Lloyd's Maritime and Commercial Law Quarterly
“Yes, we have no bananas”: reflections on ship mortgages and The Tropical Reefer
Kathleen S Goddard*
This article considers the case of
Den Norske Bank ASA v.
Acemex Management Co Ltd (The Tropical Reefer). It analyses the judgments both at first instance and in the Court of Appeal and goes on to discuss two wider issues which arise from the case. First, it considers whether the principles of law governing mortgages of ships are synonymous with the principles of law governing mortgages of real and personal property. Secondly, it discusses the problems of applying the duties of mortgagees in the context of the arrest of a mortgaged ship, followed by a judicial sale. The article concludes that, although the principles of law relating to ship mortgages are based on common law and equitable principles, the principles of law applicable to mortgages of ships are no longer entirely the same as the principles applicable to mortgages of real and personal property. The article also concludes that the duties of mortgagees have never been fully integrated with the principles of law relating to arrest, and that careful consideration will need to be given to this area of law in the future in order to reconcile these principles.
1. Introduction
Den Norske Bank ASA
v. Acemex Management Co Ltd (The Tropical Reefer)
, which was considered initially by the Commercial Court,1
and subsequently by the Court of Appeal,2
raised a number of questions relating to mortgages of ships. This article considers the judgments, both at first instance and in the Court of Appeal. It goes on to discuss two important issues arising from the case; first, whether the law relating to mortgages of ships is synonymous with the law relating to mortgages of real and personal property; and, secondly, the duties of mortgagees in the context of the law relating to the arrest of ships.
2. The facts of the case
The case concerned a loan of US$ 6 million, which was made by the claimants, Den Norske Bank ASA, to the borrowers, who consisted of three companies. The loan was to facilitate the purchase of three vessels, one of which was the Tropical Reefer
. The loan agreement was subject to English law. The security for the loan was provided by