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CHAPTER 5 Bareboat charter registration

Ship Registration: Law and Practice

Page 62


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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