Marco Morace is a partner and head of the insurance team at E.Morace & Co. He graduated in law from the University of Naples ‘Federico II’ and joined E.Morace & Co in 2003. Prior to this, he worked for the legal department of P&G in Rome, was a visiting lawyer with leading London insurers and international law firms in London.
Marco’s areas of expertise are: accident and personal injury, insurance counter-fraud, reinsurance, insurance and commercial litigation and dispute resolution, intellectual property, marine insurance, professional liability, shipping and offshore, yachts and superyachts.
Guido Greco is a partner at E.Morace & Co. He graduated in law from the University of Naples ‘Federico II’, got an LLM in international business law from the University La Sapienza in Rome and joined E.Morace & Co in 2006. Prior to this, Guido had work experience with the Office of Legal Affairs of the United Nations General Secretariat in New York.
Guido’s areas of expertise are: accident and personal injury, banking and finance, professional liability, litigation and dispute resolution, shipping and offshore, insurance and reinsurance, marine insurance.
GTDT: What is the current state of the shipping industry in your country?
Marco Morace and Guido Greco: The Italian shipping industry is showing signs of recovery thanks also to the globalisation and the acquisition of local companies from foreign operators and investors, as well as the adjustments of shipping operators to the new market standards as a consequence of the long-lasting crisis in the sector.
During the 2018 general meeting of FederAgenti, the Italian agents’ federation, it was reported that the total investment value of international groups in the shipping industry (including marine, port and logistic operators) was about €3.5 billion.
The passenger and ro-ro market is also very strong, with local operators starting new routes and international cabotage services, thanks to the good state of the local market as well as the stabilisation of east Mediterranean countries.
According to market data, Italian operators are the most active in the short sea shipping sector in the Mediterranean and the Black Sea areas.
GTDT: What are the prevailing shipping market trends affecting your country?
MM & GG: The consolidation of debt positions and the restructuring and adjustment of the organisational structures, and, thanks to the availability of Italian banks to support local operators in the restructuring of their loans and the investment of foreign operators or stakeholders, the imposition of independent management standards on companies whose operations are, in some cases, still anchored to family boutique cultural heritage.
The cabotage sector is in an excellent phase of market vitality with mergers and joint ventures, and it is also favoured by new regulations on management and investments in port infrastructures that can have a positive impact on the shipping industry in its broad sense.
“According to market data, Italian operators are the most active in the short sea shipping sector in the Mediterranean and the Black Sea areas.”
GTDT: Are there any recent domestic or international political or legislative developments that may have an impact on your country’s shipping market?
MM & GG: In January 2018, a new law came into force amending the original Law No. 84 of 1984 regulating the rights and powers of the Italian Port Authorities. Among the new features introduced, is the possibility for the Port Authorities to use up to 15 per cent of the income from embarkation and disembarkation tax, to finance operational intervention plans aimed at professional training for the redevelopment or reconversion and relocation of harbour workers. The implementation of the new Law No. 84/94, which includes the possibility to call for tenders pursuant to EU public tender principles, is expected to have an improvement on port infrastructures and consequently positive effects on the shipping and logistic market.
In February 2018, a new law came into force amending the ‘Nautical Code’, the law regulating the use of pleasure yachts. The new law basically simplifies many rules, making the use of yachts easier and introducing the definition of ‘commercial yachts’ – being yachts used only for commercial purpose that are entitled to be registered in the Italian international registry with the benefit of the relevant tax regime.
GTDT: What are the key regulatory and compliance issues for your country’s shipping market?
MM & GG: Italian legislation basically follows EU directives and regulations. Basic EU principles of free movements of persons, capital and services have been implemented in the Italian laws including the ‘Tenders Code’ regulating any public tender process. This code applies to many sectors in the shipping industry, including public subsidies to shipping routes connecting small Italian islands to the main land, tenders issued by national state companies in the energy and oil field, works to ports’ infrastructures, and the granting of maritime fields and lands.
GTDT: What are the shipping industry’s current sources of finance? How do you predict they will develop, and what are the advantages and challenges to financing a vessel in your country?
MM & GG: The Italian shipping finance market is expected to restart, having absorbed and overcome the necessary restructuring. The passenger and ro-ro sector is expanding and the Italian fleet in this field needs a renovation and therefore new sources of financing, either by using the traditional methods of ship financing or alternative structure or private equity investments.
The main advantages to financing a vessel in Italy are the possibility of identifying the owners and the taking control over the operation of the vessel, as well as the possibility of obtaining the judicial sale of the vessel based on the mortgage title.
GTDT: Have there been any recent significant domestic or foreign court decisions or arbitration awards that impact on your country’s shipping market?
MM & GG: On 30 May 2018, the Italian Constitutional Court issued a judgment against the Friuli-Venezia Giulia region in relation to a law regulating marine concessions. The judgment effectively clarifies that marine concessions should respect the ordinary rules on competition, thus falling within the competence of the state rather than that of the Italian regions.
It is hoped this decision will give rise to a national regulation for the entire sector of marine concessions with the fixing of EU competition principles to be followed by each region, and regulation on the applicability of public tender procedures. In our opinion the way the Italian government and port authorities will deal with the marine concessions issue will have a direct impact on the progress of shipping industry in the next few years.
“The way the Italian government and port authorities will deal with the marine concessions issue will have a direct impact on the progress of shipping industry.”
GTDT: What is the outlook for your country’s shipping market?
MM & GG: The Italian marine import–export sector amounts to approximately €220 billion and 500 million tonnes of goods per year.
Short sea shipping represents a point of excellence for Italy with approximately 36 per cent of the market share in the Mediterranean area.
Ro-ro traffic in Italy (50 per cent of which is carried out in the south) is a major strength for the country.
All the above sectors are very much linked to ports facilities.
If the port authorities and the new government will really start with the investments in ports’ infrastructures and facilities, intermodal structures and procedures, the entire industry will benefit and continue to grow with the possibility to take advantage of Italy geographical position as a bridge to the North African regions.
The Inside Track
What are the particular skills that clients are looking for in an effective shipping lawyer?
Our clients love our:
- care – we work hard to advise our clients as soon as possible on the day of our instruction or within one business day at latest with a preliminary advice;
- flexibility – we are keen to discuss with our clients fees as our aim is always to achieve the best result for the client, not the best opportunity for the firm;
- transparency – any client wants to keep legal costs and budgets in check especially in litigation; we always keep our clients up to date on case developments and cost so that they can check their budget is followed; and
- update – working with clients based around the world we are aware of the absolute importance of comprehensively keeping the client updated as soon as there is a development on its case or file.
What are the key considerations for clients and their lawyers when arranging finance for a shipping transaction?
A number of different considerations are made depending on whether we are assisting the lender or borrower.
The lender’s key target is to safeguard its interests in the best possible way in terms of security over the vessel as well as in her operation.
Basic security would be an ordinary first priority mortgage over the vessel; in this regard, it would be fundamental to obtain the advice of expert lawyer in the country where the mortgage is to be registered to understand whether security would be full valid and enforceable under the local law and jurisdiction.
Depending on the structure of the transaction and the quality of the borrower, lenders should also consider whether additional security should be obtained from the borrower such as parent company guarantee, charge over shares of the borrowing company, management and charge of a deposit account.
As said, the lender should also consider further types of security related to the operation of the vessel, particularly assignment of insurance in case of damage to the vessel and earnings and requisition compensation.
What are the most interesting and challenging cases you have dealt with in the past year?
One of the most interesting and challenging cases last year was the casualty of the high-speed vessel Cris M, 8 September 2017, which was stranded off the Lipari coast while on route between Eolian Islands with the 41 passengers on board. Our firm was instructed by the vessel’s owners and the P&I Club, and our marine casualty emergency response team assisted the clients in the aftermath of the event in relation to salvage and antipollution operations and afterwards with the administrative, criminal and civil proceedings. Our firm has a wide experience in similar major marine casualties around Italy.
Marco Morace and Guido Greco
E.Morace & Co
Milan, Naples and London