Registration of a mortgage over all the shares in a ship constitutes an important aspect of any ship registration transaction which involves provision of ship finance by financial institutions. The Merchant Shipping Act provides for a statutory form of mortgage used for all types of mortgages whether principal and interest or account current. Most of the leading International Ship Finance Banks and other project finance institutions have resorted to the Maltese statutory mortgage as a security for loan facilities made available to the mortgagor for the acquisition of the asset or for maintenance and repair of the same, including, a fleet mortgage.

A mortgage is an executive title and may be enforced immediately upon the occurrence of a default mentioned in the Deed of Covenant or other finance documents;

  1. A mortgagee of a Maltese statutory mortgage enjoys relatively high ranking on the list of secured debtors;
  2. It is possible to prohibit the registration of further mortgages and the transfer of the vessel, unless the written consent of the mortgagee is also forthcoming;
  3. A vessel may not be deleted from the Register without the prior written consent of the mortgagee;
  4. Once a mortgage is registered, special privileges or maritime liens not previously recorded on appurtenances or accessories of a vessel do not affect the mortgagee’s position;
  5. A mortgage may be executed and registered in favour of a security;
  6. Trustee acting under trust for the benefit of persons to whom a debt or other obligation is due. This is particularly beneficial when syndicate lending is involved;
  7. A mortgage is indivisible, however, the debt secured by the mortgage or part thereof may be assigned by the mortgagee;
  8. A mortgage attaches to the vessel, including appurtenances, insurance proceeds and to other proceeds deriving from indemnities from mishaps;
  9. There is no duty on document tax when a mortgage is registered or transferred.

1.1 Rights of the Mortgagee

If an event of default as defined in the Deed of Covenants or other finance documents verifies itself, the mortgagee, upon giving notice to the mortgagor;

  1. Is entitled to take possession of the ship or share therein in respect of which it is registered;
  2. Has power absolutely to sell the ship or share therein in respect of which it is registered.
  3. Has power to apply for any extension, pay fees, receive certificates and generally do all 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.

Any dispute arising from the deed of a Maltese statutory mortgage is decided in accordance with Maltese law irrespective of the place where the Court first seized of the matter sits, however, the finance documents may provide for their own choice of law and will be governed by the law so chosen by the parties.

1.2 Registration and Deletion of Mortgages

For the Registrar of Maltese ship to enter a mortgage in the vessel’s register, it is of utmost important to be able to verify the binding authority of the person/s executing the mortgage on behalf of the mortgagor, being in the main a corporate body. The authority-to-bind of the directors or attorneys, appearing on behalf of the mortgagor, is verified by means of a notarial declaration by a notary public or a legal opinion prepared by a lawyer qualified to opine on the law of the jurisdiction in which the mortgagor is incorporated and established.Mortgages can only be registered at the Registry in Malta. One original mortgage form duly executed is delivered and registered. Registrar retains a copy, and the original is returned to the mortgagee for safe keeping.

A registration of a mortgage shall be filed with the Registrar of Ships, with a submission of the following documents:

  1. The mortgage instrument;
  2. Legal opinion;
  3. Corporate authorities of the mortgagor, resolving in favour of the granting of a mortgage over all the shares in the vessel.

When the loan advanced is repaid by the mortgagor, the original mortgage form will have to be returned to Registrar for the discharge of the mortgage. The deed of discharge (back side of the mortgage form) is signed by the mortgagee or an authorized attorney of the mortgagee and witnessed by a lawyer or notary public, who will also certify the identity and authority of the person executing the deed of discharge on behalf of the mortgagee.

1.3 Amendment and Transfer of a Mortgage

A registered mortgage may be amended by means of the registration of an amendment mortgage. A mortgage may be amended for any purpose, including, to increase the amount of debt secured by such mortgage and to extend such mortgage to secure any other obligation of the mortgagor, whether as principal or as surety for any other person, in favour of the mortgagee.

An amendment to a registered mortgage entails the drawing up of a new mortgage instrument making reference to the mortgage to be amended and clearly indicating the amendment to be effected. The amendment mortgage is executed by the mortgagor and counter-signed by the mortgagee. Where other mortgages are registered over the vessel, the written consent of the other mortgagees whose interest may be prejudiced by the amendment is also required. Similar to the case where a mortgage is registered or deleted, the authorities of the persons executing the amendment mortgage on behalf of the mortgagee and the mortgagor will be required to be verified by a notary public who must state that the person issuing the authority is lawfully empowered to execute it on behalf of the mortgagee and binds the latter under his hand. Such amendment mortgage forms an integral part of the registered mortgage which it amends and shall continue to have the same priority as it had before the amendment was noted.

1.4 Ranking of Mortgages under Maltese Law

Section 50 of the Merchant Shipping Act lists the debts secured by a special privilege upon the vessel, as well as any proceeds from any indemnity arising from collisions and other mishaps as well as any insurance proceeds:

  1. Judicial costs incurred in respect of the sale of the ship and the distribution of the proceeds thereof;
  2. Fees and other charges due to the registrar of Maltese ships arising under this Act;
  3. Tonnage dues;
  4. Wages and expenses for assistance, recovery of salvage, and for pilotage;
  5. The wages of watchmen, and the expenses of watching the ship from time of her entry into port up to the time of sale;
  6. Rent of warehouses in which the ship’s tackle and apparel are stored;
  7. The expenses incurred for the preservation of the ship and of her tackle including supplies and provisions to her crew incurred after her last entry into port;
  8. Wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
  9. Debts secured by a mortgage rank after the debts of possessory lien holders, as well as ship agency fees, but they rank prior to debts for cash advanced to Master for necessary expenses and subsequent privileged debts listed in article 50.

Where the fund constituted by the ship is insufficient, competing creditors under the same heading shall share rateably. The Merchant Shipping Act further provides that where debts of a nature similar to the ones mentioned above are contracted in different ports, or in several forced returns to the same port, the priority established by Article 50 shall be established on each arrival or return. Privileged debts established on subsequent arrivals or returns have preferences over those contracted on the occasion of a former arrival or return.

1.5 Our Legal Services in this area

  • Reviewing, vetting of Loan Agreement and other Security Documents from the point of view of Maltese Law;
  • Reviewing or, as the case might be, drafting any corporate authorities necessary for the borrower to enter into a proposed financing transaction;
  • Preparing and drafting the mortgage recitals;
  • Registration, transfer, amend and discharge of Maltese statutory mortgages;
  • Providing the mortgagee or security trustee or agent with a legal opinion on the due;
  • incorporation of the borrower (in the case of a Maltese Shipping Organisation) and the effectiveness of the Security Documents, including, the enforceability of a Maltese statutory mortgage;
  • Arrest of vessels within Maltese territorial jurisdiction and enforcement of the Maltese and foreign registered mortgages or other security;
  • Drafting and registering of pledge of shares of the borrower (in the case of a Maltese Shipping Organisation).


Cedric Mifsud

Co-Founding Partner

Capt. François Laffoucrière

Head of Shipping Department

Charlene Gauci

Senior Associate

Jodie Darmanin

Junior Associate


Get to know us


Commercial Law
July 14, 2024

Artificial Intelligence Contract Formation in Malta. The legal Framework and the Challenges

Electronic contracts and electronic signatures have become an integral part of modern commerce, facilitating faster and more efficient transactions. In Malta, the legal framework governing…
Constitutional LawIntellectual Property LawProperty Law
July 10, 2024

Landlords’ battle over rent control ends in defeat

udge Lawrence Mintoff, dismissed claims by property owners seeking to challenge the rent arrangements of their property, citing disproportionate interference with their property rights. In…
Civil Law
July 8, 2024

Court upholds claim for payments of sum owed by applicant in a case of contractual obligations for services rendered

Court upholds claim for payments of sum owed by applicant in a case of contractual obligations for services rendered, with analysis regard diverging views on…