The expertise of the CISR, the reputation of the Cayman Islands flag internationally, the ease with which a vessel and any mortgage can be registered and the security of the Cayman Islands, its developed British based legal system and infrastructure, are all persuasive reasons to register in the Cayman Islands.
Cayman Islands seafarers have for generations plied the seas and the Cayman Islands has maintained a Shipping Registry at the Port of George Town, Cayman Islands since 1903.
The Cayman Islands Shipping Registry, a division of the Maritime Authority of the Cayman Islands, is now the favourite location for registering pleasure yachts with reputedly over half the world’s superyachts on its register as well as a fleet of well maintained commercial ships. Some of the reasons for the CISR’s prominence may be summarised as follows:
1. Vessels flagged in the Cayman Islands fly the Red Ensign flag and, as British ships, come under the protection of the British Royal Navy. Full British Consular services and Royal Naval assistance and protection for Cayman-flagged vessels are available worldwide.
2. The CISR is a genuine offshore registry with its seat of operations in the Cayman Islands. In all, there are three ports of registry available in the Cayman Islands being George Town (in Grand Cayman), The Creek (in Cayman Brac) and Bloody Bay (in Little Cayman). The CISR does not subcontract out the provision of services to a third party private body. As such, it can be relied upon to deliver a consistent approach with the best interests of yacht and ship owners as a whole at heart. The CISR is not a flag of convenience and is a full subscriber to the major international conventions. Hence, it has a deservedly good reputation and Cayman Islands registered yachts and ships can enter harbours worldwide without fear of excessive scrutiny by Port State Control.
3. The CISR has a skilled survey department that is sympathetic to owners’ needs and understanding of their requirements while at the same time maintaining the integrity of the applicable rules and conventions. In particular, the CISR survey department offers comprehensive advisory services to builders, designers and owners of new yachts under construction.
This service also extends to cover extensive vessel conversion projects. From the initial project meeting to final delivery, the CISR will appoint a dedicated surveyor with specialist knowledge of yacht construction and of the applicable regulatory standards. The appointed surveyor will act as a focal point for the duration of the build and can provide assistance and guidance on all aspects relating to the construction of the vessel, with particular emphasis on the requirements of the Large Commercial Yacht Codes (LY1 and LY2) and other requirements such as the MARPOL (the International Convention for the Prevention of Pollution from Ships) Convention. This allows vessels to be constructed in accordance with the applicable safety standards, whilst still maintaining the owner’s design aspirations. It also provides the shipyard with realistic and cost-effective means to achieve the required regulatory standards for large yachts.
4. The Merchant Shipping Law, which was revised as recently as 2007, is the governing legislation for all Cayman Islands registered vessels. So as to meet different owner’s needs, there are several different kinds of registration available under the Law including full registration, interim registration, provisional registration, ship under construction registration and demise charter/bare boat registration. For instance, an owner who is having a vessel built may decide to register the vessel, first, as a ship under construction, which can then easily be converted to a full registration on delivery.
5. Time is often a critical factor for owners. The CISR is able to expedite the registration process and the provision of the certificates and other documents required to operate a vessel. Subject to payment of expedition fees, the CISR will issue any documentation required including the Certificate of British Registry or deletion documentation on an “over the counter” (immediate) basis. Routinely, the CISR is willing to accept faxed/scanned documentation provided that an undertaking to supply the original within seven days is also given. The CISR is also able to issue a Certificate of British Registry immediately for ships coming to the register provided that an undertaking is given to supply within 21 days a signed Carving and Marking Note evidencing the necessary marking of the vessel with its name and official number. The CISR’s representative offices and facilities in multiple jurisdictions including in Fort Lauderdale (USA), London (England), Cannes (France), Athens (Greece), Tokyo (Japan) and Singapore also enable certificates to be issued immediately at any of these locations.
6. Pleasure yachts that charter, at the time of charter, must comply with the Cayman Islands Merchant Shipping (Vessels in Commercial Use for Sport and Pleasure) Regulations 2002 which in turn require the yacht to comply with the United Kingdom Maritime and Coastguard Agency Large Commercial Yacht Codes. Yachts that comply with the Codes benefit in terms of resale value, charter rates and insurance premiums. However, a MCA compliant yacht can choose to sail under either a commercial registry (describing it as a commercial vessel) or a pleasure registry (describing it as a pleasure yacht). The CISR will issue and exchange a Certificate of British Registry reflecting either a commercial vessel or a pleasure yacht registration on the owner’s request. Generally, it is beneficial for MCA compliant yachts to be classed as commercial when operating in European Union waters and pleasure when operating in the US or the Caribbean waters. Cayman Islands registered yachts that are registered as pleasure yachts and not engaged in trade in the United States will, routinely, be granted a License to Cruise the waters of the United States (also known as a cruising permit) by United States Customs allowing them to enter, depart and cruise within United States waters, reporting to United States Customs only when entering the country or changing Customs districts. Furthermore, during the period specified in the License to Cruise the yacht will generally not be subject to Florida use tax (provided, for instance, the yacht is not sold, chartered or offered for sale or charter while in Florida and the yacht is used consistently with the federal cruising license). A privately operated yacht that does not charter does not have to comply with any Cayman Islands legislation with respect to the MCA Large Yacht Codes, manning or operations.
7. All the major lenders are familiar and comfortable with the Cayman Islands. Lenders do not need to have a place of business or to qualify in any way in order to register a Cayman Islands mortgage. The Merchant Shipping Law offers a comprehensive range of security to lenders including mortgages over completed vessels, mortgages over vessels under construction as well as the ability to record a priority notice giving an intending mortgagee priority over later mortgages.
Assuming that the vessel is based outside the Cayman Islands (as is generally the case) there are no Cayman Islands duties or taxes on the registered mortgage. Subject only to earlier priority notices, mortgages are recorded on the Register on the date and time of initial deposit, remain an encumbrance on the vessel until discharged (even if the vessel ceases to be registered in the Cayman Islands) and have priority at law on a first in time basis. Mortgages may be deposited at the Registry’s head office in the Cayman Islands or at any one of its five representative offices (located at London and Southampton (UK), Athens (Greece), Tokyo (Japan), and Fort Lauderdale (United States). Determining whether a vessel is subject to a mortgage is straightforward; the CISR will, on application, issue a transcript of registry showing any mortgage or security interest recorded against a vessel or confirming it is free and clear of encumbrances. Should it become necessary for a secured lender to exercise its rights under the mortgage the Merchant Shipping Law contains a statutory power of sale which is straightforward and effective in its exercise.
8. Provided the master and crew have suitable qualifications, there are no restrictions or rules as to nationality of crew. Crew requirements and qualifications are based solely on merit and not on protectionism.
9. In order to register a vessel on the Cayman Islands Register of Ships the owner must be a qualified person. Although it is generally recommended to use a Cayman Islands vehicle for ownership purposes, it is, in fact, possible for any corporate body to own a Cayman Islands registered yacht or ship either by appointing a representative person or registering as a foreign company under Part IX of the Cayman Islands Companies Law. This allows owners the flexibility to use a foreign corporate vehicle where there are taxation benefits or other reasons for doing so. Using a corporate body to own a vessel has the important benefit of limiting the liability of the owner if a collision or other event incurring liability should occur. However, in practice, usually a new Cayman Islands company limited by shares is incorporated to own each vessel as this is generally simpler administratively and less likely to result in delay.
10. The Cayman Islands is renowned as a leading offshore jurisdiction with a tax neutral environment. It has a solid political, legal and fiscal environment with a stable parliamentary democracy since 1831. There are no income, capital gains or other taxes imposed by the Cayman Islands on vessel owning companies. With the Privy Council in England being the ultimate court of appeal, the CISR operates within a stable British based legal system which is a compelling reason to choose the CISR for the registration of vessels and any associated loan financing and security. The Cayman Islands internationally renowned financial services industry also gives owners access to a full range of services including banking facilities, provision of Cayman Islands directorship services as well as sophisticated structures such as limited partnerships for ownership purposes.
In summary, the expertise of the CISR, the reputation of the Cayman Islands flag internationally, the ease with which a vessel and any mortgage can be registered and the security of the Cayman Islands, its developed British based legal system and infrastructure, are all persuasive reasons to register in the Cayman Islands.