British Flag Yacht Registration - A Guide

The yacht owner faces an extensive and potentially bewildering choice of registration options for their vessel.

The yacht may be one of the most valuable possessions of the owner and it therefore follows that the decision on where to register their vessel should be well informed.

The chosen jurisdiction should offer universal acceptance whilst providing political and economical stability without subjecting the owner and the yacht to unnecessary regulation and bureaucracy.

Looking past the different registration options available, the choice for the yacht owner lies between registering the yacht in a home state, where they have a genuine connection by way of national or economic ties, or alternatively choosing to register in a flag state that may offer them benefits not afforded by the home state.

The British Register of Ships has traditionally been recognised as an International register for yachts, largely as a result of the ease of forming companies either within the United Kingdom, or more popularly in the British Overseas Possessions such as the Cayman Islands and Channel Islands, to enable yacht owners who ordinarily would not be able to qualify for the registration of their yacht in their own name under the British flag to obtain such registration.

In recent years the rules for qualification have been widened further, with the mainland United Kingdom register and some of the British offshore ports of registry now accepting applications from European Union nationals and European companies exercising their rights of freedom of movement.

BENEFITS OF THE BRITISH FLAG

The British flag offers the yacht owner many benefits which are listed below. Please double click on the relevant link for further information.

REPUTATON OF THE FLAG STATE

Great Britain has always been a politically and economically stable nation with a strong international profile and rich maritime heritage.

British Merchant Shipping Laws are considered to be precedental in the determination and resolution of arbitration and litigation of maritime disputes world-wide.

The registration of yachts under the British flag has always been actively encouraged by the registration authorities and the system has evolved to provide unrivalled support to the yacht owner.

The British registration authorities are well staffed with surveyors and administrators who provide a wealth of technical expertise, knowledge and experience which is utilised for the benefit and support of the yacht owner.

A further advantage afforded to British registered yachts is their entitlement to the support of British embassy and consular services throughout the world and the protection of the Royal Navy.

REPUTATION OF THE BRITISH REGISTRATION PROCEDURE

The pre-eminent status of the British flag owes much to the demanding standard of documentation that the owner must, in the first place, provide to the registrar at the chosen port of registry.

Furthermore, the physical existence of the vessel must also be proved to the respective registry. This is achieved by an inspection of the vessel, known as a tonnage survey, performed by a suitably qualified independent surveyor.

The tonnage survey also allows the vessel's dimensions and tonnage to be calculated exactly, thus enabling the data appearing on the Certificate of British Registry to provide an accurate description of its principal statistics.

The Certificate of British Registry is prima facie evidence of a vessel's ownership, as in addition to describing the vessel's dimensions, it clearly shows the name and address of the registered owner.

REDUCED TARGETING BY PORT STATE CONTROL

From an operational perspective the British flag's reputation as a quality flag reduces the likelihood of being the target of Port State Control inspections in foreign ports.

In the world of commercial shipping, exasperation among the international community at the unwillingness or inability of certain flag states to exercise proper control over the vessels entered onto their registers, has led to increasing reliance on port states to monitor compliance with international standards through inspections known as Port State Control.

Port State Control has enabled the world maritime authorities to establish a blacklist of what they consider to be the more unscrupulous shipping registers. A vessel registered in one of these states will be closely scrutinised as a result.

Although most of the bad publicity directed at these registers is focused towards commercial shipping, there is little advantage to be gained from registering a yacht in a flag state facing higher scrutiny from Port State Control.

ABSENCE OF RESTRICTIVE MANNING PRACTICES AND QUALITY OF CREW

For yacht owners registering a yacht that will be operated by a professional skipper or crew, it is important to choose a flag state that will not discriminate upon the nationality of crew which they may hire.

Under British Merchant Shipping regulations there are no nationality restrictions on the crew employed onboard British registered yachts.

It is also important to register in a jurisdiction which has a good reputation in terms of the safe manning of its vessels by competent seafarers.

The Maritime Coastguard Agency (MCA) leads the world in providing a structured career training path for the crew of British registered yachts.

This has resulted in the crew of British registered yachts being amongst the most highly trained and professional crews in the world.

ATTRACTIVENESS OF BRITISH FLAG TO FINANCIERS

Where an individual or a company is either intending to borrow money to pay for the acquisition of a yacht, or to use an existing yacht as loan collateral, lenders will require the yacht to be registered on a reputable and secure register that enables them to place a mortgage over its registration.

Providers of yacht finance have to approve the register that an owner wishes to use.

The security of title provided by the British flag under Part I of the register lends enormous benefit in terms of attachment of marine mortgages to secure finance.

The British flag allows the lenders to be sure that they can recover the vessel in any part of the world should the owner default in repayment and to be certain that the flag state's regulations respect any arrest warrant or court order.

The British flag is therefore favoured by lenders looking to loan money against the value of a particular yacht and many financial institutions stipulate that they will only finance yachts that are registered under Part I of the British Register of Ships.

ATTRACTIVENESS OF BRITISH FLAG TO INSURERS

Insurers often take a particular yacht's port of registry into account when assessing risk and determining premiums.

A yacht registered under the British flag is perceived by insurers as a yacht that is registered under a quality flag which can lead to lower premiums.

ATTRACTIVENESS OF BRITISH FLAG TO BUYERS

The potentential buyer of a yacht will want to make sure that the person selling the yacht is actually the legal owner and that there are no mortgages or other debts attached to the vessel.

A major advantage of the British flag for yachts registered under Part I of the British Register of Ships is that the buyer can easily and quickly carry out an inspection of the register to ascertain the identify of the registered owner and also to establish whether or not there are any mortgages attached to the vessel.

The buyer of a Part I British registered yacht therefore knows that they are obtaining good title in the vessel which can dramatically simplify the sales process and act as a strong selling point where a potential buyer maybe choosing between a yacht that is British Part I registered and a similar vessel registered under the Small Ships Register (SSR) or flagged in an alternative jurisdiction.

REGULATION OF CHARTER YACHTS

One of the many strengths of the British Register of Ships is that structured regulations exist for the safe operation of yachts used for commercial purposes such as chartering.

The United Kingdom Government’s Maritime Coastguard Agency (MCA) has laid down Codes of Practice for the operation of yachts that are used for commercial purposes.

The Codes of Practice help affirm the British Register of Ships as the world’s leading yacht register.

The chartering of a yacht potentially exposes the owner to liability should a guest be injured whilst onboard the vessel.

Compliance with the relevant Code of Practice means that certified vessels are equipped and maintained to the highest standard attainable in yachting leading to peace of mind for their owners with regard to their own safety and the safety of their guests and crew.

Notwithstanding the obvious benefits of improved safety, vessels demonstrating Code of Practice compliance may benefit from lower insurance premiums, as well as increased value and improved marketability when listed for sale.

All British registered yachts that are used for charter must comply with the Code of Practice applicable to their size and type.

The Codes contain safety requirements which are considered by the MCA to be an acceptable alternative to the Merchant Shipping Regulations which otherwise would apply.

At present, there are five separate Codes of Practice in operation:

i. Yellow - The Code of Practice for the Safety of Small Commercial Motor Vessels

This Code applies to motor vessels in commercial use for sport or pleasure that are less than 24 metres in load line length and do not carry more than twelve passengers.

ii. Blue - The Code of Practice for the Safety of Small Commercial Sailing Vessels

This Code applies to sailing vessels in commercial use in support of sport or pleasure that are less than 24 metres in load line length and do not carry more than twelve passengers.

iii. Brown - The Code of Practice for the Safety of Small Workboats and Pilot Boats

The Brown Code applies to small commercial vessels (other than for sport or pleasure) that carry cargo and/or not more than 12 passengers, or provide a service in which neither cargo nor passengers are carried, or are United Kingdom pilot boats.

iv. Red - The Code of Practice for the Safety of Small Vessels in Commercial Use for Sport or Pleasure operating from a Nominated Departure Point (NDP)

The Red Code of Practice or NDP Code applies to small commercial vessels in use for sport or pleasure that do not carry cargo or more than 12 passengers. The NDP Code also states that such a vessel may only operate in favourable weather and daylight from a nominated departure point and not more than 20 miles from that NDP.

v. The Code of Practice for the Safety of Large Commercial Sailing and Motor Vessels (The MegaYacht Code)

The White Code, also known as the Large Yacht Code or MegaYacht Code, applies to vessels in commercial use for sport to pleasure which are 24 metres in load line length and over, or, if they are built before July 1968, are 150 gross tons and over, according to the tonnage measurement regulations at that date. As with other codes, vessels are not permitted to carry cargo, or more than 12 passengers.

The fact that a dedicated Code of Practice exists for yachts over 24 metres is of crucial significance to the owners of large yachts when considering options for the registration of their vessel.

The Code sets the required standards of safety and pollution prevention appropriate to the size of vessel. The standards are set by the relevant international conventions and equivalent standards are applied where it is not reasonable or practical to comply with international convention.

The large yacht owner therefore has the choice of attempting to apply the complexities of international shipping regulation, primarily targeted at commercial shipping to their yacht or they can choose to comply with the requirements of the MCA Large Yacht Code of Practice which is a single user-friendly document designed specifically for large yachts.

Many yacht charter agencies will now only offer large yachts for charter that are MCA coded for charter.

Encompass Yachts recommend that all yacht owners consider the benefits of adherence to the Codes of Practice, regardless of whether their vessel is engaged in charter or not.

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