RF President signs amendments into MSC’s Article 4 on involvement of foreign-flagged ships

President of Russia Vladimir Putin has signed the Federal Law No 34-FL dated 01.03.2020 “On introduction of amendments into Article 4 of the Merchant Shipping Code of the Russian Federation” (on clarification of a possibility and arrangements for using foreign-flagged ships while conducting certain merchant shipping activities). The document has been published on the official internet portal for legal information.

The State Duma of the Russian Federation passed the Draft Law on 18 February 2020.

The Federal Law had been drafted by RF Ministry of Transport to clarify the issues related to a possibility of and arrangements for using foreign-flagged ships while conducting certain merchant shipping activities that are formalized by the above-mentioned article’s provisions as a preferential right of RF-flagged ships as well as conditions for excluding ships from the the Russian Open Register.

The bill is pursuant to the provisions of the Treaty on the Eurasian Economic Union and other international treaties of the Russian Federation.

According to Clause 1 of MSC Article 4, foreign-flagged ships can be involved in some activities if it is foreseen by international treaties of the Russian Federation, MSC and RF Government Decrees issued in pursuance of them.

However, MSC does not describe reasonable grounds allowing RF Government issue a decree defining a mechanism for involvement of foreign-flagged ships in specified activities.

Thus, the current legislation actually prevents involvement of foreign-flagged ships if necessary (for example, when there are no dedicated ships in one of RF Registers) that can result in failure to perform contract obligation under large-scale projects.

This legislative gap is eliminated through expansion of MSC Article 4. According to Clause 5 of Article 4, involvement of foreign-flagged ships in certain activities is conducted in cases and in the order established by the Government of the Russian Federation or in compliance with international treaties of the Russian Federation.