Στις 6 Οκτωβρίου 2022 ψηφίστηκε από τη Βουλή των Αντιπροσώπων «ο περί Ναυτιλιακής Εταιρείας Περιορισμένης Ευθύνης (Ν.Ε.Π.Ε.) Νόμος του 2022» (ο «Νόμος»). Ο Νόμος εγκαθίδρυσε ένα νέου τύπου εταιρικής οντότητας με την ονομασία «Ναυτιλιακή Εταιρεία Περιορισμένης Ευθύνης (Ν.Ε.Π.Ε.)», η οποία θα συστήνεται ως εταιρεία περιορισμένης ευθύνης με μοναδικό σκοπό την ιδιοκτησία και εκμετάλλευση κυπριακών πλοίων. Επίσης, ο εν λόγω Νόμος διέπει ζητήματα που αφορούν τις Ν.Ε.Π.Ε. από τη σύστασή τους μέχρι και την εκκαθάρισή τους και θεσπίζει τον θεσμό του Εφόρου Ν.Ε.Π.Ε. ως αρμόδιας αρχής για τα ζητήματα αυτά.

Ο Νόμος εφαρμόζεται στις Ν.Ε.Π.Ε. οι οποίες συστάθηκαν δυνάμει των διατάξεων του εν λόγω Νόμου και σε εταιρεία η οποία συστάθηκε ή ενεγράφη δυνάμει των διατάξεων του περί Εταιρειών Νόμου και εγγράφεται ως συνεχίζουσα στο Μητρώο Ν.Ε.Π.Ε. δυνάμει των διατάξεων του Μέρους XV του Νόμου. Όσον αφορά την  Σύσταση Ν.Ε.Π.Ε., τότε ένα (1) ή περισσότερα πρόσωπα τα οποία συνεργάζονται για οποιονδήποτε σκοπό δύνανται, με την υπογραφή των ονομάτων τους στο ιδρυτικό έγγραφο και αφού συμμορφωθούν με τις απαιτήσεις του παρόντος Νόμου αναφορικά με την εγγραφή, να συστήσουν Ν.Ε.Π.Ε. και η ευθύνη των μετόχων της Ν.Ε.Π.Ε. περιορίζεται από το ιδρυτικό έγγραφο στο ποσό, εάν υπάρχει, που δεν πληρώθηκε για τις μετοχές που κατέχουν έκαστος.

Με την εγγραφή του ιδρυτικού εγγράφου και καταστατικού, ο Έφορος Ν.Ε.Π.Ε. πιστοποιεί ότι συστάθηκε Ναυτιλιακή Εταιρεία Περιορισμένης Ευθύνης, εκδίδει τα πιστοποιητικά που αφορούν στη σύσταση και καταχωρίζει τα στοιχεία της Ν.Ε.Π.Ε. στο Μητρώο Ν.Ε.Π.Ε. το οποίο τηρεί ο ίδιος. Από την ημερομηνία σύστασης που αναφέρεται στο πιστοποιητικό σύστασης, όσοι προσυπέγραψαν το ιδρυτικό έγγραφο μαζί με οποιαδήποτε άλλα πρόσωπα που από καιρό σε καιρό καθίστανται μέτοχοι της Ν.Ε.Π.Ε., αποτελούν νομικό πρόσωπο με το όνομα που περιλαμβάνεται στο ιδρυτικό έγγραφο ικανό να ασκήσει αμέσως όλες τις δραστηριότητες μίας συσταθείσας Ν.Ε.Π.Ε., και με διηνεκή διαδοχή. Το πιστοποιητικό σύστασης το οποίο εκδίδεται από τον Έφορο Ν.Ε.Π.Ε. αποτελεί αναμφισβήτητη μαρτυρία ότι όλες οι απαιτήσεις του παρόντος Νόμου αναφορικά με την εγγραφή και στα προηγούμενα με την εγγραφή συναφή θέματα έχουν τηρηθεί και ότι η Ν.Ε.Π.Ε. ενεγράφη δεόντως με βάση τον παρόντα Νόμο. Θέσμια δήλωση συμμόρφωσης προς όλες ή οποιεσδήποτε από τις πιο πάνω απαιτήσεις από δικηγόρο που ανέλαβε τη σύσταση της εταιρείας ή από πρόσωπο που κατονομάζεται στο καταστατικό ως σύμβουλος ή γραμματέας της Ν.Ε.Π.Ε. παραδίδεται στον Έφορο Ν.Ε.Π.Ε., ο οποίος δύναται να αποδέχεται τη δήλωση αυτή ως ικανοποιητική μαρτυρία συμμόρφωσης.

Το ιδρυτικό έγγραφο και καταστατικό, όταν εγγραφούν, δεσμεύουν τη Ν.Ε.Π.Ε. και τους μετόχους της στην ίδια έκταση ως εάν είχαν υπογραφεί από κάθε μέτοχο ξεχωριστά και περιλαμβάνουν συναίνεση εκάστου μετόχου να τηρεί όλες τις πρόνοιές τους. Οποιαδήποτε ποσά είναι πληρωτέα από οποιονδήποτε μέτοχο στη Ν.Ε.Π.Ε. με βάση το ιδρυτικό έγγραφο ή το καταστατικό αποτελούν οφειλόμενο χρέος από αυτόν προς τη Ν.Ε.Π.Ε.

Επιπρόσθετα, οποιαδήποτε σύμβαση συνάπτεται πριν από την σύσταση Ν.Ε.Π.Ε. από τα πρόσωπα που υπέγραψαν το ιδρυτικό έγγραφο ή από εξουσιοδοτημένα από αυτά πρόσωπα επ’ ονόματι ή για λογαριασμό της υπό σύσταση Ν.Ε.Π.Ε. είναι προσωρινή και δεν τη δεσμεύει μέχρι την ημερομηνία της συστάσεώς της, μετά δε την πάροδο της ημερομηνίας σύστασης αυτής η σύμβαση καθίσταται αυτοδικαίως δεσμευτική για την Ν.Ε.Π.Ε και λογίζεται ότι έγινε από τη Ν.Ε.Π.Ε. Σε περίπτωση κατά την οποία η Ν.Ε.Π.Ε. δεν συσταθεί, οι υποχρεώσεις που ανελήφθησαν από οποιοδήποτε πρόσωπο επ’ ονόματι ή για λογαριασμό της, ισχύουν μόνον ως υποχρεώσεις των προσώπων αυτών, η δε ευθύνη των προσώπων αυτών είναι απεριόριστη από κοινού και κεχωρισμένως. Η εν λόγω ευθύνη δεν υφίσταται, σε περίπτωση που οι υποχρεώσεις ρητώς ανελήφθησαν υπό την αίρεση της συστάσεως της Ν.Ε.Π.Ε.

Συμβάσεις εκ μέρους της Ν.Ε.Π.Ε. δύνανται να συνάπτονται προφορικώς, γραπτώς ή ηλεκτρονικά. Σε περίπτωση Ν.Ε.Π.Ε. με ένα και μοναδικό μέτοχο, οι συμβάσεις που συνάπτονται μεταξύ του μετόχου αυτού και της εν λόγω Ν.Ε.Π.Ε. καταγράφονται σε πρακτικά ή καταρτίζονται γραπτώς, εκτός εάν αφορούν τις τρέχουσες πράξεις της Ν.Ε.Π.Ε. που συνάπτονται υπό κανονικές συνθήκες. Τέτοιες συμβάσεις έχουν νομικό αποτέλεσμα και δεσμεύουν τη Ν.Ε.Π.Ε., τους διαδόχους της και όλα τα άλλα μέρη της. Σύμβαση η οποία συνομολογήθηκε σύμφωνα με τις διατάξεις του εν λόγω Νόμου δύναται να μεταβληθεί ή ακυρωθεί με τον ίδιο τρόπο κατά τον οποίο η σύμβαση εξουσιοδοτήθηκε να γίνει σύμφωνα με τον εν λόγω Νόμο. Η Ν.Ε.Π.Ε. δεσμεύεται έναντι τρίτων από πράξεις ή συναλλαγές των αξιωματούχων της, έστω και εάν τέτοιες πράξεις ή συναλλαγές δεν εμπίπτουν στους σκοπούς της Ν.Ε.Π.Ε., εκτός εάν τέτοιες πράξεις ή συναλλαγές τελούνται καθ’ υπέρβαση των εξουσιών που ο εν λόγω Νόμος παρέχει ή επιτρέπει να παρέχονται στους συγκεκριμένους αξιωματούχους.

Η Ν.Ε.Π.Ε. δε δεσμεύεται έναντι τρίτων, σε περίπτωση κατά την οποία τέτοιες πράξεις ή συναλλαγές δεν εμπίπτουν στους σκοπούς της Ν.Ε.Π.Ε., εάν η Ν.Ε.Π.Ε. αποδείξει ότι το τρίτο πρόσωπο γνώριζε ότι οι πράξεις ή συναλλαγές δεν εμπίπτουν στους σκοπούς της Ν.Ε.Π.Ε. ή δεν ήταν δυνατόν, υπό τις περιστάσεις, να το αγνοεί. Νοείται περαιτέρω ότι, η δημοσίευση του ιδρυτικού εγγράφου και καταστατικού της Ν.Ε.Π.Ε. δεν αποτελεί από μόνη της επαρκή απόδειξη γνώσης από μέρους του τρίτου προσώπου. Οι εκ του ιδρυτικού εγγράφου και καταστατικού ή οι εξ αποφάσεως των συμβούλων ή της γενικής συνέλευσης της Ν.Ε.Π.Ε. περιορισμοί στις εξουσίες των αξιωματούχων της δεν δύναται να αντιταχθούν έναντι τρίτων προσώπων, ακόμα και εάν έχουν δημοσιευτεί.

Κάθε έντυπο, πιστοποιητικό, πρακτικό ή άλλο έγγραφο που παραδίδεται ή αποστέλλεται στον Έφορο Ν.Ε.Π.Ε. για καταχώριση ή που εκδίδεται από τον Έφορο Ν.Ε.Π.Ε., ανάλογα με την περίπτωση, για το οποίο απαιτείται δυνάμει των διατάξεων του εν λόγω Νόμου βεβαίωση, πιστοποίηση ή υπογραφή υπογράφεται και/ή πιστοποιείται και/ή επικυρώνεται με ηλεκτρονική μέθοδο, εφόσον ο Έφορος Ν.Ε.Π.Ε. εγκρίνει τη χρήση τέτοιας μεθόδου με Γνωστοποίηση που εκδίδει δυνάμει του άρθρου 31 (2) του Νόμου. Όπου γίνεται χρήση υπογραφής με ηλεκτρονική μέθοδο, αυτή θεωρείται ότι υπέχει την ίδια θέση με ιδιόχειρη υπογραφή, για τους σκοπούς οποιασδήποτε ποινικής ή πολιτικής διαδικασίας και το πρόσωπο που κάνει χρήση τέτοιας υπογραφής θεωρείται ότι έχει γνώση του περιεχομένου του εγγράφου που υπογράφει.

Σε σχέση με την έναρξη της ισχύος του Νόμου, ο εν λόγω Νόμος θα τεθεί σε ισχύ σε ημερομηνία που θα καθοριστεί με απόφαση του Υπουργικού Συμβουλίου η οποία θα δημοσιευτεί στην Επίσημη Εφημερίδα της Δημοκρατίας σε μεταγενέστερο στάδιο. Η θέσπιση του εν λόγω Νόμου έγινε προς την επίτευξη ενός πλαισίου μονοθυριδικής εξυπηρέτησης (one-stop-shop) των πλοιοκτητριών εταιρειών και των μετόχων τους, ώστε το Υφυπουργείο Ναυτιλίας να επιλαμβάνεται θέματα, πέρα του ναυτικού δίκαιου, τα οποία μέχρι στιγμής ο αρμόδιος φορέας για την αντιμετώπιση και χειρισμό τους ήταν ο Έφορος Εταιρειών.

In time charterparties, disputes may usually arise as to deductions made from charter hire in relation to an alleged underperformance of the vessel. As a matter of law, if a deduction is being made from hire, such deduction must be the result of good faith or be made on reasonable grounds.

As established in the case The Kostas Melas [1981] 1 Lloyd’s Rep 18, in the instance of a deduction for an underperformance of the vessel, the charterer may be required to show that its deductions were made in good faith and its calculations were made on reasonable grounds. In the case that such deductions were not made in good faith or reasonable grounds then the charterer may be liable for breach of contract.

In relation to the phrase “in good faith”, in some cases, the charterers claimed that these words have no effect in the context of a speed and consumption warranty, or, alternatively, as can be seen in The Lipa [2001] 556 LMLN 2,the phrase “in good faith” has not the effect of negating any warranty, as it is the case with the phrase “without guarantee”. Nevertheless, as seen in The Lendoudis Evangelos II [1997] 1 Lloyd’s Rep. 404, the owners may rely on to assert that only significant inconsistencies justify that the description was not given in good faith.

In London Arbitration 1/22, the Tribunal was called to consider whether the charterers made deductions in good faith and on reasonable grounds. The charterers withheld US$ 53,550.40 gross in respect of what they claimed was time loss due to underperformance to the extent of 6.6938 days. The Tribunal requested the charterers to show a prima facie case as to whether the deduction from hire was made in good faith and on reasonable grounds. The charterers then presented a weather routing report.

The Tribunal dismissed the charterers’ reliance on the weather routing report and also found that the charterers did not address the question of good faith, to substantiate their off hire claim and to address the claim made by the owners that there was no speed/consumption warranty in the charterparty as the fixture description of the ship was qualified by the words “all details about/in good faith”.

In the present case, the owners were entitled to payment. The Tribunal’s decision was based on the fact that the charterers had not demonstrated that their deduction was made in good faith or on reasonable grounds and as such, they should not have withheld the deduction from hire.

Since the first discussions of the use of Maritime Autonomous Surface Ships (MASS) there are many debates and concerns on whether the current legal framework, namely the 1982 Law of the Sea Convention (LOSC), is adequate and remains fit for its purpose. The use of MASS implies that a master and the rest of the crew on-board a vessel “disappear”; does this therefore necessitate the fundamental change of the current legal framework?

Besides LOSC, many international legal rules concern MASS, such as the International Convention for the Safety of Life at Sea (SOLAS). The most problematic aspect of the use of MASS as far as the international law of the sea is concerned, is when the MASS is operated from an on-shore remote control center or when such operation is performed by an algorithm on a computer.

There are a variety of viewpoints, ranging from the belief that MASS do not fall under the scope of LOSC since they are not considered to be ships, to the belief that no difficulties would occur since they are ships. Accordingly, certain articles of the LOSC exist which refer to masters, officers or crew, whom the flag State rely upon in order for certain obligations of the latter to be performed. An example of such responsibility/obligation is that a flag State must ensure that its ships have a master and officers who possess appropriate qualifications.

In general, the LOSC does not provide any specific guidelines to the flag State in terms of granting its nationality to the ships for their registration and for the right to fly its flag; the only requirement provided in the LOSC is that there must be a “genuine link” between the State and the ship. It can be assumed that a genuine link exists when the flag State has actual authority over the ship. The issue here is how such control/authority can be established when the operation of the vessel is controlled remotely in another State’s territory?

One possible solution is to consider such onshore controller as a master, nevertheless, this may also be problematic. The LOSC makes reference to a single master and thus, the difficulties will arise notably in terms of labor standards, when there are one or more controllers in such onshore remote-control center.

For the sake of argument, if such controller is considered to be a master pursuant to LOSC, in order for a flag State to satisfy its duties, namely to exercise effective jurisdiction and control, it would require the latter to do more in relation to MASS when comparing it with a manned vessel. For example, an existing argument is that in the event that something unexpected happens, there is the need to have in place extradition arrangements between the concerned States. Another recommendation which was made, was to include an annex in the current LOSC which will regulate the issue of MASS.

There are alternative methods however which may be considered as a way of regulating MASS: the International Maritime Organisation (IMO) recently considered whether its current conventions concerning safety of navigation, i.e. SOLAS, can be amended to safeguard the conformity thereof by the use of MASS.

Undoubtedly, the current legal framework is inadequate in relation to the use of MASS and therefore, any conformity with the existing legal rules is impractical. One can argue that any amendments to the LOSC may be undesirable and/or unfeasible for various reasons. Nevertheless, without any tailored-made regulations for MASS, flag States could potentially hesitate to register MASS and in general fly their flags. It is of vital importance for the IMO and the competent authorities to implement a comprehensive set of guidelines in relation to the use and operation of MASS.

Introduction:

Greece and Turkey, the two Aegean Sea neighbours, have a long tradition of confrontational relations. From the mid-1950s to the present, the two countries have been involved in a series of conflicts, some of which have escalated into major crises that have taken them to the verge of war. The main point of contention between the Greek and Turkish governments is the Aegean Sea. These problems are not only unresolved, but they also contribute to the region’s ongoing instability and tense atmosphere. Several resolution efforts were made in previous years but failed. The purpose of this article is to identify the relevant law governing the areas of conflicts and to propose a possible solution.

The essence of the problem is such that the two sides have fundamentally different perspectives concerning the Aegean. It should be acknowledged that Turkey has not signed up to the Convention on the Continental Shelf nor the superseding United Nation Convention on the Law of the Sea (UNCLOS), both of which Greece has signed and ratified. Turkey identified the inability of the UNCLOS to properly resolve exceptional geographical circumstances and the prohibition of reservations as reasons for its non-participation in the LOSC in a letter to the UN Secretary-General. The main reason Turkey refused to sign was the dispute with Greece over Aegean Sea delimitation issues. Turkey is one of the 16 countries which have not signed or ratified the Convention. Turkey believes that Greece regards the Aegean as a Greek sea and that Greece is trying to undermine Turkish security by controlling the Aegean disregarding Turkey’s rights and interests in the Aegean. On the other hand, Greece is arguing that UNCLOS Articles are binding to non-signatory countries.

Considering that the aim is to review the Aegean maritime disputes on the basis of international law, it is necessary to examine the relevant law regulating the maritime areas.

UNCLOS – Articles of Interest

Territorial Sea

The expansion of territorial waters, it has become a contentious issue. Article 3, s.2 of UNCLOS states that:

“Every State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from baselines determined in accordance with this Convention”.

In relation to Article 3, Greece has expressed its intention to extend its territorial waters to 12 nautical miles in the Aegean sea, applying this article. However, until this day Greece retains a 6 nautical mile territorial sea due to the dispute with Turkey. The expansion of nautical miles from Greece could intensify the conflict with turkey and further destabilise the Eastern Mediterranean region.

On the other hand, the Turkish point of view is that because of the large number of Greek Islands, 12 miles of territorial waters will convert the Aegean into a Greek lake. Turkey argues that it will be locked out of the Aegean and confined to its own territorial waters as a result of this. Turkey also claims that Greece should not be allowed to expand its territorial waters in the Aegean Sea to 12nm and that doing so would result in a casus belli (cause of war).

The central issue in the Aegean Sea territorial sea dispute is whether international law requires a certain limit for specific areas in special geographical areas, and if so, what implications does this have for the Aegean Sea.

Continental Shelf

The term continental shelf is used as referring to the seabed and subsoil of the submarine areas adjacent to the coast but outside the area of the territorial sea, to a depth of 200 metres or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources of the said areas.

However, the criterion of ‘exploitability’ was highly criticised as being “unsatisfactory” and it was gradually rendered obsolete as a result of technical advancements. As a result, it was replaced by the more precise “width” criterion in Article 76(1) LOSC for determining the continental shelf’s outer limit. In the absence of a delimitation agreement, the Aegean continental shelf has been another point of conflict between Turkey and Greece. The issue of the Continental Shelf has strained ties between Turkey and Greece in the past. Greece has requested the United Nations Security Council and the International Court of Justice (ICJ) with the following outcomes:

1) In Resolution 395, adopted on August 25, 1976, the United Nations Security Council urged Turkey and Greece to do everything possible to de-escalate tensions in the Aegean and urged them to resume direct talks to resolve their differences.

2) It urged them to ensure that these negotiations end in mutually satisfactory solutions. In a ruling issued on September 11, 1976, the International Court of Justice designated the Aegean continental shelf outside the territorial waters of the two coastal states as “areas in dispute” for which both Turkey and Greece seek exploration and exploitation rights.

Article 83 (1) of the Convention, as a result, is a compromise that states:

“The delimitation of the continental shelf between States with opposite or adjacent coasts shall be effected by agreement based on international law, as referred to in Article 38 of the Statute of the International Court of Justice, in order to achieve an equitable solution.” Despite the differences in content, Article 83 does not introduce a new concept. However, any prospect of agreement or resolution has failed so far.

Regime of Islands

UNCLOS Article 121 states,

“Except as provided for in paragraph 3, the territorial sea, the contiguous zone, the exclusive economic zone and the continental shelf of an island are determined in accordance with the provisions of this Convention applicable to other land territory.”

For Greece, international law, particularly UNCLOS grants the islands the right to exercise sovereignty over their continental shelf and stipulates that the continental shelf between two countries must be established on a median line basis. As a result, each of the Aegean Sea’s islands has its own continental shelf, and the median line can be used to describe the border with Turkey. For Turkey, the Greek islands do not have rights to exert jurisdiction on the continental shelf, as they are located on the Turkish continental shelf.

Maritime Boundary Delimitation

Maritime delimitation is one of the most important, although contentious, topics in maritime law. The East Mediterranean states took a leading role in the debate, citing the narrowness of the regional sea, as well as the uncertainty surrounding the relevant methods and factors to be considered, as significant obstacles to maritime delimitation. During UNCLOS III, arduous talks on maritime delimitation took place, and the East Med states found themselves in opposing interests. The limited extent of territorial sea delimitation, as well as the lower resource probabilities, made the median/equidistance line approach easier to apply. This is expressed in Article 15 LOSC and is part of customary international law. The doctrine of equitable principles is the fundamental norm of customary international law governing maritime boundary delimitation by agreement, in accordance with equitable principles, taking account of all relevant circumstances, so as to arrive at an equitable result.

Given the critical role of delimitation in maritime activities, including hydrocarbon operations, maritime boundary delimitation has been one of the most important topics for the East Med states. Greece and Cyprus supported the median/equidistance line because they saw it as the best way to ensure that their interests were properly protected. In contrast, against the scenery of the Aegean dispute, Turkey called for the equitable principles approach in order to take advantage of its long coastline and lessen the effect of islands.

Conclusion

Noting that the different positions were leading nowhere, Greece submitted the issue to the ICJ in August 1976, but Turkey refused to recognize the jurisdiction of the Court, which in the end declared itself incompetent. Since then, the maritime issue has remained and has been aggravated by territorial arguments.

As mentioned above, Turkey did not ratify UNCLOS and is a constant objector. In later articles it will be discussed whether an objector country as Turkey is bounded by UNLCOS and it will be analysed whether International law can propose a possible resolution or to have a mediating role in order to reach an agreement.

Α. Introduction

Cyprus is not itself a party to the International Convention Relating to the Arrest of Sea-Going Ships 1952; however, the Administration of Justice Act of 1956 (AJA)[1], which ratifies the Convention, applies to Cyprus[2]. Under Cypriot law, maritime liens enjoy advantages over all other permitted actions in rem (statutory liens), at the time of creation of the lien, in priority and in the enforceability of the security. In addition, statutory liens have no priority over mortgages.[3] The significance of a maritime lien is that it enables the Court or its appointees to arrest and seize the vessel in satisfaction of the claims against her. Cyprus courts follow the English case The Bold Buccleugh[4], which recognises as maritime liens salvage, bottomry, master and seafarers’ wages, disbursements and liabilities, and damage done by a vessel. The arrest of a ship is only possible in the case of an action in rem (however, the possibility of securing a Mareva injunction for freezing of assets, including a vessel, is also available). Thus, the filing of an action in rem is a prerequisite for such an arrest. The court has wide discretion to order the arrest of the vessel if it is satisfied that the plaintiff is eligible for arrest. 

Similarly, the arrest of a sister ship is applicable in Cyprus by means of Section 3(4) of the AJA. However, the concept of ‘associated ship arrest’ is not recognised under Cyprus law.

Β. Arrest of vessel for contracts relating to the sale and purchase of a ship

It is not possible to arrest a vessel for contracts relating to the sale and purchase of a ship, unless the circumstances of a case give rise to a claim to the possession or ownership of a ship or to the ownership of a share therein (under clause 1(1)(a) of AJA which applies in Cyprus under the Courts of Justice Law 1960 (Law No. 14/1960)). Also, while section 30 of the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws of 1963 to 2005 (Law No. 45/1963 as amended) provide for the right of an ‘interested person’, to apply to the Supreme Court, in its Admiralty Jurisdiction, for the issuance of the order prohibiting any dealing with a ship or any share therein if it thinks fit under the given circumstances, the case law of the Supreme Court has ruled out the buyer of a ship from the definition of the ‘interested person’.

 C. Arrest of vessel by bunker supplier

It is possible for a bunker supplier (whether physical and/or contractual) to arrest a vessel for a claim relating to bunkers supplied by them to that vessel. In the admiralty case No. 32/2014 between (1) Interbunker Management Ltd, and (2) Novoil Ltd v m/v ‘BARIS’,

The court issued an arrest warrant against the defendant’s vessel which was anchored in the port of Larnaca, Cyprus. The claim of the plaintiffs related to the supply of bunkers to the defendant’s vessel, and the arrest warrant was issued upon filing an ex parte application at the Supreme Court of Cyprus.

D. Procedures of ship arrest

Rule 50 of the Rules of the Supreme Court in its admiralty jurisdiction (RSC)[5] allows any party to apply to the court for the issue of a warrant for the arrest of property (i.e., for the arrest of ship or cargo), at the time of, or at any time after, the issuance of the writ of summons (but not without the submission of a writ of summons) in an action in rem. The application must be accompanied by an affidavit containing the particulars prescribed in the RSC, including the nature of the claim, that the aid of the court is required, the national character of the ship and that, to the best of the deponent’s belief, no owner or part owner of the ship was domiciled in Cyprus at the time the necessaries were supplied or the work was carried out. However, the judge has the discretion to issue an arrest warrant even if the affidavit does not contain all the prescribed particulars.

The arrest warrant shall be served by the marshal of the court in the same manner as prescribed by the Rules for the service of a writ of summons in an action in rem. For instance, if the arrest warrant is to be served upon a ship, or upon cargo, freight or other property that is on board a ship, the warrant shall be considered as duly served if an office copy of it is attached to a conspicuous part of the ship, including a mast. If the cargo, freight or other property is not on board the ship, an office copy must be attached to some portion of the cargo or property.

The RSC vest the power and discretion on the judge to issue provisional arrest orders, notwithstanding that no notice of the application has been given to the ship or the shipowner, on such terms as to the furnishing of security as shall appear to the judge to be having regard to the circumstances of the matter in question (Rule 205). In practice, almost invariably the judge will order the arresting party to provide security in the form of a bank guarantee from a Cyprus bank, the aim of which is to cover the costs of the marshall and to compensate the shipowner for loss he or she may have suffered due to the detainment of the ship, acknowledging the concept of wrongful arrest. However, the security of the arresting party shall not be seized in all cases where the provisional arrest order is finally set aside as unjustified. The arresting party’s guarantee may be claimed only in the event of wrongful arrest, which was so unwarrantably brought that it rather implies malice or gross negligence.

At the time the arrest warrant is issued, the judge will determine the amount of the security that the shipowner or other opposing party may deposit to the court for the arrested ship to be released, taking into account the level of the claim. The ship may be released by an order of the judge upon a written application and provided that the security originally set by the judge is deposited to the court.

Any person desiring to prevent the arrest or the release of any property under arrest or the payment of any moneys out of court may, by a written application to the Registrar of the Admiralty Court, cause a caveat against any such action or procedure and the court or judge will not proceed to issue the requested order without notice to the caveator, unless the judge deems that special circumstances have been presented that render it desirable or necessary to make such order without notice to the caveator, upon such terms as may seem fit to the judge. The caveat shall not remain in force for more than three months from the date of being entered, unless extended by further applications.[6]

Almost invariably at the time an arrest warrant is issued, the ship is located within the territorial waters of Cyprus,[7] either anchored in the port area or anchorage or berthed in one of the ports controlled by the Cyprus government (i.e., the ship must not be berthed in any of the ports that have been illegally occupied by the Turkish administration since Turkey’s invasion of Cyprus in 1974). An arrest warrant against a ship may be issued even if, at the time the warrant is issued, the ship is located outside the territorial waters of Cyprus. However, in this case, the arrest warrant will not be able to be served unless the ship heads within the territorial waters. In such instance, the arresting party must see that the warrant will be adequately timetabled so that it does not expire before served on the ship.

The Supreme Court has recognised the option of a party to the admiralty proceedings to seek the ‘arrest’ of a ship by using the Mareva injunction mechanism under Section 32 of the Courts of Justice Law of 1960 (Law No. 14/1960). However, the Court stressed that the power of the Court to issue such an injunction must be exercised only on the premise that the ship is within the jurisdiction of the court or, in other words, within the territorial waters controlled by the Cyprus government.

The issuance of an arrest warrant, based on Section 50 of the RSC or by way of a Mareva injunction, as security for court proceedings (not arbitration proceedings) pending in another jurisdiction is plausible pursuant to the provisions of Regulation (EU) No. 1215/2012 and, in particular, Section 35 of the Regulation, provided that the ship is within the jurisdiction of the court.[8]

In Nationwide Shipping Inc v. The Ship ‘Athena’,[9] the Supreme Court, by adopting an extract from the judgment given in the English case The ‘Vasso’ (formerly ‘Andria’),[10] held that the Admiralty Court has no jurisdiction to issue an arrest warrant in an action in rem for the purpose of providing security for an award that may be made in arbitration proceedings. However, it seems that the extract from the English judgment extends to other proceedings as the court in The ‘Vasso’ case stressed that the purpose of the exercise of the Admiralty Court’s jurisdiction to arrest a ship is to provide security in respect of the action in rem before it and not for any other purpose. In The Ship ‘Athena’ case, the Court did not consider the application of Regulation (EU) No. 1215/2012, which, of course, prevails over any domestic law and, therefore, confers the jurisdiction to the Admiralty Court to issue provisional measures and orders for matters adjudicated on their merits in other European jurisdictions.

E. Dsclosure obligations in court proceedings

Whilst the Judge always has the discretion to ask, out of its own motion, the parties in the litigation to proceed with disclosure of documents or facts, the Cyprus Admiralty Jurisdiction Order of 1893 (the Order), contains varied provisions which a party in a litigation may utilise to cause such disclosure.

More precisely, the disclosure of documents in an admiralty action is governed by sections 93 and 98 of the Order which constitutes the authoritative regulatory framework governing the admiralty procedure before the Supreme Court in its Admiralty Jurisdiction. In particular, section 93 of the Order provides that ‘the Court or Judge may, on the application of any party to an action and without notice to any other party, order that any other party shall make discovery, by affidavit, of all documents which are in the possession or power relating to any matter in question therein’. A similar ex officio power is vested to the Court or Judge without the motion of any party.

Rule 91 of the Order, empowers any party who is desirous to obtain the answers of the adverse party on any matters material to the issue, to apply to the Court or Judge for leave to administer interrogatories to the adverse parties to be answered on oath within such time as the Judge may direct. It is apparent that the administration of interrogatories by any party lies exclusively in the discretion of the Judge who pays regard on whether the interrogatories are material to the issue in litigation and on whether it is appropriate and convenient to grant the requested leave based on the applicable circumstances. Interrogatories which are intended to elicit admission of facts which may be adduced to the Court at the hearing or which are, or are expected to be, within the applicant’s sphere of knowledge are doomed to rejection.

The Court or Judge may, on the application of any party in the litigation and without notice to the adverse party, order the discovery, by affidavit, of all documents which the other party has in his possession or power relating to any matter in question. Any documents not contained in the affidavit of discovery cannot be put in evidence, unless with the leave of the Court or Judge (Rules 93–95). Also, a party to an action may serve upon any other adverse party a notice to produce, for inspection, any document in his possession or power relating to any matter in question and if the party so served with the production notice omits or refuses to comply with the notice, an order from the Court or Judge to this effect may be sought (Rules 95–100).

Moreover, in an action for damage by collision, the parties are procedurally obligated to file in the Court a statement with certain particulars (the so-called Preliminary Acts) outlined in the Order, relating to the circumstances of the collision. The Preliminary Acts must be sealed up and signed by the parties and must be filed by the plaintiff within one week from the issue of the writ and by the defendant at any time before the time fixed by the writ of summons for the appearance of the parties before the Court.

F. Electronic discovery and preservation of evidence

The Order does not currently contain provisions for, and the Admiralty Court practice in general does not currently permit, the electronic discovery and preservation of evidence. The Cyprus Government has recently established a Deputy Ministry of Research, Innovation and Digital Policy with the mission, inter alia, to develop and implement policies in information technologies and e-government in the public sector, including the justice system. Hence, it is expected that e-procedures, including the e-discovery and preservation of evidence, will soon be a reality in Cypriot justice system.

G. Court orders for sale of a vessel

An arrested ship, cargo or other property may be appraised and sold by order of the court or judge, either before (pendente lite) or after the final judgment. In such case, the judge will appoint the marshal of the court or any other person to appraise the property under arrest (in practice, the court appoints the marshal in almost all cases) and to proceed with its sale at auction (the sale procedure adopted in most cases). Nonetheless, the judge may allow the sale of the ship by private sale if he or she deems this fit and provided that all parties in the litigation acquiesce.[11]

The proceeds from the sale of a ship are paid into the court and, upon an application by any judgment creditor, will be distributed to all judgment creditors who claimed a share of the proceeds, in order of priority. In Cyprus, the priorities have been determined by case law and no guidance is found in the RSC or in any other law or procedural rules applying in Cyprus. Detailed analysis of the order of priorities is outside the scope of this chapter. In general terms, however, governmental fees, including the costs and expenses of the marshal, take priority over any other claims, and maritime liens take priority over statutory liens, while statutory liens have no priority over mortgages.

 Author: Zacharias L. Kapsis

FOOTNOTES: 

[1] The Administration of Justice Act of 1956 (AJA) defines the admiralty jurisdiction of the Supreme Court of Cyprus.

[2] By virtue of its Constitution and by Articles 19 and 29 of the Courts of Justice Law of 1960 (Law No. 14/1960).

[3] As seen in Nordic Bank PLC v. The Ship ‘Seagull’ (1989) 1 CLR 420.

[4] The Bold Buccleuch (1851) 7 Moo PC 267.

[5] The Rules of the Supreme Court in its admiralty jurisdiction are stated in the Schedule of the Cyprus Admiralty Jurisdiction Order 1893, which regulates the procedure and rules before the Supreme Court.

[6] Rules 65–73 of the RSC.

[7] The Republic of Cyprus, pursuant to the United Nations Convention on the Law of the Sea 1982 (UNCLOS), as well as the Territorial Sea Law of 1964 (Law No. 45/1964), has a territorial sea, the breadth of which extends to 12 nautical miles from the baselines. The geographical coordinates and the relevant map of the Cypriot baselines were submitted to the Secretary General of the United Nations on 3 May 1993. In the territorial sea, the Republic of Cyprus exercises full sovereignty and applies all related domestic laws, in line with UNCLOS provisions. Furthermore, according to the Regulation of Innocent Passage of Ships through the Territorial Waters Law of 2011 (Law No. 28(I)/2011), as well as UNCLOS, every foreign ship, whether merchant or warship, has the right of innocent passage through the territorial sea of the Republic of Cyprus, without encroaching upon its sovereignty and without a prior licence.

[8] The Commerzbank Aktiengesellschaft v. The Ship ‘Tour 2’, Admiralty Action No. 2/2018, 25 May 2018 is relevant.

[9] [2012] 1C JSC 2343.

[10] [1984] Lloyd’s Law Reports 235.

[11] Rules 74–77 of the RSC.

The Supreme Court of Cyprus, in its admiralty jurisdiction, is vested with the jurisdiction to hear and determine questions or claims, inter alia, for loss of or damage to goods carried in a ship or arising out of any agreement relating to the carriage of goods in a ship.

Cyprus has not ratified the Hamburg Rules. The operation of cargo claims in Cyprus is very much based on the old law and practice that applies in England and the common law or equity principles. In particular, the Carriage of Goods by Sea Law, Chapter 263, which essentially adopts the Hague-Visby Rules, applies only in relation to carriage of goods by sea from a port in Cyprus to any other domestic or foreign port. Also, the Bills of Lading Act 1855 and relevant sections in the UK Merchant Shipping Act of 1894 (both of which apply in the legal system of Cyprus pursuant to Section 29(e) of Law No. 14/1960) may intervene in cargo claims to clarify the legal position and possible liability of owners, carriers, shippers and agents. In addition, Cyprus ratified the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC Convention 1976) in 2006.

According to Rule 29 of the Rules of the Supreme Court in its admiralty jurisdiction (RSC), stated in the Schedule of the Cyprus Admiralty Jurisdiction Order 1893, any number of persons with interests of the same nature arising out of the same matter may be joined in the same action, whether as plaintiffs or defendants, while Rule 31, which was providently inserted in the Rules, makes it clear that an underwriter or insurer shall be deemed to be a person interested in the action.

In terms of the procedurally recognised right of the underwriter or insurer to be joined in an admiralty action as interested party, the principle enunciated in one of the important admiralty judgments given by the Supreme Court in plenary session highlights matters relating to insurers and underwriters when issuing ‘subrogation receipts’. The Court stressed that subrogation does not, by itself, give rise to a right of insurers or underwriters to bring an action to pursue the subrogated claim in their name but the action should be brought in the name of the assured, unless the claim has been clearly assigned to the insurer or underwriter. In any event, the Supreme Court stressed in a number of judgments that it is desirable that the names of both the insurer and the assured are joined in the action.

Sometimes, contracts for the carriage of goods by sea may pose uncertainty on the locus standi of an innocent party, being a shipper, consignee, endorsee of the bill of lading or other, to initiate an action to the Admiralty Court. In one of its judgments, the Supreme Court shed light on the importance and meaning of the bill of lading. Effectively, it adopted the principles articulated in common law cases and English case law, namely that the bill of lading is issued to the order of the person to whom the goods are destined and serves three purposes: (1) it is evidence that the cargo has been laden on board the ship, (2) it constitutes or may constitute evidence for the contract of carriage and (3) it also constitutes prima facie title of the goods. Nonetheless, the Supreme Court highlighted that whether the bill of lading contains the entirety of the terms and conditions of the carriage agreement is clearly a matter of the circumstances and the factual background embracing the dispute. The intentions of the parties as to the time and manner of passing the property of the goods, as reflected in the contract of carriage, is of decisive importance on the right of the consignee or end receiver of the goods to sue anyone who is responsible in terms of damage to or loss of the ordered goods.

When it comes to the possible liability of forwarding agents that undertake to transport goods from one destination to another on behalf of their clients, the Supreme Court reiterated that the contents of the bill of lading are not conclusive evidence but only an indication of the legal position of each party in the transaction for the carriage of goods. If a forwarding agent is engaged by the client to arrange the transportation of the goods to the destination that the client determines without expressly agreeing to do so only as agent of the client and, on the contrary, it essentially assumes the responsibility to ensure the safe transportation of the goods to the destination that the client will specify, the forwarding agent may be found liable against the client for the loss or damage that the goods may suffer during their delivery to the client.

If an owner, charterer, carrier, forwarding agent or other is found liable for breach of the contract of carriage due to its failure to safely deliver the goods to the prescribed destination and as a result the goods sustained loss or damage, the receiver or owner of the goods will be awarded compensation for the loss or damage suffered and that naturally arose in the usual course of things from such breach or that the parties knew, when the contract was made, to be the likely result from the breach of it. Such compensation shall not be awarded for any remote and indirect loss or damage sustained by reason of the breach. This emanates from the Contract Law, Chapter 149, which reflects the principles of common law and, likewise, the Tort Law, Chapter 148, which includes similar provisions for the award of compensation for negligent or tortious acts. The Admiralty Court has, in some instances, awarded compensation for consequential pecuniary loss in the form of loss of profits where the circumstances of the case so justified.

In relation to demise clauses, even though the Supreme Court (at first instance as Admiralty Court or in its jurisdiction as appellate court) has not specifically interpreted or examined the effect of such a clause in a charter party, if such a question would be brought before it for adjudication, the Supreme Court would, in all likelihood, follow the case law developed in England since The Berkshire case; in other words, the validity of the demise clause will be recognised.

The risks to Cypriot shipping from Brexit seem to be minimal. British companies are in the process of registering ships to the Cypriot registry and other companies have moved their headquarters to the island. On a broader level, Brexit will affect shipping companies’ income and trade, but Cypriot shipping has not been affected negatively, for the time being.

Cyprus Registry

From 1 January 2021, British vessels are no longer considered part of the EU fleet. In addition, British shipping companies are no longer considered European and therefore cannot fit into the Cyprus Tonnage Tax System unless they make the necessary changes to be considered European. The Shipping Deputy Ministry to prevent the deletion of vessels from its registry, contacted and informed the affected parties to make their own preparations for the UK’s withdrawal from the European Union, providing them with options. British nationals and companies that owned Cypriot-registered vessels, in order for them to continue to have their vessels registered under the Cyprus flag, had the following options:

a)         to transfer the ownership of their vessels to a person who, by virtue of Section 5 of the Cyprus Merchant Shipping Law, is qualified to own a Cypriot ship;

b)        to transfer the shares or change the directors of the registered owning company so that, by virtue of Section 5(4) of the Law, the registered owners will be deemed to be controlled by citizens of the European Union or the European Economic Area; and

c)         to transfer the registered office of the current registered owning company (re-domicilisation) to the Republic of Cyprus (by virtue of Sections 354A to 354H of the Companies Law, Chapter 113) or to any other EU or EEA member state.

It is interesting to mention that the vast majority of British shipowners transferred the ownership of their vessels to newly incorporated Cypriot legal entities. More specifically, the British owners proceeded with the establishment of Cypriot entities in the island, in order for them to remain eligible to own Cypriot-registered vessels. It is of great importance that, for the time being, no vessel has been deleted from the Cypriot Registry as a result of Brexit.

I. Introduction

The Cyprus Tax Department on 22 March 2019, released the unified Interpretative Circular 4 (VAT and Income Tax), referring to the registration, in the VAT Registry, of Cypriot companies which operate in the business sector of leasing pleasure yachts (recreational boats) in Cyprus.

The aforementioned Circular applies to leases commencing from 22 March 2019 and after, introducing new procedures, which are in compliance with the European and Cypriot Law and most importantly, they are approved by the European Commission.

More specifically, the new circular provides that the use and enjoyment (provisions of Article 59a of the VAT Directive 2006/112/EC) of a yacht, will be determined by reference to the distances travelled and not by reference to the yacht’s type and size, which was the method followed since 13 March 2012 and it was based on the repealed previous guidelines.

II. Registration for Vat purposes

According to the said Circular:

  1. For long-term leases of yachts, the lessor can only be a legal entity (company), registered in  the Cyprus Tax Department, possessing a valid Cyprus VAT identification number.
  2. During the Registration Process, the company is entitled to submit both:

a)       A copy of the Lease Agreement (if the business will operate based on the details of a single contract) or any other agreements signed with prospective customers (laisse); and

b)      A document which describes in detail the procedure to be implemented for keeping the logbook (if this is kept manually) or if a geotracking system is installed on board the vessel to track her movement.

  1. The Director of the Company, or any other authorised person must sign a statement approving and agreeing that the registration of the Company in the Cyprus Tax Department will be under probation for at least six (6) months, (with the possibility to be extended up to one (1) year maximum). During this period, the Commissioner of Cyprus Tax Department, has the authority to deregister or diversify the Company, for the purpose of protecting the public revenue, taking into consideration any new information that may ensue.
  2. In the event that a Lease Agreement provides to the Lessee the option to purchase the pleasure yacht at any point of time during the lease period, then the Commissioner of Cyprus Tax Department may reject the contract on the basis that the contract relates to supply of goods and not to supply of services and thus the company as the lessor, will be charged the amount of 19% as VAT.

It is worth mentioning that the question what it could be considered and characterised as a supply of goods and what as a supply of services is replied in the Mercedes- Benz Financial Services UK Ltd (Case C-164/16)In the said case the Court of Justice of the European Union (CJEU), took the view that  ‘’legal certainty requires that lease agreements should be regarded as supplies of goods for the purpose of levying VAT only when it can be assumed with certainty that in the normal course of events, at the latest by the end of the agreement term, ownership of the subject matter of the leasing agreement will be transferred to the lessee’’.

 III. Yacht Usage and Enjoyment Determination

  1. If at the time of the VAT registration, the Company cannot provide sufficient details of the place that the leasing services are expected to be used and enjoyed, then the Commissioner of Cyprus Tax Department may at his discretion and using the best of his abilities to predetermine the percentage of use and enjoyment within the European Union (EU).
  2. Whenever predefined percentages are used and if the length of the yacht is 20 meters long or more, the Company should provide details to the Tax Authority in relation to the lease and sail of the yacht, every six (6) months. Subsequently, the Commissioner of Cyprus Tax Department can proceed with a new calculation of the VAT due, if any details with regards to the use of the yacht deviate from the predetermined rates, during the 6-year-registration period, at any point of time.
  3. No input VAT on running expenses of the yacht can be claimed by Companies that use the predetermined rates for any operating expenses incurred in the course of running the leasing business.

 III. Conditions for VAT Registration

 The following conditions need to be satisfied, for the VAT registration to be successfully completed:

  1. A guarantee payment is required – based on the market value of the pleasure yacht on the registration date, (it cannot exceed 3% of the market value of the pleasure yacht);
  2. If the yacht is new, then its value should be verified by a purchase invoice, in order to determine the value of the yacht at the time of the registration. If, however, the yacht is second hand, its value should be verified by an expert valuation;
  3. The Director of the Company, or any other authorised person needs to sign a specific statement, in order to confirm the predetermined rates of use and enjoyment, as well as the terms and conditions that shall apply during the period that the Company will be registered for VAT purposes, which cannot be shorter than six (6) years;
  4. The yacht should be placed at the disposal of the Lessee in the Republic of Cyprus, which means that the yacht should sail to Cyprus prior the commencement of the lease agreement, in order to be set at the disposal of the lessee in Cyprus. The Lessee, who can be established within or outside the Republic of Cyprus, should be a physical person (under any nationality) that does not lease the yacht for business purposes.

 V. Time and Duration of VAT Registration

The Company should remain registered for VAT purposes for at least six (6) consecutive years and submit VAT returns, even if the Company has already paid the total tax due. By maintaining its registration, the Company always has the obligation to consistently submit the required tax returns.

 VI. VAT Deregistration

In case the Company ceases its engagement in the leasing activity and/or becomes deregistered from VAT at any point of time prior to the lapse of a 6-year-period from its registration, this will result in the imposition of VAT at the prevailing standard rate on the replacement value of the yacht at that date.

VII. Other Taxes 

a)      Income Taxes

 For income tax purposes, the income tax due shall be calculated in accordance to the Income Tax Law in the Republic of Cyprus, or on the basis of any other methodology that may be determined by the Commissioner of Cyprus Tax Department at the time of the Company’s registration.

 The tax payment – as it is calculated on an annual basis – shall be made in 2 instalments; the 1st instalment shall be paid no later than the 30th of June; and the 2nd instalment on the 31st of December, of each calendar year, as per Commissioner’s of Cyprus Tax Department decision.

 b)      Stamp Duty

 For non-Cypriot flagged vessels, the lease contract is subject to stamp duty. The value of the lease shall be calculated based on the market value of the vessel, its operational expenses and the expected profit of the Company.

VIII. Penalty 

The Commissioner of Cyprus Tax Department has the right to withdraw any authorisation he has granted, in respect of the use of the aforesaid instructions, when there is an unjustified delay in the payment of any amount due and/or an incomplete presentation of information that may be requested.

 OVERVIEW:

In the light of the above, the VAT is calculated on the basis of the yacht’s effective use and enjoyment within EU territorial waters. Effectively, this means that no VAT is chargeable on the portion of the lease attributable to effective use and enjoyment of the yacht outside the EU territorial waters or within international waters. Thus, this supply of services by the lessor, is taxable at the basic VAT rate, but only to the extent that the leased yacht is used within the territorial waters of the EU.

 This long-term yacht lease, is considered a supply of a service falling within scope of Cyprus VAT when the yacht is put at the disposal of the lessee in Cyprus, provided that the lessor is established in Cyprus. Such rule applies provided that the lease contract does not include an “option to buy” clause and therefore, there will be no transfer of ownership as per the lease agreement.

CONDITIONS FOR VAT REGISTRATION AND APPLICATION
In terms of the new Circular and its guidelines of the yacht leasing services, the following conditions should be satisfied:
The Lessor and the Lessee must enter into a yacht leasing agreement, which must be presented to the Cyprus Tax Department;The Lessor must possess a valid VAT identification number in the Republic of Cyprus;Concerning the long-term leases, the Lessor must be established in the Republic of Cyprus and the Lessee, who can be established within or outside the Republic of Cyprusmust be a physical person (under any nationality) that does not lease the yacht for business purposes;The yacht should be put at the disposal of the Lessee in the Republic of Cyprus, which means that the yacht should sail to Cyprus prior the commencement of the lease agreement;A guarantee payment is required, which cannot exceed 3% of the market value of the pleasure yacht on the registration date;At any time of VAT registration, the Lessor must maintain and provide enough records, in order to prove the percentage of use and enjoyment within or outside the EU; otherwise the Cyprus Tax Commissioner may, at his discretionto predetermine the said percentage within the EU;A six-month declaration should be filed by the Lessor with the Tax Commissioner, in order to state the use and enjoyment records, as the Tax Commissioner has the power to adjust the pre-agreed rates.
VAT PAYMENT
In terms of effective use and enjoyment of the standard VAT rules within the EU:
During submission of the VAT returns, the Lessor is obliged to charge any VAT to the Lessee on the lease fee, declare and pay any resulting VAT liability to the Tax Department of the Republic of Cyprus;Thus, in this scope of Guidelines, an adjusting process is provided, ensuring that the terminal VAT charge reflects the actual yacht’s effective use and enjoyment within the territorial waters of the EU; andIn light of the above, the use and enjoyment records shall be submitted as this is required by the Guidelines in a semi-annual basis to the Cyprus Tax Department, since the Cyprus Tax Commissioner has the power to adjust the pre-agreed use and enjoyment rates.
CALCULATION OF USE OF THE YACHT WITHIN THE TERRITORIAL WATERS OF EU
The Yacht Leasing Guidelines provide:
The Cyprus Tax Commissioner shall determine the use and enjoyment based on the data that will be provided to the said, during the VAT registration process;The Director of the Lessor must sign a statement approving the agreed rates resolved by the Cyprus Tax Commissioner, whilst the Lessor must maintain enough records to prove this effective percentage of use and enjoyment within or outside the EU; andIn conclusion, the use and enjoyment records shall be submitted to the Cyprus Tax Department in a semi-annual basis, as the Tax Commissioner has the power to adjust the pre-agreed rates.


 
Example

In order to provide a better understanding to the reader of this article, we set out below an example reflecting the circumstances of a case handled recently by the Shipping Department of our Law Firm, which is related to the registration of a company, which is operated in the business sector of leasing pleasure yachts in Cyprus, before the Cyprus Tax Department.

For the sake of consistency and clarity, it is imperative to be emphasised that the below example is based on the unique characteristic and facts of this specific case per se and it can only be used for general information. This example does not create a precedent and should not be regarded as a standard to be relied upon with regards to the subject matter and for any decisions to be taken thereon.

 Pleasure Yacht’s Description

  • Length: 25m
  • Market Value: 1.200.000€
  • 20% agreed percentage of Yachts’ Usage and Enjoyment, within the EU.

I. Guarantee Payment

A guarantee payment of the amount of 36.000,00 € is required and it is due to be paid as soon as the company is registered in the Cyprus Tax Department (it cannot exceed the 3% of the market value of the yacht). The amount is based on the market value of the pleasure craft on the registration date and it could either be paid via bank cheque or bank transfer.

II. Duration of VAT Registration

 The company should remain registered for VAT for at least six (6) consecutive years and it is due to pay the following amounts:

III. Payments

 a) VAT Tax amount:  80.256,00€

The above mentioned Vat Tax amount is indicative and it is subject to any changes or amendments may occur after the Cyprus Tax Department receives further information about the yacht. The amount of 614,67 € shall be paid by the 10th day of each month.

It is well mentioning that in case the VAT Tax amount is paid in advance (in one instalment), accepted on the registration date, then the applicant may receive a discount, which ranges depending on the circumstances of the case, which normally does not exceed 3% of the market value of the pleasure craft.

 b) Income Tax amount: 24.000,00 €

The payment of the Income Tax amount shall be made in 2 instalments, each year throughout the period of six (6) years (unless the applicant elects to settle the VAT charged in advance as mentioned above). The 1st instalment should be paid no later than the 30th of June and the 2nd instalment on the 31st of December, of each calendar year. The amount of each instalment is 2.000,00 €.

 c) Stamp Duty amount: 4.139,00 €

 For non-Cypriot flagged vessels, the lease contract is subject to stamp duty, which is payable on the registration date.

Cyprus has a strong maritime connection going back thousands of years. Due to the perfect location of the island, with easy access to three continents, and of course being an island, sailing has always been part of the Cypriot life. Whether for business or leisure, the sea is the lifeblood of Cyprus and, over the centuries, maritime knowledge has been passed down through the generations, making Cypriot sailors some of the best, and most experienced, in the entire world.

To this day, shipping remains a very strong part of the Cypriot economy. This ‘blue economy’ provides a great deal of employment and contributes significantly to the island’s financial situation. It is an industry that is constantly growing and expanding and so it’s perhaps no surprise that there are many high-quality marina facilities around the island.

– Limassol Marina

Dubbed ‘the Monte Carlo of Cyprus’, Limassol Marina is incredibly impressive, attracting both yacht owners and tourists. This landmark marina offers docking for up to 650 yachts from 8 to 115 metres making it the first Cyprus marina with a capability of accommodating super yachts. With a wide range of bars and restaurants, Limassol Marina is a lively and salubrious area.

 – Larnaca Marina

 Located in Larnaca Bay, this official entry point to Cyprus offers mooring for 450 vessels. It’s wise to note that the Larnaca Marina is 1.5m at some points so entry for vessels over 2 metres deep should enter with caution using a depth meter. This marina offers a wide range of amenities from water and electricity to access to showers and laundry facilities.

 – Ayia Napa Marina

 Currently under construction, this impressive new marina is expected to be completed in 2021. The planned development will give vessels access to high-end facilities and there will also be several luxury accommodation areas overlooking the marina.

 – Latchi Harbour and Marina

 Latchi used to be a small fishing port, but over recent years it has increased in popularity and become a main stopping point. The marina offers all the services for vessels you’d expect of a small harbour and there are some amazing fish restaurants here too.

 – Paphos Marina

 Another marina under construction, the Paphos Marina is set to be a large development with capacity for 1000 vessels on 45,000 square metre site that will include housing, parking and restaurants.

 – St. Raphael Marina

 On the east side of Limassol is St. Raphael Marina. This beautiful marina provides docking for 273 vessels up to 30 metres long and 4 metres deep. Electricity, wireless and television services are available as well as management and technical services.

 – Zygi Marina

 Zygi Marina can be found in the Larnaca district. It’s a small marina mainly used by small to medium sized fishing boats. It offers basic services for vessels and the area is very pleasant with a beach and restaurants close by.

 For further information and for all your maritime legal requirements, contact A. Kartizis & Associates LLC.

Being a Cyprus legal business, it’s perhaps no surprise that we are experts in Shipping and Maritime Law. We have a dedicated maritime law department with an expert team ready to help with any aspect of maritime law from vessel registration and yacht leasing to financing and admiralty court representation. Please do get in touch today to discover how we can help you.

Coastal State regulation of bunkering (the supplying of fuel for use by ships) in the Exclusive Economic Zone (EEZ) is a contentious matter. The United Nations Convention on the Law of the Sea (UNCLOS) does not establish a clear allocation of jurisdiction as between coastal and flag States. Bunkering by its very nature is a way to avoid customs duties applied by the coastal State. Inevitably, bunkering in the EEZ entails more dangers, especially environmental hazards, than bunkering within a port. Several coastal States regulate bunkering of fishing vessels in the EEZ in their fisheries laws, but State practice is not uniform.

Part V, Articles 55-75 of UNCLOS establishes the legal regime that governs the EEZ. The EEZ is a maritime zone sui generis which combines fundamental freedoms of the High Seas with certain sovereign rights of coastal States, thereby creating considerable tension between the two interests. The Coastal State enjoys broad-ranging legislative jurisdiction within its EEZ (Article 56). At the same time, the rights, and obligations of other States in EEZ are set out in Article 58 of UNCLOS. While Articles 56 and 58 of UNCLOS have undoubtedly an important role to play, it is not straightforward how they should be applied. Offshore bunkering is not contemplated by Article 58. Where the coastal State has no jurisdiction, any legislative or enforcement measures will constitute an infringement of the flag State’s freedom of navigation in the EEZ pursuant to Article 58 (1) UNCLOS.

Bunkering in the EEZ can be considered as falling under the freedom of navigation or as being “related to the freedom of navigation. However, if interpreted too liberally, this provision (Article 58) would arguably frustrate the will of the drafters by infringing upon the field of operation that they chose to reserve for Article 59 which deals with the resolution of conflicts regarding the attribution of rights and jurisdiction in the EEZ.

  1. The M/V SAIGA and the M/V Virginia G cases

The possible inclusion of bunkering among the domains on which the coastal State may lawfully legislate was questioned for the first time in the “SAIGA” Cases. In the “SAIGA” (No.1) Case as an obiter dicta comment, the International Tribunal for the Law of the Sea (ITLOS) considered that it was possible to argue that “refuelling is by nature an activity ancillary to that of the refuelled ship” and thus an activity the regulation of which can be assimilated to the exercise by the coastal State of its sovereign rights under Article 56.

In the “SAIGA” (No. 2), ITLOS decided that in the EEZ, the coastal State does not have jurisdiction to apply its customs laws and regulations other than in respect of artificial islands, installations, and structures. While in both cases (“SAIGA”) ITLOS did not expressly mentioned whether bunkering falls into the scope of coastal State jurisdiction, dissenting opinions gave some critical considerations on the issue. Interestingly, Judge Anderson in “SAIGA” (No. 1) following the collective dissenting opinions of Judges Wolfrum and Yamamoto stated that bunkering falls withing the internationally lawful uses of the sea related to navigation and it is not within the competence of the coastal State concerning fishing. In the case of bunkering of a fishing vessel, on the other hand, “the accent is not so much on the navigation of the fishing vessel as upon its efficient exploitation of the stocks.” However, Judge Zhao in “SAIGA” (No. 2) stated in his separate opinion that bunkering must not be regarded as falling within the high seas freedom of navigation or related to it, but it is an offshore commercial activity.

Later, in the Virginia G Judgment, ITLOS unanimously concluded that the requirement for bunkering vessels to obtain the authorization of the coastal State prior to bunkering fishing vessels in the EEZ could be considered as a legitimate exercise of the coastal State’s jurisdiction to conserve and manage living resources under Article 56(1)(a) of UNCLOS. This finding, however, only applies in relation to bunkering of vessels engaging in fishing and it does not extend to the bunkering in general of non-fishing vessels.

  1. The M/V Norstar Case

More recently, in 2019 ITLOS in the M/V Norstar Case declared that bunkering on the high seas is part of the freedom of navigation under Article 87 of the Convention. Following that argumentation, it could be stated that the coastal State in the EEZ cannot regulate bunkering activities, except in the cases of bunkering of fishing vessels or other instances such as Marine Scientific Research on which the coastal State has jurisdiction as per article 56, because bunkering falls within the freedom of navigation.

ITLOS’ reasoning in the “Norstar” case can be extended by arguing that the EEZ bunkering of vessels in transit should be regarded as an internationally lawful use of the sea related to the freedom of navigation under Article 58. Yet, it is still questionable whether States need an authorization prior to bunkering in the EEZ in the case of non-fishing or fishing related vessels, especially in today’s fragile marine environment and ecosystem.

On 12 June 2020 the Shipping Deputy Ministry to the President of Cyprus issued the Circular 13/2020, through which informed all owners, bareboat charterers and managers of ships flying the Cyprus Flag about the replacement of its previous circular no. 12/2020, dated 14 May 2020, providing information regarding the revised procedure for conducting crew changes in a practical and effective way, in accordance with the Decree no. 28, issued by the Minister of Health and the relevant instructions of the Minister of Transport, Communications and Works, regarding the operation of Ports and Port Facilities as well as the related protocol for crew changes.

For the sake of consistency and clarity, according to Decree No. 28 dated 5 June 2020, issued by the Minister of Health (on the determination of measures to prevent the spread of COVID-19), crew changes are possible at Cyprus ports provided certain conditions are met.

The revised procedure is as follows:

  1. For crew changes involving crew members which, in the 14 days before their arrival in Cyprus, were in countries belonging to categories A or B, or were onboard vessels which did not dock at any port, or were onboard vessels which docked only at ports of countries belonging to categories A or B, no approval is required from the Shipping Deputy Ministry. In all such cases, crew changes should be executed in accordance with all existing measures and procedures applicable to persons arriving from countries belonging to categories A and B.
  2. For crew members which meet the above criteria but are not able to perform a PCR- based covid-19 test from a certified medical center in the country of departure within 72 hours of departure with a negative result, a request should be made to the Shipping Deputy Ministry in accordance with the procedure set out in paragraph 3 below, in order to secure approval, so that a PCR-based covid-19 test is conducted upon their arrival in Cyprus.
  3. In addition to cases described in paragraph 2 above, special approval should be obtained from the Shipping Deputy Ministry for crew members and passengers of vessels or pleasure craft who do not meet the provisions set out in paragraph 1 above. Approval requests should be submitted electronically at the following email address: crewchanges@dms.gov.cy.  

All requests should include the following information:

  • Vessel Name and/ or IMO number
  • Vessel location in the Republic of Cyprus (name of port/ marina)
  • Crew members’ names (on-signers and off-signers)
  • Crew members’ flight details and original country of departure
  • Accommodation arrangements in Cyprus (if applicable)

No approval is required for crew changes between vessels (which do not involve the embarkation/ disembarkation of any crew members).

  1. In cases where charter flights are organised for the transfer of crew members and/ or passengers, additional permission is required from the Ministry of Transport, Communications and Works for the execution of such flights.
  2. The above procedures should be carried out in accordance with the provisions of Decree No. 28 of the Minister of Health (on the determination of measures to prevent the spread of COVID-19) as issued on 5 June 2020, as well as the provisions of the Protocol for crew changes issued by the Ministry of Transport, Communications and Works. 

It is of great importance to be mentioned that the relevant provisions for crew changes can be found in paragraph 2.15 of Decree No. 28, issued by the Minister of Health. Provisions for the disembarkation of crew members can be found in paragraph 2.16 of said Decree and provisions for the disembarkation from pleasure craft can be found in paragraph 2.19 of said Decree.

According to paragraph 2.15 of Decree No. 28:

The transportation and/or departure from the Republic shall be allowed as of 9 th June 2020 at 00:01 hrs until midnight 19th June of persons who are members of crews of commercial aircraft or members of crews on rigging platforms carrying out exploratory drilling within the Exclusive Economic Zones of States, with which the Republic has established diplomatic relations, or members of laid up cruise ships or members of pleasure boats, which are either docked in ports of the Republic, or are arriving by commercial flights or flights, which are allowed by exception, following a special permit by the Minister of Transport, Communications and Works, in accordance with the Civil Aviation (Determination of Measures against the Spread of the COVID-19 Coronavirus) Regulations of 2020 until (No.6) of 2020, as amended or replaced for the time being under the following terms:

(i) The said persons shall be placed in a state of self-isolation 14 days prior to their arrival,

(ii) They shall undergo molecular examination for the COVID-19 disease, before their arrival, which should be negative or if this is not possible on their arrival and if the examination is positive, they shall remain in a state of compulsory isolation (quarantine) subject to the medical protocol of the Ministry of Health.

(iii) The company for which they work or/and the agent who has undertaken the change of crew, shall undertake to transfer the crew directly from the ship to the airport, while the transfer of the crews arriving by air from airport to the port of departure, under strict security measures. If there is no coordination between the arrival of the ship and the arrival of the flight, or if the results of the molecular examination are pending, the company or/and the agent shall proceed to the necessary arrangements with the Authorities for the crew to stay in designated premises, in a state of isolation, until the arrival of the flight or the ship. Where possible, the disembarking crew shall remain on the ship until the date of the flight.

Provided that, for persons who are already working as crew members on vessels anchored in Cypriot ports, which are due to depart from the Republic, only sub-paragraph (iii) shall apply.

According to paragraph 2.16 of Decree No. 28:

The transfer and stay shall be allowed in the Republic as of 9th June 2020 at 00:01hrs until midnight 19th June 2020, of sailors and members of ship crews, who arrive on board vessels anchored in the ports of the Republic, under the following terms:

(a) For vessels arriving in the Republic from countries of Categories A and B, and provided that in the previous 14 days they have not called at a port of any country not belonging to the above categories, the sailors and crew members shall furnish a negative certificate of molecular examination for the COVID-19 disease, valid 72 hours prior to the departure of the vessel or such persons shall undergo molecular testing at the place of anchorage and they shall remain on board the vessel until the result is issued.

(b) For vessels arriving at the Republic from countries not belonging to Categories A and B, the sailors and crew members thereof must: (i)have completed 14 days in self-isolation and filled out a particular form issued by the Ministry of Transport, Communication and Works, as part of the protocol for change of crews. (ii)submit to a molecular examination for the COVID-19 disease upon disembarkation. (iii)these persons shall remain on the boat or in places of compulsory isolation (quarantine) until the result of the examination is issued.

(c) If the persons referred to in sections (a) and (b) above are positively diagnosed for the COVID-19 disease, they shall remain in a state of compulsory isolation (quarantine) subject to the medical protocol of the Ministry of Health.

(d) The procedures provided in Regulation 2.15(iii) are followed proportionally for the conduct of the molecular examinations, the transfer procedure and the isolation, until the issuing of the results for the examination of said persons.

 According to paragraph 2.19 of Decree No. 28:

With the exclusion of paragraphs 2.15 and 2.16 above, concerning the sailors and crew members, the following apply for persons lawfully entering the Republic from legal points of entry by sea:

(i) For pleasure boats arriving in the Republic from countries of Categories A and B, the passengers shall present a negative certificate of molecular examination for the COVID-19 disease, valid 72 hours prior to the departure of the boat or the said persons are given a molecular testing at the docking berth and in such case remain on the boat until the result is issued.

(ii) The passengers of pleasure boats which arrive from countries not falling under categories A and B and 14 days prior to their arrival they have not docked at any other port or they have docked only in the ports of countries that belong to categories A and B, shall be given a molecular test for the COVID-19 disease upon their arrival at the place of anchorage and remain on board until the result is issued.

(iii) The persons of categories (i) and (ii) who arrive in the Republic and are positively diagnosed for the COVID-19 disease, shall remain in a state of compulsory isolation (quarantine) subject to the medical protocol of the Ministry of Health. Provided that the administrators of the legal points of entry by sea shall ensure that the passengers will comply with all of the above.

  1. Crew members entering the Republic of Cyprus through the airports of the Republic of Cyprus can apply for granting of a “CyprusFlightPass”, at the official web electronic platform of the Republic of Cyprus (https://cyprusflightpass.gov.cy/). By selecting, through the online platform, in Section 41 of the form “Passenger Locator”, the following category of passengers: “Persons, regardless of nationality, having a special permission by the Republic of Cyprus”, and stating thereafter whether or not they will perform a Covid-19 test upon their entry into the Republic of Cyprus, the “CyprusFlightPass” will be granted. Said pass must be presented to the airlines, so that the crew members will be allowed to board the aircraft. Crew members who will be doing the Covid-19 test upon entry into the Republic of Cyprus will need to pay the relevant cost of 60 euros. In the case where the web electronic platform of the Republic of Cyprus is temporarily unavailable due to technical issues or scheduled maintenance, persons travelling to Cyprus will be able to complete the required forms manually. These forms can be downloaded from the above web electronic platform.

 Countries which have been classified in Categories A and B

The Ministry of Foreign Affairs of the Republic of Cyprus announced on 12 June 2020 the classification of countries which have been classified in Categories A and B, based on the epidemiological risk assessment undertaken by the Infectious Diseases Epidemiological Monitoring and Control Unit (IDEM&CU) on 10/6/2020.

The countries are the following:

Countries in Category A

  1. Malta
  2. Greece
  3. Bulgaria
  4. Norway
  5. Austria
  6. Finland
  7. Slovenia
  8. Hungary
  9. Denmark
  10. Germany
  11. Slovakia
  12. Lithuania
  13. Croatia
  14. Estonia
  15. Czech Republic
  16. Switzerland
  17. Latvia
  18. Luxembourg

Countries in Category B

  1. Israel
  2. Poland
  3. Romania

A. Measures adopted by the Ministry of Transport, Communications and Works of the Republic of Cyprus

I. Revised Measures on Ports and Port facilities

The Minister of Transport, Communications and Works of the Republic of Cyprus exercising the powers he is vested in according to article 14(1) of the Law on Cyprus Ports Authority 1973 to 2016, has issued on 6 May 2020 revised instruction on the implementation of the restrictive measures to tackle COVID-19 pandemic at ports and ports facilities in Cyprus.

Further to the Directives of the Minister of Transport, Communications and Works dated 9.4.2020 to the Cyprus Ports Authority and within the framework of the gradual lifting of the containment measures to deal with the state of emergency in Cyprus due to the COVID-19 pandemic, the Minister of Transport, Communications and Works issues the following new Directives as regards the revised restrictive measures which must be observed in all ports and port facilities, by the Cyprus Ports Authority as well as by the Contractors/Licensees/Port Operators of port services and port facilities:

  1. Passenger / crew disembarkation: Any disembarkation of passengers and persons who are crew members of any type of vessel, including cruise ships and yachts, for the purpose of visits, short stays or overnight stays in the territory of the Republic is prohibited, excluding crew replacement / change as mentioned in 2 below.
  2. Crew replacement/change: Persons who are members of crews of merchant ships, cruise ships in decommissioning, yachts and crew members on platforms that carry out exploratory drilling rigs within Exclusive Economic Zones of states with which the Republic of Cyprus maintains diplomatic relations, who are either on boats moored in the ports of the Republic or arrive on flights which, exceptionally, are allowed following a special permit by the Minister of Transport, Communications and Works, in accordance with the Civil Aviation (Determination of Measures aimed at minimising the spread of COVID-19) Decrees of 2020 (No.4) are allowed transportation and / or departure from the Republic. A relevant protocol on the procedure that must be followed during crew changes is attached.
  3. As regards crews of commercial vessels (tugboats, etc.) which have their permanent base in Cypriot ports, insomuch that they perform international voyages outside territorial waters, or voyages within territorial waters and come into contact with other crews or ports abroad, upon return to Cypriot ports, shall strictly comply with the instructions given by the Medical and Public Health Services, i.e. self-isolation for 14 days. All such vessels performing voyages within or outside of territorial waters, insomuch that the same crew members are employees of the company and insomuch that when they serve other ships they do not come into contact with the crews of other ships and do not visit ports abroad, then there will be no obligation to self-isolate.
  4. Ship decommissioning: The long-term stay of ships in anchorages of the Republic for decommissioning purposes, in readiness conditions (warm lay-up), on the basis of the availability of slot for anchoraging for decommissioning purposes and on the basis of the characteristics of the ships, is permitted. It is understood that passengers or crews may not be disembarked for reasons other than for crew replacement/change purposes as referred to in 2 above.
  5. Military Vessels: They may be docked after Notam Verbatim, but their crews may not be disembarked except for replacement/change as mentioned in 2 above.
  6. Moving of private vessels for maintenance and repair purposes: Private vessels may move between authorised berths within the territory of the Republic for maintenance and repair purposes.
  7. UNIFIL: It is permitted to move members of the UNIFIL Command force based in the ground installations of the port of Limassol. As regards the crews of UNIFIL vessels, it is only allowed to disembark for direct transport to an appropriate hotel inland for selfisolation and for their replacement/change as referred to in 2 above.
  8. Emergency medical situations: In the event of emergencies (emergency medical situations) for a sick passenger or a sick crew member, either at anchorage or in port, agents exceptionally and due to the emergency medical situation will be entitled to make the necessary arrangements for the transport and care of the patient, provided that they consult, in advance, with the Medical and Public Health Services and inform the Cyprus Ports Authority.
  9. No one is allowed to embark on any vessel for any reason apart from conducting activities which relate to cargo operations. It is permissible for stevedores, lashersunlashers and Ships/Cargo Surveyors to embark on vessels for conducting cargo operations with the prerequisite that the master shall undertake to isolate/restrain the crew and send a written confirmation to the Cyprus Ports Authority or to the Contractors/Licensees/Port Operators of port services and port facilities, that the crew is in self-isolation order within their cabins and no contact shall incur with the abovementioned personnel during their stay on board the vessel. It is understood that if their activities can be conducted electronically (signing of certificates) they are prohibited from boarding. It is further clarified that the same applies for surveyors involved in the administrative part of operations. Namely, only those who conduct operations relating to sampling checks and measurements (i.e. bunkering) may embark. It is further understood that stevedores, lashers-unlashers and surveyors must strictly adhere to the rules of self-protection/hygiene (masks, gloves, keeping necessary distance of 1-2 metres from each other, washing hands etc.) before their embarkation and after their disembarkation from the vessel, as per the guidelines for embarkation and disembarkation of navigators in paragraph 12.
  10. In case there is a need for an inspection of a berthed vessel on the quay by crew members, only one member of the crew may disembark for a short period of time, provided that the ship’s agent informs the Cyprus Ports Authority or the Contractors/Licensees/Port Operators of port services and port facilities, in order to remove the persons working at that time in the specific part of the yard, as well as the Cyprus Port and Marine Police for on-site presence and supervision.
  11. Provisions/Supplies: Crew must self-restrain in their cabins during the ship’s provision process. The Captain is responsible for confirming, both to the Ship Agent and the Cyprus Ports Authority or the Contractors/Licensees/Port Operators of port services and port facilities, that there will be no physical contact/interface of crew with ground personnel. It is understood that providers/suppliers will place the supplies on the quay, at a point near the ship to be indicated, and after they have evacuated the area, the crew will be allowed to approach and load the supplies to the ship. At anchorage, provision is permitted, provided there will be no physical contact/crew interaction with the providers/suppliers.
  12. Instructions for boarding and disembarking vessels: 

i. Before navigators board the pilot boat:

a)       Hand washing before use of equipment (masks, gloves).

b)      Installation/application of equipment (masks/gloves) before boarding the pilot boat.

c)       Using masks with respirator-filter (type FFP2).

d)      Use of disposable gloves.

e)      Always have an antiseptic solution with at least 60 % alcohol content so that in case the gloves are distorted during the manoeuvre, they may be disinfected.

 ii. Boarding the ship: 

f)     A distance of at least 1 meter from any person shall be kept.

g)    The ship’s bridge shall accommodate the minimum necessary number of people.

iii. Disembarkation of Navigators from the pilot boat:

h)    Gloves, masks are removed in the appropriate way.

i)     They are dispensed at the end of the manoeuvre as quickly as possible, in a bin on the quay that shall be placed for this purpose and definitely before entering the offices or interacting with any other persons.

j)     Hand washing and antiseptic use.

13. Those who have no other option but to board a ship for operations – such as Port State Vessel Inspectors or Ship Inspectors, or Technicians necessary for conducting inspections or other qualified persons for supervision of unloading machines (e.g. bulk cargo, oil products) as well as inspection of equipment and safety incidents – must comply with the applicable instructions relating to boarding procedures mentioned in paragraph 12.

14. As regards persons who remain on board, irrespective of the duration, such as the “Mooring Master”, for transhipment operations of petroleum products from ship to ship – “STS Operations”, and specialised persons for unloading petroleum products at power stations) , the following should be adhered to:

a)       Certification by the ship carrying the cargo that there has preceded disinfection of the person’s/persons’ living space (cabins). Where it is possible, such cabins should be single to double.

b)      Clarification whether a personal toilet is available for such staff. In the case of a positive response, the personnel will remain isolated in their cabins without contact with the ship’s crew and will use the personal toilets exclusively and strictly adhere to the personal protective/health measures. In the event of a negative response, the ship must designate a separate toilet for the persons, for which it will also have to certify its prior disinfection.

c)       The person(s) should carefully remove the personal protective/health equipment after completion of supervision and before entering the cabin. When leaving the cabin and if they are to come into contact with the ship’s crew, personal protective/hygiene equipment should be available for change in the cabin. The final removal of personal protective/health equipment will take place as recorded in the guidance for navigators (i.e. once they reach land).

d)      Special attention should be paid to avoiding the unnecessary stay of any personnel of the ship near the Mooring Master/Specialised Persons. E. As far as the issue of nutrition is concerned, it is recommended that they carry the necessary supplies for his/her stay on board with him/her. In case anything additional is needed, it will be left outside the cabin for them and strictly keep hands clean.

15. Crew shall be prohibited from disembarking and performing work on the quay for purposes of maintaining the ship, e.g. painting, washing a vessel, etc.

16. Those entering ports and port facilities should adhere strictly to the instructions of the Medical and Public Health Services in relation to the use of personal protective/health equipment. It is understood that requests for exemption from the application of any of the above restrictive measures submitted to the Cyprus Ports Authority will be forwarded by the Cyprus Ports Authority to the Minister of Transport, Communications and Works and the Permanent Secretary of the Ministry of Transport, Communications and Works for consideration and decision after consultation with the Minister of Health of the Republic of Cyprus.

II. Crews change Protocol

  1. Crew change is allowed in the following categories of ships:

a)       Crew members of commercial ships.

b)      Crew members that work on platforms that are currently conducting research drilling works within the exclusive economic zones of countries that the Republic of Cyprus has established diplomatic relations with.

c)       Crew members of cruising ships that are currently laid-up.

d)      Crew members of recreation ships.

  1. For a crew change to take place, the following rules apply:

a)       Those persons have to remain in self-isolation for 14 days before entering the Republic of Cyprus. The attached document will have to be completed as a confirmation of the above.

b)      They have to have taken the coronavirus molecular test before their arrival or –if this is not possible- immediately after their arrival and the result should be negative.

c)       The company that employs the said crews and/or the agent that has undertaken the crew change has to take the necessary action for the transportation of the crew directly from the ship to the airport and the transportation of crews arriving by plane to the port of departure under strict protection measures.

d)      If the arrival of the ship and the arrival of the flight cannot be synchronized, the company and/or the agent has to make the necessary arrangements in cooperation with the authorities for the accommodation of the crew in particular shelters where they are going to stay isolated until the arrival of the flight or the ship.

e)      If the results of the molecular tests are still pending, the company and/or the agent has to make the necessary arrangements in cooperation with the authorities for the accommodation of the crew in particular shelters where they are going to stay isolated until the announcement of the results.

f)        Whenever possible, the crew that is going to disembark shall remain on board until the date of the flight.

g)       Persons that work as crew members in ships that are docking at Cyprus ports and those persons are going to disembark from the ship in order to leave the Republic of Cyprus and the arrival of the ship cannot be synchronized with the arrival of the flight, the company and/or the agent has to make the necessary arrangements in cooperation with the authorities for the accommodation of the crew in particular places where they are going to stay isolated until the arrival of the flight. For those persons, points (a) and (b) above do not apply.

  1. Procedure at the airport:

a)       The crew changes shall be realized with flights specifically chartered for this purpose either by the agent or the ship-owner and/or those organized by the Republic for the repatriation of Cypriot citizens in the event there is space available.

b)      Within the premises of the airport, all the safety and protection instructions have to be implemented.

c)       The use of a mask is compulsory while all the measures of hand sanitization will have to be implemented. Staff members in the airports and other people within the premises should keep the distance of 2 metres from each other.

d)      The transportation to the airport has to be completed within reasonable time as required by the instructions provided by the respective airline before the embarkation at the airport.

  1. Procedure at the port:

a)       Members of the crew that are going to enter the port of the port facilities for reasons of embarkation/disembarkation to/from the ship will have to follow strict protection measures.

b)      The use of a mask is compulsory while all the measures of hand sanitization will have to be implemented. Staff members in ports and other people within the premises should keep the distance of 2 metres from each other.

c)       The transportation to the port has to be completed within short time in relation to the embarkation time and provided that the ship is due to the embarkation of the crew.

d)      The disembarkation shall take place only at the presence of the transportation vehicle which is going to transport the crew to the airport or to the designated shelter according to the case.

e)      The embarkation of the new crew shall take place only after the previous crew has left, unless this cannot take place for security reasons.

f)        Any additional instructions provided by the manager of the port and the Cyprus Ports Authority as regulatory authority shall be strictly implemented.

  1. Transportation process

a)    Transportation from and to the destination, according to the case (port, airport, hotel) shall be conducted under strict rules.

b)    The transportation process shall be direct and no intermediate stops will be allowed. Disembarkation from the bus/shuttle is not allowed unless there is an emergency.

c)    The type of bus/shuttle chosen will depend upon the number of passengers and in relation with the rules in force implemented within the Republic.

  1. Further instructions:

a)       When, according to paragraph 2(b), a coronavirus molecular test is deemed necessary during the arrival of the crew members in the Republic, the company and/or the agent shall make arrangements through a relative agreement with the laboratory and take all the necessary actions for the direct transportation of the crew to a laboratory where the molecular test is to take place, in compliance with the procedure set out by paragraph 5, before the crew is transported to the shelter.

b)      In the event that the use of specific shelters is deemed necessary in accordance to paragraphs 2(d) and 2(e), the company and/or the agent will have to provide the appropriate shelter and the relative arrangements should be made for the accommodation of the crew, where the crew members should stay in isolation for the time required according to each case.

c)       The expenses of the ticket, bus/shuttle, use of protective measures, molecular testing and crew members accommodation in shelters shall be covered by the company/agent.

B. Measures adopted by the Shipping Deputy Ministry of Cyprus (‘SDM’)

I. Procedure for facilitating crew changes within the framework of the gradual relaxation of the Restrictive Measures applicable during the COVID-19 Pandemic.

Pursuant to, Decrees No. 20 and No.21 of 2020 issued by the Minister of Health (on the determination of measures to prevent the spread of COVID-19), crew changes are possible at Cyprus ports provided certain conditions are met.

More precisely, on 14 May 2020 the SDM issued the Circular 12/2020, through which informed all owners, bareboat charterers and managers of ships flying the Cyprus Flag about the procedure for conducting crew changes in a practical and effective way, in accordance with the above Decrees and the revised instructions of the Minister of Transport, Communications and Works, dated 6 May 2020, for the operation of Ports and Port Facilities as well as the related protocol for crew changes.

According to the said circular:

a)       Interested companies must address electronically all requests for crew changes to the Shipping Deputy Ministry to the following email addresses: deputy.minister@dms.gov.cy and epavlidou@dms.gov.cy. All such requests will be assessed by the SDM and, upon their approval, will be referred to the Ministry of Transport, Communications and Works (MTCW) for granting the necessary approval of the Minister of Transport, Communications and Works to perform a flight.

b)      The above arrangements will apply provided the provisions of the Decrees No. 20 and No.21 of the Minister of Health (on the determination of measures to prevent the spread of COVID-19) as issued on 30 April 2020 and 05 May 2020, as well as the provisions of the Protocol for crew changes issued by the MTCW, are met.

Requests concerning crew changes need not be registered on the online platform connect2cy of the Ministry of Foreign Affairs, which operates for the purpose of providing assistance to Cypriot citizens or permanent residents of Cyprus in emergency situations.

Crew change requests involving Cypriot citizens who wish to remain in the Republic of Cyprus should be addressed to the Ministry of Health for handling.