Background material: Ships
Most nation states operate a national registry of ships, or sometimes more than one registry. Once registered with a particular register the ship acquires a nationality and flies the flag or ensign or the particular state (the Flag State). So a British ship will fly the red ensign and be registered with the UK registry run by the Maritime and Coastguard Agency (MCA) at Cardiff. She will bear on her stern her name and the port of registry, say, Southampton.
A registry may be run, not by a government agency as in the UK, but by a private company. For example, a corporation based in New York City, USA, runs the Liberian Registry. Profits from its operation are shared with the Liberian government, but there is unlikely to be any direct contact between the shipowner and that West African state.
Operation of the vessel and flagging
Different registries have different requirements, but there is not necessarily any connection between the nationality of the Flag State (registry), the registered owner of the ship, and the actual operator of the vessel.
‘Single ship companies’ are quite common in an industry where protecting limited liability may be an important consideration.
For instance, a vessel might be owned by a Panamanian company, flagged in Liberia and operated by a UK company (or the Panamanian company may itself have tax residence in the UK). Taxation will follow operation, but it may be claimed that a profit on a bareboat charter be allocated to the company owning such a vessel. You should be cautious of accepting that any significant risk (and associated profit) be allocated to the offshore company. The Tonnage Tax Technical Adviser may be able to offer further advice.
In order to be registered a ship must be certificated to be of a particular type and size and to be maintained to certain minimum standards. Classification societies are licenced by states to undertake this work on their behalf. Most states do not insist that ships are ‘classed’. However, without ‘class’ there would be considerable difficulties in operating a ship, as ‘class’ is generally a requirement of most insurance companies and shippers using the vessel.
Classification societies are organisations that survey and classify ships, both during their construction and their operation. They are the principal means by which standards of construction and maintenance are enforced, and ship certificates can be issued by Flag States. The principal societies are:
|American Bureau of Shipping||ABS|
|Bureau Veritas (France)||BV|
|China Classification Society||CCS|
|Det Norske Veritas (Norway)||DNV|
|Germanischer Lloyd (Germany)||GL|
|Det Norske Veritas Germanischer Lloyd (DNV & GL merged in September 2013)||DNV GL|
|Hellenic Register of Shipping||HRS|
|Indian Register of Shipping||IRS|
|Korean Register of Shipping||KRS|
|Lloyd’s Register of Shipping (UK)||LR|
|Nippon Kaiji Kyokai (Japan)||Class NK|
|Polski Rejestr Statkow (Poland)||PRS|
|Registro Italiano Navale (Italy)||RINA|
Types of certificate issued by classification societiesAs part of the registration process of a ship with a Flag State, the classification society may issue both an ‘International Tonnage Certificate’, detailing both gross and net tonnage, and a ‘Certificate of Survey’.
During periodic surveys a ‘Certificate of Class’ will be produced to confirm that the ship remains up to standard. This and a surveyor’s report will be used by both the owner and by an insurance company or P&I club to satisfy themselves that the ship is seaworthy and usable for its intended purpose.
Some flag states allow class to deal with all surveys and issue all types of certificate, including ‘International Load Line’ and ‘SOLAS’, whilst others restrict the certificates class can issue on their behalf, or do not delegate at all.
To check on the gross or net tonnage of a vessel, officers may request an ‘international tonnage certificate’, (see TTM01330).
Officers may also request sight of an ‘International Load Line’ or ‘SOLAS’ certificate to check whether the vessel is certificated for navigation at sea, or seagoing, (see TTM03510).
|Tonnage of a ship||TTM15020|
|Certification of ships||TTM03515|