Mortgages and Liens

Ship Mortgages

A mortgage could be “any charge by way of lien on any property for securing money or money’s worth”. It is the creation of a charge or encumbrance in favour of the lender of money by the person wishing to borrow.

Under the statutory form of the mortgage, the number of shares in the ship and in her boats, guns, ammunition, small arms and appurtenances (all articles appropriated to the vessel and which ha re necessary for her navigation or performance of her voyages and which are present on the vessel at the time when the mortgage was entered into) are mortgaged to the mortgagee as security in express terms. It does not include cargo which is on board the ship at the time of mortgage and which belongs to the mortgagor.

Most ship-owners today are undercapitalized and mortgages are a recognized method of raising finance. The word “mortgage” is derived from the Latin mortuum vadium (a dead pledge). It covers the mortgage loan or transaction, the mortgage deed or document and the rights generally conferred by the document upon the lender of the money.

Therefore a ship owner who wishes to raise finance may do so by borrowing money on the security of his ship, giving the financer or lender an interest in the ship as security for the loan. The ship owner is known as “mortgagor” and the person lending the money is known as a “mortgagee”.

Note that a mortgagee has no liabilities to third parties since the mortgagor remains the owner of the ship and the shares in it. He is free to operate and trade the vessel as a profit making possession provided that he does not act in such a way as to jeopardize or put at risk the ship as security for the mortgage loan and thus prejudice the mortgagee’s position.

However it shall be seen that a mortgage with a ship as the security is not an ideal form of security as certain privileged claims can rank against the vessel in priority before those of the mortgagee. Also being a floating object, it can escape out of the jurisdiction of the courts where the mortgagee might be seeking a claim. The ship is further exposed to partial or total damage through the perils of the sea. Most importantly if a further mortgage is carried out on the same ship as a security and registered in the intervening period, the new mortgage may rank ahead of any new advances on the previous mortgages.

Merchant Shipping Act

·         A registered ship or share therein may be made a security for a loan or other valuable consideration, and the instrument creating the security (called mortgage) shall be in the prescribed form or as near thereto as circumstances permit, and on the production of such instrument the registrar of the ship’s port of registry shall record it in the register book.

·         Mortgages shall be registered by the registrar in the order of time in which they are produced to him for that purpose, and the registrar shall, by memorandum under his hand, notify on each mortgage that it has been recorded by him stating the day and hour of that record.

·         Where a registered mortgage is discharged, the registrar shall, on the production of the mortgage deed with a receipt for the mortgage money endorsed thereon, duly signed and attested, make an entry in the register book to the effect that the mortgage has been discharged, and on that entry being made the estate, if any, which passed to the mortgagee shall vest in the person in whom (having regard to the intervening acts and circumstances, if any) it would have vested, if the mortgage had not been made.

·         If there are more than one mortgagee recorded in respect of the same ship or share, the mortgages shall, notwithstanding any express, implied or constructive notice, have priority according to the date on which each mortgage is recorded in the register book and not according to the date of each mortgage itself.

·         Mortgagee is not deemed to be the owner by reason of his mortgage in the ship or any share therein, except for making a mortgaged ship or share within available as a security for the debt.

·         If there is only one registered mortgagee of a ship, he is entitled to recover his money due under the mortgage by selling the ship or share without approaching the High Court.

·         If there are more than one registered mortgagees of a ship or share they shall be entitled to recover the amount due under the mortgage in the High Court, who may direct a ship or share therein to be sold in execution of a decree.

·         Every registered mortgagee of a ship or share who wishes to recover his money by selling the mortgaged ship or share shall give an advance notice of fifteen days relating to such a sale, to the registrar of the ship.

·         The notice shall be accompanied with a proof of payment of wages and other amounts as deemed necessary.

·         An insolvency notice by a mortgagor shall not dispose of the priority of the mortgagee to recover his money over any right, claim or interest therein created by other creditors of insolvent.

·         A registered mortgage of a ship or share therein can be transferred to any other person and the instrument detailing such a transfer shall be in the prescribed form, which shall be recorded by the registrar, entering in the register book the name of transferee as ten mortgagee of the security, and also enter on the instrument of transfer the time and date of the record. The person to whom such a right is passed enjoys the same rights as the original mortgagee.

·         Where the interest of the mortgagee is passed to another by death or insolvency or any other legal means other than a transfer under the MSA, it shall be authenticated by a declaration of the person to whom the interest is transmitted containing a statement of the manner in which and the person to whom the property has been transmitted. It shall be accompanied by the like evidence for the transmission of ownership.

·         The registrar on receipt of the declaration and the evidence shall enter the name of the person entitled under the transmission in the register as mortgagee of the ship or share.

Priorities

Registration gives a mortgagee priority over:

a)    Earlier unregistered mortgages, whether or not he had the knowledge of them

b)    later registered or unregistered mortgages

c)     unregistered debentures of earlier creation, even though he knew of them

d)    additional advances subsequently made under a prior registered mortgage

A mortgagee, even if the mortgage is registered, does not have priority over:

a)    Mortgages registered earlier

b)    Any mortgages entered into under current certificates of mortgage where notice of the certificate of mortgage appeared on the register at the time when the mortgagee entered into his mortgage.

c)     Any claims in connection with which the vessel had already been arrested at the time when the mortgage was entered into

d)    Any possessory lien of a ship –repairer

e)    Any maritime liens, whether earlier or later.

Collateral deed

There may be several terms or details which both parties to a mortgage wish to be included in the mortgage deed and such details are usually contained in a collateral deed. The basic statutory form shall then have a reference to such a deed. The matters that may be entered into a collateral deed are:

a)    the time fore the repayment of the principal sums;

b)    the interest payable on the capital raised

c)     the method of payment

d)    Responsibility of insurance of vessel

e)    Any restrictions that may be placed on the manner in which the ship is to be used

f)     Other considerations for possession and selling of the mortgaged property.

Rights of Mortgagor

A mortgagor remains the rightful owner of the vessel. The only limitation is that it may be necessary to make the ship or share available as security for the mortgage debt. He bears all expenses due to the ship and reaps all the profit from her.

A mortgagor can enter into contracts for the use of the vessel and these contracts will be valid and can be enforced. The manner in which the ship is to be used should not jeopardize the ship and prejudice the mortgagee’s security. A mortgagee who tries to interfere in a profitable and clean charter party can be restrained by an injunction, and the mortgagee may be made liable to damages plus costs to the mortgagor.

The mortgagor may sell the vessel to another person even though the vessel is mortgaged, since he remains the legal owner. The registered mortgagee’s rights to the vessel remain valid, as the buyer takes possession with the notice of mortgage.

The mortgagor has the right to redeem the property from the mortgagee as soon as the time for redemption has elapsed. This is usually six months after the date of mortgage and upon full payment of all outstanding loan money. The right vests even after the mortgagee has taken possession of the property, though it cannot be exercised once the property has been sold by the mortgagee for the purpose of realizing his security.

Insurance of the mortgaged property

Insurance rights usually vests in the mortgagor who is declared owner of the full value of property having the insurable interest in it. A stipulation to this effect would be entered in the collateral deed. If it does not then it should be expressly stipulated in the mortgage deed. A breach of this duty may entitle the mortgagee to ensure the ship and charge the costs on to the mortgage debt.

Rights of Mortgagee

The mortgagee has the right to receive payments of the principal sum together with the interest, at the time stipulated in the collateral or mortgage deed as agreed. In the event of non-payment, the mortgagee has the right to seize the property and sell it to realize his sum.

The mortgagee has an insurable interest in the property and has therefore, the right to insure it, provided a stipulation has been put into the deed agreement.

The mortgagee can seize the vessel and is said to be in actual possession if the ship is in the jurisdiction and through a representative who may actually go on board. He may dismiss the master of the ship or retain him and make him the agent of the mortgagee.

The mortgagee is said to be in constructive possession if the vessel is not in the jurisdiction and it is impossible for the mortgagee to take actual possession. The mortgagee then takes “constructive possession” by giving notice of his intention to the mortgagor, charterers, underwriters and any other persons known to be having interest in the ship.

Once having the possession, the mortgagee becomes entitled to all subsequent profits from the trading of the ship including freight from subsequent business, but he should work the ship as any prudent ship-owner would do and not jeopardize the ship.

Foreclosure

A mortgagor has an equitable right to redeem the security on payment of the dues even after default on his part and the ship going into the possession of the mortgagee, but prior to the sale of the ship by the mortgagee. So as to give the mortgagee to extinguish this power of redemption of the mortgagor, an action of foreclosure can be brought. The mortgagee asks the court to make a foreclosure order nisi. The court directs that the accounts between the parties to be settled and that if the mortgagor fails to pay within a stipulated time, the mortgage will be foreclosed and the mortgagor loses the right of redemption.

Liens

A LIEN is a form of remedy available under certain circumstances, entitling him to enforce the satisfaction of a claim.

There are three classes of liens:

1.    Possessory liens – particular and general

2.    Maritime liens

3.    Equitable liens.

POSSESSORY LIENS (PARTICULAR)

A particular lien is the right of a person in possession of goods to retain possession of them until payment has been made by the real owner in respect of those goods, due to a legal contract.

Thus such a lien arises from a service rendered to alter or improve the goods in terms of labour, skills and expenses, service to receive the goods or where the person in possession has saved the goods from loss at sea etc.

Such liens cannot be exercised until the work contracted for hasn’t been actually performed.

Examples of a Particular Lien would be:

-          Lien of a carrier on the goods he carried for the freight.

-          Warehousemen’s lien on goods foe their services in connection with the goods.

A ship owner has a possessory lien on the cargo carried on board his ship for

·         Freight

When freight is due on delivery of cargo only, except when a contract of affreightment provides for the freight to be paid after delivery of the goods.

The ship owner may lawfully retain all the goods for which freight is payable even if the value of all the goods may be more than the freight payable. He may retain only sufficient goods as security for the freight payable on all. In case a number of B/Ls have been issued to different consignees, the ship owner would have a separate lien on each B/L and he cannot hold goods under just one B/L as security of all.

·         General Average

The lien on cargo for general average charges can be exercised by ship owner in possession of goods in his own interest as well as a duty to other cargo owners contributing towards the GA. In actual practice, though a security bond or a general average deposit is availed in exchange of goods, while awaiting the GA adjustment.

·         Salvage expenditure

Lien on cargo in case of a salvage expenditure incurred by the ship owner for the preservation of ship and its cargo, proportionally, so long as the salvage was not caused by neglect or default of ship owner or his agents.

·         Demurrage and Detention

A lien on cargo for demurrage or detention would exist only if the contract of affreightment expressly provides for it in the charter Party or the B/L.

·         Deadfreight

No lien can be undertaken at common law for Deadfreight. But an express provision in the Charter Party can be provided to allow lien to be effected to enforce payment of the Deadfreight.

POSSESSORY LIENS (GENERAL)

A general lien is the right that arises by customary practices in certain trades, or by contract, to retain goods until dues in respect of them are paid and also for any sum owed by the owner of the goods to the person in possession. Example- a solicitor’s lien on all the papers of his clients.

MARITIME LIENS

A maritime lien is a right against a ship and the freight she may be earning at the time which gives the claimant powers to have the property arrested and realized to have the proceeds in order to satisfy the claim. The right exists independently of the possession of the property and it continues to be attached even after a change of ownership. The holder of a maritime lien has a higher priority over other creditors if the ship is to be sold and the assets distributed.

Maritime liens are of two types:

1)   Contractual liens

Contractual liens are affected in respect of payments due under some contract, for e.g., bottomry (money raised by pledging the ship and its freight by Master in an emergency), respondentia (money raised by pledging the cargo by the Master in an emergency as an agent of the cargo owner), salvage (though strictly speaking a salvage service is to be voluntary but a contract of salvage agreement is entered into these days in practice), seamen’s wages, master’s wages etc.

2)   Damage Liens

Damage liens arise mainly due to collision damages. The damage must be done by the ship (and not its crew), the wrongful action or neglect of owner or his servant must be proved in support. The lien can be exercised within 2 years of the date of damage suffered, unless the court sees it fit to extend such period.

A salvage lien has priority over other contractual liens, next being lien due to wages of Seamen and Master and then bottomry etc.

EQUITABLE LIENS

An equitable lien is the right to have certain property applied in a particular manner, irrespective of possession and the holder has the right to a judicial sale. Example a partnership lien.

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TEXT OF INTERNATIONAL CONVENTION ON MORTGAGES AND LIEN

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International Convention on Maritime Liens and Mortgages

(Geneva, 6 May 1993)

THE STATES PARTIES TO THIS CONVENTION,

CONSCIOUS of the need to improve conditions for ship financing and the development of national merchant fleets,

RECOGNIZING the desirability of international uniformity in the field of maritime liens and mortgages, and therefore

CONVINCED of the necessity for an international legal instrument governing maritime liens and mortgages,

HAVE DECIDED to conclude a Convention for this purpose and have therefore agreed as follows:

Article 1

Recognition and enforcement of mortgages, "hypothèques" and charges

Mortgages, "hypothèques" and registrable charges of the same nature, which registrable charges of the same nature will be referred to hereinafter as "charges", effected on seagoing vessels shall be recognized and enforceable in States Parties provided that:

(a) Such mortgages, "hypothèques" and charges have been effected and registered in accordance with the law of the State in which the vessel is registered;

(b) The register and any instruments required to be deposited with the registrar in accordance with the law of the State in which the vessel is registered are open to public inspection, and that extracts from the register and copies of such instruments are obtainable from the registrar; and

(c) Either the register or any instruments referred to in subparagraph (b) specifies at least the name and address of the person in whose favour the mortgage, "hypothèque" or charge has been effected or that it has been issued to bearer, the maximum amount secured, if that is a requirement of the law of the State of registration or if that amount is specified in the instrument creating the mortgage, "hypothèque" or charge, and the date and other particulars which, according to the law of the State of registration, determine the ranking in relation to other registered mortgages, "hypothèques" and charges.

Article 2

Ranking and effects of mortgages, "hypothèques" and charges

The ranking of registered mortgages, "hypothèques" or charges as between themselves and, without prejudice to the provisions of this Convention, their effect in regard to third parties shall be determined by the law of the State of registration; however, without prejudice to the provisions of this Convention, all matters relating to the procedure of enforcement shall be regulated by the law of the State where enforcement takes place.

Article 3

Change of ownership or registration

1. With the exception of the cases provided for in articles 11 and 12, in all other cases that entail the deregistration of the vessel from the register of a State Party, such State Party shall not permit the owner to deregister the vessel unless all registered mortgages, "hypothèques" or charges are previously deleted or the written consent of all holders of such mortgages, "hypothèques" or charges is obtained. However, where the deregistration of the vessel is obligatory in accordance with the law of a State Party, otherwise than as a result of a voluntary sale, the holders of registered mortgages, "hypothèques" or charges shall be notified of the pending deregistration in order to enable such holders to take appropriate action to protect their interests; unless the holders consent, the deregistration shall not be implemented earlier than after a lapse of a reasonable period of time which shall be not less than three months after the relevant notification to such holders.

2. Without prejudice to article 12, paragraph 5, a vessel which is or has been registered in a State Party shall not be eligible for registration in another State Party unless either:

(a) A certificate has been issued by the former State to the effect that the vessel has been deregistered; or

(b) A certificate has been issued by the former State to the effect that the vessel will be deregistered with immediate effect, at such time as the new registration is effected. The date of deregistration shall be the date of the new registration of the vessel.

Article 4

Maritime liens

1. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel:

(a) Claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;

(b) Claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel; 

(c) Claims for reward for the salvage of the vessel;

(d) Claims for port, canal, and other waterway dues and pilotage dues;

(e) Claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on the vessel.

2. No maritime lien shall attach to a vessel to secure claims as set out in subparagraphs (b) and (e) of paragraph 1 which arise out of or result from:

(a) Damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to international conventions or national law providing for strict liability and compulsory insurance or other means of securing the claims; or

(b) The radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste.

Article 5

Priority of maritime liens

1. The maritime liens set out in article 4 shall take priority over registered mortgages, "hypothèques" and charges, and no other claim shall take priority over such maritime liens or over such mortgages, "hypothèques" or charges which comply with the requirements of article 1, except as provided in paragraphs 3 and 4 of article 12.

2. The maritime liens set out in article 4 shall rank in the order listed, provided however that maritime liens securing claims for reward for the salvage of the vessel shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operations giving rise to the said liens were performed.

3. The maritime liens set out in each of subparagraphs (a), (b), (d) and (e) of paragraph 1 of article 4 shall rank pari passu as between themselves.

4. The maritime liens securing claims for reward for the salvage of the vessel shall rank in the inverse order of the time when the claims secured thereby accrued. Such claims shall be deemed to have accrued on the date on which each salvage operation was terminated.

Article 6

Other maritime liens

Each State Party may, under its law, grant other maritime liens on a vessel to secure claims, other than those referred to in article 4, against the owner, demise charterer, manager or operator of the vessel, provided that such liens:

(a) Shall be subject to the provisions of articles 8, 10 and 12;

(b) Shall be extinguished

(i) after a period of 6 months, from the time when the claims secured thereby arose unless, prior to the expiry of such period, the vessel has been arrested or seized, such arrest or seizure leading to a forced sale; or

(ii) at the end of a period of 60 days following a sale to a bona fide purchaser of the vessel, such period to commence on the date on which the sale is registered in accordance with the law of the State in which the vessel is registered following the sale;

whichever period expires first; and

(c) Shall rank after the maritime liens set out in article 4 and also after registered mortgages, "hypothèques" or charges which comply with the provisions of article 1.

Article 7

Rights of retention

1. Each State Party may grant under its law a right of retention in respect of a vessel in the possession of either:

(a) A shipbuilder, to secure claims for the building of the vessel; or

(b) A shiprepairer, to secure claims for repair, including reconstruction of the vessel, effected during such possession.

2. Such right of retention shall be extinguished when the vessel ceases to be in the possession of the shipbuilder or shiprepairer, otherwise than in consequence of an arrest or seizure.

Article 8

Characteristics of maritime liens

Subject to the provisions of article 12, the maritime liens follow the vessel, notwithstanding any change of ownership or of registration or of flag.

Article 9

Extinction of maritime liens by lapse of time

1. The maritime liens set out in article 4 shall be extinguished after a period of one year unless, prior to the expiry of such period, the vessel has been arrested or seized, such arrest or seizure leading to a forced sale.

2. The one-year period referred to in paragraph 1 shall commence:

(a) With respect to the maritime lien set out in article 4, paragraph 1(a), upon the claimant's discharge from the vessel;

(b) With respect to the maritime liens set out in article 4, paragraph 1(b) to (e), when the claims secured thereby arise;

and shall not be subject to suspension or interruption, provided, however, that time shall not run during the period that the arrest or seizure of the vessel is not permitted by law.

Article 10

Assignment and subrogation

1. The assignment of or subrogation to a claim secured by a maritime lien entails the simultaneous assignment of or subrogation to such a maritime lien.

2. Claimants holding maritime liens may not be subrogated to the compensation payable to the owner of the vessel under an insurance contract.

Article 11

Notice of forced sale

1. Prior to the forced sale of a vessel in a State Party, the competent authority in such State Party shall ensure that notice in accordance with this article is provided to:

(a) The authority in charge of the register in the State of registration;

(b) All holders of registered mortgages, "hypothèques" or charges which have not been issued to bearer; 

(c) All holders of registered mortgages, "hypothèques" or charges issued to bearer and all holders of the maritime liens set out in article 4, provided that the competent authority conducting the forced sale receives notice of their respective claims; and

(d) The registered owner of the vessel.

2. Such notice shall be provided at least 30 days prior to the forced sale and shall contain either:

(a) The time and place of the forced sale and such particulars concerning the forced sale or the proceedings leading to the forced sale as the authority in a State Party conducting the proceedings shall determine is sufficient to protect the interests of persons entitled to notice; or,

(b) If the time and place of the forced sale cannot be determined with certainty, the approximate time and anticipated place of the forced sale and such particulars concerning the forced sale as the authority in a State Party conducting the proceedings shall determine is sufficient to protect the interests of persons entitled to notice.

If notice is provided in accordance with subparagraph (b), additional notice of the actual time and place of the forced sale shall be provided when known but, in any event, not less than seven days prior to the forced sale.

3. The notice specified in paragraph 2 of this article shall be in writing and either given by registered mail, or given by any electronic or other appropriate means which provide confirmation of receipt, to the persons interested as specified in paragraph l, if known. In addition, the notice shall be given by press announcement in the State where the forced sale is conducted and, if deemed appropriate by the authority conducting the forced sale, in other publications.

Article 12

Effects of forced sale

1. ln the event of the forced sale of the vessel in a State Party, all registered mortgages, "hypothèques" or charges, except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature, shall cease to attach to the vessel, provided that:

(a) At the time of the sale, the vessel is in the area of the jurisdiction of such State; and

(b) The sale has been effected in accordance with the law of the said State and the provisions of article 11 and this article.

2. The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia , the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1(a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants, the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable.

3. A State Party may provide in its law that, in the event of the forced sale of a stranded or sunken vessel following its removal by a public authority in the interest of safe navigation or the protection of the marine environment, the costs of such removal shall be paid out of the proceeds of the sale, before all other claims secured by a maritime lien on the vessel.

4. If at the time of the forced sale the vessel is in the possession of a shipbuilder or of a shiprepairer who under the law of the State Party in which the sale takes place enjoys a right of retention, such shipbuilder or shiprepairer must surrender possession of the vessel to the purchaser but is entitled to obtain satisfaction of his claim out of the proceeds of sale after the satisfaction of the claims of holders of maritime liens mentioned in article 4.

5. When a vessel registered in a State Party has been the object of a forced sale in any State Party, the competent authority shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all registered mortgages, "hypothèques" or charges, except those assumed by the purchaser, and of all liens and other encumbrances, provided that the requirements set out in paragraph l (a) and (b) have been complied with. Upon production of such certificate, the registrar shall be bound to delete all registered mortgages, "hypothèques" or charges except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of new registration, as the case may be.

6. States Parties shall ensure that any proceeds of a forced sale are actually available and freely transferable.

Article 13

Scope of application

1. Unless otherwise provided in this Convention, its provisions shall apply to all seagoing vessels registered in a State Party or in a State which is not a State Party, provided that the latter's vessels are subject to the jurisdiction of the State Party.

2. Nothing in this Convention shall create any rights in, or enable any rights to be enforced against, any vessel owned or operated by a State and used only on Government non-commercial service

Article 14

Communication between States Parties

For the purpose of articles 3, 11 and 12, the competent authorities of the States Parties shall be authorized to correspond directly between themselves. 

Article 15

Conflict of conventions

Nothing in this Convention shall affect the application of any international convention providing for limitation of liability or of national legislation giving effect thereto. 

Article 16

Temporary change of flag

If a seagoing vessel registered in one State is permitted to fly temporarily the flag of another State, the following shall apply: 

(a) For the purposes of this article, references in this Convention to the "State in which the vessel is registered" or to the "State of registration" shall be deemed to be references to the State in which the vessel was registered immediately prior to the change of flag, and references to "the authority in charge of the register" shall be deemed to be references to the authority in charge of the register in that State. 

(b) The law of the State of registration shall be determinative for the purpose of recognition of registered mortgages, "hypothèques" and charges. 

(c) The State of registration shall require a cross-reference entry in its register specifying the State whose flag the vessel is permitted to fly temporarily; likewise, the State whose flag the vessel is permitted to fly temporarily shall require that the authority in charge of the vessel's record specifies by a cross-reference in the record the State of registration. 

(d) No State Party shall permit a vessel registered in that State to fly temporarily the flag of another State unless all registered mortgages, "hypothèques" or charges on that vessel have been previously satisfied or the written consent of the holders of all such mortgages, "hypothèques" or charges has been obtained. 

(e) The notice referred to in article ll shall be given also to the competent authority in charge of the vessel's record in the State whose flag the vessel is permitted to fly temporarily. 

(f) Upon production of the certificate of deregistration referred to in article 12, paragraph 5, the competent authority in charge of the vessel's record in the State whose flag the vessel is permitted to fly temporarily shall, at the request of the purchaser, issue a certificate to the effect that the right to fly the flag of that State is revoked 

(g) Nothing in this Convention is to be understood to impose any obligation on States Parties to permit foreign vessels to fly temporarily their flag or national vessels to fly temporarily a foreign flag. 

Article 17

Depositary

This Convention shall be deposited with the Secretary-General of the United Nations. 

Article 18

Signature, ratification, acceptance, approval and accession

1. This Convention shall be open for signature by any State at the Headquarters of the United Nations, New York, from 1 September 1993 to 31 August 1994 and shall thereafter remain open for accession. 

2. States may express their consent to be bound by this Convention by: 

(a) Signature without reservation as to ratification, acceptance or approval; or 

(b) Signature subject to ratification, acceptance or approval, followed by ratification, acceptance or approval; or 

(c) Accession. 

3. Ratification, acceptance, approval or accession shall be effected by the deposit of an instrument to that effect with the depositary. 

Article 19

Entry into force

1. This Convention shall enter into force 6 months following the date on which 10 States have expressed their consent to be bound by it. 

2. For a State which expresses its consent to be bound by this Convention after the conditions for entry into force thereof have been met, such consent shall take effect 3 months after the date of expression of such consent. 

Article 20

Revision and amendment

1. A conference of States Parties for the purpose of revising or amending this Convention shall be convened by the Secretary-General of the United Nations at the request of one third of the States Parties. 

2. Any consent to be bound by this Convention, expressed after the date of entry into force of an amendment to this Convention, shall be deemed to apply to the Convention, as amended. 

Article 21

Denunciation

1. This Convention may be denounced by any State Party at any time after the date on which this Convention enters into force for that State. 

2. Denunciation shall be effected by the deposit of an instrument of denunciation with the depositary. 

3. A denunciation shall take effect one year, or such longer period as may be specified in the instrument of denunciation, after the receipt of the instrument of denunciation by the depositary. 

Article 22

Languages

This Convention is established in a single original in the Arabic, Chinese, English, French, Russian and Spanish languages, each text being equally authentic. 

DONE AT Geneva this sixth day of May, one thousand nine hundred and ninety-three. 

IN WITNESS WHEREOF the undersigned being duly authorized by their respective Governments for that purpose have signed this Convention.

International Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages

(Brussels, 27 May 1967)

THE CONTRACTING PARTIES,

HAVING RECOGNIZED the desirability of determining by agreement certain rules relating to maritime liens and mortgages,

HAVE RESOLVED to conclude a convention for this purpose, and thereto agreed as follows:

Article 1

Mortgages and "hypothèques" on sea-going vessels shall be enforceable in Contracting States provided that:

(a) such mortgages and "hypothèques" have been effected and registered in accordance with the law of the State where the vessel is registered;

(b) the register and any instruments required to be deposited with the registrar in accordance with the law of the State where the vessel is registered are open to public inspection, and that extracts of the register and copies of such instruments are obtainable from the registrar, and

(c) either the register or any instruments referred to in paragraph (b) above specifies the name and address of the person in whose favour the mortgage or "hypothèque" has been effected or that it has been issued to bearer, the amount secured and the date and other particulars which, according to the law of the State of registration, determine the rank as respects other registered mortgages and "hypothèques".

Article 2

The ranking of registered mortgages and "hypothèques" as between themselves and, without prejudice to the provisions of this Convention, their effect in regard to third parties shall be determined by the law of the State of registration; however, without prejudice to the provisions of this Convention, all matters relating to the procedure of enforcement shall be regulated by the law of the State where enforcement takes place.

Article 3

1. Subject to the provisions of Article 11, no Contracting State shall permit the deregistration of a vessel without the written consent of all holders of registered mortgages and "hypothèques".

2. A vessel which is or has been registered in a Contracting State shall not be eligible for registration in another Contracting State, unless:

(a) a certificate has been issued by the former State to the effect that the vessel has been deregistered, or

(b) a certificate has been issued by the former State to the effect that the vessel will be deregistered on the day when such new registration is effected.

Article 4

1. The following claims shall be secured by maritime liens on the vessel:

(i) wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel;

(ii) port, canal and other waterway dues and pilotage dues;

(iii) claims against the owner in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;

(iv) claims against the owner, based on tort and not capable of being based on contract, in respect of loss of or damage to property occurring, whether on land or on water, in direct connection with the operation of the vessel;

(v) claims for salvage, wreck removal and contribution in general average.

The word "owner" mentioned in this paragraph shall be deemed to include the demise or other charterer, manager or operator of the vessel.

2. No maritime lien shall attach to the vessel securing claims as set out in paragraph 1 (iii) and (iv) of this Article which arise out of or result from the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive product or waste.

Article 5

1. The maritime liens set out in Article 4 shall take priority over registered mortgages and "hypothèques", and no other claim shall take priority over such maritime liens or over mortgages and "hypothèques" which comply with the requirements of Article 1, except as provided in Article 6(2).

2. The maritime liens set out in Article 4 shall rank in the order listed, provided however that maritime liens securing claims for salvage, wreck removal and contribution in general average shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operations giving rise to the said liens were performed.

3. The maritime liens set out in each of sub-paragraphs (i), (ii), (iii) and (iv) of paragraph (1) of Article 4 shall rank pari passu as between themselves.

4. The maritime liens set out in sub-paragraph (v) of paragraph (1) of Article 4 shall rank in the inverse order of the time when the claims secured thereby accrued. Claims for contribution in general average shall be deemed to have accrued on the date on which the general average act was performed; claims for salvage shall be deemed to have accrued on the date on which the salvage operation was terminated.

Article 6

1. Each Contracting State may grant liens or rights of retention to secure claims other than those referred to in Article 4. Such liens shall rank after all maritime liens set out in Article 4 and after all registered mortgages and "hypothèques" which comply with the provisions of Article 1; and such rights of retention shall not prejudice the enforcement of maritime liens set out in Article 4 or registered mortgages or "hypothèques" which comply with the provisions of Article 1, nor the delivery of the vessel to the purchaser in connection with such enforcement.

2. In the event that a lien or right of retention is granted in respect of a vessel in possession of:

(a) a shipbuilder, to secure claims for the building of the vessel, or

(b) a ship repairer, to secure claims for repair of the vessel effected during such possession,

such lien or right of retention shall be postponed to all maritime liens set out in Article 4, but may be preferred to registered mortgages or "hypothèques". Such lien or right of retention may be exercisable against the vessel notwithstanding any registered mortgage or "hypothèque" on the vessel, but shall be extinguished when the vessel ceases to be in the possession of the shipbuilder or ship repairer, as the case may be.

Article 7

1. The maritime liens set out in Article 4 arise whether the claims secured by such liens are against the owner or against the demise or other charterer, manager or operator of the vessel.

2. Subject to the provisions of Article 11, the maritime liens securing the claims set out in Article 4 follow the vessel notwithstanding any change of ownership or of registration.

Article 8

1. The maritime liens set out in Article 4 shall be extinguished after a period of one year from the time when the claims secured thereby arose unless, prior to the expiry of such period, the vessel has been arrested, such arrest leading to a forced sale.

2. The one year period referred to in the preceding paragraph shall not be subject to suspension or interruption, provided, however, that time shall not run during the period that the lienor is legally prevented from arresting the vessel.

Article 9

The assignment of or subrogation to a claim secured by a maritime lien set out in Article 4 entails the simultaneous assignment of or subrogation to such maritime lien.

Article 10

Prior to the forced sale of a vessel in a Contracting State, the competent authority of such State shall give, or cause to be given at least thirty days written notice of the time and place of such sale to:

(a) all holders of registered mortgages and "hypothèques" which have not been issued to bearer;

(b) such holders of registered mortgages and "hypothèques" issued to bearer and to such holders of maritime liens set out in Article 4 whose claims have been notified to the said authority;

(c) the registrar of the register in which the vessel is registered.

Article 11

1. In the event of the forced sale of the vessel in a Contracting State all mortgages and "hypothèques", except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature shall cease to attach to the vessel, provided however that:

(a) at the time of the sale, the vessel is in the jurisdiction of such Contracting State, and

(b) the sale has been effected in accordance with the law of the said State and the provisions of this Convention.

No charter party or contract for the use of the vessel shall be deemed a lien or encumbrance for the purpose of this Article.

2. The cost awarded by the Court and arising out of the arrest and subsequent sale of the vessel and the distribution of the proceeds shall first be paid out of the proceeds of such sale. The balance shall be distributed among the holders of maritime liens, liens and rights of retention mentioned in paragraph 2 of Article 6 and registered mortgages and "hypothèques" in accordance with the provisions of this Convention to the extent necessary to satisfy their claims.

3. When a vessel registered in a Contracting State has been the object of a forced sale in a Contracting State, the Court or other competent authority having jurisdiction shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all mortgages and "hypothèques", except those assumed by the purchaser, and all liens and other encumbrances, provided that the requirements set out in paragraph 1, sub-paragraphs (a) and (b) have been complied with, and that the proceeds of such forced sale have been distributed in compliance with paragraph 2 of this Article or have been deposited with the authority that is competent under the law of the place of the sale. Upon production of such certificate the registrar shall be bound to delete all registered mortgages and "hypothèques", except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of re-registration, as the case may be.

Article 12

1. Unless otherwise provided in this Convention, its provisions shall apply to all sea-going vessels registered in a Contracting State or in a non-Contracting State.

2. Nothing in this Convention shall require any rights to be conferred in or against, or enable any rights to be enforced against any vessel owned, operated or chartered by a State and appropriated to public non-commercial services.

Article 13

For the purposes of Articles 3, 10 and 11 of this Convention, the competent authorities of the Contracting States shall be authorized to correspond directly between themselves.

Article 14

Any Contracting Party may at the time of signing, ratifying or acceding to this Convention make the following reservations:

1. to give effect to this Convention either by giving it the force of law or by including the provisions of this Convention in its national legislation in a form appropriate to that legislation;

2. to apply the International Convention relating to the limitation of the liability of owners of sea-going ships, signed at Brussels on 10 October 1957.

Article 15

Any dispute between two or more Contracting Parties concerning the interpretation or application of this Convention which cannot be settled through negotiation shall, at the request of one of them, be submitted to arbitration. If within six months from the date of the request for arbitration the Parties are unable to agree on the organization of the arbitration, any one of those Parties may refer the dispute to the International Court of Justice by request in conformity with the Statute of the Court.

Article 16

1. Each Contracting Party may at the time of signature or ratification of this Convention or accession thereto, declare that it does not consider itself bound by Article 15 of the Convention. The other Contracting Parties shall not be bound by this Article with respect to any Contracting Party having made such a reservation.

2. Any Contracting Party having made a reservation in accordance with paragraph 1 may at any time withdraw this reservation by notification to the Belgian Government.

Article 17

This Convention shall be open for signature by the States represented at the twelfth session of the Diplomatic Conference on Maritime Law

Article 18

This Convention shall be ratified and the instruments of ratification shall be deposited with the Belgian Government.

Article 19

1. This Convention shall come into force three months after the date of the deposit of the fifth instrument of ratification.

2. This Convention shall come into force in respect of each signatory State which ratifies it after the deposit of the fifth instrument of ratification, three months after the date of the deposit of the instrument of ratification.

Article 20

1. States, Members of the United Nations or Members of the specialized agencies, not represented at the twelfth session of the Diplomatic Conference on Maritime Law, may accede to this Convention.

2. The instruments of accession shall be deposited with the Belgian Government.

3. The Convention shall come into force in respect of the acceding State three months after the date of deposit of the instrument of accession of that State, but not before the date of entry into force of the Convention as established by Article 19(1).

Article 21

Each Contracting Party shall have the right to denounce this Convention at any time after the coming into force thereof in respect of such Contracting Party. Nevertheless, this denunciation shall only take effect one year after the date on which notification thereof have been received by the Belgian Government.

Article 22

1. Any Contracting Party may at the time of signature, ratification or accession to this Convention or at any time thereafter declare by written notification to the Belgian Government which, among the territories under its sovereignty or for whose international relations it is responsible, are those to which the present Convention applies.

The Convention shall three months after the date of the receipt of such notification by the Belgian Government, extend to the territories named therein.

2. Any Contracting Party which has made a declaration under paragraph (1) of this Article may at any time thereafter declare by notification given to the Belgian Government that the Convention shall cease to extend to such territories.

This denunciation shall take effect one year after the date on which notification thereof has been received by the Belgian Government.

Article 23

The Belgium Government shall notify the States represented at the twelfth session of the Diplomatic Conference on Maritime Law, and the acceding States to this Convention, of the following:

1. The signatures, ratifications and accessions received in accordance with Articles 17, 18 and 20.

2. The date on which the present Convention will come into force in accordance with Article 19.

3. The notifications with regard to Articles 14, 16 and 22.

4. The denunciations received in accordance with Article 21.

Article 24

Any Contracting Party may three years after the coming into force of this Convention, in respect of such Contracting Party, or at any time thereafter request that a Conference be convened in order to consider amendments to this Convention.

Any Contracting Party proposing to avail itself of this right shall notify the Belgian Government which, provided that one-third of the Contracting Parties are in agreement, shall convene the Conference within six months thereafter

Article 25

In respect of the relations between States which ratify this Convention or accede to it, this Convention shall replace and abrogate the International Convention for the unification of certain rules relating to Maritime Liens and Mortgages and Protocol of signature, signed at Brussels on 10 April 1926.

IN WITNESS WHEREOF the undersigned plenipotentiaries, duly authorized, have signed this Convention.

DONE at Brussels, this 27th day of May 1967, in the French and English languages, both texts being equally authentic, in a single copy, which shall remain deposited in the archives of the Belgian Government, which shall issue certified copies.