A maritime mortgage is a contractual security which gives the creditor a real right over the ship. The mortgage must be registered in each national maritime mortgage register by the competent administrative authority, which is responsible for its preservation and publication.
The registration preserves the mortgage for 10 years from its date. Its effect ceases if the registration has not been renewed before the expiry of this period on the register of the competent administrative authority. The registration guarantees two years’ interest in addition to the current year, ranking pari passu with the capital.
Ships and other seagoing vessels registered in each Member State of the C.E.M.A.C. may be mortgaged. They may only be encumbered by conventional mortgages. The mortgage must, on pain of nullity, be constituted in writing. The mortgage deed may be authenticated or under private seal. It may also be a promissory note: in this case, endorsement entails transfer of the mortgage right.
The mortgage may only be granted by the owner of the vessel or by his authorised representative with a special mandate.
The mortgage can be taken out on a sea-going vessel under construction.
A mortgage granted on a ship or on an undivided share thereof extends, unless otherwise agreed, to the body of the ship and to all accessories, machinery, fittings and tackle. It does not extend to the cargo.
If the ship is lost or damaged, the following shall be subrogated to the ship and its accessories for the amount of a mortgage claim:
a) compensation due to the owner for material damage suffered by the ship;
b) sums due to the owner for contribution to general average suffered by the ship;
c) indemnities due to the owner for assistance rendered or salvage carried out since the registration of the mortgage, insofar as they represent the loss of or damage to the mortgaged vessel;
d) insurance indemnities on the body of the vessel.
Before any payment is made, the insurer must request a statement of mortgage registrations. No payment shall discharge the insurer if it is made in disregard of the rights of creditors appearing on the said statement.
Payments made in good faith before opposition are valid.
A maritime mortgage on a ship flying the flag of a Member State shall be entered in the register referred to in Article 85 by the competent administrative authority of that Member State on the basis of its constitutive instrument, which shall ensure that it is preserved and purged and/or cancelled.
The register must be accessible to the public; at the request of any interested party, the Registrar shall issue an extract from the register. The competent maritime authority of the port of registration of the ship is automatically provided with a copy of the entries and deletions of mortgages. Finally, an up-to-date extract from the ship’s mortgage register must be kept on board.