QATAR NATIONAL BANK QPSC V THE OWNER OF THE YACHT FORCE INDIA

[2020] EWHC 103 (Admlty), Queen's Bench Division, Admiralty Court, Mr Justice Teare, 27 January 2020

Admiralty – Action in rem – Mortgage – Inconsistency between mortgage and deed of covenant

The claimant, Qatar National Bank, sought to enforce a mortgage on the superyacht Force India, a 49.9 metre Mangusta 165. She was under arrest in Southampton. The mortgage on the yacht was in 2016 granted as additional security for a loan to Gizmo, a company related to the yacht’s owner, for a business transaction dating back to 2008. The loan was due to be repaid in 2015 but the original Facility Letter was extended by a First Amendment Letter and then again by a Second Amendment Letter dated 29 September 2016, by which the loan was extended to 30 June 2017 on condition that a mortgage was granted over Force India which was owned by a company related to Gizmo. By a side letter dated 27 October 2016 it was agreed that the mortgage was limited to “a principal amount of €5 million”. The mortgage and associated deed of covenant were not executed until 15 February 2017. The mortgage was governed by Maltese law; the yacht being registered in Malta. The deed of covenant was expressly governed by English law. Due instalments were not paid and the claimant reserved its rights. By a Third Amendment Letter dated 13 November 2017 it was agreed that if the yacht were sold, the sale proceeds would be paid to the claimant in reduction of the amounts owing under the loan. In January 2018 the yacht was arrested for non-payment of crew wages and judgment in default was obtained in May 2018. The claimant cautioned against release and issued its own in rem proceedings on 30 August 2017.