The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
The main forms of standard security taken in a ship finance transaction comprise a vessel mortgage (supplemented by a separate deed of covenants in jurisdictions which use a short statutory form mortgage such as the UK) and an assignment (often referred to as a 'general assignment') of the insurances, earnings and requisition compensation in respect of the vessel (for more information on the types of security, typically taken in shipping finance transactions, see Practice Note: Shipping finance—security and Precedent: Deed of covenant: for a ship mortgage).
Taking specific security over the insurances and earnings is especially relevant in shipping finance as the borrower will often be a single vessel owning company which will typically have no material assets other than the vessel and its insurances and income. In most jurisdictions (including those of the UK), a mortgagee of a vessel does not automatically obtain a security interest in the vessel's insurances. The mortgage is invariably governed by the law of the vessel's place of registration, whereas security over earnings and insurances is more appropriately governed by the law applicable to those related assets (often English law, given the global reach of the London insurance market and the international usage of English law charter forms). As a result, the use of an 'all asset' corporate debenture is less common than
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234