Law of Ship Mortgages

Page 297 CHAPTER 13 Liabilities of the mortgagee to third parties 13.1 Introduction 13.1.1 This chapter examines the different ways in which a mortgagee might become liable to specific third parties, or to the world at large. The potential liability of a mortgagee enforcing its security to charterers and cargo interests will be examined, a subject on which there is confusing case-law. 1 The position of a mortgagee taking possession of the ship will be covered. 2 Liability to owners of equipment on the ship will be addressed. 3 Some risks of liability to third parties arising from specific provisions of law will be looked at, 4 together with the wider circumstances in which a secured lender might find itself liable to third parties. 5 Finally, the circumstances in which a mortgagee might lose the benefit of its security and be subordinated to other creditors will be touched upon. 6