Ship mortgage is a real right that plays an important role in maritime trade and gives the creditor the authority to collect his receivables first by having the ship or its share sold. So, when does this powerful right end? In this article, we will examine in detail the reasons for the termination of the ship mortgage and its legal consequences.
Reasons Leading to the Termination of Ship Mortgage:
1. Termination of Receivable: The mortgage terminates automatically with the termination of the receivable that forms the basis of the mortgage. This situation can occur in various ways, such as payment of the receivable, exchange, statute of limitations or discharge.
2. Merger of Creditor and Debtor Adjectives: If the creditor and debtor titles are combined in the same person, the mortgage ends as the receivable is deemed to be paid.
3. Cancellation of Ship Mortgage: The mortgage is terminated when the mortgagee and the ship owner agree on the cancellation of the mortgage and the registration of this agreement in the ship registry. The agreement must be made in writing and the signatures must be notarized.
4. Termination of Ship Mortgage: If the mortgagee terminates the mortgage, the mortgage ends. Termination must be notified in writing by the creditor to the ship owner.
5. Ship Bankruptcy: In case of bankruptcy of the ship, all receivables, including the ship mortgage, are transferred to the bankruptcy estate and the creditors receive payment in the relative amount of their receivables.
6. Termination of Ship Mortgage by Court Decision: In certain cases, it is possible to terminate the ship mortgage by court decision. These situations are:
o The creditor is unknown
o Deposit of receivables
o The ship sinks beyond salvage or becomes unacceptable for repair.
Legal Consequences of Termination of Ship Mortgage:
With the termination of the ship mortgage, the creditor's authority to collect the receivable by selling the ship or its share disappears. In this case, the ship owner is released from the mortgage and regains free disposition over the ship.