Government Purchase of Low-Efficiency Vessels Law

(Purpose) Article 1. The purpose of this Law is to diminish the surplus of coastwise shipping bottoms through the Government's purchase of low-efficiency vessels, in order to contribute to the recovery of the normalcy of coastwise shipping industry.

(Definition) Article 2. In this Law, "low-efficiency vessels" shall mean the steel vessels which are of not less than 800 gross tons (excluding those whose deadweight tonnage is less than 60% of the gross tonnage) and which fall under any of the following items: (1) Wartime standard vessels (excluding those which hold the International Load Line Certificate provided for in the Ministerial Ordinance concerning the Certificate under the Provisions of the International Convention for the Safety of Life at Sea and International Load Line Convention (Ministry of Communications Ordinance No.22 of 1935)); (2) Vessels which were launched prior to August, 1921.

(Purchase) Article 3. The Government will purchase low-efficiency vessels having the equipments enumerated in the following items upon application of their owners (with regard to the vessels which are held jointly by the Sempaku Kodan, the owners other than the Sempaku Kodan, hereinafter the same);provided that this shall not apply to the vessel which is sunken or in need of a large scale repair at the time of enforcement of this Law, or the vessel which may sink or come to need a large scale repair after the enforcement of this Law, or the vessel which is owned by the Japanese Monopoly Corporation, Japanese National Railways or local public entity: (1) Equipments for closing the hatch and other openings in the hull; (2) Piping; (3) Hand Steering gear; (4) One boat; (5) Portable fire-extinguishers and fire-buckets; (6) Anchor oil-lamp and black ball; (7) Anchor, anchor-cable and rope; (8) Capstan gear; (9) Manual bilge-pump; (10) Gangway ladder; (11) Other equipments which the Minister of Transportation has deemed indispensable for administration of the vessel in mooring status and designated by public notice. 2 The purchase under the provision of the preceding paragraph shall not exceed \2,700,000,000 in total purchasing prices. 3 The provision of Article 2 of the Ministerial Ordinance concerning Restriction of Navigation, etc.(Ministry of Transportation Ordinance No.40 of 1945) shall not apply to the vessels which are to be purchased under the provision of paragraph 1.

(Purchasing Price) Article 4. Prices for the purchase under the provision of the preceding Article shall be as follows: Classification of Vessels Purchasing Price Vessel of 5,000 G/T or more Sum obtained by multiplying \4,606 by the gross tonnage of the vessel. Vessel of 2,000 G/T or more but less than 5,000 G/T Sum obtained by multiplying \7,037 by the gross tonnage of the vessel. In case, however, the sum thus obtained exceeds \23,030,000, \23,030,000. Vessel of less than 2,000 G/T Sum obtained by multiplying \8,890 by the gross tonnage of the vessel. In case, however, the sum thus obtained exceeds \14,074,000, \14,074,000.

(Period for Application) Article 5. The period during which the applications for the Government purchase under the provision of Article 3 may be made shall be from September 1 to 30, 1950.

(Order of Government Purchase) Article 6. Each applicant shall specify the order of priority to be given to his vessels, where he offers two or more vessels for sale. In case the total tonnage of vessels, offered for sale by the applicants within the period prescribed in the preceding Article, exceeds the limits prescribed in Article 3 paragraph 2, the selection of vessels for purchase shall be effected, priority being given to vessels in the order specified by the applicants (if one vessel only is offered for sale by an applicant, the first priority is given to such vessel in the selection), and if, in the course of selection, all of some group of vessels which are to be given equal priority according to the order specified by the applicants cannot be given equal priority because of the said limits, the selection shall be made by lottery specifically among those vessels.

(Contract for Purchase) Article 7. The contract for purchase shall be made in writing, and at least the following matters shall be specified therein: (1) Name, registry number and signal code of the vessel concerned; (2) Purchasing price of the vessel; (3) Time and place of delivery of the vessel; (4) Where the Sempaku Kodan stands in co-ownership of the vessel, matters concerning purchase of the Kodan's share by the other owner; (5) Where a priority right or mortgage exists on the vessel, matters concerning cancellation of the priority right or mortgage; (6) Matters concerning removal or destruction of the main boiler and main engine of the vessel.

(Rescission of the Contract for Purchase) Article 8. In the case falling under any of the following items, the Minister of Transportation shall rescind the contract for purchase: (1) In case where the Sempaku Kodan stands in co-ownership of the vessel for which the contract for purchase is made, and where the Kodan's share has not been purchased by the other owner than the Sempaku Kodan by the day of delivery as designated in the contract for purchase; (2) In case where a priority right or mortgage exists on the vessel for which the contract for purchase is made, and where such priority right or mortgage has not been cancelled by the day of delivery as designated in the contract for purchase; (3) In case where the main boiler and main engine of the vessel under the contract for purchase have not been removed by the day of delivery as designated in the contract for purchase or they have not been destroyed by the said day to the extent that their repairing is no longer economically lucrative.

(Method of Payment) Article 9. The Minister of Transportation shall not pay the purchase-money for the vessel for which the contract for purchase is made, before the delivery thereof has been effected.

Article 10. The purchase-money mentioned in the preceding Article shall be paid into a special deposit account which the seller of the vessel will open with a bank or banks (except the Bank of Japan), in accordance with the contract for purchase.

(Restriction on Drawing Out Deposit Money) Article 11. The contract for purchase shall stipulate that the deposit money mentioned in the preceding Article shall not be drawn by the seller of the vessel for any purpose other than repayment of debts as specified in the following items, that it may be drawn by him after repayment of such debts has been completed and that it may be drawn by him when there is no such debt: (1) The retirement allowances to be paid due to the labor agreement which may be concluded between the seller of the vessel and labor unions organized by his employees in connection with the sale of vessel under this Law; (2) The debts which the seller of the vessel owes at the time of promulgation of this Law in connection with the vessel concerned; (3) The debts which the seller of the vessel has come to incur as a result of purchase of the Sempaku Kodan's share mentioned in Article 8 item (1) or as a result of cancellation of the priority right or mortgage mentioned in item (2) of the same Article.

(Time of Transfer of Title) Article 12. The title to the vessel for which the contract for purchase is made shall be transferred upon delivery thereof.

(Cancellation of Registration, Etc.) Article 13. Where the title to a vessel for which the contract for purchase is made has been transferred to the State, the Minister of Transportation shall immediately entrust to the competent authorities the cancellation of registration of the vessel (hereinafter referred to as "Government-purchased skeleton vessel" ) and have its registry cancelled.

(Administration) Article 14. The Government-purchased skeleton vessels shall be administered by the Minister of Transportation.

(Custody) Article 15. Any person who has sold a vessel to the Government under the contract for purchase shall take custody of the Government-purchased skeleton vessel in accordance with the terms and conditions of the contract for purchase until the Minister of Transportation has turned it over to the Minister of Finance under the provision of the following Article. In this case, the period of the custody shall not extend after July 31, 1951.

(Sale) Article 16. The Minister of Transportation shall, when he intends to have the Government-purchased skeleton vessel sold, turn it over to the Minister of Finance. 2 The Minister of Finance shall immediately sell the Government-purchased skeleton vessel to a person who intends to scrap it. 3 If the Minister of Finance has not succeeded in selling a Government-purchased vessel by July 31, 1951, he shall either scrap or abandon it not later than September 30, 1951.

(Obligation concerning Scrapping) Article 17. The person who has purchased the Government-purchased skeleton vessel from the Government, shall remove from the hull of the skeleton vessel some steel-made portions of the hull equivalent, in weight, to at least one-fourth of all steel-made portions of the hull, by September 30, 1951.

(Prohibition of Transference, Etc.) Article 18. The person who has purchased a Government-purchased skeleton vessel from the Government, shall not transfer, lease, or put it to pledge.

(Prohibition of Preferential Treatment) Article 19. No preferential treatment or special favor, in connection with construction of vessels, shall be afforded by the Minister of Transportation and other Government agencies to any person who has sold the low-efficiency vessel to the Government under this Law, on the ground that he has made the sale.

(Penal Provision) Article 20. Any person who has contravened the provision of Article 18 shall be liable to penal servitude for not exceeding one year or a fine not exceeding \100,000.

Supplementary Provisions: (Date of Enforcement) 1. This Law shall come into force as from the day of its promulgation, provided that the provisions of paragraphs 2 to 4 inclusive of the Supplementary Provisions shall come into force as from October 1, 1950. (Amendment to the Cabinet Order for Ship's Operation) 2. The Cabinet Order for Ship's Operation (Cabinet Order No.48 of 1950) shall be partially amended as follows: In the Index of Contents, "Chapter II. Coastwise Trade Vessels (Articles 4-11)" shall be amended as "Chapter II. Deleted." Chapter II shall be amended as follows: Chapter II Deleted.

Articles 4 to 11 inclusive shall be deleted.

(Transitional Provisions) 3. With regard to the vessel which has been laid up for consecutive 30 days or more in the period up to September 30, 1950, the precedents under the former provisions shall apply to the payment of standby subsidy accruing prior to October 1, 1950. 4. In case where the owner of a coastwise trade vessel as provided for in the Cabinet Order for Ship's Operation (the ship's husband in case of the vessel being in co-ownership and the lessee in case of it being leased (including time-charter)) has actually laid up the vessel prior to the time of promulgation of this Law and has continued laying-up thereof for 10 days or more but less than 30 days in the period up to September 30, 1950, the Government will pay the standby subsidy to him. In this case, the instances as provided for in the Cabinet Order for Ship's Operation before amendment shall still prevail with respect to the payment of standby subsidy accruing prior to October 1, 1950.