Modernisation of the Luxembourg Maritime Law

The Luxembourg’s Maritime Law is the law of 9 November 1990 on the creation of a Luxembourg public maritime register.

The Bill has two objectives: first, to streamline and simplify the administrative procedures relating to the registration of ships and registration of the associated real rights for the public, and second, to make the Luxembourg flag more attractive.

Under the current terms of the Luxembourg Maritime Law, registering a new ship in the Luxembourg register, with the registration of relevant mortgages, is an extremely complex and burdensome process for those concerned.

On the day of registration, the declarant or his representative must:

• Register the deed of sale of the vessel with a Luxembourg Civil Deeds Office (Bureau des Actes Civils), which office is identified depending on the location of the notary
• Go to the Luxembourg Maritime Authority (Commissariat aux Affaires Maritimes) (the CAM) to obtain the registration order
• Register the vessel with the Luxembourg Mortgage Office (Conservateur des hypothèques)
• Register the mortgage assignment and the credit agreement with a Luxembourg Civil Deeds Office (Bureau des Actes Civils), which office is identified depending on the location of the notary
• Register the mortgages with the Luxembourg Mortgage Office (Conservateur des hypothèques)
• Return or arrange for the return of the duplicate certificate of registration to the CAM

In addition, before being able to take these steps, the constituent has to:

• Submit an application for registration (technical and administrative files) to the CAM
• Make an appointment with the Luxembourg Registrar of Mortgages to register the vessel once the file has been validated by the CAM and the authorisation to register and operate the vessel has been signed by the Minister of the Economy (or his delegate)
• Notify the CAM of the date and time of the appointment so that the officer in charge of the file can contact the Luxembourg Registrar of Mortgages to obtain the certificate of registration number and the registration number in the register of mortgages in order to prepare the certificate of registration

In addition, various other administrations, such as the Regulatory Institute for ship stations, Post and Telecommunications for Inmarsat equipment, the Ministry of Social Security, the Ministry of Justice (armed guards), the Technical Investigation Administration, the Civil Aviation Directorate (helicopter platforms), the Health Directorate (radioactive sources, particularly on dredgers), may also intervene before or after the ship is registered.

The involvement of several geographically dispersed administrations is undeniably an obsolescence of the Luxembourg system. In France, for example, the French International Register has set up a one-stop shop to handle some of the administrative procedures. More recently, Belgium has also simplified the procedure for registering its ships.

The Bill redefines the powers and responsibilities of the various government departments in order to centralise procedures as far as possible under the authority of the CAM.

To this end, the maritime register (of ships) will be placed under the authority of the CAM and held by the maritime mortgage registrar. The aforementioned maritime mortgage registrar will be integrated at the CAM, will be appointed by the responsible minister, and will also be entrusted with the maintenance of a register of real rights over vessels. The CAM will effectively become the one-stop shop in Luxembourg for the registration of vessels and the registration of real rights thereon.

The Bill also simplifies administrative procedures and incorporates proposals made during interministerial consultations and consultations with industry representatives. It includes the following measures:

• The abolition of the ministerial registration order – under the Bill the Commissioner, rather than the Minister, authorises the ship registration and informs the Registrar of Mortgages directly with a view to registering ownership of the ship in the Register of Real Rights in Ships
• The abolition of the obligation to register private deeds at the Luxembourg Civil Deeds Office (Bureau des Actes Civils), making such registration optional
• The possibility of registering authentic instruments after they have been entered into the register within a short period of time
• The introduction of a certificate of ship registration for an unlimited period (instead of having to renew it every two years at the latest), subject to payment of the annual ship registration fee

The administrative simplification proposed by the Bill goes hand in hand with greater flexibility on the part of the administration, which will accept documents drafted in English, the language most commonly used in the maritime and financial sectors.

The modernisation of administrative procedures is accompanied by a desire to enhance the competitiveness of the Luxembourg flag by implementing several measures, some of which are inspired by civil aviation legislation.

Some measures are aimed at facilitating financing and include:

• The possibility of mortgaging all or part of a maritime fleet. It is worth noting that even if a single deed is sufficient under the Bill to encumber all or part of the fleet, each vessel must nevertheless be registered and a “bordereau” issued for each one
• The possibility for a person acting on behalf of the beneficiaries of the mortgage, a trustee or a fiduciary to constitute a mortgage
• The qualification, for the purposes of registration, of a ship leasing contract as a bareboat charter contract when the leasing company, in leasing the vessel, entrusts the nautical and commercial management of the vessel to the lessee

Furthermore, the definition of a ship under the Bill has a broader scope of application. In fact, this definition includes devices such as submarines, dredgers and other increasingly specialised service vessels, autonomous vessels, and devices propelled wholly or partly by wind or other new technologies. In addition, wind or drilling platforms and artificial islands that are not designed for navigation but have similarities with ships are also considered under the Bill to be ships. The aim is to respond to the recent but rapid changes in the maritime sector. Considering such “non-traditional” craft as ships ensures that the provisions of the Luxembourg Maritime Law will apply in terms of liability, environmental safety, and navigation.

Finally, the Bill aims to promote more environmentally friendly shipping by establishing fiscal incentives. These include:

• Reductions of the annual ship registration fee for ships using renewable and low-carbon fuels or alternative energy sources
• An exemption from registration and mortgage duties for credit facilities involving the creation of mortgages on the ship intended to finance new equipment, fixtures or fittings to improve the quality of the ship

These incentives are part of the ”green shipping” initiative, which also includes the Luxembourg Bill of Law No. 8388 which confers on the CAM the power to certify the reality and conformity of fixed assets eligible for special depreciation.

The above initiatives will support the modernisation of Luxembourg's maritime fleet, whose average age is currently 11.5 years. The fleet should be modernised either by replacing older vessels with newer ones or by carrying out structural work to upgrade equipment to improve vessels' energy performance.

Introduction of administrative penalties

The Bill also introduces new administrative sanctions to reaffirm the control exercised by the CAM over the register. These sanctions are aimed, in particular, at ”declarants” who fail to notify the Commissioner for Maritime Affairs of any changes that impact the conditions of registration.

Creating a certificate of seaworthiness

Until now, the certificate of registration attests that the ship meets all the requirements of the Luxembourg Maritime Law and the regulations made under it, including the technical conditions. Consequently, delivery of the certificate of ship registration is equivalent to authorising the vessel to navigate under the Luxembourg flag. If the vessel does not meet the technical conditions, the words ”without authorisation” to navigate will be entered on the certificate, particularly for vessels under construction.

The creation of a certificate of seaworthiness, following the example of current practice in Belgium, makes it possible to differentiate between compliance with administrative conditions and compliance with technical conditions. Authorisation to navigate is now attested by the certificate of seaworthiness, while the certificate of ship registration is limited to proving that the vessel is registered in the Luxembourg maritime register.

The Bill, which constitutes the second phase of the reform of the Luxembourg Maritime Law, cannot be adopted until after the vote on and entry into force of Bill of Law No. 7329.

Our Luxembourg team can assist you with matters relating to Luxembourg maritime law. Massimiliano is a member of the board of directors of the Luxembourg Maritime Cluster (CML). He is also active within CML reviewing and commenting Luxembourg projects of law on shipping related matters.

Please do not hesitate to contact Massimiliano, the author of this article, or your usual Harneys contact for expert guidance tailored to your needs.