Aspects of Ship Finance: The Market, Ship Mortgages and Their Enforcement

Abstract

The ship finance market has, during the past decade, undergone profound changes. Compared with readily available ship finance in the boom years of the early noughties, the Global Financial Crisis (GFC) has seen many traditional ship finance banks exit the market. For those banks that have remained in shipping, there are now significantly tighter funding parameters, in line with the imposition of stricter controls over banks by the Basel Committee on Banking Supervision. Those seeking ship finance have, increasingly, had to rely on other sources of finance. Whatever the source of finance, the lender typically will want to secure that finance through the tried and trusted mechanism of a ship mortgage. Following an event of default on the mortgage, the lender may wish to enforce its rights by possession, sale, and arrest (followed by sale) of the ship. This paper analyses how these choices play out, particularly in the context of recent decisions of the English and Singapore courts.