FAQs - Ship Mortgages
Question 1: Is a ship mortgage accepted in principle under Jamaican Law?
The Shipping Act, 1998 makes provision for the recording and enforcement of ship mortgages. There is a central register where all mortgages are registered however closings may be facilitated at any time in the major shipping centres of the world through the Jamaica ship registry’s network of deputy registrars. A transcript of the register stating the date and time of recording of the mortgage can be issued by the Registrar on request.
Question 2: What charges, liens or securities could take the priority over a mortgage?
The Shipping Act, 1998 lists the order of priority of maritime liens and only the liens associated with claims for wages and master’s disbursements take priority over the claims of a registered mortgagee.
Question 3: Can an owner register subsequent mortgages without the consent of the prior mortgagees?
Where the mortgage prohibits the creation of further mortgages without the prior written consent of every registered mortgagee, the Registrar is required to make an entry in the register to that effect and shall not register any further mortgage in the absence of that consent. The registration of a mortgage without the consent required will be of no effect.
Question 4: Can a vessel be deleted or transferred without the consent of the mortgagees?
Where the mortgage prohibits the transfer of the ownership of a ship or its de-registration without the prior written consent of every mortgagee, the Registrar is required to make an entry in the Register to that effect and shall not register any transfer or de-registration in the absence of that consent. The transfer or de-registration of a ship without the consent required will be of no effect except that the Registry may delete the vessel where conditions for deletion are otherwise satisfied.
Question 5: Can the mortgage secure loans in any other currency or multiple currencies?
Yes. A mortgage may be secured in any legal currency.
Question 6: Can a mortgagee secure a loan in US Dollars?
Yes. A mortgage may be secured in United States Dollars
Question 7: Can proceeds of an enforcement of the mortgage be payable in the loan currency or any other currency?
Yes. There are no restrictions under Jamaican law in respect of the currency used in the payment of the proceeds.
Question 8: Can a mortgage secure a floating interest rate?
Yes, provided there is certainty in the calculation of the rate.
Question 9. Can a mortgage secure interest rate swap liabilities?
Yes. Interest rate swap liabilities may be secured by a mortgage against a Jamaican ship.
Question 10. Can a mortgage secure currency swap liabilities?
Yes. Interest rate swap liabilities may be secured by a mortgage against a Jamaican ship
Question 11. What remedies are available to enforce the mortgage?
The Shipping Act, 1998 gives the registered mortgagee absolute power to dispose of the ship in which he is registered as mortgagee. This statutory power includes the power of sale which is exercisable without the need to apply for a Court Order. The mortgagee may also exercise his rights to arrest the ship and to apply to the Court for an order for the sale of the ship.
Question 12. Are any stamp duties, taxes or other levies payable in order to:
a) register mortgages;
b) enforce mortgages;
No duties, taxes or levies are payable in relation to the registration or enforcement of a mortgage on exempted ships.
Question 13. If the mortgage is enforced outside Jamaica, will the judgement of a foreign court be recognised so that the vessel and the mortgage may be deleted from the register?
The judgment of a foreign court will be recognized pursuant to the Judgments (Foreign) Reciprocal (Enforcement) Act.
Question 14. Are any consents or governmental authorization necessary for?
(a) the registration, or
(b) enforcement of the mortgage
No consent or government authorization is necessary for the registration, transfer or enforcement of mortgages on Jamaican ships.
Question 15: What is the procedure for registering the mortgage?
The duly executed instrument of mortgage is required to be produced to the Registrar along with the prescribed fee. The particulars of the mortgage and the date and time of registration will thereafter be entered in the register of Jamaican ships. The instrument of mortgage will be endorsed by the Registrar with the date and time of registration and thereafter returned to the mortgagee. A transcript of the register stating the mortgage(s) registered against the ship will be issued on request.
Question 16: Can mortgages be registered on ships under construction and provisionally registered ships?
The Shipping Act, 1998 also makes provision for the registration of: -
1. Ships under construction
2. Provisionally registered ships
The statutory provisions relating to mortgages on permanently registered ships including priorities apply to mortgages on provisionally registered ships and ships under construction.
Question 17: Will an owner be subject to any (Jamaican) income or corporate taxes?
The owner of an exempted ship will be exempt from any income tax in respect of gains or profits derived from the ownership or operation of the ship. Exempted ship status is granted contemporaneous with the registration of the ship.
Question 18: Is there any withholding tax liability?
No withholding tax is payable in relation to exempted ships.
Question 19: Can a marine mortgage secure guarantee obligations?
Question 20: What laws govern the arrest of Arrest of ships?
Jamaica has incorporated the provisions of the 1952 Convention Relating to the Arrest of Seagoing Ships and the Civil Procedure Rules governing the Arrest of ships is identical to the current United Kingdom CPR.
Question 21: Local Counsel
There are several law firms and sole practitioners in Jamaica who specialize in maritime law and commercial law transactions and represent international banks and the major P& I Clubs.