i-law

Law of Ship Mortgages

Page 587

INDEX

INDEX
  • Bailment
    • concept of 322
  • Bareboat charter 319–326
    • see also Demise charters
  • Beneficial ownership 18–21
    • companies 20–21
    • contract, created by 21
    • determination 19
    • duties and liabilities 19
    • express trust, created by 21
    • meaning 19–20
  • Beneficial interest
    • meaning 58
  • Bills of Sale Acts 17–18
  • Blue Sky litigation 110–112
  • Bottomry 4, 344
  • Bottomry bond 59–60
  • Brazil

  • Page 588

    British ship 25–26
  • Builder’s certificate 29
  • Bunkers
  • Cargo 299–319, 353–5
  • Cargo interests 299–319
  • Caveat 223, 348
  • Certificate of registry 29–30
  • Change of obligations 128–131
    • further advances 130
    • guarantee, and 130–131
    • new obligation 129
    • precautionary security 128
    • refinancing 129
    • subsequent mortgage, ad 129–130
    • underlying facility amended 128
  • Change of parties 127
  • Charge
    • section 859 Companies Act 2006 144
  • Charterparty 494–499
  • Classification societies 189–190
  • COFR 188, 471
  • Collateral advantage
  • Collateral deed of covenant
    • see Deed of covenant
  • Collateral security
  • Common law 1–2
  • Common law liens 208–209
  • Common law mortgages 43, 50–52
    • charge, as 157
    • deed 52
    • form 52
    • maritime structures 52
    • priority 158
    • unregistered ship 50–52
  • Company voluntary arrangement
  • COMI 386–390
  • Conditional sale agreement 43, 44
  • Conflict of laws 67–119
    • aircraft 69
    • analogies 116
    • Blue Sky litigation 110–112
    • cases of ownership and arrest jurisdiction 86–89
      • corporate veil, and 86–87
      • lex fori 88–89
      • relationship between ownership and registration 87–88
      • timely completion of legal formalities 89
    • court’s protection of mortgagor, and 295–296
    • English position 69
    • foreign government action 80–83
    • foreign judicial proceedings, and 75–79
    • foreign law not confiscatory 81
    • foreign ship mortgages 83–86
      • geographical fiction 85
      • law of register 85
      • priority dispute 84
      • recognition 83–84
    • FPSO OSX3 in brazil 112–116
    • fraud upon mortgages, and 78
    • general maritime law 76, 108–109
    • insurance, and 461–462
    • international conventions 105–108
    • international insolvency 109–110
    • law of ship’s register 67–68
    • lex maritima 68
    • lex situs see situs
    • lex situs, conclusions on 116–119
    • Louisiana law, and 76–77
    • metaphors 116
    • mid-nineteenth century cases 74–80
    • power of requisition of British ships 82
    • priority issues 89–97
      • common law jurisdictions 94–96
      • French law 89–93
      • hypotheque 89–93
      • Latin American countries 96–97
      • lex causae 94
      • lex fori 90–91
    • review of issues 70
    • rights acquired under laws of foreign states 79–80
    • security over earnings and charterparties 488–489
    • situs 68, 69–70, 79
    • WD Fairway litigation 97–105
      • British Register 104
      • British ships belonging to port of registry 105
      • Exception1 to Dicey’s Rule 133 103–104
      • facts 97
      • geographical fiction 105
      • issues for determination 97–98
      • lex situs 98–99

      • Page 589

        registered transfers of proprietary interests 102
      • renvoi 101, 103
      • transaction defrauding creditors 102
  • Consents 194–196
  • Consolidation 205–206
  • Contract of affreightment 479
  • Court sale procedure 357–370
    • Admiralty Marshal’s costs and expenses 371–372
    • application for sale ‘pendente lite’ 358–359
    • costs and disbursements 372–373
    • delivery of ship to successful tenderer 366–370
    • determination of priorities 370–377
    • maritime lien claims 373–375
    • mortgage claims 375
    • mortgagee’s application for determination of priorities 370–371
    • mortgagee’s application for judgment in default 359–360
    • order for sale 368–369
    • order of priorities disturbed, when 376–377
    • ordered to direct buyer without tender or appraisement 361–362
    • payment of purchase price into court 366–370
    • payment out 370–377
    • possessory lien claims 375
    • steps taken by Admiralty Marshal after order 364–366
  • Courts’ protection of mortgagor 266–296
    • conflict of laws 295–296
    • derivative liability to relevant parties 290–293
    • excluding duties 293–294
    • general law 266
    • intermeddling 294–295
    • mortgage in possession’s duties to mortgagor 268–272
    • mortgagee’s exercise of power of sale 272–277
    • right to redeem 267–268
    • sales to self or favoured buyers 277–286
    • self-help, and 266
    • ship and land mortgages compared 286–290
  • Covenant defaults 223
  • Cross-Border Insolvency Regulation 419–424
  • Cross-border jurisdictional issues insolvency, and 390–391
  • CVA see company voluntary arrangement
  • Debt subordination 178–180
    • deed of indemnity, interpretation of 179–180
    • priority, and 178–180
    • ship finance transaction, and 178
  • Deed
    • common law mortgage 52
  • Deed of covenant 184–187
  • Default
    • breach of obligations 217
    • common law rights, and 217
    • discretions in relation to 223
    • effect 226–228
    • events 218
    • financial distress, and 216
    • meaning 218
    • mortgagee’s options following 230–232
    • post-default interest and break-funding 228–230
    • time to remedy 216
    • waiver of events 223–225
      • clauses 225
      • discussion 225
      • express remedy or cure language 224–225
      • failure to act 224
      • inactivity of mortgagee 224
  • Demise charters 39–40
    • duties and liabilities of mortgagee, and 319–326
    • mortgages on demise chartered ships 39
    • nature of 320
    • registration 39
  • Derivative liability to relevant parties 290–293
  • DIP financing 427
  • Discharge 202–205
    • preference, and 205
    • record in Register 204
    • repayment of debt 203–204
    • right to redeem, and 204
    • transfer to third party, and 205
  • Discretions 194–196
  • Disguised mortgages 53–54
    • motive 53
    • ‘true sale’ 54

  • Page 590

    Dual registration 39
  • Duties and liabilities of mortgagee to third parties 297–337
    • demise (bareboat) charters 319–326
    • history of ship mortgages, and 297–299
    • issues arising under Partnership Act 1890 330–332
    • lender liability summary 335–337
    • mortgagee in possession 328–329
    • non-demise charters and cargo interests 299–319
    • third party property 329–330
    • wider lender liability risks 332–334
  • Earnings 63, 71, 87, 132, 134–5, 142, 146, 151, 153–4, 156–7, 178, 200, 205, 216, 218, 224, 242, 248, 256, 258–9, 262–3, 307, 317, 330, 344, 358, 395, 399, 427, 473–508
  • Effect of registration 30–33
    • delivery of bill of sale, and 32
    • legal title, and 32–33
    • rectification, and 32
    • transfer, and 31–32
  • Enforcement 233
    • Admiralty Court, competency 345–6
    • ancillary equipment, and 188
    • application of proceeds of sale 255–256
    • arrest procedure 346–350
    • bareboat charter, and 187, 189
    • claims 341–5
    • collateral security, of 262–263
    • common law right to take possession 233–239
    • courts’ protection of 284–285, 295
    • default in payments, and 62
    • double mortgagee, and 169–170
    • earnings account 499–500
    • exercise of 293
    • factors relevant to decision to take possession 242–248
    • foreclosure 260–261
    • foreign judgments 71
    • joint and several borrower, and 173
    • judicial sale 357–370
    • law of place at time of 114
    • liability to third parties 323, 326, 334–5
    • liens, and 207, 213
    • marshalling, and 168, 174–175
    • mechanics and effect of mortgagee’s private sale 252–253
    • method of taking possession 239–242
    • mortgagee’s expenses of sale 253–255
    • mortgagee’s rights 475, 480, 496
    • penalties, and 133
    • rights of mortgagees in possession 248–249
    • sale of mortgaged ship 249–252
    • second mortgagee, and 151–152
    • security over shares, of 264–265
    • step-in rights 494–499
    • subordinate mortgagees 261–262
    • time charter, and 187
    • unfavourable jurisdiction 151–152
  • Equitable charge 42, 58–61
    • acknowledgment of receipt, and 59
    • lien, and 60–61
    • nature of 59
    • New York Produce Exchange form, clause 18 60
    • owner’s lien on sub-freights 60–61
    • priority 155
  • Equitable liens 209
  • Equitable mortgages 42, 54–58
    • beneficial interest 58
    • creation 56
    • definition 55
    • deposit of title deeds 55
    • enforcement 57–58
    • failure to create legal mortgage, and 56
    • nature of 54–55
    • priority 155
  • Equitable subordination 334–335
  • Equity 2
    • De Mattos v Gibson 309
  • EU Insolvency Regulation 386–390, 414–419
    • basic rule 415
    • enforcement of rights 417–418
    • interpretation 418
    • limits 416
    • secondary proceedings 419
  • Execution 120–121
  • Expiry of registration 34
  • Extortionate credit transactions 412–413
  • General maritime law
    • conflicts of law, and 108–109
  • Germany
    • insolvency regime 414
  • Greece
    • insolvency regime 414
  • Illegality
  • Insolvency 378–429
    • challenge to ship mortgage 404–414
      • avoidance of floating charges 411–412
      • extortionate credit transactions 412–413
      • guarantees and security as undervalued transactions 409
      • impact of Insolvency Regulation on vulnerable transactions 413–414
      • preferences 409–411
      • transactions at undervalue 407–409
      • transactions defrauding creditors 404–407
    • COMI 386–390
    • consensual restructurings 378, 381–383
    • Cross-Border Insolvency Regulation 419–424
    • cross-border jurisdictional issues 390–391
    • effect of EU Insolvency Regulation 414–419
    • EU Insolvency Regulation 386–390
    • European regimes 414
    • Germany 414
    • Greece 414
    • liquidation 391–395
    • scheme of arrangement under Companies Act 2006 383–386
    • UK administration 395–401
    • UK administrative receivership 401–402
    • UK company voluntary arrangement 403
    • UK winding up 391–395
    • UNCITRAL Model Law on Cross-Border Insolvency 419–424
    • United States Bankruptcy Code, Chapter 11 424–429
  • Institute mortgagees’ interest clauses – hulls 577–581
  • Insurance 430–472
  • Interference with third party property 329–330
  • Intermeddling
  • International conventions
    • conflicts of law, and see Conflicts of law
  • International insolvency
    • conflicts of law, and 109–110
  • Invalidity
    • priority, and 175
  • Issues in owners’ undertakings 186–191
    • bareboat charter 187
    • classification societies 189–190
    • compliance with all applicable laws and regulations 190
    • dual flagging 189
    • insurances 186–187
    • maintenance of ship 189
    • maritime liens 187–188
    • registration of ship 188–189
    • time charters 187
  • Leasing arrangements 43
  • Legal mortgage 42
    • see also Common law mortgages
  • Legal ownership 16–18
    • passing of title 17–18
  • Legislative reform 7–10
  • Letters of undertaking 368, 437, 457–460
  • Liabilities of mortgagee in possession to third parties 328–329
  • Liability to demise (bareboat) charterers 319–326
    • charter entered into after mortgage granted 324–325
    • nature of charterer’s interest 323
    • notice of prohibition 325–326
    • position between mortgagee and lessee, and 326
    • possession as proprietary interest 321–322
  • Liability to non-demise charterers and cargo
    • interests 299–319
    • applicable law 315–318
    • bill of lading holder, and 315–316
    • economic torts, and 319
    • entitlement to ship’s earnings 307–308
    • equitable relief 305–306
    • impairment of security 312–313
    • modern cases 308–309
    • principles 310–311
    • remedies 311–312
    • statutory mortgage, and 302–303
    • wrongful interference with contracts 314
  • Liens 207–215
    • categories 207
    • equitable charge, and 60–61
    • sub-freights, on 492–493
  • Liquidation 391–395
  • Loss payable clauses 263, 451, 456–457
  • MAC 219–222
  • MAE 219–222
  • Maritime law
    • history of 3–4
    • ship mortgages, and 3–7
  • Maritime liens 209–213
  • Marshalling 167–175, 294
    • bottomry bonds, holders of 173
    • conceptual basis 174–175
    • contribution, right of 173
    • common debtor rule 170–172
    • double mortgage, and 168–170
    • double mortgage not fully paid out 168–169
    • example 167–168
    • principle 167
    • scope 174–175
  • Merchant Shipping Act 1854 9
  • Merchant Shipping Act 1995, Part II
  • Merchant Shipping Act 1995, Schedule 1
  • Merchant Shipping (Registration of Ships) Regulations 1993
  • Method of taking possession 239–242
    • actual possession 240–241
    • constructive possession 241–242

  • Page 593

    Mortgagee in possession’s duties to mortgagor 268–272
    • account 271
    • ownership, and 270
    • reasonable use of ship 270–271
  • Mortgagee’s exercise of power of sale 272–277
    • context of realisation 274
    • method of sale 276–277
    • preservation of value of property 275–276
    • trustee standard of care 273
  • Mortgagee’s expenses of sale 253–255
  • Mortgages
    • historical development 1–15
    • nature of 2
  • Mortgages of unregistered ships 15
  • Mortgagor’s obligations and undertakings 182–197
    • consents 194–196
    • deed of covenant see Deed of covenant
    • discretion 194–196
    • imperilling or prejudicing security, and 183
    • issues on owners’ undertakings 186–191 see also Issues on owners’ undertakings
    • principal rights 182–183
    • protection of security 196–197
    • rights or incidents of ownership 183
    • sanctions 191–194
  • Mortgagee’s private sale 252–253
  • Multiple obligations 124–127
    • parallel debt 126
    • project bonds 127
    • security trustee 125–126
    • syndicated form 125
  • Non-ship structures 35–39
    • in rem proceedings 36
    • insurance 36
    • liability to third parties 36
    • ownership and security 35–37
    • regulatory regime 37–38
    • salvage, and 36
  • Obligations secured 122–124
    • change of obligations 128–131 see also Change of obligations
    • flexibility 123
    • liabilities of third party 124
    • obligation, meaning 123
    • option to purchase, and 124
    • transfer of title 123
  • Oil pollution 25, 213, 246–247
  • Ownership 16–21
  • P&I clubs 432
  • Parties 120
    • change of see Change of parties
  • Parties to subordination or priorities
    • agreement 181
  • Partnership Act 1890
    • issues arising under 330–332
  • Payment defaults 218–219
  • Penalties, rule against 132–133
  • Port authority
    • over-reaching power of sale 215, 366
  • Port state control 35, 243
  • Possession
  • Possessory lien 43
  • Power of attorney 62–63, 78, 121, 141, 152, 153, 189, 214, 244, 252–253, 300, 461, 498, 570–571
  • Preferences 409–411
  • Priority 149–181
    • agreed 149–152 see also Agreed priority
    • conflict of laws, and see Conflict of laws
    • courts’ approach 175–177
    • equitable mortgages and charges 155
    • failure to register mortgage 154–155
    • floating charges 156–159
      • assignment of earnings and insurances 157–158
      • Companies Act regime 156–157
      • mortgage over registered ship, and 158–159
      • negative pledge 156
      • post-2013 regime 158
    • invalidity, and 175
    • marshalling see Marshalling
    • mortgages of foreign-registered ships 159
    • mortgages of unregistered ships 155
    • parties to subordination or priorities agreement 181
    • registered statutory 149
    • security over collateral assets 153–154
    • tacking of further advances 160–166 see also Taking of further advances
  • Proceeds of sale

  • Page 594

    Property covered by mortgage 135–137
    • Admiralty Marshal, sale by 137
    • appurtenances 135–136
    • cargo 137
    • container leasing agreement, and 137
    • equipment 136
    • passenger ships 137
    • third party owners of tangible property 137
    • wide definition 135–136
  • Property in registered aircraft under English
    • domestic law 73–74
    • ships compared 74
    • UK Register of Civil Aircraft 73–74
  • Property in ships under English domestic
    • law 71–73
    • legislation, history of 71–72
    • Merchant Shipping Act 1854 73
    • shift from mercantilism to free trade 72
    • ship belonging to particular port 72
  • Purchase option see Third party purchase options
  • Receivership 256–260
  • Rectification 199–200
  • Refusal of registration 34
  • Register 25–27 see also flag
    • British ship 25–26
  • Registering of British Vessels Act 1845 13, 18, 31, 49, 57, 63
  • Registering of Vessels Act 1823 7–8, 42
  • Registration 22–24
    • Application to Register 29–30
    • Declaration of Eligibility 29
    • demise charters 39–40
    • deterioration in physical condition 185
    • effect 30–33 see also Effect of registration
    • fishing vessels 27–28
    • function 22
    • Merchant Shipping Act 1988 23–24
    • name of ship 29
    • Navigation Act 1660 22
    • ownership, and 22–23
    • Part III of Register 30
    • parts 25
    • procedure 29–30
    • qualified owners 26
    • representative person 27
    • shares in ship 26–27
    • ship with no nationality 24
    • small ships 28
    • statutes 22–23
    • United Kingdom ship 25–26
  • Registration of mortgages 138–148
    • Bills of Sale Acts 147–148
    • Companies Act 2006 141–147
      • amendment 142–143
      • certificate 142
      • change of chargee 145
      • consequence of failure to register 142
      • disclosure of negative pledges 145
      • documentation 141–142
      • financial collateral arrangement 141
      • further security 145
      • inspection by search 145
      • limited liability partnership 145
      • overseas companies 145–146
      • receiver or manager 145
      • rectification 142
      • release 143
      • time limit 143
    • effect 140
    • evidencing 139
    • Merchant Shipping Act 1995 139–141
      • collateral deed of covenant 139
      • deed of priority 139
      • form of mortgage 139
      • notice of mortgage intent 140
      • power of sale 140
      • transfer or discharge 140
    • reform of system 148
    • registries 138
    • Shipping Registrar 138
  • Renvoi 69, 98, 101–103, 111–112
  • Requisition
  • Right to redeem
  • Right to take possession at common law 233–239
    • inadequate marine insurance 236–237
    • intended overseas voyages 237
    • maritime liens and impecuniosity 237–238
    • money secured by mortgage is due 235
    • mortgagee’s security impaired or imperilled 236
    • unfavourable charters 238–239
  • Rights of mortgagee in possession 248–249
  • Risks 184–185
    • incidents causing physical loss or damage 185
    • non-compliance with legal or regulatory requirements 185
    • third parties acquiring competing rights against or in ship 185
  • Roman law 1

  • Page 595

    Sale by port authority 215, 366
  • Sale of Goods Act 1979 16, 18
  • Sale of mortgaged ship 249–252
  • Sales to self or favoured buyers 277–286
    • allegations by mortgagor on facts 280–284
    • burden of proof, and 285–286
    • improper purpose 284–285
    • precautions 279–280
    • proper price 278–279
    • protection of other persons 279
    • special purchaser analysis 283–284
  • Salvage 36, 109, 210, 212, 344, 351, 373–4, 471, 506, 526–527
  • Sanctions 191–194
    • complexity of 192
    • documentation 192–193
    • effect 191
    • in a ship 63
    • issues to be addressed 194
    • lack of control, and 193
  • Schemes of arrangement under Companies
  • Security interests in ships 41–66
  • Security over earnings and charterparties 473–508
    • assignment 475–476
    • bareboat charter 476–477
    • charterparties 494–499
    • commercial background 475–479
    • conflict of laws 488–489
    • demise charter 476–477
    • distinction between legal and equitable assignment 478–479
    • earnings account 499–500
    • equitable assignments 483–484
    • financial collateral arrangements 501
    • freight 474
    • future rights 479–481
    • legal assignments 483–484
    • legal issues 477–478
    • liens on sub-freights 492–493
    • notice of assignment 484–485
    • partial assignments 481–483
    • pooling arrangements 500–501
    • present rights 479–481
    • requisition compensation 501–508
    • restrictions on assignment 489–492
    • set-off issues 484–488
    • step-in rights 494–499
    • suspensory assignments 481–483
    • time charters 475–476
  • Security over shares 263–265
  • Self-help remedies 217
  • Senior Courts Act 1981, section 20(2) text 526–527
  • Share in ship, mortgage of 63
  • Ship
    • definition 35
    • non-ship structures, and 35–36
  • Ship mortgages
    • increased need for 6–7
    • Industrial Revolution, and 9–10
    • jurisdiction 4
    • maritime law, and 3–7
    • nationality requirements 8–9
    • nature of 2–3
    • registration, and 5–6
    • risks 1
    • shares, in a ship 63
  • Ships under construction, mortgage of 63–66
    • construction register 66
    • equitable assignment 64
    • lex situs, and 65
    • material used in construction 65
    • terms of shipbuilding contract 64, 66
  • Small ships
    • registration 28
  • Special fees 132–135
  • Statutory mortgages
    • central public register 46
    • competing claims of mortgagee 44
    • current form 48–50
    • definition 41
    • detailed formal agreements 50
    • effect of registration 45–46
    • endorsement 13
    • Merchant Shipping Act 1854 46–47
    • Merchant Shipping Act 1995 48
    • nationality requirements, and 11–12
    • primacy of registration 44–48
    • priority 12–13, 49
    • registration 48–49
    • statutory charge, whether 14
    • sub-mortgages, and 62
    • transfer of title, and 10–11, 50
    • unique significance of system 47
  • Status defaults 219–223
  • Statutory liens 213–215
  • Statutory possessory liens 215
  • Step-in rights 475, 478, 494–499
  • Sub-freights

  • Page 596

    Subordinate mortgagees 261–262
    • enforcement rights 261–262
  • Submortgages 61–63
    • deed 62
    • equitable 62
    • nature of 61–62
    • power of sale, and 62–63
  • Syndicated loans 125, 126, 388
  • Tabula in naufragio 66
  • Tacking of further advances 160–166
    • common law 160–161
    • constructive notice, and 160–162
    • court sale in foreign jurisdiction 165
    • mitigation of uncertainty 166
    • notice, and 163–164
    • registered ship mortgages, and 164–165
    • statutory regime 163
    • subsequent claims 165
  • Termination of registration 34
  • Third Parties (Rights against Insurers) Act 2010 430, 452
  • Third party purchase options 326–327
  • Time charter
  • Transactions at undervalue 407–409
  • Transactions defrauding creditors 404–407
  • Transfer 200–202
  • UK administration 395–401
  • UK winding up 391–395
  • UNCITRAL Model Law on Cross–Border
  • United Kingdom ship 25–26
  • United States Bankruptcy Code, Chapter 11 424–429
    • automatic stay 425–429
    • cram-down 428
    • DIP financing 427
    • features of concern 426
    • jurisdiction 424–5
  • Upside sharing arrangements 132–135
  • Usual terms of mortgage 131–132
  • War risks 154, 245, 431, 455, 456, 457–458, 506, 526–527
  • WD Fairway litigation 97–105
    • British Register 104
    • British ships belonging to port of registry 105
    • Exception1 to Dicey’s Rule 133 103–104
    • facts 97
    • geographical fiction 105
    • issues for determination 97–98
    • lex situs 98–99
    • registered transfers of proprietary interests 102
    • renvoi 101, 103
    • transaction defrauding creditors 102

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