The Greek Code of Private Maritime Law is the main domestic law applied by the Greek shipping and maritime courts in marine disputes governed by Greek law. The most common maritime claims filed with the relevant Greek competent courts are claims for unpaid crew wages or repair/service costs, personal injury claims, marine insurance claims and maritime accidents. Mortgagee banks also use the Greek courts to enforce their rights under Greek or foreign mortgages. The aforementioned claims are usually secured through ship’s arrest and applications for interim injunctions.
Article 51 of Law 2172/1993 provides for the establishment and operation of a special maritime division within the Court of First Instance of Piraeus and the Court of Appeal of Piraeus. The maritime division of the Court of Piraeus has exclusive jurisdiction in the Attica region and concurrent jurisdiction all over Greece.
The Directive 2009/16/EC of the European Parliament and of the Council applies in Greece in relation to the establishment of a harmonised inspection system for vessels entering Greek territory.
Greece is also a party to the Paris Memorandum of Understanding (MOU), pursuant to which the prime responsibility for compliance with the requirements laid down in the international maritime conventions lies with the ship-owner, while responsibility for ensuring that compliance remains with the Flag State.
In this regard, Port State Control in Greece is conducted by the competent department of the Hellenic Coastguard, which follows the rules and procedures established by the above Directive. The Port State Control authority must decide which ships are due to undergo mandatory inspection or are eligible for inspection (Article 12 of the Directive), the type of such inspection, ie, expanded or initial/more detailed (Articles 13 and 14 of the Directive) taking into consideration various parameters, which include the following:
The Port State Control authority has been granted extended powers in relation to ships which have been involved in grounding or collision incidents (Clause II,2A, Annex A of the Directive). Although there are now specific provisions in relation to wreck removal, the enhanced authorities of the Port State Control will have an overriding effect in blocking cases.
Under Greek law, there are two available methods of registering a ship under the Greek flag:
In order to register a vessel under the Greek flag, more than 50% of the shares in the vessel must be ultimately beneficially owned by either:
Pursuant to Article 9 of the Greek Code of Public Maritime Law (GCPML), Greek Port or Consular authorities abroad have been granted the power to issue temporary trading certificates for vessels applying for registration under the Greek flag, with validity that cannot exceed six months. Immediately after the issuance of the temporary trading certificates, the Greek Ministry of Shipping and Insular Policy will take over the registration file, in order to proceed with the permanent registration of the subject vessel in accordance with the applicable legislative provisions.
There is no provision under the existing Greek legislation that provides for the dual or bareboat registration of vessels flying the Greek flag and therefore, as the law currently stands, these forms of registration are not permitted.
In order for a Greek mortgage to be effective and enforceable against third parties, it should be registered with the competent Ship’s Registry of the vessel’s port of registration and become publicly recorded. A maritime mortgage under Greek law may be either simple or preferred. A simple mortgage is granted by a unilateral statement of the mortgagor, while a preferred mortgage may only be granted by deed. In that case, the mortgage must be in the form of a notarial deed and in the Greek language. If a mortgage is executed abroad, a certified Greek translation of the mortgage must be submitted together with the original document.
Each port of the vessel’s registration maintains two main registers in hard-copy (book) form:
The Greek Ship Registry does not yet have a full online platform. However, documentation for the registration of a vessel under the Greek flag can be submitted electronically.
These two registers are available to the public through research and review of the relevant book registers by a lawyer or a notary public. However, in order for a third party to review any ancillary documentation (eg, the mortgage deeds, documents of title, etc), permission must be first granted in writing by a competent public authority, following proof of the existence of legal interest.
The Greek state has ratified the following international conventions, which are in force as amended and applicable to owners and third parties in the event of a maritime pollution incident:
The Presidential Decree 55/1998 (as amended) in relation to the protection of the Marine Environment, as well as Article 914 of the Greek Civil Code regarding liability in tort, also applies.
Pursuant to Law No 2881/2001, wreck removal is the responsibility of the vessel’s owner and therefore insurance against wreck removal is mandatory. The Greek state has also the authority to proceed with the removal of a wreck directly and subsequently to claim directly against the respective insurer, in the event that the ship-owner is unable to cover the cost. Despite the national regulation applicable for wreck removals, Greece has not yet ratified the Nairobi International Convention on the Removal of Wrecks.
The Greek state has ratified the following international legislation, which is in force as amended and applicable in the case of a maritime collision incident:
These international regulations provide a framework for determination of the liability of the parties to a collision incident.
In circumstances where the international regulations do not apply, the provisions of Articles 235 to 245 of the Code of Private Maritime law and Article 914 of the Civil Code shall apply.
Greece is a party to both Convention for Limitation of Liability on Maritime Claims 1976 (LLMC 76) and its 1996 Protocol, which have been implemented at a national level through the enactment of Laws 1923/1991 and 3743/2009, respectively. Law 1923/1991 gives the force of national law to the provisions of LLMC 76, while Law 3743/2009 gives effect to the amendments introduced by the 1996 Protocol.
In relation to the types of claim that may be subject to limitation of liability, Law 1923/1991 (as amended) is in line with Article No 2 of the LLMC, as to the following types:
However, Article No 2 sub-paragraphs 1 (a) and (c) of Law 1923/1991 refer to “the exploitation of the ship” differing from the corresponding sub-paragraphs of LLMC 76, which use the phrase “the operation of the ship”.
It has been decided by high authority (Piraeus Court of Appeal, decision number 228/2016, with recent Supreme Court approval, decision number 1470/2017) that the term "exploitation" adopted by the draftsmen of Law 1923/1991, does not do justice to the original text of LLMC 76. Accordingly, the phrase “exploitation of the ship” in Article No 2 of Law 1923/1991 should be read in line with the English text of LLMC 76 (ie, “operation of the ship”) so as to include technical aspects and not only the commercial operation/exploitation of the ship.
In relation to the types of claim that may be excluded from liability, Law 1923/1991 (as amended) is in line with Article No 3 of the LLMC 76, as to the following types:
In relation to the applicable limits, Article 16 of Law 4504/2017 ratified the increase of the LLMC limits according to the IMO “tacit amendment procedure”. Therefore, liability may be limited as follows.
It must be noted that Greece is a member of the International Monetary Fund (IMF) and, therefore, the resulting SDR is given its euro value (depending on the establishment date of the limitation fund) by using the method of valuation applied by the IMF for its operations and transactions. The SDR value is determined daily, based on the spot exchange rates observed around noon London time, and posted on the IMF website.
The particulars for the establishment and operation of a Limitation Fund under LLMC 76 are set out at Law No 1923/1991, pursuant to which the LLMC 76 has been ratified and enacted to the Greek legislation.
Under Article 11 of Law No 1923/1991, a limited liability fund may be set by any person that could be considered liable under a maritime claim. The limitation fund is set by application of the relevant person at court or other competent authority. A party seeking to set up a limitation fund will need to post a Greek bank guarantee of a form and wording acceptable to the court.
It is a requirement for the establishment of the fund that the bank guarantee must be able to cover the totality of the amounts claimed in relation to the incident giving rise to the fund, together with relevant interest applicable from the date of the event. Calculations are made taking into account the “unit of account” referred to in Articles 6 and 7, which is the Special Drawing Right as defined by the International Monetary Fund. The amounts mentioned in Articles 6 and 7 shall be converted into the national currency of Greece, according to the value of the currency at the date the limitation fund shall have been constituted, payment is made, or the guarantee is issued.
Greece has ratified the 1924 Hague Convention and the 1986 Visby Protocol, making the Hague-Visby Rules applicable to cargo claims subject to Greek jurisdiction, which have been given the force of national law through the enactment of Law 2107/1992. Greece has not ratified the UN Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules) or the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2009 (the Rotterdam Rules).
In relation to domestic legislation, when the Hague-Visby Rules do not apply, Articles 107 to 148 of the Code of Private Maritime Law provide a regime similar to the Rules.
As a matter of principle under Greek law, when cargo is lost or damaged in the course of carriage, the party generally entitled to claim in its own name is the shipper that entered into the contract with the carrier. However, there are exceptions to this general rule, including the following.
In accordance with the Hague-Visby Rules, the ship-owner/carrier is entitled to limit its liability either by unit (666.67 special drawing rights (SDRs) per unit) or by weight (2 SDRs per kilogram), whichever is higher. The limitation limits set out by the LLMC Protocol 1996 following the LLMC 76 and the International Convention on Oil Pollution Preparedness, Response and Co-operation 1990 (the OPRC Convention) also apply.
However, the approach is different if the ship-owner is the actual carrier only and not the contractual carrier, having assumed the responsibility to carry the cargo and deliver it at the port of discharge. In this case, the Hague-Visby Rules are not interested in the actual carrier, for whose actions and omissions it is the contractual carrier who remains responsible. The contractual carrier has then a right of claim for damages in tort pursuant to Article 914 of the Civil Code and Article 106§2 of the Code of Private Maritime Law.
Pursuant to Article III Rule 5 of the Hague-Visby Rules, the shipper guarantees the accuracy of the statement as to weight and quantity of the cargo, as well as the marks and number. In this regard, the carrier has the right to claim in damages against the shipper based on contract or tort for any liabilities due to claims of other cargo interests or due to damage caused to the vessel, if they were caused due to misdeclaration of any of the aforementioned cargo particulars by the shipper.
In the specific case of loading dangerous cargo (inflammable, explosive or other dangerous goods) without the knowledge of the Master of the vessel, any such cargo may be discharged, rendered harmless or destroyed at the shipper’s expense.
The national provision of Article 137 of the Code of Private Maritime Law follows the same approach, whereby the carrier will not be liable in the event of misdeclaration of the type, weight or value of the cargo. This approach has also been followed by the Greek courts, which recognise (inter alia) that a carrier will be discharged from liability to deliver a cargo in accordance with the respective bill of lading, if the shipper has made a false statement in that bill of lading (Decision No 438/1995 of the Piraeus Court of Appeal).
The time bar for filing a claim for damaged or lost cargo in Greece is one year, with the time to be counted from the date of actual delivery or the date on which delivery should have taken place. These limits remain the same irrespective of whether the provisions of the Hague-Visby Rules (Article III Rule 5) or the Code of Private Maritime Law apply (Article 148). This one-year period may, however, be extended by agreement of the parties after the cause of action has arisen.
Greece is a party to the International Convention for the Unification of Certain Rules relating to Arrest of Sea-going Ships of 10th May 1952 (the 1952 Arrest Convention), which has been ratified and implemented in Greece by the Legislative Decree 4570/1966.
The 1952 Arrest Convention (together with the provisions of Articles 682, etc, and Articles 707, etc, of the Greek Code of Civil Procedure (the GCCP), which supplement the 1952 Arrest Convention) applies in cases where a vessel flies the flag of a signatory Member State and she is arrested in the jurisdiction of a signatory Member State, while the provisions of the GCCP are applicable to all other cases for the arrest of vessels in Greece.
Under Greek law, claims deriving from or relating to services provided on board the vessel and claims deriving from damages cause by a vessel are recognised as maritime liens.
More specifically, Article 205 of the Greek Code of Private Maritime Law (the GCPML) recognises the following claims as maritime liens:
A claim in relation to a foreign-flagged vessel is considered to be a maritime lien if both the law of the flag and Greek law recognise that claim as a maritime lien.
In cases where the 1952 Arrest Convention is applicable (ie, where a vessel flying the flag of another signatory Member State calls at a Greek port), that vessel may only be arrested for one of the following maritime claims, as defined in Article 1 of the 1952 Arrest Convention:
If the claim is not one of a maritime nature, the creditor cannot arrest the vessel which relates to that claim.
For all the other cases where the 1952 Arrest Convention does not apply, the general provisions of Greek law apply. Under Greek law, a vessel may be arrested for any type of claim against the owner of the vessel.
Under Greek law, maritime claims are in personam claims. In contrast to other jurisdictions, Greek law does not provide for claims in rem against a vessel.
Any application for the arrest of a vessel must be filed against her registered owner – this applies even in cases of claims against third parties (ie, a demise charterer, vessel’s operator or other party controlling the vessel).
Similarly, in cases of transfer of ownership of a vessel, arrest of that vessel may be effected against the new owner of the vessel for a debt of the previous ship-owner (even if that debt does not constitute a maritime lien as per Article 205 of the GCPML).
Under Greek law, a bunker supplier can arrest a vessel in connection to unpaid bunkers supplied to a vessel, provided the owner of the vessel has undertaken a contractual obligation towards the bunker supplier. However, if the bunkers were ordered by the charterer for the supply of a chartered vessel, only the charterer, as the party that purchased the bunkers, would be held liable for the unpaid bunkers and the vessel would not be able to be arrested for debts of the charterer.
The second question relates to the most recent well-known OW Bunker cases brought before various courts around the world, including the Greek courts. The Greek courts have issued conflicting decisions on the liability of the owner to pay the physical supplier in relation to unpaid bunkers (in some cases, the owner has been held liable to pay the physical supplier while in other instances that liability has been dismissed).
In order to arrest a vessel, an application shall be filed by the creditor with the First Instance Court of the place where the vessel is moored, describing (and subsequently proving on a prima facie basis):
Upon filing of the application, a hearing of the application is fixed within the next ten to 15 days.
Upon filing of the application, it is common practice for the creditors to apply for an ex parte provisional order with a view to prohibiting the vessel from sailing away and/or to effect any changes on her legal status (transfer of ownership, registration of mortgage, etc).
In relation to the application of arrest of a vessel, a proper hearing is held before the Court of the First Instance, witnesses are cross-examined on the merits of the case and upon completion of the hearing the judge determines a time-frame of two to three days, within which the parties have to file their written submissions and their supporting documentation.
Parties are not required to file original documents and therefore, usually, the parties file copies of the documents duly certified by a lawyer as true copies of the originals (together with official translations of those documents into the Greek language, if relevant).
Although the court has the discretion to order a security deposit on behalf of the arresting party, such a measure is quite rare in Greece.
Bunkers on board the vessel can be arrested in Greece, provided the arresting party has a valid claim; however, due to the difficulties encountered, the arrest of bunkers is not a common practice.
Under Greek law, an attachment can be exercised over freight owed to the charterer. However, a creditor exercising such an attachment has no right to collect the freight, but rather has a right to apply for the attachment of freight, even if that freight is held by a third party (arrest in the hands of a third party).
Under Greek law, the arrest of a sister ship may only be effected in limited circumstances and in practice this is rather unusual.
Provided Greek courts have jurisdiction to hear applications for security measures in accordance with the provisions of the GCCP (ie, the defendant has its residence in Greece or the defendant has property in Greece, etc), a debtor can inter alia apply for the attachment of bank accounts of the defendant and the registration of mortgage pre-notation over a property.
Under Greek law and following the application of any interested party, the court must amend the decision ordering the arrest of a vessel (and lift the arrest) and replace the security measure of the arrest with a security up to the amount of arrest ordered by the court.
The most common types of security permitted by Greek law are the following:
It should be noted that a decision ordering the arrest of a vessel is not subject to any form of appeal. However, the Greek Code of Civil Procedure permits the revocation (or amendment) of such a decision under specific circumstances.
Procedure for Judicial Sale
Under Greek civil procedural law, auction proceedings in Greece generally take place without the involvement of a court. All public auctions are conducted exclusively through electronic (online) procedures (e-auctions) under the supervision of an appointed, accredited notary public (http://www.eauction.gr).
The public auction proceedings are initiated by any creditor who has an enforceable title (ie, a final and unappealable Greek court judgment or a foreign court judgment/arbitral award declared enforceable in Greece or a notarial deed (including a ship mortgage)/foreign ship mortgages to the extent that these have been declared enforceable by a Greek court decision, etc).
A copy of the enforceable title together with an exequatur (an official order addressed to all competent enforcement officers to execute the enforcement deed) attached thereto and a demand for payment are served on the debtor within a term of three business days by a court bailiff upon a creditor’s instruction.
If the debtor fails to pay within three business days, the creditor may begin the main enforcement proceedings by officially instructing a court bailiff to proceed with the enforcement and arrest of the vessel. The court bailiff is instructed by the creditor to draft and issue a deed of arrest of the vessel, including:
The public auction of the vessel is scheduled on the first Wednesday (a business day) 40 days following her arrest.
The public auction is conducted by openly tendering online offers and is conducted on a real-time basis with successive online bids to the notary public via the specialised electronic bidding platform.
To take part in the auction procedure, prospective bidders must:
Liability for Maintaining the Vessel
The liability for maintaining the vessel from its arrest and until it is sold lies with the arresting party who is also obliged to place guards on board the vessel.
Under Greek law (Article No 975 of the Greek Code of Civil Procedure), the costs and expenses of the enforcement (including all costs incurred during the pre-auction phase, the arrest, the maintenance of the arrested vessel, etc) are deducted from the auction proceeds prior to its distribution to the ranking creditors.
Priority of Maritime Liens/Mortgages
The maritime liens of Article 205 of the GCPML take priority over a mortgage, except for a preferred ship mortgage on a Greek-flagged vessel registered as a foreign investment in the form of a notarial deed duly registered in the mortgage register in accordance with the provisions of LD 2687/1953, which ranks in priority over all maritime liens of Article 205 of the GCPML (except for those which are also recognised as liens in Article 2 of the Brussels Convention of 1926 in relation to liens and mortgages).
In the event of the auction of the vessel, the announced creditors with a claim protected by a maritime lien will be ranked in priority over the mortgagee creditors.
Article 205 of the GCPML provides for four classes of maritime liens and the claims of the first class are ranked in priority over the claims of the second class, etc. However, claims of the same class are ranked pari passu.
On 26 October 2020 a new integrated Insolvency Code (Law 4738/2020 on Debt Settlement and Second Chance Providence) was introduced and came into effect from 1 January 2021.
The new law has implemented in Greece the EU Directive 2019/1023 on preventive restructuring frameworks and second chance, and provides for preventive mechanisms, in and out-of-court restructuring procedures and updated liquidation proceedings.
One of the newly introduced mechanisms is the out-of-court settlement procedure which, inter alia, permits to debtors (both legal and natural persons) to make a request (on a confidential basis) for a settlement proposal of any debts by financial institutions and the Greek State.
Article 703 of the GCCP provides that the arresting party shall pay damages in the event of wrongful arrest of a vessel if the following two conditions are met:
The award of damages due to wrongful arrest is quite difficult and rare, except for cases where the arrest of the vessel was ordered on the basis of false or fraudulent evidence.
Applicable International Conventions/Law
Greece has ratified both the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea of 13 December 1974 (the PAL) (Law 1922/1991) and its 2002 Protocol (Law 4195/2013). The PAL and the 2002 Protocol establish a framework under which passengers may claim compensation in the event of death/bodily injury/loss or damage of property.
On 23 April 2009, the Regulation (EC) No 392/2009 of the European Parliament and of the Council on the liability of carriers of passengers by sea in the event of accidents (the PLR) was adopted, implementing both the PAL and the 2002 Protocol in all the EU Member States with a view to creating a harmonised legal framework across the EU Member States in relation to the liability of carriers to passengers.
The PLR is applicable to all international voyages on passenger vessels where the vessel flies an EU Member State flag, the contract of carriage was concluded in an EU Member State or the place of departure/destination is an EU Member State.
The PLR also applies to domestic voyages carried out by Class A vessels since 31 December 2016, while since 31 December 2018 the PLR has also applied to domestic voyages carried out by Class B vessels.
Any claim for damages arising out of death/personal injury/loss or damage of luggage shall be time-barred after a period of two years.
The limitation period shall be calculated as follows:
Due to grounds for suspension/interruption, the limitation period can be extended up to:
The period of limitation may also be extended, either by a written declaration of the carrier or by a written agreement of the parties, following the occurrence of the incident.
Limitation on Liability
Under the PLR, carriers are subject to a two-tier liability system for passenger claims involving personal injury and death arising out of a “shipping incident” (Annex I of PLR), while for all other cases which do not arise out of a “shipping incident” (as defined in the PLR), the liability of the carrier must be established.
Carriers are also liable for the loss of/damage to the luggage and vehicle of a passenger up to specific limits as they are defined in the PLR.
The carrier shall not be entitled to the benefit of the limits of liability prescribed in Articles 7 and 8 and Article 10(1) of the PLR, if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause such damage, or recklessly and with the knowledge that such damage would probably result.
Under Greek law, jurisdiction clauses incorporated in charterparties reflect the written agreement of the parties and as a result such clauses are mainly considered valid.
However, the same does not apply to jurisdiction clauses incorporated in bills of lading, especially due to the fact that a bill of lading is directly issued by the carrier. As a result, different approaches on the validity and the binding nature of such jurisdiction clauses have been followed by the Greek courts, depending on whether such clauses refer to courts inside or outside of the European Union.
Following the decision 883/1994 of the Supreme Court, jurisdiction clauses referring to courts outside of the European Union are valid and bind the holder if such a clause has been confirmed in writing and both the carrier and the holder have signed the bill of lading.
However, Article 25 of the Regulation (EU) 1215/2012 applies to jurisdiction clauses relating to courts of another EU Member State.
Article No 25 of the Regulation grants exclusive jurisdiction to the courts of any Member State (as long as the parties are in agreement and regardless of where they are domiciled) “to settle any disputes which have arisen or which may arise in connection with the particular legal relationship”. Article No 25 further provides that such an agreement conferring jurisdiction must be:
In contrast to jurisdiction clauses, parties can choose the applicable law governing their contract and that choice can be made expressly, orally or clearly demonstrated by the terms of the contract or the circumstances of the case (Regulation 593/2008 – Rome I).
The application of a choice of law may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum.
Under Greek law, the incorporation of an arbitration clause of a charterparty into the relevant bill of lading shall bind only bind the receiver/holder if this is appropriate to the relations of the carrier and the receiver/holder and if that clause has been incorporated into the bill of lading by an express and clear reference to the relevant arbitration clause of the charterparty.
A more lenient approach has been followed in relation to specific types of charterparty bills of lading, ie, CONGENBILL, where it is expressly stated these bills of lading are “to be used with charterparties”. In such cases, the incorporation of the arbitration clause of the charterparty into the bill of lading has been accepted as valid and binding and there is a rebuttable presumption that the receiver can access the charterparty and has knowledge of or can review the content of that clause.
Greece is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention), which has been implemented in Greece by Legislative Decree 4220/1961.
The New York Convention is applicable provided (i) the dispute is one of a commercial nature and (ii) the arbitral award has been issued in another member state of the New York Convention.
However, if the arbitral award does not fall within the scope of application of the New York Convention, Articles 906, etc, of the Greek Code of Civil Procedure apply, which provide the requirements and the procedure following which a foreign arbitral award may be recognised as enforceable in Greece.
The presence of a vessel within the Greek territorial waters and the subsequent call of that vessel at a Greek port would establish jurisdiction of the relevant Greek courts for purposes of arrest of that vessel (and this jurisdiction would continue to apply as long as the vessel remained berthed at a Greek port).
However, if the Greek courts do not have jurisdiction to decide on the merits of claim (due to a specific jurisdiction clause/arbitration agreement), the jurisdiction created by the presence of the vessel within the Greek territorial waters may be challenged.
If the 1952 Arrest Convention applies, the court in the jurisdiction of which the arrest has been effected (although that court does not have jurisdiction on the merits of the case), that court shall determine a timeframe within which the creditor must file a claim with the court which has jurisdiction.
If the parties have agreed to submit the dispute to the jurisdiction of a particular court other than that within the jurisdiction of which the arrest was made or to arbitration, the court or other appropriate judicial authority within the jurisdiction of which the arrest was made may fix the time within which the creditor shall commence main proceedings.
In Greece, there are two main arbitration bodies for maritime claims.
A claim for damages could be brought before Greek courts in the event of initiating proceedings in breach of a foreign jurisdiction or arbitration clause; however, this is quite uncommon in Greece.
Tonnage tax in Greece is generally governed by Law 4110/2013, passed on 11 January 2013, imposing tonnage tax on foreign-flagged vessels.
Specifically, the following companies are subject to this tax system:
The tonnage tax is calculated as per the formula applying to vessels registered under the Greek flag pursuant to Article 13 of LD 2687/1953. The relevant formula in each circumstance will be the one in force during the year preceding the tax becoming payable. Any equivalent taxes or dues paid to the flag state are set off against the Greek tonnage tax.
Law 4110/2013 not only imposed tonnage tax on foreign-flagged vessels, it also clarified certain tax exemptions regarding the distribution of dividends and the transfer of ownership of shares.
However, in 2019, the Greek government enacted the new Law 4670/2019, introducing a series of important amendments in the aforementioned taxation scheme, which can be summarised as follows:
During the outbreak of COVID-19, the Hellenic Maritime Administration sought to maintain the smooth operation of the international maritime transport whilst securing high standards for the protection of public health. Domestically, the key objective has been to maintain essential maritime cabotage services to the Greek islands, which is largely restored, with the necessary adjustments to secure public health.
In this regard, various measures have been adopted throughout the last ten months, and are being re-considered regularly, depending on the changing circumstances of the pandemic, including the following:
Although there have been no further specific measures or restrictions, the Hellenic Coastguard is considering the COVID-19 pandemic on a case-by-case basis, depending on factors that include entering ships' last port of call, possible COVID-19 cases and the declarations made by the ship’s Master before entering Greek ports.
The Greek courts have not yet decided on the issue of the recognition of the coronavirus pandemic as force majeure and/or frustration. Even in the few cases that COVID-19 has been claimed as a reason for non-payment under contracts relating to shipping services, the Greek courts have not yet considered the application of frustration or force majeure as a defence (Decision No 3012 of the Piraeus First Instance Court). It is likely that such cases will be considered in the future, with the high volume of cases brought before the Greek courts usually delaying hearing for nine to 12 months after the respective application has been filed.
However, the majority of shipping contracts remain subject to English law and arbitration. In this regard, when considering such shipping cases brought before them, Greek courts will need to consider the applicable law and the interpretation given under that law to the coronavirus pandemic within the concept of force majeure and frustration.
Law 4646/2019 came into force on 12 December 2019, bringing a historical change to the ship registration procedures in Greece. Pursuant to paragraph 3 of Article 61, the key provisions of Article 1, Law 791/1978 have been amended to provide that any foreign company with an establishment and office in Greece acting as (inter alia) a bareboat charterer or ship lessee of vessels registered under the Greek flag will have its constitution and legal capacity governed by the governing laws of the country of its incorporation – irrespective of the place of actual management and operation.
The extension of the application of the original provisions of Law 791/1978 to bareboat charterers and ship lessees operates as indirect recognition of the concept of bareboat chartering and sale and leaseback structures as part of Greek legislation. Although this addition is a relatively minor amendment to the original legislation, it allows the Greek flag further scope with the introduction of these two internationally recognised schemes.
At the beginning of 2020, the Greek Minister of Shipping and Insular Policy, Mr Ioannis Plakiotakis voted 2020 as the year of change for Greek shipping. However, the outbreak of COVID-19 changed many timeframe expectations, with the pandemic emerging as a dominating factor for the implementation of new measures and changes to the Greek maritime and shipping industry. Nevertheless, legislative changes remained on the agenda and these include many of the following matters.
The 2020 Parliamentary Bill
In February 2020, a comprehensive draft bill was submitted to the Greek Parliament, covering all aspects relating to the shipping sector, including new shipping legislation, privatisation of ports and safety at sea.
A priority of the bill was the upgrading of the Piraeus port, aiming to attract new investors and to reinforce the port’s position within the international market. It also provided for 1,500 new job positions to enable the port authorities and respective departments to operate quickly and efficiently. The bill also provided for the privatisation of ten Greek ports, including the one at Alexandroupolis, which has already attracted the interest of international investors from USA and China.
Another core issue dealt with by the bill was the modernisation of the Greek flag in order to become more competitive, by adopting improved practices and facilitating ship registration electronically. An innovating proposal to upgrade the flag registration system was the creation of an interface linking the Ministry with the tax authorities and the Ministry of Development.
The Greek Parliament voted in favour of the bill in March 2020, and the adoption of the measures and implementation of further actions is still under way.
The 0.5% sulphur cap of IMO 2020 came into force on 1 January 2020, despite certain implementation concerns expressed worldwide, including those of the Minister of Greek Shipping and Insular Policy, as well as longstanding Greek ship-owners. Apart from Greek merchant marine, coastal shipping has also been affected by the enforcement of the new regulation and the rapid increase to the prices of very low sulphur fuel oil (VLSFO) from 1 January 2020. In an effort to address those increasing costs, the Greek government proceeded with an amendment to the then-existing regulatory framework, allowing coastal shipping operators to increase their fares if needed. However, in fear of price hikes being passed to the passengers, which could further damage coastal shipping/ferry companies, the Greek government adopted a temporary measure, by decreasing the VAT applicable to the coastal transportation fares, from 24% to 13% from 1 June 2020 to 31 October 2020. Although temporary, the measures provided a safety net for Greek shipping and tourism sectors significantly affected by the COVID-19 pandemic.
The IMO Ballast Water Management Convention, which came into force in September 2019, requires ballast water treatment systems to be fitted on ships during docking surveys, between 2019 and 2024, in an effort to eliminate the transferring of organisms between marine ecosystems worldwide. As relevant deadlines approach, implementation of the system comes at a time when the Greek shipping industry is already struggling to bear increased fuel costs and bunker fuel quality issues, which reflect the dramatic changes brought about in view of the enforcement of IMO 2020 and the 0.5% sulphur cap on marine fuels from 1 January 2020 – in addition to the general impact of the COVID-19 pandemic.
Unsurprisingly, the pandemic has caused major disruption to the operation of the shipyards and the chains of supply for BWTS providers, which in turn creates unforeseen delay to the equipment installation schedules. As the installation of the BWTS system is labour-intensive, further delays are expected, with the majority of countries involved being under lockdown and several shipyards shutting down indefinitely.
COVID-19 Impact and Greek Seafarers
The outbreak of COVID-19 led to tremendous difficulties for crew changes and repatriations, impacting Greek seafarers as with all other seafarers all around the world – some of whom have been stuck at sea for over 20 months in some cases. Following the pandemic, most major ports worldwide (including Singapore, Fujairah and all Chinese ports) have, from time to time, either suspended crew-change operations or implemented extremely strict measures which rendered crew changes almost impossible. Thousands of Greek seafarers were stuck on board ships under unfamiliar circumstances, filled with uncertainty about their time of repatriation and the psychological pressure for them and their loved ones back at home.
As a result of the aforementioned restrictions placed on ship-owners to disembark their crew, most of the seafarers’ certificates applicable under International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) 78 had expired or were due to expire, leading to a breach of the regulations of the respective flag states. In an effort to ensure the smooth operation of shipping, the Greek Ministry of Shipping and Insular Policy has been granting general extensions of validity until 31 December 2020 for expiring certificates and this could well continue if pandemic restrictions continue to make renewals impossible in the short term.
In relation to the trading and statutory certificates of vessels registered under the Greek flag and in relation to surveys, audits and inspections by the Hellenic Maritime Administration, additional special measures were also implemented. Appropriate regulatory provisions have been adopted in cases where surveyors, auditors and/or inspectors are not able to undertake such surveys, audits and inspections, due to restrictions imposed by COVID-19 countermeasures. The aim has been to grant reasonable time-extensions to compulsory surveys/audits and the validity of the expiring statutory certificates and documents for maritime safety and security, protection of the marine environment and maritime labour.
Further to more positive developments in relation to COVID-19 and the discovery of a vaccine, the Union of Greek Ship-owners issued a press release expressing the view that seafarers, as essential workers, should be given priority for COVID-19 vaccinations. According to its President, Mr Theodoros Veniamis, this would “facilitate crew changes and repatriations, which at the moment are seriously disrupted, and the protection of the uninterrupted international trade”.
It remains to see how the international organisations and state authorities will respond to the urgent need for a substantial solution to the problem of crew changes.
Legal Developments: Bareboat Registrations (Law 4646/2019)
Paragraph 3 of Article 61, Law 4646/2019, brought a major change to Greek shipping and ship registrations in Greece, with the indirect recognition of the concept of bareboat chartering and sale and leaseback structures as part of Greek legislation. Article 61 supplements the key provisions of Article 1, Law 791/1978. Pursuant to Article 1, Law 791/1978, any foreign company with an establishment and office in Greece, acting (whether currently or historically) as a ship-owning, chartering or management company of vessels registered under the Greek flag, will have its constitution and legal capacity governed by the governing laws of the country of its incorporation – irrespective of the place of actual management and operation. The new law and provisions of Paragraph 3 of Article 61, Law 4646/2019 supplement Article 1, Law 791/1978 by adding a new definition of companies acting as bareboat charterers or ship lessees. Whilst a relatively minor amendment, this small change opens up an internationally recognised structure for the Greek flag – which has historically been strict and limited in the forms of registrations available.
Legal Developments: Ship Financing Valuation Provisions (Decision No 3561/2020)
An important decision in the context of ship financing in Greece has recently been handed down with Decision No 3561/2020 in the First Instance Court of Piraeus – recognising and determining the interpretation of “Value Ratio” (also known as a “loan-to-value” clause) in financing agreements. The recent decision relates to a dispute between a ship-owning company (acting as claimant, the Borrower) and: (i) a brokering company providing the valuation (the Broker), (ii) the physical person issuing/signing the valuation; and (iii) the financial institution acting (inter alia) as lender and security agent (the Lender).
The Borrower disputed the validity of a valuation which the Broker provided pursuant to the application of the “Value Ratio” clause. That valuation led to the occurrence of an event of default under the applicable provision and the service of a default notice from the Lender. The allegations of the Borrower were supported (inter alia) by the existence of a further/more recent valuation obtained unilaterally by the Borrower, which increased the ship value and therefore reduced the shortfall of the loan’s value ratio. The Borrower refused to take the first valuation into consideration or to comply with the Lender’s default notice or request for additional security, which then permitted the Lender to accelerate the loan and enforce its security by arresting the vessel. The Borrower also alleged that the loan and interest were being repaid in a timely manner and, as the market for ship valuations was rising, the Lender was adequately secured. However, the Greek court ruled against the Borrower, stating that the existence of an increased (unilateral) valuation did not automatically invalidate the notice of default served by the Lender. In addition, the Greek court ruled that, although the market was rising and therefore the vessel’s value would provide sufficient security to the Lender, the Lender had, at the time of the arrest, acted in good faith and within the commercial terms agreed in the finance documents. The Greek court also acknowledged the recent decision of the English Court of Appeal for “Alkyon”, which applied a strict interpretation of loan provisions, evidencing that both parties to a loan agreement should be well-advised of the meaning, application and interpretation of the provisions to which they agree and are contractually bound, together with the respective risks.
A Historic Bill
On 8 January 2021, the Greek government proceeded with the historic motion of submitting a bill to parliament extending Greece’s western limit of territorial waters in the Ionian Sea to 12 nautical miles. The bill is a result of fruitful negotiations between Greece, Italy and Albania, enhancing the country’s strategy to promote security and prosperity in the region by mutual agreement. The bill was expected to be voted on by the Greek Parliament in January 2021.
While the implications of the COVID-19 pandemic worldwide have not yet been fully evaluated, Greece is struggling to protect its shipping and tourism sectors and avoid a further recession – following the Greek debt crisis in 2011. In this regard, Greek ship-owners have once again responded to the needs of Greek society and, together with the Greek State, have provided aid and support (through financial assistance and provision of medical supplies), remaining committed to the Greek values of solidarity and contribution. With 2021 now beginning in earnest, it remains likely that further legislative changes and improvements will be seen in the shipping sector in Greece.