Act on the "Development of the Argentine Merchant Fleet and Regional Fluvial Integration"

The Act on the Development of the Argentine Merchant Fleet and Regional Fluvial Integration (No. 27,419), in force since December 29, 2017, was enacted with the purpose of promoting the transport industry and the participation of Argentine shipowners in the charter market.

Said act brought about the creation of the Registry of National Shipowners, which depends on the Undersecretariat of Ports, Waterways and Merchant Navy of the Ministry of Transport, in contrast with the Registry of Onshore Personnel, which depends on the Argentina Maritime Authority (Prefectura Naval Argentina, PNA).

Those enrolled in this new Registry can receive the advantages and benefits established by Act No. 27,419; among them, the reduction of obstacles to:

– Import foreign vessels so as to include them in the Argentine fleet (without paying import taxes).

– Charter foreign-flagged vessels and naval artefacts under bareboat charter contracts within a temporary import legal regime and to have them considered Argentine-flagged to all effects, including to operate on national cabotage during the chartering period (i.e. the vessel shall keep its foreign flag but it will receive ‘Argentine Flag Treatment’).

Pursuant to Section 29, foreign-flag vessels and further naval devices which have been granted with Argentine Flag Treatment, or those which have been permanently incorporated into the national flag shall be exclusively manned by Argentine crew, under penalty of losing the benefits arising from the promotional regime. Interestingly, contradicting the recently mentioned section, Section 31 provides that said vessels shall be manned exclusively by Argentine crew or residents.

Every employment contract entered into with the crew of these vessels shall be governed by the agreements signed with the different unions, as well as by the applicable Argentine regulations, and subjected to Argentine administrative and judicial jurisdictions.

In case of unavailability of Argentine crew, foreign personnel may be admitted, until such unavailability ceases, as provided for in section 112 of Law 20,094, as amended by Law 22,228. Preference will be given to staff coming from Mercosur countries, who demonstrate having the required suitability. That is to say, the Navy Command-in-Chief shall approve the training of the proposed foreign personnel, who shall be authorized by the Maritime Authority.

In addition, the regulation sets forth the obligation of using the Spanish language in oral and written command orders, and service of the ship; logbooks and further documents annotations; order transmitters, accommodation and compartments signs.

In the event the vessel departs from national jurisdiction, the Argentine crew must be maintained, and all obligations that bounds Argentine Shipowners shall apply, since as far as the Argentine authorities concern, vessels under the Argentine Flag Treatment regime are considered Argentine vessels, for all purposes.

Although pursuant to this new act, vessels and naval devices reached by this regime must have the relevant insurance coverage for navigation and commercial operations, as required by Argentine regulations, the restrictions arising from Act. 12,988 (i.e. the obligation of contracting with Argentine insurance companies) shall not apply.

In addition to the benefits resulting from the temporary import and the national flag treatment regimes (explained above), Act No. 27,419 provides for tax benefits which, as the case may be, will apply for the term of 10 years. These benefits involve certain exemptions from employer contributions, and a possible subsidy to fuel, which has not been regulated yet.

In case you need more information about the requirements and formalities related to the enrolment in the above-mentioned Registry of National Shipowners, or to any other aspect of this regulation, do not hesitate to contact your legal counsel.

By Dra. María Belén Espiñeira