This fully updated and comprehensive 3rd edition of The Law of Ship Mortgages provides readers with a practical, commercially based and definitive guide to the English law of ship mortgages. The authors, being seasoned practitioners, bring their extensive experience to bear on a number of difficult and developing areas of the law, such as: mortgagees’ duties, liability to charterers, the conflict of laws, work-outs, restructurings and cross-border insolvency. The 3rd edition includes new chapters on pre-delivery security, security over shares and on the increasingly important topic of ship leasing as a method of finance. It is written against the background of, and has regard to, ever-increasing sanctions affecting shipping and ship finance as well as the continued regulatory and industry-driven push towards reduction of emissions (IMO 2020 and IMO 2050). Written primarily with practitioners in mind, The Law of Ship Mortgages will continue to be extremely useful to legal professionals, especially in common law jurisdictions, involved in international ship finance or ship mortgage enforcement. It will also be a valuable resource for postgraduate students and academics, especially those with an interest in shipping law or the law of personal property more generally.

Table of Contents:
Foreword xiii Preface and acknowledgements xvi Table of cases xviii Table of legislation xx CHAPTER 1 HISTORICAL INTRODUCTION 1 1.1 Background 1 1.2 Maritime law and ship mortgages 4 1.3 Legislative reform 8 1.4 The nature of the statutory mortgage 11 1.5 The international legacy 16 1.6 Mortgages of unregistered ships 17 CHAPTER 2 OWNERSHIP AND REGISTRATION 18 2.1 Legal ownership 18 2.2 Registration; history and development 21 2.3 The Register 24 2.4 Fishing vessels 25 2.5 Small ships 26 2.6 The nature and effect of registration 27 2.7 The certificate of registry 28 2.8 Registration and beneficial ownership – including the arrest context 29 2.9 Registration and priority 35 2.10 Other circumstances, where registration is not conclusive or relevant 38 2.11 Refusal of registration, termination and expiry of registration 39 2.12 The ship 42 2.13 Bareboat charters and registration 47 2.14 Mortgages on ‘bareboat charter in’ ships 49 2.15 Mortgages on ‘bareboat charter out’ ships 49 CHAPTER 3 SECURITY INTERESTS IN SHIPS 50 3.1 Introduction 50 3.2 Statutory mortgages – the primacy of registration 52 3.3 The form and effect of a registered statutory ship mortgage 53 3.4 Common law mortgages 55 3.5 Disguised mortgages 58 3.6 Equitable mortgages 59 3.7 Equitable charges 63 3.8 Submortgages 66 3.9 Mortgage of a share in a ship 67 3.10 Mortgages of ships under construction 68 CHAPTER 4 THE CONFLICT OF LAWS 71 4.1 Introduction 71 4.2 The general maritime law 75 4.3 International conventions 76 4.4 Property in registered ships under English domestic law 79 4.5 The mid-nineteenth-century conflicts cases (on ships and on chattels generally) 82 4.6 The cases on foreign ship mortgages 86 4.7 The cases on registered ownership and arrest jurisdiction 89 4.8 The conflict of laws dimension to priority issues 90 4.9 The WD Fairway litigation 97 4.10 Property in registered aircraft under English domestic law 106 4.11 The Blue Sky litigation 107 4.12 Conclusions on the English conflict of laws on lex situs and registered ships 110 CHAPTER 5 EXECUTION, SECURED OBLIGATIONS AND PROPERTY COVERED 116 5.1 Parties 116 5.2 Execution 116 5.3 The form of mortgage and obligations secured 118 5.4 Multiple obligations 121 5.5 Change of parties 124 5.6 Change of obligations 124 5.7 Relationship between the mortgage and the collateral deed of covenant 127 5.8 Special fees and ‘upside’ sharing arrangements 129 5.9 Property covered by the mortgage 133 CHAPTER 6 REGISTRATION OF MORTGAGES 138 6.1 Introduction 138 6.2 Merchant Shipping Act 1995 139 6.3 Companies Act 2006 143 6.4 The Bills of Sale Acts 148 6.5 Reform of the registration system 149 CHAPTER 7 PRIORITY 150 7.1 Statutory registered priority 150 7.2 Agreed priority 152 7.3 Failure to register a mortgage 156 7.4 Equitable mortgages and charges 157 7.5 Floating charges; negative pledges 158 7.6 The Order of Priorities in an Order for Sale 160 7.7 Tacking of further advances 160 7.8 Tabula in naufragio 165 7.9 Priority of security over ancillary receivables 166 7.10 Marshalling 167 CHAPTER 8 MORTGAGOR’S OBLIGATIONS AND UNDERTAKINGS 174 8.1 Introduction 174 8.2 Typical express owners’ undertakings 176 8.3 Certain issues on owners’ undertakings 178 8.4 Sanctions 183 8.5 Consents and discretions 191 8.6 Protection of security 196 CHAPTER 9 AMENDMENT, TRANSFER AND DISCHARGE 198 9.1 Amendment 198 9.2 Correction and rectification of the Register 199 9.3 Transfer and transmission 200 9.4 Discharge 204 9.5 Consolidation 207 CHAPTER 10 LIENS 209 10.1 Introduction 209 10.2 Common law liens 210 10.3 Equitable liens 212 10.4 Maritime liens 212 10.5 Statutory liens 216 10.6 Statutory possessory liens 217 CHAPTER 11 DEFAULT, AND SELF-HELP ENFORCEMENT POWERS 219 11.1 Introduction 219 11.2 Events of Default (EODs) 222 11.3 Non-payment EODs 223 11.4 Other EODs 224 11.5 Discretions in relation to default 232 11.6 Waiver of EODs 232 11.7 Effect of an EOD 235 11.8 Default interest and break-funding 239 11.9 The lender’s/mortgagee’s options following a default 242 11.10 Enforcement 244 11.11 The right to take possession at common law 245 11.12 Method of taking possession 250 11.13 Factors relevant to the mortgagee’s decision to take possession 253 11.14 The rights of a mortgagee in possession 259 11.15 Sale of the mortgaged ship 260 11.16 Mechanics and effect of a mortgagee’s private sale 264 11.17 The mortgagee’s expenses of sale 265 11.18 Application of the proceeds of sale 267 11.19 Receivership 268 11.20 Foreclosure 272 11.21 Subsequent mortgagees 273 11.22 Enforcement of security over ancillary receivables 274 CHAPTER 12 THE COURTS’ PROTECTION OF THE MORTGAGOR 276 12.1 Introduction 276 12.2 Protection of the mortgagor’s right to redeem 277 12.3 The mortgagee in possession’s duties to the mortgagor 279 12.4 The mortgagee’s exercise of its power of sale 283 12.5 Sales to self 288 12.6 Sales to favoured buyers; improper purposes 291 12.7 Are ship mortgages different from mortgages of land? 296 12.8 Derivative liability to relevant parties 302 12.9 Excluding duties 306 12.10 Anti-set-off clauses 307 12.11 Marshalling 309 12.12 The perils of intermeddling 309 12.13 The conflict of laws 310 CHAPTER 13 DUTIES AND LIABILITIES OF THE MORTGAGEE TO THIRD PARTIES 311 13.1 Introduction 311 13.2 Mortgagee enforcing security: liability to non-demise charterers and cargo interests 313 13.3 Mortgagee enforcing security: demise (bareboat) charterers 335 13.4 Third-party purchase options 341 13.5 Liabilities of a mortgagee in possession to third parties 342 13.6 Interference with third-party property 344 13.7 Issues arising under the Partnership Act 1890 345 13.8 Wider lender liability risks 347 13.9 Equitable subordination 349 13.10 Lender liability: an attempt to summarise 350 CHAPTER 14 ENFORCEMENT BY ARREST AND COURT SALE 352 14.1 Introduction 352 14.2 The Admiralty jurisdiction of the High Court 354 14.3 Ship arrest procedure 360 14.4 Court sale procedure 373 14.5 Enforceability of the court bill of sale 387 14.6 Determination of priorities and payment out 391 CHAPTER 15 RESTRUCTURING AND INSOLVENCY 404 15.1 Introduction and background 404 15.2 Consensual restructurings 409 15.3 Schemes of arrangement under the Companies Act 2006, Part 26 412 15.4 Restructuring plans under the Companies Act 2006, Part 26A 416 15.5 The move towards restructuring globally 420 15.6 Chapter 11 (and Chapter 15) of the United States Bankruptcy Code 422 15.7 The Recast Insolvency Regulation 429 15.8 The UNCITRAL Model Law on Cross-Border Insolvency and the Cross-Border Insolvency Regulations 437 15.9 Other UK cross-border jurisdictional issues 442 15.10 Hanjin 444 CHAPTER 16 INSURANCE 446 16.1 Introduction 446 16.2 The nature of the mortgagee’s interest 449 16.3 Insurance placed by the mortgagee for its own benefit 452 16.4 Co-assurance 454 16.5 Assignment 456 16.6 Notice of assignment 461 16.7 Assignment: clubs and mutual associations 465 16.8 Loss payable clauses 466 16.9 Letters of undertaking 467 16.10 Claims 470 16.11 The conflict of laws 471 16.12 Illegality risk 473 16.13 Reinsurances; assignments of reinsurances 477 16.14 Mortgagees’ interest insurance 478 16.15 Mortgagees’ Additional Perils (Pollution) (‘MAPP’) insurance 502 16.16 Mortgagees’ rights insurance (‘MRI’) 505 16.17 Other mortgagees’ insurances 507 16.18 Concluding observations 508 CHAPTER 17 SECURITY OVER EARNINGS AND CHARTERPARTIES 510 17.1 Introduction 510 17.2 The commercial background 512 17.3 Present rights and future rights 517 17.4 Partial assignments, suspensory assignments and assignments by way of charge 520 17.5 Notice of assignment 523 17.6 Legal assignments and equitable assignments 525 17.7 Certain set-off issues 527 17.8 The conflict of laws 529 17.9 Restrictions on assignment 530 17.10 Liens on sub-freights 534 17.11 Charterparties and step-in rights 536 17.12 Earnings account 542 17.13 Financial Collateral Arrangements 544 17.14 Pooling arrangements 545 17.15 Requisition compensation 545 CHAPTER 18 PRE-DELIVERY SECURITY 553 18.1 Background and Introduction 553 18.2 The builder’s refund obligations 555 18.3 Refund guarantees 556 18.4 Advance payment guarantees 564 18.5 Assignment issues, control over disputes 565 18.6 Stepping in to the buyer’s position 567 CHAPTER 19 SECURITY OVER SHARES 571 19.1 Introduction 571 19.2 Reasons for taking shares security 571 19.3 SPC liabilities 574 19.4 Aspects of the security documents; enforcement 576 19.5 The courts’ protection of the grantor of the security 577 19.6 The conflict of laws 579 CHAPTER 20 LEASE FINANCING OF SHIPS 581 20.1 Introduction and background 581 20.2 The nature and form of a ship lease 587 20.3 Differences between financial leases and ship mortgages in relation to default and enforcement 588 20.4 Recharacterisation of financial leases 606 20.5 Liability of lessors to third parties 611 20.6 Leases and mortgages combined 616 20.7 Issues for financial lessees 618 20.8 Financial leases and secured loans; some reflections on the differences 621 Appendix 1: Statutory Material 623 A Merchant Shipping Act 1995, Part II 624 B Merchant Shipping Act 1995, Schedule 1 637 C Merchant Shipping (Registration of Ships) Regulations 1993, SI 1993/3138, Part VII (as amended) 641 D Senior Courts Act 1981, section 20(2) 646 Appendix 2: Statutory Forms 650 A Form MSF 4736 REV 1118 (Mortgage of a Ship to secure Account Current etc. other/obligation) 651 B Form MSF 4737 REV 1118 (Mortgage of a Ship to secure Principal sum and Interest) 665 C Form 4739 REV 1118 (Notice of Mortgage Intent) 678 Appendix 3: Specimen Deed of Covenant 682 Appendix 4: Institute Mortgagees’ Interest Clauses - Hulls 722 Appendix 5: The Admiralty Marshal’s Conditions of Sale and Bill of Sale 727 Index