Vassiliades & Co. (Malta) Limited Guide on Malta Ship Registry: Registration of Ship Mortgages
Registration of Ship Mortgages
The Firm is committed to providing high quality service in the field of Shipping Law. It offers legal services to ship owners, charterers, ship managers and ship financing institutions. Advice is given on the sale/ purchase of vessels, ship registration, charter agreements, ship financing and registration of mortgages. In a ship mortgage, a debtor (mortgagor) provides a creditor (mortgagee) an interest in a ship as security for the repayment of a loan or the performance of some other obligation.
There are various advantages of Maltese mortgages, some of which including the following. Mortgages have a high ranking form of security and they constitute executive titles. They may be assigned or amended. In the case of an assignment, the assignee of part of a debt or other obligation secured by a registered mortgage of a ship or share can demand that the assignment be entered in the register of the particular ship for the part so assigned. With regards to amendments, when a registered mortgage is amended, such amendment shall form an integral part of the registered mortgage and such amended mortgage shall have the same priority as it had before such amendment was noted. An amendment of a mortgage shall be effected for example in order to increase the amount of capital secured by such mortgage. A registered mortgage of a ship or share may be transferred to any person by an instrument of transfer executed by the transferor in the presence of, and attested by, a witness or witnesses. A ‘power of attorney’ may be granted to the Mortgagee in addition to the mortgage as a form of added security, which will only apply in case of default on the part of the Mortgagee.
A mortgage over a Maltese ship shall have effect towards third parties only once it is duly recorded in the Register. Mortgages are recorded by the Registrar in the order in time in which they are produced to him for registration. If there are more mortgages than one registered in respect of the same ship or share, the mortgages shall be entitled in priority, one over the other, according to the date and time at which each mortgage is recorded in the register. Through a memorandum under his hand, the Registrar has to notify on each mortgage, that such mortgage has been recorded by him and has to state the day and hour of that record. In the case that the mortgage instrument states that it is prohibited to create further mortgages over a vessel without the prior written consent of the mortgagee, the registrar shall not record such further mortgage unless the consent in writing of the holder of a prior mortgage is produced to him. Any mortgage that is registered in violation of this is null and void. If a further mortgage is executed in favour of an existing mortgagee, the mortgagee’s consent shall not be required. In the case that the mortgage instrument states that it is prohibited to effect the transfer of the ship that is being mortgaged, or of a share therein, without the previous written consent of the mortgagee, the registrar shall not record any transfer of such ship or of a share therein unless the consent in writing of such mortgagee is produced to him, saving where the transfer is made pursuant to a court order in a sale by auction of such a ship or pursuant to any other court order. Any transfer that is registered in violation of this is null and void.
Rights of Mortgagee
In the event of default of any term or condition of a registered mortgage or of any document or agreement referred to therein, the mortgagee shall, upon giving notice in writing to the mortgagor, be entitled a) to take possession of the ship or share therein in respect of which he is registered; b) have power absolutely to sell the ship or share in respect of which he is registered; and c) have power to apply for any extensions, pay fees, receive certificates, and generally do all such things in the name of the owner as may be required in order to maintain the status and validity of the registration of the ship.
Maltese Mortgage Form and Deed of Covenants
Ship mortgages may be registered in the Registry of Shipping by filing a Mortgage Deed. Apart from this mortgage deed, there is a deed which complements the mortgage form which is the ‘deed of covenants’. It contains certain provisions which cannot be included in the mortgage form. It contains provisions regarding the mortgagee’s right to carry out inspections on the vessel, the mortgagor’s obligation to provide the mortgagee with certain information and so on.
Foreign mortgages are recognised as mortgages with the status, rights and powers specified in the Merchant Shipping Act provided that certain conditions are met. The mortgage (i) must have been validly recorded in the registry of ships of the country under those laws the ship is documented, (ii) the registry is a public registry, (iii) the mortgage appears upon a search of the registry and (iv) such mortgage is granted a preferential and generally equivalent status as a mortgage under the Merchant Shipping Act under the laws of the country where the mortgage is registered.