953

1 INTRODUCTION

Parallel Registration has become an inherent element

of modern shipping. This is the outcome of a long

lasting process and it took a long period of time for

the maritime industry to adopt the practices of

Parallel Registration. The term Parallel Registration

itself is not exhausting and can be combined with the

terms Dual Registration, Demise Charter Registration

and Bareboat Charter Registration. The evolution and

gradual domination of the Open Registries is the

determinant factor for the wider acceptance of the

practices of the Parallel Registration in the maritime

sector.

There are obvious benefits that accompany the

application of Parallel Registration for both the States

involved and the Ship Registries themselves. Apart

from the Open Ship Registries that are the driving

forces behind the establishment of Parallel

Registration the traditional Closed Ships Registry

have more or less adopted a positive stance towards

Parallel Registration.

Apart from the evaluation of the importance of

Parallel Registration the current paper examines the

synergies that are created between Parallel

Registration and Marine Insurance in particular. For

this reason the latter part of the essay focuses on the

special provisions governing the issues of Marine

Insurance when a vessel is under bareboat chartering

registration.

2 THE EVOLUTION OF PARALLEL

REGISTRATION

The practice of Parallel Registration of ships is not

observed exclusively in the modern shipping

Importance of Parallel - Bareboat Charter Registration

and Its Connection with Marine Insurance

G. Daniil & P. Saviolakis

University of Piraeus, Piraeus, Greece

ABSTRACT: The impact of the Parallel Registration is pretty apparent in modern shipping. Traces of Parallel

Registration, Dual Registration, Demise Charter Registration and Bareboat Charter Registration can be found in

both the Open Ship Registries system and the traditional Closed Ship Registries. The stance of both the new

maritime nations and the traditional Flag States towards Parallel Registration are analyzed. The reasons for

the acceptance of the Parallel Registration include the positive impact to the maritime companies, the benefits to

the Ship Registries involved and the satisfaction of particular ambitions on behalf of the States that embrace this

institution. There is further specialization in the implications of Parallel Registration in the Marine Insurance

practices especially in the case of bareboat chartering. The status of the ship owner, the ship charterer and the

mortgage lender are further examined under the auspices of Parallel Registration in the event of a Marine

Insurance incident.

http://www.transnav.eu

the International Journal

on Marine Navigation

and Safety of Sea Transportation

Volume 14

Number 4

December 2020

DOI: 10.12716/1001.14.04.21

954

industry. We have to keep in mind that the roots of

Parallel Registration can be traced back in the 18th

century. During this era, Genovese shipowners chose

to use the French and the British flag interchangeably,

while trading in the waters of the Gulf of Corinth in

Eastern Mediterranean . Furthermore, Greek subjects

of the Ottoman Empire were using the Russian flag in

addition to the Ottoman flag . The main reason for

adopting this parallel flag was the commercially

preferential status that accompanied the Russian flag

following the Treaty of Kuchuk-Kainarji in 1774.

Nowadays, the modern trend of Parallel

Registration commences with the German Law of the

Flag Act of 1951. According to this legal arrangement,

German shipowners were allowed to flag-out by

registering their ships to an Open Registry, usually

the Panamanian ship Registry. At the same time they

bareboat chartered these ships to their German

maritime company thus having the right to raise the

German flag . Nevertheless, the last few decades the

mechanism of Parallel Registration more often works

in a different way. The owner of the vessel usually

forms a maritime company in an Open Registry and

bareboat charters, with the method of parallel-out

(demise-out), the vessel to this company consequently

raising the flag of the Open Registry.

The legal framework that defines the details of

Parallel Registration is set by the International

Conventions of UNCLOS I of 1958, UNCLOS III of

1982 and mainly the United Nations Convention on

Conditions for Registration of Ships of 1986, which is

not yet in force due to the still pending adherence of

the minimum number of States that need to sign it.

While in both the Article 6 of the Convention of the

High Seas-UNCLOS I and the Article 92 of the

UNCLOS III Flag-States are entitled to grant their

nationality to commercial ships , however the case of

Parallel Registration is not specifically dealt with.

Additionally, many legal experts advocate the view

that although dual documentation of ships is

forbidden, Bareboat Registration is not affected by this

restriction .

The step forward was accomplished in Article 11,

Paragraphs 4 & 5 and Article 12 of the United Nations

Convention on Conditions for Registration of Ships of

1986, which reprises (Farthing and Brownrigg 1997)

the conditions of UNCLOS I and UNCLOS III with the

addition, though, of special arrangements for the case

of Bareboat Charter and its implications to Parallel

Registration (United Nations 1986). Among other

provisions, the Registry of destination in order to

accept the flag-in vessel has to establish a mechanism

of adequate exchange of information with the Registry

of origin, thus reassuring that the duration of the

Parallel Registration matches with the duration of the

relevant Bareboat Charter Party.

3 CONNECTION BETWEEN PARALLEL

REGISTRATION AND OPEN REGISTRIES /

FLAGS OF CONVENIENCE

Parallel Registration offers the shipowner the

opportunity to operate a vessel under most favorable

terms by exploiting the advantages of an Open

Registry or a Flag of Convenience, while at the same

time retaining the nationality of the original Registry.

The advantages of the Open Registries and the Flags

of Convenience to a maritime company that chooses

to register a vessel via Parallel Registration have both

economic and legal nature . As far as it concerns the

economic aspect of transferring a vessel to a Parallel

Registry, the most common cause is the need of the

maritime company to be more competitive. By this

means it will have the opportunity to achieve lower

tax obligations, flexibility concerning the nationality

of the crew and thus lower operating costs.

Furthermore, when it comes to ship finance, the

maritime company will have the option to choose the

most appropriate Ship Registry that satisfies the

demands of the financial institution that is going to

supply the funds and in turn ask for a ship mortgage.

The legal framework concerning the mortgage of

ships of the Ship Registry has to be acceptable to the

bank that finances the acquisition of the vessel. One

should also not underestimate the fact that by

exercising Parallel Registration a number of

shipowners seek to hide their true identity and

nationality.

The Open Registries and the Flags of Convenience

are highly competitive in order to attract as much

tonnage as possible from the international market. For

this reason there are willing to offer the opportunity

of Parallel/Bareboat Charter Registration to their

potential customers who seek for a more flexible and

economical business framework or simply try to

achieve banking finance. The vast majority of Open

Registries and Flags of Convenience, including the

largest Registries of quality, have adopted a positive

attitude towards Parallel, as is the case of Panama ,

Marshall Islands and Liberia .

The rule is that the duration of the Parallel

Registration is in accordance with the duration of the

Bareboat Charter Party . Exemptions regarding the

duration of the Parallel Registration can be found in

the case of Open Registries such as Bermuda , where

the initial duration of five (5) years can be renewed for

additional maximum five (5) years each time. Even

more flexible is the approach of Cyprus where albeit

the initial duration is limited to the duration of the

Bareboat Charter Party, thereafter the duration can be

rearranged upon permission of the Authorities of the

Ship Registry .

A key factor that can potentially restrict the

options concerning the Parallel Registration is the

compatibility of the legal systems of both the Registry

of origin and the Registry of destination. Some Open

Registries such as Malta demand that both Registries’

national laws permit this type of legal arrangements .

The same condition can be found in Cyprus . On the

other hand, some Open Registries, as is the case of

Bahamas and Palau , bypass this obstacle by merely

accepting a written consent by the Authorities of the

other Registry.

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4 THE ATTITUDE OF THE TRADITIONAL

MARITIME NATIONS TOWARDS PARALLEL

REGISTRATION

Traditional maritime nations historically have

responded quite differently to the challenge of

flagging-out of their fleets. Some of them, as is the

case of Denmark and USA, have chosen to remain

Closed Ship Registries, while others, such as UK and

Greece have adopted a more flexible approach by

relaxing the criteria for the application of genuine

link. Many of the traditional maritime countries have

even moved a step forward by establishing

International Registries, as in Norway (NIS), Germany

(GIS) and Denmark (DIS), while others have created

Off-shore Registries as is the case of Isle of Man and

Bermuda regarding the UK. Hence, the approach of

the traditional maritime nations is all but uniform

when it comes to Parallel Registration.

The majority of traditional maritime nations, even

those that operate Closed Ship Registries, have chosen

to implement Parallel Registration of ships as is the

case of Denmark . The same provision applies to the

International Registry of Denmark (DIS) too, as it

actually happens with the vast majority of the rest of

the International Registries. The trend towards the

gradual approval of Parallel Registration among the

traditional maritime nations can be clearly

investigated in the case of Australia. Initially,

Bareboat Charter Registration resulted in the

cancellation of the primary Registry, but over the

years the Australian maritime Authorities commenced

to approve of the Parallel Registration in both the

Closed Registry and the Australian International Ship

Registry (AISR).

Interestingly, some countries with Closed Ship

Registries, such as Azerbaijan and Kazakhstan, have

the precondition of obligatory Parallel Registration to

their national Closed Ship Registry for foreign flagged

ships that intent to navigate in their domestic waters .

A somewhat different situation is the case of the

Germany. First of all, all vessels that are registered to

the German International Ship Registry (GIS) need to

be registered to the German Closed Ship Registry,

thus applying Parallel Registration. This is a

peculiarity of the German ship registration system,

since International Registries generally do not require

for prior registration to the relevant national Closed

Registry. Additionally, vessels registered to the

German Ship Registries are permitted to temporarily

fly a foreign Flag by using the Parallel Registration

system.

When we evaluate the more flexible Closed

Registries, we can clearly distinguish between the

cases of the UK Registry which accepts Parallel

Registration according to the UK Merchant Shipping

Act of 1995, c.21, part II and Greece where this is not

possible. The Off-shore Registries, such as Bermuda,

generally approve Parallel Registration since they

regard it as comparative advantage in order to attract

tonnage from both the Closed and Open Registries.

Only ships of approved flags are allowed to

or the International Ship Registry (NISR) for Parallel

Registration purposes. Similarly, the Isle of Man

demands that the jurisdictions of both Registries are

compatible.

5 CONTRIBUTION OF PARALLEL

REGISTRATION TO THE SHIPPING INDUSTRY

AND THE SHIP REGISTER’S STATE

Parallel Registration contribution to the Shipping

industry spreads in various areas of concern that

affect both the public and the private sector.

Furthermore, it spreads to a wide range of areas of

concern covering both political and financial aspect of

the maritime activity.

5.1 Contribution of Parallel Registration to the Shipping

Industry

The fact that Parallel Registration is also known as

Bareboat Charter Registration is indicative of the

importance of Parallel Registration to the Shipping

Finance. More specifically, banking institutions that

are active in the shipping sector usually provide the

appropriate funds for the buying or building of ships

and in turn receive the guarantee of a mortgage. For

this reason it is of high importance for their legal

departments to be familiar with the legal procedures

that are followed by each Ship Registry. In case that

the banks do not feel safe enough about the validity

and the effectiveness of the mortgage, the ship might

need to reflag to a more acceptable Registry. This

phenomenon was apparent in many Russian-flagged

vessels in the 1990’s that adopted the Cypriot Flag in

order to overcome the mistrust of western banks to

the legal system of the Russian Registry.

When assessing the importance of Parallel

Registration to the maritime companies, we cannot

overlook the impact to the financial performance of

the vessel, which is of utmost importance for the

lending institutions. By transferring the vessel to a

more cost effective Ship Registry , the maritime

company gains the capability to reduce certain

categories of the operating cost. These categories

consist of the labour cost, expenses for social security

and lower tax obligations. In this way the economic

performance of the maritime company ameliorates

and there is positive impact to the corporate

profitability and consequently to the evaluation of the

banking sector.

In many cases the ship-manager does not possess

the appropriate funds for the acquisition of the vessel

. In this scenario there is another private entity, the

shipowner, that deals with the property issues.

Everything that matters the banking finance, the

mortgage and the obligations towards the Bareboat

Charter Registry and the Authorities concerns the

shipowner. Hence, the ship-manager can exercise his

maritime skills by facing the issues that occur from the

operational activity of the vessel, unaffected by the

burden of the vessel as an asset.

Another outcome of significant importance that

derives from the application of Parallel Registration is

the flexibility of the ship-managers to choose the

workforce regardless of their nationality. In

956

traditional maritime nations one of the greatest

disadvantages that hinder the growth or sustainability

of the existing national Registries is the lack of

adequate human resources to man the vessels . The

scarcity of specialized seafarers can be faced by

shifting via Parallel Registration to a more lax

Registry concerning the nationality of the crew and

the officers. There is sufficient workforce originating

from third countries that can contribute to the

uninterrupted evolution of the shipping industry

through the channels of Registries other than the

Closed Registries. It is important to keep in mind

though that usually this freedom in the choice of the

nationality of the crew members and the officers of

the vessels come along with lower salary expenses .

Another important issues that increases the

effectiveness of the vessel due to the Parallel

Registration is the ability to reach a wider range of

ports worldwide. The fact that there are periods of

civil unrest and political turbulence in many parts of

the globe poses as threat to the smooth operation of

the maritime sector. A vessel might not be permitted

to reach a port depending on the Flag that it flies as

was the case of the South African and Israeli Flag in

the past. In order to surpass this difficult situation a

ship has the option to alter its nationality by

registering to a suitable Ship Registry, while at the

same time remaining for mortgage reasons at a

different Ship Registry. It is apparent that the

ownership of the vessel is different from the ship-

management, in order to satisfy maritime traffic of

certain geographic areas in troubled years.

It is true that many maritime nations offer

incentives to their shipping sector in order to increase

their survivability while facing foreign competition.

State subsidies, guarantees, shipbuilding subsidies

as well as the tonnage tax scheme are available for the

maritime companies that choose to remain under the

national Flag, which in most cases is more expensive

to operate when compared to its competitors from

abroad. In few countries, such as Germany , not only

the State offers the above mentioned privileges to the

ships that fly their Flag, but at the same time allows

these ships through Parallel Registration to take

advantage of the lower operating costs of an Open

Registry. We can say that in this case maritime

community members enjoy the best of two worlds.

5.2 Contribution of Parallel Registration to the Ship

Registry’s State

The positive contribution of Parallel Registration

extends to the countries that have chosen to exercise

it. Actually, this is the driving force behind the

adoption of Parallel Registration by the majority of

both the traditional maritime nations and the new

maritime powers globally. One of the direct

advantages of Parallel Registration is the inflow of

revenues for the public budget due to the taxation of

the ships that fly the Flag of the respective State. In

spite of the fact that taxation through the tonnage tax

scheme, that is followed by almost all of the Open,

International, Off-shore Registries and a growing

number of Closed Registries, in shipping is

significantly lower compared to the taxation of land-

based companies, there is great impact to the fiscal

policy of the small countries that have exercised

Parallel Registration. In fact in many cases this is main

incentive for small and underdeveloped countries of

the third world with no presence in the maritime

matters in the past to create an Open Registry and

after that to offer Parallel Registration services. In this

category of countries we can distinguish among

Panama , Liberia, Marshall Islands and Palau.

Furthermore, it has positive impact to the foreign

exchange reserves of these States , since the global

currency of shipping is the US Dollar and the

payment of the tax obligations of the ships are

executed in this currency .

We have to keep in mind though that the more

developed the State is, the less important the revenues

originating from the inflow of ships are. In these cases

the main objective of the State’s policy is to attract

maritime activity, stimulate economic growth to the

country and consequently reposition itself as a

maritime center . Though the influx of shipping

companies, marine law firms, accounting offices,

marine insurance companies, naval architect offices,

ship chandlers and freight brokers many States aim to

revitalize the local economy, create employment and

thus maximize the benefits of the maritime industry .

Examples of countries of this category are Cyprus,

Malta and Singapore among others . These countries

enjoy political and financial stability, have a sound

base of infrastructure, solid and respectable legal

systems and have created flexible Registries for the

attraction of marine-related services within their

borders.

It is apparent that Parallel Registration encourages

the creation of a fleet that flies the national Flag. In

some nations that try to overcome a difficult and

destructive period in their history, Parallel

Registration is a means to attract readily available

tonnage and thus to build a fleet that better serves

their interests. With no particular demands

concerning shipping finance, local shipyards,

specialized seafarers or whatsoever a State can allure

ships from overseas to the national Ship Registry.

Perhaps the most typical example is the maritime

policy of Germany after the WWII, which albeit under

most depressing financial circumstances managed to

reestablish the national Registry and reconstitution

the German fleet after the war . In particular, it

permitted the creation of maritime companies in

Germany that chartered back ships from abroad and

through the Parallel Registration process they could

fly the German Flag.

Apart from reconstituting the merchant fleet in

troubled periods of time, traditional maritime nations

have found refuge to the Parallel Registration in order

to protect their maritime sector during years of

normal business activity. The phenomenon of

flagging-out has long threatened the very existence of

traditional fleets. The growth of the Open Registries at

the expense of the traditional maritime nations was a

matter of concern in these countries. One of solutions

that were proposed was the adoption of Parallel

Registration in order to attract foreign ships in the

national Registry. With this method ships that have

already flagged-out could be chartered back to

maritime companies established in these States and

hence fly the national Flag.

957

One of the main reasons that impel States to retain

a minimum number of ships under their Flag is the

satisfaction of their strategic needs as well as for

defense purposes . Most countries depend on imports

and exports for the survival of the indigenous

population or the preservation of the quality of life. In

this context it is of crucial importance to ensure the

safe transportation of goods such food, energy

resources, minerals, military supplies etc. by ships

that are controlled by this State . Additionally, for

States with long-distance overseas territories, such as

UK and France, merchant navy is of vital importance

for the confirmation of national sovereign. By

preserving the existence of an adequate number of

vessels flying the national Flag, the State’s interests

are better served. For this reason Parallel Registration

was seen by many countries as method that could

assist them in accomplishing their strategic ambitions.

The preservation of respectful fleet registered in

the national Registry has long been seen as a tool for

the exercise of political pressure and flag display by

many countries . Decisions made in the context of the

United Nations (UN) and more specifically the

International Maritime Organization (IMO) take into

consideration the volume of the tonnage that is

controlled by the signing parties. Needless to say that

negotiation in the place of other international or

multinational organizations such as the European

Union largely depends on the weight of each Member

State in terms of fleet size. This is the reason that

comparatively small States with considerable fleets

though, such as Cyprus, Malta and Greece, play

significant role in the maritime matters in European

Union.

6 ASPECTS OF MARINE INSURANCE IN

PARALLEL REGISTRATION

In an effort to achieve uniformity in international

maritime transport and to address the issues arising

from the bareboat, the terms of such contracts, as

formulated by long-standing shipping practice, have

been systematized by numerous international

organizations. These charter agreements are either

adopted in their full form or are taken as a basis for

reaching an agreement between the parties and there

are relevant additions or subtractions at the discretion

of the parties.

The charterparty agreement most commonly used

in international shipping practice for bareboat

chartering is the one codenamed BARECON and

formulated by BIMCO. BARECON was published in

1974 in the form of two types of contracts, which were

incorporated into a single text in 1989 following a

previous revision. Since then, BARECON has

undergone other revisions, most recently in 2017,

aimed at adapting to new shipping practices,

facilitating contracting parties and eliminating

problems encountered in implementing its previous

forms.

After a brief presentation of the legal provisions

and charter agreements governing the bareboat

chartering and the attempt to determine its nature,

key problems related to insurance will be identified

and may arise during the Parallel Registration of a

ship, the use of which has been granted by bareboat

charter. These problems stem from the fact that during

the bareboat chartering the issue of application of

legal rules of more legal orders may be raised. In

particular, while for the transfer of ownership and

encumbrances on the ship such as mortgages, the law

of the main registration is generally applied, for issues

that may arise during the operation of the ship by the

charterer, the law of the state of the Parallel Registry

may apply.

More specifically, a key problem is identified in

particular when the shipowner, who enters into a

bareboat contract with the charterer, has entered into a

loan agreement and the lender has entered into a

mortgage on the ship to ensure that his claims are

met. The risk that may arise from the existence of a

condition such as the above becomes apparent if the

owner has entered into a loan agreement and the

lender has entered into a mortgage on the ship in

order to ensure that his claims are met. In such a case,

even if there is a Parallel Registration of the ship after

the conclusion of a bareboat charter contract, for the

mortgage and any tangible burden placed on the ship

applicable will be the law governing the establishment

of the mortgage, which in most cases it is synonymous

with the law of the main registration. Therefore, if the

shipowner grants his use to the charterer under a

bareboat charter agreement, the lender may not be

able to exercise his rights on board provided by the

pre-registration on the ship, as the use, exploitation

and control of the ship has been transferred to the

charterer who now functions as its de facto owner.

This is even more apparent if the charter is combined

with the Parallel Registration of the vessel and its

consequent inclusion in the legal status in force in the

State whose flag it bears during the period of validity

of the charter. The problem is that there is no

contractual or any other relationship between the

mortgage lender and the bareboat charterer that binds

the bareboat charterer to the shipowner mortgage

lender. In addition, the lack of any legal relationship

between the bareboat charterer and the owner's

mortgage lender does not make him liable to the latter

if the charterer uses the boat in a way that would

reduce the value of the ship, causing a corresponding

loss of rights of the insurer.

Adding to the above problem, as mentioned above,

are the rules of a different legal order in relation to

those of Parallel Registration, which govern the

mortgage and the remaining encumbrances on the

ship.

The risk to the interests of the mortgage lender is

exacerbated by the existence of a condition that

appears in many Marine Insurance policies, according

to which Marine Insurance automatically terminates

in the event of a change of ownership or bareboat

chartering the ship. With a condition like the one

above, it becomes even more precarious to secure the

rights of the mortgage lender, because he will not be

able to access the insurance indemnity, either directly

as an insured or after its collection by the owner, if the

ship in who has registered a mortgage, after the

conclusion of a bareboat charter contract and as long

as it is under the control of the charterer, its value is

destroyed or reduced. This is because the existing

958

contract, after the bareboat charter contract,

terminates under the aforementioned condition.

But problems can also arise for the owner of the

ship. More specifically, he may lose his rights arising

from the property relationship that binds him to the

ship. This risk may arise in the event that the bareboat

charterer's creditors or those making claims against

the charterer surrounded by maritime privileges

attempt to settle by initiating enforcement

proceedings on board. The same risk exists in the

event of destruction of the cargo transported during

the bareboat chartering of a vessel, in which case the

owner of the cargo, to whom the charterer of the

naked vessel is responsible, has the option of pledging

the ship in order to seek satisfaction.

Finally, the satisfaction of claims against the

charterer of bareboat with the imposition of

enforcement measures on the ship may be sought by

the added charterer who was injured in the chartered

ship during the period of the above charter he

performed the services for which he was hired by the

bareboat charterer.

In the above unfavorable developments for the

owner of the ship, there is a possibility of a gap of

protection of the owner of the ship due to non-

insurance coverage of such a risk. This gap may arise

from the following reasons: The first reason is the

termination of the insurance contract that concerned

the specific ship and was concluded by the owner of

the ship under the aforementioned condition,

according to which the charter of a bareboat

terminates the insurance.

Additional inability to pay insurance

compensation to the owner of the ship for which the

charterer of the bareboat is responsible for the above

reasons may arise in case of non-insurance of this risk

by the charterer of the bareboat.

Even the non-conclusion of the appropriate

insurance contract by the bareboat charterer can cause

financial damage to the owner of the ship by not being

able to compensate the owner of the ship for the

amount that the latter will be called to pay as a

consequence of causing marine pollution due to

incorrect maneuvers of the ship by adders of the

charterer during the validity of the bareboat

charterparty.

Finally, because both the shipowner and the

charterer of a bareboat establish an insurance interest

of a different nature on their own, in combination

with the different liability that may arise for each of

them, a lack of insurance agreement may leave them

unprotected risks relating to either hull insurance or

liability insurance.

Addressing the above issues directly related to

Marine Insurance, which could arise during the

chartering of a bareboat charter, resulted in the

relevant clause of the new version of the standard

charter agreement BARECON 2017 undergoing

significant changes.

However, the case known as "The Ocean Victory"

played a catalytic role mainly for the modification of

the above clause on marine insurance and the

outcome was that the new version of BARECON was

revised. The main amendments are found in its

maritime insurance clause and were dictated, inter

alia, by the decision of the Supreme Court in the case

known as “Ocean Victory”.

7 CONCLUSION

Parallel Registration is an instrument that can be

exercised by the shipping industry in many maritime

nations around the world. It has undergone many

changes throughout the years of its evolution and it is

an acceptable method of the shipping enterprise for

the majority of the stakeholders. Among the great

supporters of Parallel Registration are the Open

Registries and the Flags of Convenience. On the side

of the traditional maritime nations the acceptance of

Parallel Registration varies depending on the State

involved. In some cases the State encourages the

maritime interests to seek refuge by registering the

vessel in a Parallel Registry, while in other cases States

oppose the institution of Parallel Registration.

The positive impact of Parallel Registration can be

seen in various aspects of the shipping industry. One

such positive outcome has to do with shipping

finance. Lending institutions and private funds that

wish to invest in the maritime sector tend to trust the

legal system of certain Flags that support the interests

of the lender when it comes to mortgage. For this

reason when the vessel under examination flies the

Flag of a non-favorable to the lenders State, then the

maritime company has the option to register via

Parallel Registration the vessel to a Flag that is most

attractive to the investors. Additionally, the maritime

company enjoys the freedom to choose the crew of

regardless of its nationality. The same level of

freedom applies to the ports of call that the vessel can

approach.

The States that offer the option of Parallel

Registration intend to increase their welfare with

various means. For small nations the taxation and fees

of the Registry can contribute significantly to the fiscal

policy of the State, while in other more developed

nations the main target is the creation of a maritime

center that attracts maritime activity from around the

globe. Furthermore, a fleet that flies the Flag of a State

is an asset for national security, since the

transportation of the strategic goods is important for

the survivability of the population and the

continuation of the maritime activities. It is needless

to state that the political impact of a State in the

maritime industry depends largely on the size of its

fleet.

The impact of Parallel Registration to the Marine

Insurance extends to a number of issues that affect

maritime operations. Especially in the case of bareboat

chartering there is the involvement of the owner of the

vessel, the bareboat charterer and the mortgage

lender. Between these three parties there are certain

implications when it comes to Marine Insurance

matters. All of these above mentioned parties face a

differentiated status due to the fact that the vessel is

registered to two Ship Registries.

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