed by this Convention are governed by Article 574 et seq. of the Commercial Code. Portugal has not yet signed the 1967 Convention. As to pollution the following conventions and agreements (inter alia) have been signed by Portugal: (i) the International Convention on High Seas in Cases of Oil Pollution Casualties 1992; (ii) the International Convention for the Prevention of Pollution from Vessels (MARPOL) 1973 and its 1992 Protocol; (iii) the Oilpol 54/62 Convention; Suppl. 35 (December 2009) Portugal Part II 11

12 MANUEL P. BARROCAS (iv) the International Fund for Compensation for Oil Pollution Damage (the 1971 Fund Convention) and its Protocol of 1992; (v) the Tanker Owners Voluntary Liability Agreement for Oil Pollution so-called (TOVALOP); (vi) the Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution (CRISTAL). Every international convention mentioned above has been implemented in Portugal by statute. The owner and the master of a Portuguese vessel commit an infringement if, bearing in mind the nature of the service for which the vessel is in port, the vessel is unfit to sail without serious danger to human life. Charterers and managers who have directly or indirectly taken on the responsibility of the owner as to the vessel s fitness may also commit this infringement. 7. LAW APPLICABLE TO SAFETY AND OPERATION OF REGISTERED VESSELS 7.1. International conventions Portugal has signed and ratified the major international conventions including the International Labour Organisation s conventions. The following conventions, inter alia, are in force in Portugal: (i) International Conventions for Safety of Life at Sea 1960 and 1974; (ii) The European Agreement on the organization of working time of seafarers, resulting of the EC Directive 1999/95/CE and implemented by the Decree Law 146/2003; (iii) The 1979 International Convention on Maritime Search and Rescue and the EC Directive 95/21/CE relative to marine safety prevention of pollution and conditions on board of vessels; (iv) The employment of seafarers on Portuguese flag vessels is governed by the Decree Law 280/2001 of 23 October which implemented the EC legislation on the matter, namely, the EC Directive 98/35/CE of 25 May 1998 and the 95 amendment to the STCW Convention General 7.2. National laws and regulations The general law of employment to a large extent applies to seafarers but there are additional provisions applicable to seafarers taking into account the special conditions of work on board a vessel. A number of collective agreements between unions and employers supplement the law. Portugal Part II 12 Suppl. 35 (December 2009)

13 PORTUGAL Number of officers and crew The Director-General of Seafarers of the Department of Transport is the regulatory authority that establishes the number and level of certification of the crew of a vessel (including officers, doctors, cooks and others). A minimum number of crew members is specified by the regulations and depends on the type of vessel, its size and area of operation bearing in mind the safety of the vessel, crew, cargo and environment. The same regulatory authority may exceptionally authorize a vessel to operate without meeting the minimum crew requirements provided that there are justified reasons and there is no danger to the safety of the vessel. The owner of a vessel is liable to fines if the vessel goes or attempts to go to sea undermanned. The vessel may also be detained at any time. The regulatory authority may issue a prior and non-binding opinion on the minimum crew of a vessel upon application. In any case, both officers and crew members must be duly recorded and have a valid licence approved by the respective Harbour Master in Portugal which allows them to sail a Portuguese flag vessel Nationality of officers and crew and immigration laws to be observed when hiring foreigners Without prejudice to the European Community rules and other bilateral conventions between Portugal and other countries all officers and crew members of a Portuguese flag vessel must be Portuguese nationals. There are exceptional cases in which foreigners may be hired to become officers or crew of a Portuguese flag vessel. However, the Captain and the Mate must always be Portuguese citizens. Those exceptional cases must be duly justified and authorized by the relevant governmental regulatory authority (IMP Instituto Marítimo Portuário ). Other exceptional circumstances which do not require prior permission are those in which there is a need to complete the crew when abroad due to illness of existing crew members or other force majeure situations. However, such contracts must terminate as soon as the vessel calls a Portuguese port where the temporary crew members can be replaced by Portuguese nationals. The EC rules about this matter are laid down in the Directive 89/48/EEC which was implemented in Portugal by Decree-Law 289/91 dated 10 August Whenever a foreigner is authorized to become an officer or a crew member on a permanent basis he must obtain a work permit from the Immigration Office or a Portuguese Consulate abroad. A written employment agreement made between the shipowner or substitute and the seaman is required as well as any other formalities indicated by the authorities concerned. Suppl. 35 (December 2009) Portugal Part II 13

14 MANUEL P. BARROCAS Certificates of masters and officers The certification of masters and officers is governed by law and depends on the vessel concerned. This is considered in practice on a case by case basis Rules in respect of minimum wages, shore leave, social security and insurance Minimum wages, hire conditions, leave, termination of employment contracts and other matters relating to employment are defined in two statutes (a general act on contracts of employment and a specific act which governs seamen s contracts of employment) and in collective agreements with the shipowners concerned. It would take too long to discuss the most important aspects of the regime here, so prior consultation with an expert is recommended. Social security relations are the same as for any other worker in Portugal. The employer is bound to pay 24.5 per cent of the worker s salary (including other possible remunerations and allowances) in social security and the employee pays 11 per cent of the same amount. The employer must retain at source the employee s contributions. Workplace accidents and industrial illness are not covered by social security. Compensation and other legal consequences resulting from workplace accidents and illness arising from the particular conditions under which the work is performed must be insured against. Portugal has signed several conventions on social security with other countries which govern common rules in respect of nationals working in other countries which are also parties to the convention concerned. They should be taken into account when considering the intercommunication of benefits and obligations. The International Convention for the Safety of Life at Sea (SOLAS) 1974 was signed by Portugal in 1983 as well as the 1988 Amendments. B. Dual registration 8. PROCEDURE FOR FLAGGING IN 8.1. Generally Any merchant vessel may fly the Portuguese flag even though it remains registered in another country. Such registration is only allowed on a temporary basis by the government if a Portuguese registered shipowner takes a foreign flag vessel on bareboat-charter, which grants him to an option to purchase the vessel. Portugal Part II 14 Suppl. 35 (December 2009)

15 PORTUGAL 8.2. Time restrictions Permission is given for a limited term which shall not exceed five years. The period may be renewed by the government once or if necessary more than once Registration Vessels benefiting from registration in Portugal under the conditions described in this chapter are subject to the same technical requirements as any other Portuguese vessel. Therefore, there is no difference between a vessel having principal registration in Portugal and a vessel having only a second register in Portugal (see the respective requirements in the chapters concerned) Documentation The application for dual registration in Portugal is addressed to the Ministry of Sea accompanied by the following documents: (i) original or certified copy of the bareboat-charter duly translated into Portuguese; (ii) a memorandum describing the advantages for the Portuguese economy and for the applicant of dual registration in Portugal; (iii) a statement duly signed by the shipowner in which the dual registration in Portugal is authorised; (iv) a statement by the competent authority of the country in which the principal registration is made authorising the dual registration in Portugal; (v) a certificate proving ownership and registration of the vessel in the country in which the principal registration is made and the mortgages and other charges recorded therein; (vi) a copy of the camber s certificate; (vii) current copies of the certificates of class and seaworthiness Application for registration The vessel herself is registered with the Harbour Master only and not with the Vessels Registrar. The latter is, however, required to register the bareboat-charter if the shipowner is registered as a Portuguese company. The application for registration must contain (i) the owner s name and the nationality and the name of the register in which principal registration is made; (ii) the Portuguese charterer s name; and (iii) the term of validity of the temporary registration in Portugal established by the Government. Suppl. 35 (December 2009) Portugal Part II 15

16 MANUEL P. BARROCAS 9. PROCEDURE FOR FLAGGING OUT There is no law covering this matter in Portugal. Therefore, a Portuguese flag vessel which is flagged out on the basis of a bareboat-charter is acknowledged in Portugal as a Portuguese vessel only, which means that the second registration abroad is not valid in Portugal. C. Mortgages on vessels 10. SOURCES OF LAW Sources of the law and general characterisation of mortgages Under Portuguese law the so-called hipoteca which we can, for practical reasons, compare to the concept of mortgage does not, however, have the same nature or, of course, the same legal regime of the mortgage under anglo-saxon law. Hipoteca is a security traditionally connected with buildings and other immovables in general, as they are registerable assets, so the legal regime of hipoteca is substantially based on the registration of buildings either regarding the effectiveness of the security (because an hipoteca, although created by contract between the parties, if it is not registered, has no legal effect even between the parties concerned) or as to the priority of claims once duly registered A pledge concerns only movable assets and receivables and is not subject to registration. There are three types of movable assets which are mandatorily subject to registration with a specific Registrar and for this reason the security which may be created over them is an hipoteca and not a pledge. They are: vessels, aircraft and cars. As a matter of fact, the law puts upon an equal footing immovable and movable objects which are subject to registration. A security over a vessel takes the form of an hipoteca The legal definition of the hipoteca is given by Article 686 of Civil Code as follows: a security which confers on the claimant the right to be paid according to the proceeds of the forced sale of certain immovables or similar things owned by the debtor or a third party (who has given security over its own asset to secure the payment of the debt of a third party) with priority over other claimants except those claimants benefiting from a privile gio credito rio (lien)or a mortgage ranking prior in time to the legislation of his mortgage. It is the explanation and the development of this definition as it concerns a vessel that will be dealt with in this chapter. Portugal Part II 16 Suppl. 35 (December 2009)

17 PORTUGAL A mortgagee ( credor hipoteca rio ) is not deemed to be the owner of the vessel nor does the mortgagor cease to be the owner of the vessel under a hipoteca. They are deemed only as a secured claimant and a debtor respectively. Furthermore, the mortgagee himself is not entitled to take possession of and to sell the vessel when enforcing the hipoteca. He must do it through the court only. A clause providing for the possibility of the mortgagee acquiring title over the mortgaged asset when the mortgagor does not fulfil its obligations is null and void (Article 694 of the Civil Code). However, the mortgagee is entitled to ask to acquire title over the mortgaged asset during the court proceedings of enforcement of the mortgage. Also null and void is a clause preventing the mortgagor from selling the mortgaged vessel, although it is valid for the purposes of establishing that if transfer of title occurs the debt secured by the mortgage matures and becomes due at once (Article 695 of the Civil Code). The mortgagee is also entitled to arrest the vessel as a preparatory measure to the enforcement of the security, if his claim is one of those maritime claims allowing the arrest (see Part I. Arrest of Vessels in Portugal) Different types of vessel mortgages There are three types of vessel mortgages differentiated by the source of their creation: (i) created by agreement between the claimant and the debtor; (ii) created by law; (iii) resulting from the adjudication of a court. It is the first one, namely, that created by mutual agreement between the claimant and the debtor, which is to be examined here. As a matter of fact, a mortgage created by law covers situations only where the state is a claimant for tax debts and other special credits and a limited number of other creditors who are not worth mentioning as they are not connected with maritime law and commercial law in general. However, a mortgage as a consequence of the adjudication of a court should be mentioned in particular. In this case, there is no mortgage created by agreement of the parties, but only a judgment charging a debtor to pay to the plaintiff. The latter, based on such a judgment, is entitled to register by his own election a mortgage over immovable or similar assets (including vessels, as seen above) to secure his claim. This interim remedy has a very limited use in maritime law either due to the pre-existence of a mortgage created by agreement which is often granted in connection with claims arising out of loan agreements or guarantee facility agreements entered into by the shipowner and the mortgagee or due to the Suppl. 35 (December 2009) Portugal Part II 17

18 MANUEL P. BARROCAS possibility of obtaining an arrest over the vessel to secure maritime claims. As a matter of fact, the arrest (even though it is not similar in nature to a mortgage) has the same interim effect to the kind of mortgage resulting from the adjudication of a court Applicable international conventions Portugal is a party to the 1926 Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages and is not a party to the 1967 Convention on the same subject Requirements for the creation of a valid charge As mentioned above, the registration of the mortgage is a legal condition precedent for the creation of an effective mortgage either between the mortgagor and the mortgagee or as against third parties. An unregistered mortgage is not effective. Unregistered covenants relating to the terms and conditions or the effectiveness of the mortgage which are not registered with the mortgage itself may not be invoked either between the parties or against third parties. The date of registration of a mortgage is the relevant date to establish priority when there is more than one mortgage over the vessel. The date of creation of the mortgage is irrelevant to priority. If the mortgage may not be definitively registered due to the lack of any particular data or requirement it is not (in principle) rejected, but registration is made on a provisional basis which is valid for six months. Within this time the applicant must complete registration. If registration is not completed within that time, the owner forfeits registration and it is considered as never having been applied for. On the other hand, if registration is completed within the six months time limit it is deemed to have been fully completed and it is effective for every purpose as of the date of presentation of the initial application for registration. 11. MAIN FEATURES OF THE REGISTER Description The mortgage over a vessel registered in a separate register of the vessel which is dealt with in Section A. above. The mortgage registration is effected only with the Registrar and not with the Harbour Master and is always related to the vessel s register. The registration of the mortgage requires, in principle, that the vessel is already registered. If not, the mortgagee is entitled to apply for the vessel s registration simultaneously with that of the mortgage. Portugal Part II 18 Suppl. 35 (December 2009)

19 PORTUGAL The certificate of registry carried on board of a Portuguese flag vessel may or may not contain the register of mortgages and it is not a document of title which may transfer title. It may not be pledged either, although the right to mortgage may be pledged. A mortgagee having a right over an immovable or similar asset, including a vessel, is entitled to pledge his right to mortgage whilst carrying on being the mortgagee. As a matter of fact, under Portuguese law, a receivable is a right subject to pledge if so desired by the respective holder wishing to grant it as security for payment in favour of a third party to who the former owes money. In sum, the mortgage itself is security over a vessel and, therefore, operates in rem. The asset in question is the vessel. However, the right to the mortgage is a receivable operating in personam which may be pledged without directly affecting the structure and the object of the mortgage Documents required for registration of mortgages As stated above, the registration of a mortgage requires that the vessel is already registered, or at least registered simultaneously with the mortgage registration. For registration of the mortgage all that is required together with the payment of the appropriate fee, is the form of mortgage duly executed in Portugal or abroad (if it is executed in Portugal it must be executed before a notary public in the format of an escritura publica (i.e., a notarial deed); if executed abroad the local legal form is accepted It should be carefully borne in mind that Portuguese law allows the provisional registration of a mortgage simply based on a statement by the owner authorizing the registration of the mortgage over the vessel. Although this provisional registration is only valid for six months and is renewable it has relevant practical aspects, since it is based on a very informal document and the effects and priority of the mortgage to be created later revert back to the time of entering the application for provisional registration at the Registrar s office If the vessel is still registered, then what is said in Section A. above about the formalities of registering a vessel should be borne in mind Costs of registration The registration of a mortgage implies the payment of a registrar fee of e135. Stamp Duty is applicable to the incorporation of mortgages at the rates of 0.04 per cent per month for mortgages which secures loans or other types of financing which reimbursement term does not exceed one year, 0.5 per cent for more than one year and 0.6 per cent for more than five years or on indefinite Suppl. 35 (December 2009) Portugal Part II 19

20 MANUEL P. BARROCAS term. The rate applies to the value of the mortgage which is deemed to be equivalent to the value of the secured obligations. 12. TYPES OF VESSELS WHICH MAY BE MORTGAGED Any whole vessel (not separate parts of a vessel) already in existence or under construction may be the object of a mortgage. 13. WHO CAN BE A MORTGAGEE? Anyone may be a mortgagee whether an individual or a corporation. The entity must have legal existence in the country in which it has been established. 14. TYPES OF OBLIGATIONS WHICH MAY BE SECURED BY A MORTGAGE It is necessary to know about the general law relating to the rights of creditors and debtors and to the creation of security, such as laws concerning the powers of companies or their directors to give or to authorize the creation of security and laws relating to bankruptcy and insolvency in order to determine whether a mortgage is valid and enforceable. It is also necessary to bear in mind that, under Portuguese law, a mortgage may be created in favour of a mortgagee either by the debtor or by a third party owning the assets concerned who is not the debtor, but intervenes to give a mortgage to secure the debt of the debtor Existing liability for a definite sum It is not necessary for the debt of claim to exist or be defined prior to the creation of the mortgage and they may be future credits or credits whose existence is subject to a condition not yet satisfied. The mortgage also may relate to a revolving debt, an account current, an indefinite amount or a pre-fixed and defined amount Contingent liabilities and unascertained sums In all circumstances, a mortgage may only secure a pre-established and registered maximum amount including principal and interest. Interests secured may not extend beyond a maximum of five years duration. A further mortgage Portugal Part II 20 Suppl. 35 (December 2009)

21 PORTUGAL is needed if the mortgagee requires to cover a further amount above the limit of principal securing an interest exceeding five years duration. Therefore, in the case of an account current or a indefinite amount it is required to establish and register the maximum amount secured Security for a guarantee liability The mortgage may be created to secure a guarantee of a different or equal nature (namely to secure a pledge or another mortgage). Furthermore, the mortgage and its terms and conditions are only effective between the parties (mortgagor/mortgagee) and as against third parties if and when it is duly registered. Unregistered covenants connected with the terms and conditions of the mortgage which are not registered may not be invoked both between the parties and as against third parties. 15. LIABILITY FOR INTEREST AND COSTS As said above, claims for interest can be secured by a mortgage but up to a maximum of a five year period. A mortgage ranking in second priority (even where between the same mortgagor and mortgagee) is necessary to secure any interest of over five years duration. Costs are also secured by a mortgage and are not limited in their amount. The clause of the mortgage relating to interest and costs needs to be registered. 16. PARTICULARS RECORDED AND OTHER EVIDENCE OF A MORTGAGE In respect of a mortgage on a vessel registered in Portugal As mentioned above, a mortgage is only effective between the mortgagor and the mortgagee and between any of these parties and any third party if and as from the date and time of presentation of the application for the registration at the Registrar s office and only insofar as those terms and conditions that are recorded. There is, therefore, a broad protection of the public and unsecured present and potential claimants against the mortgagor. The application to register a mortgage as well as any other registrable interest in respect of a vessel may be made to a Portuguese consul who will transmit the application and all documentation to the Registrar concerned. The mortgaged assets must be properly identified and detailed. The mortgage covering all the assets of the debtor without specification asset by asset is null and void. Suppl. 35 (December 2009) Portugal Part II 21