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CHAPTER 13 Liabilities of the mortgagee to third parties

Law of Ship Mortgages

Page 297


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

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