DF Advocates Malta

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Financial Services
Aviation Industry
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Ship Finance

Maltese law provides that vessels constitute a particular class of moveables as they form separate and distinct assets within the estate of their owners, for the security of actions and claims to which the vessel is subject. This particular feature of Maltese law ensures that a financier finds comfort under Maltese law when securing an interest in its favour on a Maltese registered vessel. To safeguard its interest, a financier may also register a Maltese mortgage over a Maltese registered vessel.

The registration of a mortgage grants the financier a first ranking claim over any vessel in the order of priority of registration. Mortgages enjoy a relatively high ranking among maritime claims, so that the financier will rank above all other non-maritime creditors.

In case of default by the mortgagor (the ship owning company), the mortgagee (the financier ) is entitled:

  • to take possession of the ship (this can be further safeguarded by the filing of an irrevocable power of attorney in favour of the mortgagee);
  • to subsequently sell the vessel;
  • generally to do any such things in the name of the owner as may be required in order to maintain the status and validity of the registration of the vessel.

Since a mortgage constitutes an executive title under the Maltese Law, a mortgage may be enforced upon default without the need to file any court proceedings before the Maltese courts. By giving notice to the mortgagor, the mortgagee can immediately act to safeguards its rights. In the event that the sum due is no longer the same as the original amount provided to the mortgagor.  Maltese law requires that the existing amount due is formally ascertained and notified to the mortgagor by means of a simplified procedure.

Noteworthy is the fact that Maltese law, in a further attempt to safeguard the mortgagee’s position, allows that no further charge or transfer of the vessel is done without the mortgagee’s consent, as long as this is expressly stated in the mortgage deed.

DF Advocates has represented ship owners and has advised and assisted several banks with the drafting and registration of mortgages over Malta registered vessels.


Email: jean.farrugia@dfadvocates.com
Contact Name: Dr. Jean C. Farrugia
Dr. Kevin Deguara

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