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Brexit and shipping in Spain

07/15/2016
Professional articles

It is not easy to determine the potential effects of Brexit since it is not even clear, at the present time, whether it will finally go ahead. Moreover, if it does, it will not be imminent and will depend on the agreement reached with the EU.

Jesús Barbadillo Eyzaguirre (counsel of the Madrid Litigation practice)
Transporte XXI

Following the recent referendum in which the UK voted to leave the EU, it is now time to assess the potential consequences. It is worth noting that we are talking about a country with one of the longest naval traditions in the world and, while it no longer leads the worldwide rankings of controlled and flagged fleets, it still holds a strong position in both. Furthermore, London continues to be one of the most important centers of worldwide maritime law and business, where many of the most representative international organizations (IMO, BIMCO) are headquartered. London is also still the global capital of maritime insurance and where the majority of the biggest maritime disputes are settled (via arbitration and/or in court).

It is no easy matter to determine the potential effects of Brexit, since it is not even clear, at the present time, whether it will finally go ahead. Even if it does, it will not be imminent and could take more than two years, not counting any possible extensions. It will all depend on the terms finally agreed between the UK and the EU, which are currently highly uncertain. Taking all of this into account, and looking solely at the Spanish shipping industry, we consider that the main effects could, in principle, be as follows:

UK-flagged vessels would cease to be considered Community vessels and therefore: (i) they will not be able to carry out internal transport or cabotage in Spain, save under a waiver where there is no Community vessel suitable and available to provide such transport; (2) they would be able to carry out international transport, including intra-Community transport, although the latter would not be subject to the customs, tax and other benefits of EU membership; and (3) they would not be counted as Community vessels for the purposes of Spanish tonnage tax.

Sailors who are UK nationals would be considered non-EU nationals and, as a result: (1) would be counted as such when determining the legally permitted crew on Spanish vessels on both the Standard Register and on the Special Canary Islands Register; (2) could not captain Spanish-flagged vessels or vessels on the Standard Register and on the Special Canary Islands Register; and (3) could not benefit from the tax and welfare incentives applicable to sailors enrolled on vessels on the Special Canary Islands Register and used for regular passenger transport services between EU ports.

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