Newsletter from Wikborg Rein's Banking and Finance group
| 9th June 2009Read or download the latest newsletter from Wikborg Rein's Banking and Finance group.
SUGGESTED CHANGES TO THE MARTIME CODE FOR REGISTRATION OF VESSEL (HULL) MORTGAGES ETC. - SIMPLIFICATION OF HULL MORTGAGING DURING TOWING
New legislation regarding registration of vessel (hull) mortgages for hulls built by foreign yards for completion by Norwegian yards has been proposed by the Norwegian Ministry of Trade and Industry in Ot. prp. nr 85 (2008-2009). The suggested changes are proposed to be effective as soon as possible, but at the earliest 1 July 2009.
The changes are welcomed by the Norwegian shipbulding industry, since the proposal will allow easier registration of hull mortgages regarding hulls delivered from a foreign yard, also during towing.
As of today, a vessel built in Norway, or a contract regarding building of vessels in Norway, may be registered in the shipbuilding register cf. the Maritime Code, Section 31. Pursuant to the Maritime Code Section 43, a mortgage can be registered against the vessel. Despite change in practice in 2006 regarding registration of hulls contracts, the Maritime Code prohibits registration of mortgage against a hull built by a foreign yard until the hull has been delivered at the Norwegian yard. Consequently, it has not been possible to register a mortgage against the hull during the towage, and hence the hull has been pledged by other means (in Norwegian: håndpant).
Proposed amended Section 31, first paragraph, first and second sentence:
Vessels under construction in [Norway] and contract for construction in [Norway] may, upon request be registered in a
separate department of the Ship register (Shipbuildingregister). Such registration of vessels will include, hull, large hull sections or main engine built by foreign yard outside [Norway] if delivery from the foreign yard has taken place.
The proposed amendment will enable registration of hulls built by foreign yards from the time of delivery of the hull from the foreign yard.
Furthermore, it will from the same time be possible to register a mortgage against the hull. The main advantage will be that the hull owner will be able to grant ordinary hull mortgage to its financiers, from the time of delivery from the foreign yard.
Proposed amended Section 43, first paragraph:
Unless otherwise agreed, the vessel mortgage against a vessel built or to be built in Norway will include main engine for the vessel and large hull sections if the main engine or sections are built at, or delivered to the main yard’s area. If built by another yard in Norway, it may be agreed that it shall be included in the mortgage. This shall also apply if the hull, large hull sections or main engine are built at a foreign yard, and delivery from the foreign yard has taken place.
Registration of a hull will also include large hull sections and the main engine from the time of delivery from the foreign yard. Consequently, the same may be included in the vessel mortgage from this time (if separate agreement is entered into).
NEWS FROM WIKBORG REIN’S BANKING AND FINANCE GROUP
Alexander W. Owesen and Linn Hertwig Eidsheim have been appointed as new partners in Wikborg Rein from 1 January 2009.
Alexander W. Owesen is based in the firm’s Oslo office. Before joining the Banking and Financing group, he was with the Corporate Finance group. Owesen assists Norwegian and foreign clients in connection with financing, restructuring and acquiring/selling of businesses, and has special competence in corporate and contract law, finance, security/collateral and enforcement law.
Linn Hertwig Eidsheim is based in the firm’s Bergen office. her main areas of practice are transactions and financing, nationally and internationally, especially within the purchase and sale of ships and ship financing, as well as construction contracts. She also specializes in company law and contract law.
For more information, please contact:
Linn Hertwig Eidsheim, Partner
e-mail: lhe@wr.no, tel.: 55 21 52 21 / mobile: 970 55 557
Peter Frølich, Partner and Head of the Banking Finance group
e-mail: pfr@wr.no, tel. 55 21 52 36 / mobile: 913 15 908