Click here to download the Ship finance 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 19 jurisdictions are covered in this report:

Brazil; China; Cyprus; Germany; Israel; Italy; Japan; Liberia; Malta; Marshall Islands; Nigeria; Panama; Russia; Singapore; Sweden; Switzerland; United Arab Emirates; United Kingdom; United States.

Questions

The set of questions relating to the topic of Ship finance and answered by the guide for each jurisdiction covered include:

Due diligence

• • How does one demonstrate title to or legal ownership of a vessel registered under the laws of your jurisdiction?
• • How can one determine whether there are any liens recorded over a vessel?
• • How does one determine whether there are any security agreements, liens, charges or other encumbrances granted by a vessel owner or affiliated party who might be a borrower, guarantor or other credit party in connection with a vessel finance transaction?
• • Can one determine whether an obligor registered in your jurisdiction is duly organised and in good standing from a search of a public registry?
• • Can the shareholders or other equity interest holders, directors and officers or other authorised signatories of an obligor organised in your jurisdiction be determined from a search of a public registry? If not, how are these parties customarily identified?
• • What corporate or other entity action is necessary for an obligor to enter into or guarantee a debt obligation? When is action by the board of directors or other governing body required? Must shareholders approve a guarantee?
• • Must foreign lenders qualify to do business in your jurisdiction to extend credit to a borrower organised in your jurisdiction? Will foreign creditors be deemed resident as a consequence of making a loan or other extension of credit to an obligor within your jurisdiction?

Repayment

• • Is central bank or other regulatory approval required for repayment of a loan in foreign currency?
• • Do usury laws limit the interest payable to a lender in respect of a vessel financing?
• • Are withholding taxes payable on principal or interest payments to nonresident lenders?

Registration of vessels

• • What vessels are eligible for registration under the flag of your country? Are offshore drilling rigs or mobile offshore drilling units considered vessels under the laws of your jurisdiction? What is the effect of registration?
• • Who may register a vessel in your jurisdiction?
• • Is there an alternate registry for international shipping operations?

Ship mortgages and other liens over vessels

• • What types of ship mortgages exist and what obligations may a ship mortgage secure? Can contingent obligations, including swap obligations, be secured? Are there standardised forms?
• • Give details of any required form for ship mortgages in your jurisdiction.
• • Who maintains the register of mortgages? What information does it contain and where are such filings to be made? What is the effect of registration?
• • Must the total amount of the mortgage be stated therein? Must the mortgage contain a maturity date? Must the underlying debt instrument be filed with or attached to the recorded mortgage?
• • Can a mortgage be registered in the name of an agent or trustee for the benefit of multiple lenders?
• • If the mortgagee is an agent or trustee for a lending syndicate, must any filings be made upon transfer of a portion of the underlying debt among existing lenders or to a new lender?
• • If the mortgagee transfers its interest to a new lender, agent or trustee, what filings are required? Is the mortgagor’s consent required?
• • What other maritime liens over vessels are recognised in your jurisdiction? Do these claims give rise to a right to arrest a vessel? In what circumstances may associated ships be arrested?
• • What maritime liens rank higher than a mortgage lien?
• • May non-mortgage liens be recorded over a vessel?
• • Will mortgages on “foreign” flag vessels be recognised in your jurisdiction? If so, do they share the same priority as those on vessels registered under the laws of your jurisdiction?
• • What is the procedure for enforcing a mortgage in your jurisdiction by way of foreclosure? Are interlocutory sales permitted? How long does a judicial sale take? What are the associated court costs and how are they calculated?
• • May a vessel be sold privately by a mortgagee? Will the sale discharge liens over the vessel?
• • Will the courts of your jurisdiction enforce mortgage provisions stipulating the appointment of a receiver on default under the mortgage?
• • What duties does a mortgagee owe to an owner or third-party creditors?

Collateral

• • May finance leases or other charters be recorded over vessels flagged under the laws of your jurisdiction?
• • May finance leases be recharacterised by a court as a financing contract? If so, is there any procedure for protecting the lessor's interest against third-party creditors?
• • How is a security interest created over earnings of a vessel, charter contracts, insurances, etc? How are these security interests perfected?
• • Must security interests against non-vessel collateral be registered to be enforceable? If so, where are such filings made?
• • How is a security interest over a deposit account established? How is a security interest perfected?
• • How are security interests in non-vessel collateral enforced?
• • How are share pledges for vessel financings established? Are share pledges or share charges common in your jurisdiction?
• • Is there a risk that a pledgee, before or after exercise of the share pledge, may be exposed to debts or other liabilities of the pledged company?

Tax considerations for vessel owners

• • Is the income earned by the owners of vessels registered in your jurisdiction subject to domestic taxation? At what rate?
• • Is there an optional tonnage tax exempting vessel owners from tax on income?
• • What special tax incentives are available to shipowners registering vessels in your jurisdiction?
• • Are there any other noteworthy tax provisions specifically applicable to shipping, shipping income or ship finance?

Insolvency and restructuring

• • Is there a general scheme of reorganisation or insolvency administration in your jurisdiction?
• • Will the courts of your jurisdiction respect the rulings of a foreign court presiding over reorganisation or liquidation proceedings?
• • Has your jurisdiction adopted the Model law on cross-border insolvency promulgated by the United Nations Commission on International Trade Law?
• • What is the order of priority among creditors? In what circumstances will creditors be required to disgorge payments from an insolvent company?
• • May a vessel owner provide security on behalf of other related or unrelated companies? What are the requirements for it to be enforceable?
• • Is there a law of fraudulent transfer that permits a third-party creditor to challenge, for example, the grant of a mortgage because of insolvency of the mortgagor or insufficient consideration received by the mortgagor in exchange for the grant of the mortgage?
• • How may a creditor petition the courts of your jurisdiction to declare a debtor bankrupt or compel liquidation of an insolvent obligor?
• • Has your jurisdiction adopted the Model Netting Act of the International Swaps and Derivatives Association (ISDA)? If not, may a swap provider exercise its close-out netting rights under an ISDA master agreement despite an obligor’s insolvency?