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Electronic ship registration in NIS/NOR

In the near future the Norwegian Ship Registries will introduce electronic registration of vessels and encumbrances. The current memo from the Norwegian Maritime Authority subject to public hearing outlines the new concept, and this article describes some of the highlights.
Aerial view cargo ship terminal, Unloading crane of cargo ship terminal, Aerial view industrial port with containers and container ship.

Electronic registration
The Norwegian Maritime Authority (“NMA“) has developed a new system for electronic ship registration and has proposed certain amendments to the Norwegian Maritime Code and appurtenant regulations. The amendments are currently circulated in a memo subject to public hearing. In short, the amendments aim to make the registration provisions technology neutral and make certain adjustments to address issues on priority between electronically submitted documents, and documents submitted in hard copy originals.

The NMA presents that the new system for electronic registration will include an electronic portal. Depending on the relevant registration the applicant wishes to apply for, f.ex. transfer of ownership or registration of mortgage, the portal will generate a list of required documents to be uploaded. When the applicant has submitted all necessary documents for the relevant registration, the portal will automatically generate evidence of registration significantly reducing response time.

When the applicant has submitted all necessary documents for the relevant registration, the portal will automatically generate evidence of registration significantly reducing response time.

The current practice today however does not rely on processing of documents on the day of closing of a transaction. The parties will normally have submitted the required documents in advance, to be held in escrow at the registry pending instructions to effect registration at the relevant point in the closing procedure. The NMA acknowledges the industry’s need to accurately time the registration steps in a closing, and notes that the electronic portal will continue the possibility to submit documents in escrow, to be released at a later stage.

The proposal further includes the opening of electronic signing of registration documents. The current requirements for witnessing of bills of sale and mortgages is suggested replaced by electronic signing with a sufficiently high safety level, requiring the applicant to sign with Bank-ID or similar with equivalent safety level.

In practice, and due to the lack of electronic signing tools with sufficiently high safety level and international recognition, this means that electronic signing will only be available for Norwegian applicants. The applicant can however be an attorney-in-fact acting on behalf of a foreign party. The amendments do however not limit the relevant signing tools, hence should Bank-ID be replaced or supplemented with solutions with international availability this will be allowed under the regulations.

Parallel system
Due to the international character of shipping transactions and the parties involved in ship registrations in NIS/NOR, there will continue to be a need for the current system to continue in parallel with electronic registration, including within the same case. The current system will typically continue to be relevant for foreign parties not having access to the electronic signing of documents to be submitted. It will however be possible for foreign parties to issue a power of attorney in favor or a Norwegian party with access to Bank‑ID which in turn can submit documents electronically. The power of attorney will have to satisfy the same requirement regarding notarizations and legalization/apostille as per today.

Discharge of mortgage without original mortgage document
A new development on the discharge of ship mortgages, is that the NMA proposes to remove the requirement of submitting the original mortgage together with the request for discharge. The opening to submit the request for discharge only will be available for licensed banks and financial institutions as specified in the Norwegian Act on Financial Institutions and Financial Groups. The right for said parties to discharge a mortgage without returning the original comes with a liability for the bank for any losses that might arise as a result of the bank not marking or destroying the original mortgage document.

For the time being, existing mortgages may only be discharged through physically submitted documentation, due to constraints in the IT solution. All electronically registered mortgages may however be discharged electronically.

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In summary, the proposed changes to the ship registration are in our view very welcome. We experience the Norwegian Ship Registries to be swift and service minded in their handling of registrations, and this will only further adapt the registries to an even more user-friendly and swifter service. We are not aware of any other ship registries currently rolling out electronic registration solutions, which will give the Norwegian Ship Registries a competitive advantage. Although the technical solutions do not make electronic registration available to all parties, in particular foreign parties, the amendments being made to the registration provisions open for a fully electronic and automated process once the technology allows

Should you have a particular interest in these matters, please contact us: Agnete Nummedal, senior associate (anu@svw.no), or Christine Rødsæther, partner (cro@svw.no).

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