Rights of ship mortgagees under the Maltese Jurisdiction

Dr Daniela Bartolo | 20 May 2013

Chetcuti Cauchi Lawyers

 

Known in the industry also as maritime mortgages, ship mortgages have become accepted as a major source of finance for ship owners, who use their interest in the ship as a security for a loan. The relationship between ship mortgages and the maritime industry dates back to the nineteenth century and since then, ship mortgages have become an accepted practice for seeking finance for ship construction or purchase since through them a ship owner provides the creditor with security for the repayment of a loan or a performance of some other obligation by the acquisition of a property interest in the ship.
 
In Malta, the legal regime of the mortgage of vessels is foreseen in the 1973 Merchant Shipping Act, as subsequently amended. The Act provides a generous degree of security to the financier of the vessels, who, under a Maltese jurisdiction may safeguard their investment in case of a default in payment by the ship owner.  
 
In the context of an international financial crisis which is inevitably impacting the shipping industry, Malta provides an effective jurisdiction for financiers delivering efficient and effective procedures that implement the rights set in the Merchant Shipping Act.
 

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