Law of Ship Mortgages
17
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Security over earnings and charterparties
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17.1 Introduction
17.1.1 English law does not confer on a ship mortgagee any security or other interest in the ship's freight or earnings, or in charterparties relating to the ship, unless and until the mortgagee takes possession of the ship or is granted an assignment of the freight or earnings.1 The position has been explained as follows:2
It is to be observed that the Merchant Shipping Act nowhere deals with charges on freight. They were long before the passing of the Act securities well known in the shipping world, and of ordinary occurrence. And the right of a mortgagee in respect of freight had also been long settled and well recognised. But it was not thought fit to provide by that Act either with respect to the priorities of charges on freight, or with respect to the rights of mortgagees to freight. These were left to be dealt with according to the ordinary principles of law and equity, and the rules and doctrines established by the decisions of the Courts.