What is ship mortgage? Rules of ship mortgage in Vietnam

What is ship mortgage? Rules of ship mortgage in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is ship mortgage?

According to Clause 1, Article 37 of the Vietnam Maritime Code 2015, ship mortgage refers to a ship owner’s putting up his own ship as security for fulfillment of civil obligations to the mortgagee without having to transfer such ship to that mortgagee.

2. Rules of ship mortgage in Vietnam

Rules of ship mortgage in Vietnam according to Article 38 of the Vietnam Maritime Code 2015 are as follows:

- Transfer of ownership of a mortgaged ship shall not be allowed, unless otherwise approved by the mortgagee.

- The shipowner must buy insurance for mortgaged ship, unless otherwise agreed upon in the mortgage agreement.

- If the mortgagee has transferred the whole or a part of ownership of the debt secured by a ship secured by a mortgaged ship to other person, such ship mortgage shall also be transferred in an equivalent manner.

- One ship may be mortgaged to secure a lot of obligations if value of the mortgaged ship is greater than total value of such obligations, unless otherwise agreed.

Priority order of ship mortgages shall be determined, based on the order of registration of an equivalent ship mortgage recorded in the national register of ships of Vietnam.

- The mortgaging of a ship owned by two or more owners must be unanimously agreed by these owners, unless otherwise agreed.

- The ship mortgage shall be terminated under the following circumstances:

+ Obligations secured by such mortgage come to an end;

+ Such ship mortgage is cancelled or replaced by other security alternatives;

+ The mortgaged ship has been treated under laws and regulations;

+ The mortgaged ship is subject to total loss;

+ As agreed upon by contracting parties.

- The mortgagee shall only keep a copy of the certificate of registration of the mortgaged ship.

3. Regulations on registration of Vietnamese ship mortgage

Registration of Vietnamese ship mortgage according to Article 39 of the Vietnam Maritime Code 2015 are as follows:

- Registration of Vietnamese ship mortgage shall include the following basic contents:

+ Name, place of office of the mortgagee and the shipowner;

+ Name and nationality of the mortgaged ship;

+ Mortgage sum, interest rate and debt repayment due date.

- Mortgaging of a Vietnamese ship shall become effective if such mortgaging is recorded in the national register of ships of Vietnam.

- Information about registration of the mortgaged Vietnamese ship shall be provided for persons who request such information.

- Persons who register the ship mortgage and those who use information about the ship mortgage shall be liable for statutory fees.

4. Regulations on transfer of ownership of ship in Vietnam

Regulations on transfer of ownership of ship in Vietnam according to Article 36 of the Vietnam Maritime Code 2015 are as follows:

- Transfer of ownership of ship must be expressed in writing under the provisions of Vietnamese laws or laws of the country where transfer of such ownership takes place.

- Transfer of ownership of a Vietnamese ship shall become effective if such transfer is recorded in the national register of ships of Vietnam.

- Upon completion of ship ownership transfer, a ship and property aboard such vessel shall be assigned to the ownership transferee, unless otherwise agreed by contracting parties.

The aforesaid property includes physical objects and equipment aboard such vessel but exclude constituent parts of such vessel.

- Regulations on ship ownership transfer shall be applied to transfer of ownership of share of a ship.

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