Lesson 11: Vessel mortgages, maritime liens, and enforcement of maritime claims

Question 1

Mortgage

Answer 1

• A secured and normally registered preferential right against an asset of a debtor as security for a claim.
• Is normally security for the repayment of a loan agreement.
• Used for assets of considerable value.
• In bankruptcy are secured creditors

Question 2

Enforcement

Answer 2

• In personam: ordinary action against a named defendant.
• In rem: an action against the ship or ships of named or unnamed defendant. Legal device putting pressure on the shipowner to defend.

Question 3

Three groups of claims that can be enforced by an action in rem

Answer 3

• Action in rem in respect of claims to the possession or ownership of the ship
• Action in rem arising from maritime liens
• Action in rem in respect of other claims

Question 4

Maritime lain mortgage?

Answer 4

No, a lien is a security interest over an asset to secure payment of a claim

Question 5

Why are maritime Lien unique?

Answer 5

• Take priority over other liens and mortgages
• Does not require agreements between the shipowner and creditor
• Attach to the vessel even if it’s sold

Question 6

Who has the authority to arrest the ship?

Answer 6

• Arrest Convention 1952, article 4: The ship can only be arrested under the authority of Court

Question 7

Freezing Injunctions

Answer 7

• A court order aimed at securing funds for the satisfaction of a legal right.
• The purpose is to prevent the defendant from taking action designed to frustrate subsequent orders of the court.