Mortgage and Maritime Liens in Maritime Law
In various legal systems, despite fundamental differences in the scope and application of the concepts of mortgage, lien, and maritime lien, these notions are often treated as though they lack clear categorization and do not differ materially from one another.
In England’s legal system, maritime liens have a relatively limited scope of application. Claims giving rise to maritime liens generally arise from the following categories:
- Claims in tort, particularly those arising from damage caused by a vessel
- Claims in contract, such as claims relating to the master’s wages and disbursements made on behalf of the vessel, ship mortgages, and freight
- Claims arising from quasi contract, such as salvage claims
Ship Mortgages and Maritime Security in Commercial Contracts
The International Convention on Maritime Liens and Mortgages
The International Maritime Organization, in cooperation with the United Nations Conference on Trade and Development, adopted the International Convention on Maritime Liens and Mortgages 1993 in order to clarify the rules governing maritime liens, ship mortgages, and other maritime charges. The Convention seeks to achieve the following objectives:
- International recognition of maritime liens.
- Determination of the principal characteristics of maritime liens and mortgages, together with clear definitions.
- Clarification of the relationship between maritime liens and maritime mortgages.
- Establishment of priority rules between maritime liens and ship mortgages.
- Consideration of the role of insurance in determining the ranking of competing claims.
- Regulation of the consequences of the forced sale of a vessel.
- Determination of the conditions and effects of deregistration of a vessel in one country and registration in another.
- Addressing issues arising from conflicts of laws.
- Registration of rights relating to ships under construction.
- Examination of enforcement practices, including arrest and detention of vessels.
- Consideration of the necessity of new international instruments in this field.
- Evaluation of the desirability of unified or separate conventions governing maritime liens, mortgages, and vessel arrest.
- Consideration of whether rights relating to ships under construction should be addressed within the same instrument or in a separate convention.
Recognition and Enforcement of Mortgages, Liens, and Related Charges
Article 1 of the Convention provides that mortgages, liens, and registrable charges created in connection with a seagoing vessel shall be recognized and enforceable in the States Parties, provided that:
- Such mortgages, liens, and charges have been registered in accordance with the law of the State in which the vessel is registered.
- The register and all documents required under the law of the State of registration have been duly filed and are accessible to the public for inspection, extraction of certified copies, or obtaining excerpts.
- The register or relevant documents indicate, at a minimum, the name and address of the person in whose favor the mortgage, lien, or charge has been registered or endorsed, the maximum amount secured if required by the law of the State of registration or specified in the instrument, and the date and other particulars that determine priority under the applicable law.
In most legal systems, maritime liens and certain in rem claims arising from specified debts related to a vessel may be enforced directly against the vessel, irrespective of ownership. However, vessels used solely for navigation within territorial waters do not fall within the scope of Article 1 of the Convention.
Change of Ownership or Registration of a Vessel
The registered ownership of a vessel may change in two principal circumstances:
- Voluntary change of ownership or registration.
- Compulsory change of ownership or registration by operation of law.
Voluntary Change of Ownership or Registration
Article 3 of the Convention
(a) Where ownership or registration of a vessel changes voluntarily, deregistration or removal of title from the national register of a State Party may occur. However, such a State shall not permit deregistration unless all registered mortgages, liens, and charges have first been deleted from the register, or the holders of such rights have given written consent to the deregistration.
(b) Subject to Article 11 paragraph 3, a vessel registered in one State Party shall not be eligible for registration in another State unless:
- A certificate is issued by the former State of registration confirming that the vessel has been deleted from its register.
- A certificate is issued by the former State confirming that deletion will occur immediately upon new registration, such that deletion takes effect simultaneously with the new registration.
- The date of the new registration corresponds to the date of deletion of the prior registration.
Compulsory Change of Ownership or Registration by Operation of Law
Where deletion of a vessel from the register of a State Party to the International Convention on Maritime Liens and Mortgages 1993 is compulsory under the law of that State, holders of registered mortgages, liens, and charges shall be notified that the vessel will be removed from the register within a reasonable period, which shall not be less than three months. Unless they have consented, such rights holders may take appropriate measures to safeguard their interests within that period.
Frequently Asked Questions on Mortgage and Maritime Liens in Maritime Law
In maritime law, a mortgage or lien refers to the registration of a vessel and its related interests as security for maritime debts and charges, recognized in various legal systems.
The Convention aims to ensure international recognition of maritime liens, clarify the relationship between liens and mortgages, establish priority rules, regulate enforcement procedures, and facilitate registration of rights relating to vessels.
Mortgages and liens must be registered in accordance with the law of the State of registration, required documents must be properly filed and publicly accessible, and the register must specify essential details such as the beneficiary’s name, secured amount, and registration date.
Ownership or registration may change voluntarily through transfer and deregistration, or compulsorily by operation of law, subject to notification and protection of existing rights holders.
Maritime liens generally include claims arising from damage caused by a vessel, maritime contracts such as freight and master’s disbursements, and quasi contractual claims such as salvage.
No. Vessels used solely for navigation within territorial waters are not included within the scope of Article 1 of the International Convention on Maritime Liens and Mortgages 1993. What are mortgage and lien in maritime law?
What are the objectives of the International Convention on Maritime Liens and Mortgages 1993?
What conditions are required for recognition and enforcement of mortgages and liens?
How can ownership or registration of a vessel change?
What claims are included under maritime liens?
Do vessels operating only in territorial waters fall within the scope of the Convention?
