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?
If a company repairs a vessel but the owner does not pay, can they claim against the ship itself?
In some legal systems, certain maritime claims may create a maritime lien that attaches to the vessel and can provide security for the claimant. The existence and enforcement of such a claim depend on the applicable law, the type of service provided, and the circumstances of the case.
Is a maritime lien the same as putting a normal mortgage on a ship?
A maritime lien and a ship mortgage are different legal concepts. A maritime lien generally arises from specific maritime claims by operation of law, while a mortgage is usually created through an agreement and registration process. The priority between different claims depends on the applicable legal rules.
If a ship changes owners, can the previous owner’s unpaid debts still affect the vessel?
In some cases, maritime liens may continue to attach to the vessel even after a change of ownership. However, the effect depends on the type of claim, the applicable jurisdiction, and the legal procedures involved.
A company supplied fuel to a vessel but was not paid. Does that count as a maritime claim?
Claims related to necessary services provided to a vessel may receive special treatment under maritime law in some jurisdictions. Whether a specific claim qualifies depends on the nature of the service, authorization, and applicable legal rules.
Can a creditor stop a ship from leaving the port because of an unpaid maritime debt?
Depending on the circumstances and the applicable law, certain maritime claims may support procedures such as arrest of a vessel. The availability of this remedy depends on the type of claim and the legal requirements that apply.
If several people have claims against the same vessel, who gets paid first?
Priority between maritime claims can be a complex issue and depends on the nature of each claim, applicable maritime laws, and court decisions. A detailed review of the claims and documents would be needed to determine possible priority.
Does every person who provides a service to a ship automatically get a maritime lien?
Not every service or claim automatically creates a maritime lien. Maritime law usually recognizes specific categories of claims, and the requirements vary depending on the jurisdiction and circumstances.
If a vessel owner refuses to pay damages caused by the ship, can the injured party claim against the vessel?
Certain maritime claims may allow a claimant to seek remedies against maritime property, depending on the type of damage and applicable law. The available options require reviewing the facts, evidence, and jurisdiction involved.
I heard maritime liens are different from normal property liens. What makes them special?
Maritime liens have unique characteristics in admiralty law. One important feature recognized in many legal systems is that the claim may attach to the vessel itself rather than only creating a personal obligation against the owner.
Can a ship repair company keep possession of the vessel until it receives payment?
The rights of a repair company depend on the type of claim, the agreement with the vessel owner, and the applicable maritime laws. Some claims may involve possessory rights, while others may require different legal procedures.