The Advantages of the Malta Flag

December 19 09:19 2023 by The Editor Print This Article

Defined in the United Nations Convention on the Law of the Sea, the flag state is the state which may exercise jurisdiction and control in administrative, technical and social matters over ships flying its flag. In so-doing, each State party to the Convention must maintain a register of ships with the names and particulars of ships flying its flag, and under its internal law, assume jurisdiction over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.

Key Issues

  • Legal Standing of the Valletta Flag
  • History & Advantages
  • Global Ranking

Valletta Flag (Malta Flag) in a Nutshell

Registration has a dual function in that it has a public function by carrying the sovereignty of the state whose flag it being flown as well a private function in that it is a moveable property over which one or more persons have rights which, at law, are considered worthy of protection. It is these functions that form the basis of the factors that must be assessed in deciding a flag of choice. 

The Valletta Flag, often referred to simply as the "Malta Merchant Flag," is a distinctive and historically significant maritime flag that has played a pivotal role in the rich maritime heritage of the Mediterranean island nation of Malta. Its legal framework, the Merchant Shipping Act was passed by Parliament in 1973, the Merchant Shipping Act today contains nearly 400 sections, and is divided in 10 parts. Complementing this primary legislation, a series of legal notices have been issued under the Act, addressing various aspects of merchant shipping. Together, the Act and these legal notices constitute a comprehensive body of legislation that can be intricate and complex due to its technical nature.

History of the Malta Flag

In the Mediterranean, the domains of maritime navigation, trade, and commerce have prospered thanks to the influence of well-established and highly respected maritime laws, sometimes encapsulated in documents like the Consolato del Mare. Malta's pivotal maritime role has ensured that the study and practice of maritime law have thrived among the island's legal community.

In fact, it is this legal tradition that contributed to Malta's initiative at the 1967 United Nations General Assembly, ultimately leading to the adoption of the 1982 United Nations Convention on the Law of the Sea.

The registration of vessels under the Maltese flag and the operation of Maltese ships are governed by the Merchant Shipping Act, primarily based on United Kingdom legislation but subsequently revised and amended in 1986, 1988, 1990, and 2000. These amendments introduced significant control measures, enhanced safeguards for financiers, making financing more appealing, and introduced bareboat charter registration.

Malta is a signatory to most of the major International Maritime Organization (IMO) and International Labour Organization (ILO) conventions related to maritime affairs. Maltese-flagged vessels are bound to strictly adhere to the provisions of these international conventions.

The Advantages of the Malta Flag

As evidenced by Malta‚Äôs position as the largest registry in the EU and the sixth largest in the World, Malta excels in the following sectors:

  1. Experience and Reputation
  2. Legal infrastructure and support
  3. Access to capital markets and exchange control
  4. Competitive Fees and Low taxation rates
  5. Political Stability
  6. Vessel eligibility
  7. Compatible registry for bareboat chartering
  8. Straightforward Registration Process
  9. Unconditional rules on nationality of crews
  10. Low company formation costs
  11. Sound banks
  12. No trading restrictions

Malta is well-aware that to retain its highly-ranked position in the dynamic shipping industry, it must meet the needs of international operators and thus continue to fulfil the one-stop shop concept. 

The efficiency of registration in Malta complements the low company formation and ship registration costs, the attractive fiscal incentives to owners, no duty on the sale or transfer of shares of a company owning Maltese ships, no trading restrictions and preferential treatment to its ships in certain ports. 

Evolution of Flag State Performance 

The International Chamber of Shipping (ICS) publishes an annual comparative analysis of all the flags of ship registration, namely the Shipping Industry Flag State Performance Table. By conducting this analysis, shipowners gain an impartial and expert evaluation of how these flags have fulfilled their responsibilities towards the global shipping sector and how effectively they have carried out their roles in ensuring maritime safety and environmental protection.

The ICS stands as the primary worldwide trade association for shipowners and ship operators, boasting representation of more than 80 percent of the global merchant fleet, comprising approximately 100,000 vessels. Given its complete independence, the ICS holds substantial authority in the research it conducts and the outcomes it produces. Therefore, when the Malta flag is recognized as a registered flag that successfully meets all criteria, it is a source of pride as a national asset, deserving acknowledgment and appreciation.

Malta Flag Benefits: ICS Study

The study of the ICS has found that the Malta flag has ticked all the boxes in respect of:

  • Port state control;
  • Ratifications of conventions;
  • The recognition of the organisation;
  • The average age of the vessels that it registers;
  • Being on the white list for international conventions;
  • The participation by the respective authority (primarily Transport Malta) by way of attendance to IMO meetings and, above all, satisfying the audit undertaken by IMO.

In entirety, there are 18 criteria considered when evaluating a flag's status, and the Malta flag has earned the endorsement for complete conformity with all of these standards. This outstanding achievement should not only be a source of pride for the relevant authorities and those engaged in the maritime sector but for every citizen of Malta as well. The Malta flag serves as the nation's representative in all the global regions where vessels bearing the Maltese flag are in operation.

What this means for you

Whether you are interested in obtaining the Valletta flag for your new yacht or considering relocating your fleet to Malta, you can be rest assured that you will proudly fly a flag of confidence. The Valletta flag provides yacht owners and crew the stability and peace of mind required. 

How we can help

Our Maritime Law Practice regularly advises on transfers and purchases, structured financing and refinancing of all types of vessels, from sailing yachts to cargo vessels. Our team has, through its established links with various credit and other financial institutions throughout the world, assisted in numerous transactions involving the registration of statutory mortgages on Malta-flagged ships. 

Our Maritime lawyers have long been involved in typical or complex transactions in this area and through the use of Malta solutions, based on the country's sound legal framework, have added value, and given solutions beyond the traditional execution of orders. Get in touch with us for more information on the Malta Flag and registration.