001B Admiralty Law Sg2021

Master of Laws (LLM)
Postgraduate Diploma in Laws

Postgraduate Certificate in Laws
Admiralty law
Module B: Acquiring
ownership in ships and
the ship as property
Revised edition, 2021

A. Mandaraka-Sheppard
M. Tsimplis
LWM01B
This Study Guide was prepared for the University of London by:
̆ Dr Aleka Mandaraka-Sheppard (LLB, LLM, PhD, Dip.IArb), formerly Head of the

Shipping Law Unit, University College London – Founder and Chairman of the
London Shipping Law Centre.
̆ Professor Mikis Tsimplis (BSc, LLM, PhD) Professor of Law, City University of
Hong Kong.
This is one of a series of Study Guides published by the University. We regret that
owing to pressure of work the authors are unable to enter into any correspondence
relating to, or arising from, the Guide.
University of London
Publications Office
Stewart House
32 Russell Square
London WC1B 5DN
United Kingdom
london.ac.uk
Published by the University of London

© University of London 2021
The University of London asserts copyright over all material in this Study Guide
except where otherwise indicated. All rights reserved. No part of this work may
be reproduced in any form, or by any means, without permission in writing from
the publisher. We make every effort to respect copyright. If you think we have
inadvertently used your copyright material, please let us know.
Contents
Contents
Chapter 1: Introduction..........................................................................................1
1.1 Admiralty law...........................................................................................................1
1.2 Course aims and outcomes................................................................................. 2
1.3 Introduction to Module B.................................................................................... 2
1.4 How to use this Study Guide.............................................................................. 3
1.5 Preparation for the course................................................................................... 5
1.6 Allocating your time............................................................................................. 7
1.7 The examination.................................................................................................... 7
Chapter 2: Ownership and management.......................................................... 11
Introduction...................................................................................................................11
2.1 Registration of British ships and ownership............................................... 12
2.2 Management of ships........................................................................................ 14
2.3 International Safety Management Code (ISM Code) and possible
liabilities........................................................................................................................ 14
Chapter 3: Ship mortgages .................................................................................. 17
Introduction...................................................................................................................17
3.1 Nature of a ship mortgage................................................................................. 18
3.2 Priority of a ship mortgage as a secured creditor and conflict of laws...... 18
3.3 Rights and obligations of a mortgagor......................................................... 19
3.4 Rights and obligations of a mortgagee........................................................ 20
3.5 Rights of third parties affected when the mortgagee enters into
possession...................................................................................................................... 21
Chapter 4: Shipbuilding contracts......................................................................25
Introduction.................................................................................................................. 25
4.1 The contract........................................................................................................... 25
4.2 Basic rights and obligations of the parties and remedies for breach.27
Chapter 5: Ship sale and purchase...................................................................... 31
Introduction...................................................................................................................31
5.1 Negotiations stage and binding contract..................................................... 32
5.2 Important terms of the contract..................................................................... 33
5.3 Parties’ respective remedies for default.......................................................34
i
Admiralty law: Module B
Notes
ii
Chapter 1: Introduction
1.1 Admiralty law

Admiralty law belongs to the category of private law and, as such, it
regulates the rights and duties of people whose object of trade is a
ship. Although the subject comprises areas of the law which regulate
conduct of seamen at sea while navigating or assisting other ships
in need, the subject encompasses many more other areas of the law
(as you will find out by studying this subject). However, it does not
include the law relating to the carriage of goods by sea, international
trade law and marine insurance. These are complementary subjects
and are covered by separate courses in the University of London series.
Admiralty law is the core subject of shipping law (or maritime law, in a
sense), which means that you will comprehend shipping law better by
studying this subject.
In particular, when studying this subject you will learn about the
following areas of law in each of the four Study Guides:
• Module A: Admiralty jurisdiction; claims in rem and in personam;
maritime liens; ship arrest as security for civil liability claims.
• Module B: ownership and management of ships and the liabilities
that might be involved; intimately related areas to this are the laws
relating to the sale and purchase of second-hand ships as well as to
shipbuilding.
• Module C: the law of liabilities arising from negligence at sea and
limitation of liability.
• Module D: the law relating to assistance given at sea and in ports.
Admiralty law has developed from sources common to many maritime
nations and, as such, it is useful to many international lawyers (and
even to non-lawyers) who wish to know about the areas covered by the
subject. Through the ratification of international conventions by most
maritime nations, the internal municipal laws of different countries
show greater similarity to one another. Its substance is, therefore, of
direct interest to nationals of many maritime nations (even though the
law to be studied is common law and has been developed over the
years by the English courts). Thus, many of the principles you will learn
are applied by non-English courts as well.
1.1.1 Study sequence

The Study Guide for each of the four modules is self-contained
(Modules A–D); for example, you can learn about admiralty jurisdiction
without knowledge of the other modules. However, you will need
to understand some concepts which are unique to admiralty law by
looking them up in the textbook.
It is advisable that the study of the subject of admiralty law is
approached in the order of presentation (A to D) and Module C must
be attempted before Module D.
1
1.2 Course aims and outcomes

Aims of the course
The primary aims of this course are to enable you to:
• learn the legal principles related to admiralty law
• acquire a deeper understanding of difficult legal concepts
• widen your knowledge of maritime law and commercial reality
• develop lateral thinking.
These skills will be essential for both the final examination and future work
opportunities.
Course learning outcomes

By the end of this course you should be able to:
• interpret maritime statutes, conventions and contractual terms in specialised
maritime contracts
• explain the legal principles and concepts derived from court decisions and
international conventions
• critically analyse admiralty law
• apply legal principles and statutory provisions to practical situations
• distinguish between the principles applicable to different sets of
circumstances.
1.3 Introduction to Module B

This module deals with the quality of shipping and its link with
ownership and management of ships. Commercial ships must be
registered in order to be able to trade. Registration entitles the ship to
fly the flag of the state it is registered in, but at the same time obliges
the ship to be compliant with the safety regulations applicable by
that state. These safety regulations are, in most cases, adopted by
the International Maritime Organisation and for that reason establish
international standards. Such standards are necessary and set the
sufficient requirements for ships to sail through the jurisdictional zones
of coastal states. However, where ships use the facilities of a coastal
state or enter a port then additional requirements may be imposed.
The registration of ships also enables the registration of private
interests, in the form of mortgages (as defined by statute). This
provides security against the transferring of the ship to another flag
without paying of the mortgage, and enables the mortgagee to take
possession and sell the ship where there is money due.
You will recall from Module A that mortgagees are also entitled to
Admiralty enforcement through an action in rem. The statutory rights
available to them are in addition to their contractual rights under the
contracts through which they have obtained ownership of the ship.
This module covers the contractual aspects of mortgages and the
contracts that normally cover the way by which ownership of the ship
is obtained, namely, shipbuilding contracts for new ships and sale and
purchase contracts for second-hand tonnage. This module also covers
the statutory requirements which, in addition to contract, regulate
such arrangements.
2
Learning objectives for Module B

By the end of this module and having completed the relevant readings, you will
have a good understanding of:
• management of ships and obligations of both owners and managers under
the International Regulations for ship safety
• the principles of ship finance and mortgages
• acquiring ownership in ships either by purchasing second hand ships, or by
having a new ship built at a shipyard.
Learning outcomes for Module B

By the end of this module, and having completed the Essential readings and
activities, you should be able to discuss:
• the importance of the flag of the ship and the role of flag states in ship safety
• the statutory rights available for mortgagees
• the principles of ownership and registration of ships
• the important terms of ship management agreements, managers’ duties and
potential liabilities
• the contractual principles of ship mortgages; rights and duties of the parties
• the contractual and statutory principles of shipbuilding contracts and the
respective obligations of the parties
• the construction of important contractual terms of ship sale and purchase
contracts and remedies for breach.
1.4 How to use this Study Guide

This Study Guide acts as a focal point for the study of Admiralty law on
the Postgraduate Laws programme. It is designed to guide you through
the various important elements of the subject and, in particular,
the difficult areas which you need to master for the examination. In
addition to giving guidance on the sources in which you will find the
information required for your gradual learning, you are also given
learning outcomes and activities for each chapter, which you must
complete before you move to the next area of study. Some feedback
and advice as to how to approach your answers are also given.
It is impossible in this Study Guide to deal with all the areas in which
you need to expand your knowledge. The Guide simply draws up the
boundaries of the course, and it is recommended that you search for
more reading. The Guide includes suggestions about Essential reading
as well as Useful further reading in each of the chapters.
Without lectures or seminars to attend, you are in charge of your time
allocated to your study and, therefore, it must be used sensibly and
constructively.
This course requires a systematic and methodical approach not only
because of the difficulty of the subject but also because you will not
have lectures, tutorials or group pressure from other students that you
would have were you to complete the course internally. Those of you
from civil law jurisdictions, or non-lawyers, will require even more time
to devote to the subject because of the different way of learning a
common law subject. The role of case-law in common law jurisdictions
cannot be understated, not only for learning and understanding the
law, but also for your success in the course. 3
1.4.1 Case-law and statutes

The exam assesses the module outcomes. This is done through essay
questions, which ask you to write an essay critically analysing or
explaining a legal principle or development, and problem questions,
normally drawn from real factual situations of previous court cases
with, perhaps, some additional points not necessarily fully discussed
in court. In order to answer both types of questions you need to be
aware of court decisions and their rationale. It is therefore strongly
recommended that you read the suggested case-law as well as the
case-law cited in the readings. This will enable you to:
• acquire the ability to make the legal argument in support of your
case
• understand the limitations of each court decision
• develop a critical view as to the correctness of the majority, and any
dissenting, judgments forming the decisions
• learn the importance of the commercial reality surrounding a
particular case.
To be able to remember the cases (of which there are many), it is
advisable that you devise a method that is suitable for you. The human
memory is enhanced if the principles of cases are noted in clear and
succinct notes, either by using a card system or another clear form of
note taking. Mind maps have a more long-term effect on learning than
a linear method of note taking. This method is described in a book by
Tony Buzan: The Mind Map Book (BBC Worldwide Publishing, 2009).
In addition to case-law the other main legal sources for studying
admiralty law are the statutory provisions of the Merchant Shipping
Act 1995, as well as other statutory instruments and legislative acts and
the international maritime and other conventions. These, together with
the case-law, are synthesised in a coherent discussion of admiralty law
in the Study Guide and, more comprehensively, in the textbook (see
below).
Admiralty law evolves continuously. It is good practice to learn how
to keep yourself updated by searching for new leading authorities,
statutory instruments and international conventions. The Online
Library subscribes to several databases including LexisLibrary, Westlaw
and Lloyds Law Reports: https://onlinelibrary.london.ac.uk/
In view of the strict time limit during the examination, you will be
required to remember important decisions and statutes.
1.4.2 Reading
This Study Guide is based on the set textbook:
• Modern maritime law: Volumes 1 and 2 by Aleka Mandaraka-
Sheppard. This is available via the VLeBooks database in the Online
Library.
This is a comprehensive text, which has been chosen by the University
for your study and is supplemented by additional references provided
in this Guide. Throughout this course, the textbook will be referred to
as ‘Sheppard’.
4
References to other important books and materials are also made

in the Useful further reading. You should expand your knowledge
by referring to these other sources as well, particularly if they are
emphasised in the text.
Essential reading
Primary textbook
• Mandaraka-Sheppard, A. Modern maritime law (Volumes 1 and 2). (Abingdon:
Informa Law, 2014), 3rd edition [ISBN 9780415843201], Volume 2, Chapters 3,
4, 5, 6, 7 and 8.
• Module A refers to Volume 1: Jurisdiction and risks and Modules B, C and D refer
to Volume 2: Managing risks and liabilities.
Useful further reading

• Meeson, N. and J. Kimbell Admiralty jurisdiction and practice. (Abingdon:
Informa Law (Lloyd’s Shipping Law Library), 2017) 5th edition
[ISBN 9781138916678].
• Coles, R. and A. Watt Ship registration: law and practice. (Abingdon: Informa Law
(Lloyd’s Shipping Law Library), 2018) [ISBN 9781138244917].
• Anderson, P. The ISM Code: a practical guide to the legal and insurance
implications. (Abingdon: Informa Law (Lloyd’s Practical Shipping Guides), 2015)
3rd edition [ISBN 9781843118855].
• Curtis, S. The law of shipbuilding contracts. (Abingdon: Informa Law, 2012)
4th edition [ISBN 9781842145388].
• Goldrein, I., M. Hannaford and P. Turner Ship sale and purchase.
(Abingdon: Informa Law (Lloyd’s Shipping Law Library), 2013) 6th edition
[ISBN 9781842145876].
Statutes and statutory instruments
• Merchant Shipping Act 1995.
• Merchant Shipping (Registration of Ships) Regulations 1993 (SI 1993/3138).
• Sale of Goods Act 1979.
1.5 Preparation for the course

Bear in mind that the reading required for any postgraduate course
is remarkable and for this subject, in particular, you are required to
study a number of important decisions. But you are guided on how to
proceed and which sources to pay more attention to than others.
It is therefore extremely important to at least complete all the Essential
reading. The suggested materials, including the Useful further reading,
help you to complete the picture: this will all become clear to you at
the end. The required study is extensive and you will not be able to do
all your reading at the last minute. Studying gradually, while making
clear notes, will enable you to obtain a better understanding of this
exciting and difficult subject.
1.5.1 Self-assessment questions

Self-assessment can tell you how well you understand the topic
of study. For self-assessment to be effective, however, you need to
understand the assessment criteria.
5
In addition to the learning objectives and outcomes for each module,

Admiralty law has some overarching aims for the whole course
(see 1.2).
There are also specific learning objectives and outcomes for each
module, to help with your self-assessment (see 1.3).
The self-assessment questions – like the examination questions –
always cover several learning objectives and are assessed against the
general and specific learning outcomes.
Example (from Module A): ‘Explain the priority of claims for actions in
rem.’
This question requires an explanation of where an action in rem can be
initiated.
• This engages with the objective ‘the enforcement procedures
available under the Admiralty jurisdiction of the High Court’.
• It also requires an understanding of ‘the concept of maritime
liens, their significance in enforcing the claim which gives rise to
a maritime lien and conflict of laws’ in order to explain why these
have priority.
• It further covers ‘the procedure of arrest and release of the ship
from arrest and the consequences for the shipowner, the claimant
and any third party’ in order to explain how/when the priority
issues arise and who decides them.
• And of course it also covers ‘the order of priorities in the payment of
claims by the court’, which refers to the case-law and its rationale.
The question also reflects the two course learning outcomes:
• ‘explain the legal principles and concepts derived from court
decisions and international conventions’
• ‘distinguish between the principles applicable to different sets of
circumstances’
and to a lesser extent covers:
• ‘critically analyse admiralty law’ and
• ‘apply legal principles and statutory provisions to practical
situations’.
Of course, self-assessment is also concerned with how well each
outcome is met and – for those outcomes and skills that reflect
synthetic and critical ability – how well the various learning outcomes
are integrated. In other words, when you use self-assessment you not
only have to ask ‘Have I done a particular task?’, but also ‘How well have
I done the particular task?’
Stating the law correctly and accurately is, for example, one level,
providing the correct source (whether it is a case or a statute), is a
second, and being able to critically analyse the law is a third level.
Self-assessment will help you to identify areas where your performance
is good and where it is less good. This will enable you to improve in
those areas where you fall below your own standards. By comparing
your legal statements with those made in the Essential and Useful
further reading you will be able to identify where your expression
6
and writing technique is not precise enough or where you have

simply made a mistake. When you have completed a task, you might
like to upload your answers to the Student Café on the VLE and seek
comments from your peers. Peer evaluation is an excellent method of
assessment.
So the self-assessment questions are learning tools to improve your
awareness of what you know and how well you know it. You do not
need to treat them as sample examination questions or complete them
within the time normally allowed in the examination. They are simply
another stage of preparation which you must start after you complete
the work in each module.
1.6 Allocating your time

It is impossible to say how much time you should set aside for studying
Admiralty law because each student has individual learning rates
depending on personal circumstances, fluency in English and any prior
study of law.
However, as a full-time Postgraduate Laws student you are expected
to spend approximately 120 hours studying and preparing for the
examination for each module of this course. It is advisable to set aside
a specific amount of time each week to study each module, increasing
the amount of time dedicated to studying in the six weeks before the
examination. Some topics of the syllabus will require considerably
more time than others.
1.7 The examination

Important: The information and advice given in the following
section is based on the examination structure used at the time this
Study Guide was written. However, the University can alter the
format, style or requirements of an examination paper without
notice. Because of this, we strongly advise you to check the
instructions on the paper you actually sit.
The course outcomes for each module will be assessed by an unseen
written examination of 45 minutes’ length, with reading time. To the
extent that there are any prerequisites for this module, knowledge
of the materials covered in those prerequisites may be necessary to
answer the questions on the examination of this module.
1.7.1 How to approach the examination questions

The overarching course aims (see 1.2) and the specific learning
objectives and outcomes for each module (see 1.3) encompass both
declarative and functional knowledge:
• Declarative knowledge in our context is what you know about the
relevant area of admiralty law (including the source and how to
reference it).
• Functional knowledge concerns the things you can do with
it. These could be a synthesis, a comparison, a critique or an
application of the law to specific facts.
7
Examination questions are generally in two forms:

• An essay question could ask you to synthesise, compare, criticise or
agree/disagree with a statement (in many cases quite a provocative
or exaggerated one).
• A problem question could ask you to apply the law to a number of
facts and, unavoidably, synthesise the outcomes into some sort of
advice or analysis.
Both types of questions therefore test the same knowledge. In both
cases declarative knowledge must be demonstrated and supported.
Functional knowledge is also tested by both methods, although in
slightly different ways.
• Essay questions emphasise the ability to correctly identify the
issue raised by the question, describe the arguments and counter
arguments, synthesise the declarative knowledge so that it answers
the question asked and so demonstrates your relevant knowledge.
• In problem questions the important first step is to identify the
issues raised by the facts given. Then you need to demonstrate your
knowledge of the law relevant to the facts and synthesise them so
as to give the potential outcomes of such a case.
Some further guidance is given below on each type of examination
question.
Remember that a good structure, an accurate description of the law
and its limitations with appropriate references is needed in both cases
– as well as appropriate reasoning.
Therefore, a poor answer to a question on salvage, for example, would
generally describe the law of salvage instead of focusing on the
question or the facts of the problem. And even with a good structure,
an answer will be poor if it does not state the law correctly. Only good
legal knowledge combined with good functional knowledge will result
in a good answer. That is why it is essential that you not only learn
admiralty law but also develop the required functional skills through
the various activities and self-assessment questions. You should also
practise answering past examination questions, initially without time
constraints and then with the actual examination time limit.
Remember that you are studying for a Masters degree and this requires
more extensive and in-depth declarative knowledge than undergraduate
courses, and significantly improved functional knowledge. This can only
be acquired by broader reading, accurate analysis of the law and the
development of critical and synthesising skills.
A final and very important point: time in the examination is limited.
Every minute you spend adding irrelevant information is a minute
wasted, when you could have been doing something to gain marks.
So make sure that you are selective in what information you use when
answering an examination question.
Essay questions
Structure
Properly structuring an answer to an essay question will facilitate your
writing, and ensure that it is logical and that the conclusions follow a
8
logical flow. In general there should be at least three sections:

• First, an Introduction, identifying the limits of the answer and
perhaps the policy or commercial reasons why it is important.
• Second, the main part of the essay, identifying and discussing
the arguments for and against, demonstrating the declarative
knowledge (i.e. what the law is, what the source is: statute/case),
what are the problems/unclear issues/unsatisfactory aspects.
Here you should also develop your arguments based on what you
know. Arguments do not need to be one sided: an accurate and
dispassionate analysis is much better than a one-sided analysis. This
section can have more than one sub-section discussing specific
arguments for dealing with partial issues that affect the main part
of the discussion.
• Finally, a concluding section where a clear answer to the question is
given on the basis of the arguments made earlier. Where there are
competing arguments, explain here why you prefer one to another,
and how these affect your answer.
Content
• Demonstrate a good understanding of the topic. You should not
only make accurate statements on the law but also discuss only the
relevant aspects of the law, instead of a general exposition.
• Reference the right legal sources and materials. The primary
textbook is very comprehensive so you are not expected to refer,
in a written examination, to all the case-law. However, reference to
the basic sources are needed to get a pass mark, and discussion of
further sources – including material from the Useful further reading
– will get higher marks (always remembering that this is only part
of the tested learning outcomes).
• Be able to analyse and/or synthesise the law. This must be based on
decided case-law and/or statute, whichever is appropriate.
• Give a dispassionate and rational analysis of the issues involved
by referring to the relevant legal principles or policy objectives.
Discussing only some of the arguments in order to make your
answer more persuasive is not good practice because it implies
lack of knowledge of the counter arguments. It is good practice to
examine all the arguments and counter arguments one by one and
assess them against each other.
• Always keep your discussion relevant to and focused on the
question asked. You may have read something remotely relevant
or prepared an essay on a similar – but not exactly the same –
question. Trying to fit what you have prepared or read as part of the
answer to another question will not gain you a good mark.
Problem questions
A problem question has advantages and disadvantages when
compared with an essay question. The advantage is that because
problem questions are normally based on several legal issues there is
a better chance that you will be aware of at least some of them. The
disadvantage is that identifying these issues is by itself part of the
9
examination – a part of functional knowledge. Missing out one or more

makes the answer incomplete, with consequently poorer marks.
Structure
An answer to a problem question can be structured in different ways:
• You can follow the temporal steps in the case. This way you can
discuss every part and identify the issues. This is a very basic
structure, and in the end you should bring all the sections together.
• Another common structure is to identify the major legal issues or
risks, discuss the facts surrounding them and come to a conclusion
on each of them. In the end you should provide a synthesis
according to the question asked (e.g. advise A or discuss).
• For liability problems perhaps the best technique is to identify
the damages, the parties that suffered them and complete your
analysis by looking practically at each of the potential claims and
counterclaims.
You can use other structures, but important elements to always include
are:
• identifying the issues
• explaining and documenting the applicable law
• discussing the facts of the question and the extent to which those
facts permit different outcomes to those in the existing case-law
• performing the task required (advise, discuss, etc) in the conclusion.
Content
• Demonstrate a good understanding of the topic. You should not
only state the law accurately but also explain whether existing
case-law can be distinguished from the facts of the problem, why
and with what potential outcomes.
• Reference the right legal sources and materials. Avoid trying to
demonstrate how much of the case-law you know – use only what
is relevant.
• Show your ability to apply the law to the facts of the case – and
arrive at an outcome.
• Provide alternative analyses where the facts are inadequate. If facts
are missing, then either state what your assumption is in order to
continue your answer or – a better option leading to higher marks
if done correctly – state alternatives and their outcomes.
• Give a relevant analysis of the facts and the case-law, focused on
the problem question asked. If, for example, there are three parties
involved – A, B and C – and you are asked to advise A, do not
concern yourself with any disputes between B and C, unless these
affect A too.
10
Chapter 2: Ownership and management
Introduction
A ship has the nationality of the state whose flag it is entitled to fly
(Art.91 of the UN Convention on the Law of the Sea 1982 (UNCLOS)).
Flag states are free to prescribe laws and regulations for ships in
their national registers which are entitled to fly their flag. They have
enforcement rights on their ships in all their jurisdictional zones and in
the high seas.
There must be a genuine link between the ship and the flag state.
However, each state has the right to set the conditions for granting its
nationality to ships. It follows that the existence of a genuine link is a
matter in essence for each flag state to decide.
Ship registration provides financial activity and income to the flag
state. Thus, states can compete for attracting ships to their registers
by providing taxation benefits (see for example the UK tonnage tax
legislation) and confidentiality with regard to the ownership of the
shipping company. The development of ‘open registers’ or flags of
convenience originally posed significant problems with respect to the
enforcement of international standards on ships. Port state control
provides information about such flags and can lead to the exclusion
of specific ships. See www.parismou.org for information on the Paris
Memorandum of Understanding (MoU) and look through the white,
grey and black listed flag states and their statistics.
Enforcing regulations by the flag states is one aspect of the safety of
shipping. A second aspect concerns the way the ship is managed; the
deficiencies on the ship are reported to the head office, actioned upon
and repaired quickly and without risking the ship. In this chapter we
will look at issues of management of ships and the duties of managers.
Learning outcomes
By the end of this chapter, and having completed the Essential readings and
activities, you should be able to:
• explain the role of ship registration, distinguishing between its public and
private roles
• discuss the notion of flags of convenience and the argument based on the
requirement of ‘genuine link’
• explain who is entitled to register a UK ship
• identify the obligations of owners and managers under the international
regulations concerning the safety of ships, the International Safety
Management Code (ISM Code)
• analyse the principles of attributing liability to the shipowning or ship
management company.
11
2.1 Registration of British ships and ownership

Essential reading
• Sheppard, Vol. 2, Chapter 3, section 1 and Chapter 5, sections 1 and 2.
Ship registration has two functions. The first concerns the public law
character of ship registration. This includes:
• the right of a ship to fly the flag
• freedom of navigation in the high seas without interference from
foreign ships
• the entitlement to protection by the flag state’s navy
• the right of diplomatic protection and consular assistance
• rights in the territorial sea of the flag state (for example fishing or
marine research)
• application of the rules of war where the flag state is at war.
The second role of ship registration concerns the private law aspects
of ownership and security. Under English law the Merchant Shipping
Act 1995 (MSA 1995) provides for the creation of a ship registry and
sets out the general provisions for the registration of British ships.
The Merchant Shipping (Registration of Ships) Regulations 1993 (SI
1993/3138) provide for the detail for registration.
A ship is entitled to be registered in the UK Register if it is owned by a
‘qualified owner’ and satisfies the requirements under the MSA 1995
and the regulations.
The following categories of legal and physical persons are defined as
‘qualified owners’ and can register a ship as a British ship:
• A citizen of the UK or one of the British dependent territories
or a British overseas citizen or a citizen of an EU member state
exercising rights under Arts.48 or 52 of the EU Treaty in the UK.
• A company incorporated in one of the European Economic Area
(EEA) countries or in any British overseas possession which has
its principal place of business in the UK or those possessions, or a
company in an European Economic Interest Grouping (EEIG).
To do this they have to be either the owners or the bareboat charterers
of the ship.
If none of the registering persons are resident in the UK, a
representative individual resident in the UK or a representative
company incorporated in one of the EEA countries with a place of
business in the UK must be appointed.
The flag state is obliged to exercise jurisdiction and control for
administrative, technical and social matters (UNCLOS, Art.91) and has
jurisdiction with regard to any offences committed on the ship (The
Oteri v The Queen [1977] 1 Lloyd’s Rep 105; The Angel Bell [1979] 2
Lloyd’s Rep 491).
12
The flag state has extensive obligations to ensure the seaworthiness

and the safety of the ship. These obligations are detailed in
international regulations and the flag state has to ensure their
implementation. International regulations are agreed by the state
members of the International Maritime Organisation (IMO), some of
them are passed by diplomatic conferences and eventually may be
ratified by the states as international conventions, others are agreed
within the IMO Committees and introduced as amendments to existing
conventions.
Implementation of these regulations by flag states is achieved
through surveys and inspections of the ships prior to registration
and at regular intervals thereafter. These tasks are undertaken by
the maritime authorities of the flag state and performed by that
authority, or by other recognised organisations. These are normally
classification societies contracted by flag states to provide surveying
and certification services concerning the appropriate implementation
of international shipping regulations. The compliance with such
regulations is confirmed by the issuance of appropriate certificates.
When ships visit ports, their certificates are inspected and, if in order,
they are accepted as proof of compliance. However, the port state
official, if they identify irregularities or suspect deficiencies in the ship,
may inspect the ship, fine it or detain it, depending on the seriousness
of the deficiency. They always have to report such deficiencies to the
flag state.
The entry of a ship into a port presumes that the ship complies not only
with the IMO regulations but also with national requirements imposed
by the coastal state. Thus, in European ports regulations passed by the
European Commission in the form of Directives or Regulations are also
applicable.
The ownership aspects of ship registration will be discussed later. Now
read the statutory requirements for registration of British ships.
Activities 2.1–2.6
2.1 What are the functions of the flag of a ship?
2.2 What are the respective roles of the flag state and the port state?
2.3 What is the role of the classification societies?
2.4 What are the basic obligations under the ISM Code?
2.5 Outline the requirements for registering a ship under the British registry.
2.6 What is the position of abandoned ships? Read The Ross Revenge [2017]
EWHC 787 (Admlty), [2017] 1 Lloyd’s Rep Plus 66.
Feedback is available at the end of this chapter.

• Coles, R. and A. Watt Ship registration: law and practice. (Abingdon: Informa Law
(Lloyd’s Shipping Law Library), 2018) [ISBN 9781138244917].
3rd edition [ISBN 9781843118855].
13
2.2 Management of ships

Essential reading
• Sheppard, Vol. 2, Chapter 5, section 3.
A whole range of activities is undertaken by managers. Commercial

management includes chartering and marketing, technical
management is separate and deals with operations, while the third
aspect of management deals with recruitment of crew, otherwise
known as crewing management. A manager company may carry out all
of these activities.
There are standard terms of agreements about each of these
management aspects from which the manager derives their authority
and their duties are defined; see the examples of cases provided. Like
any commercial agreement, there are specific consequences provided
contractually for breach of the agreement as well as contractual
exclusions or limitation of liability. The managers have an additional
duty nowadays to ensure that the ships under their management are
compliant with the international safety regulations as provided under
the International Safety Management Code (ISM Code).
2.7 What are the basic duties of a manager of a ship under the management
contract? Illustrate the difference between their duty of care and their duty
to exercise best endeavours.
2.8 Explain the extent of the manager’s authority to engage repairers to carry
out repairs on the ship which they manage.
2.9 Explain the term ‘fiduciary duty’ of the manager to the owner; would arrest of
the ship manager to secure outstanding agency fees be a breach of that duty?
2.3 International Safety Management Code

(ISM Code) and possible liabilities
Essential reading
• Sheppard, Vol. 2, Chapter 3, sections 2–10, Chapter 4 and Chapter 5, section 3.
The implementation of the ISM Code is made mandatory through

Chapter IX of the Safety of Life at Sea Convention 1974. The Code as
such does not impose liabilities for non-compliance; non-compliance
will simply result in the withdrawal or suspension of the relevant
certificates which are required for the ship’s trading. However, the
statutory instrument which enacts the Code into the law of a country
imposes penalties upon the designated person, the master of the
ship and the board of the company’s directors in the event of non-
compliance with the Code’s provisions.
In addition, the fact that the Code requires the recording of information
with regard to all incidents that occur during the operation of ships has
implications for potential liabilities of the relevant company and those
who make the decisions at board level.
14
For such liabilities to be attributed to the company, the persons who

make the decisions for the company must be identified and their
liability be established in accordance with certain legal rules.
2.10 Identify the mechanisms that the ISM Code introduces in order to improve
safety on board ships.
2.11 Identify the persons responsible for the implementation of the ISM Code
on behalf of the company and those who are part of the ISM Code safety
mechanism.
2.12 Explain the certifications involved, identify which entity certifies companies
and ships and the conditions under which each certification may be
withdrawn.
2.13 Read the Meridian case [1995] 3 All ER 918 PC and explain:
• the ‘primary rules of attribution’
• the ‘vicarious liability’ doctrine
• ‘the special rule of attribution’.
2.14 Consider whether, on the analysis of company liability under the Meridian
case, the ISM Code can affect the liability of the shipowner in cases where
negligence is the legal basis of liability, for example, collisions, and in cases
where contractual obligations are in place, for example, for cargo damage
under a charterparty or a bill of lading.

3rd edition [ISBN 9781843118855].
• Gobert, J. ‘The Corporate Manslaughter and Corporate Homicide Act 2007 –
thirteen years in the making but was it worth the wait?’ [2008] 71(3) Modern
Law Review 413.
Self-assessment questions
1. Who can register a ship in the UK Register?
2. How is the ‘genuine link’ requirement expressed in the MSA 1995?
3. Can bareboat chartered ships be registered in the UK even if owned by foreign
entities? What is the ‘genuine link’ then?
4. What is the role of recognised organisations? Which classification societies
have this character for the UK Register? Who do they work for when they
survey a ship for statutory compliance purposes?
5. What is the role of classification societies? Who do they work for when they
survey a vessel for class purposes?
6. How are the following terms defined under the ISM Code: Safety Management
System, Document of Compliance, Safety Management Certificate?
7. What is the role of the designated persons? The designated persons should
have ‘direct access to the highest level of management’. Does this mean that
they impersonate the company in terms of safety decisions? Would they
satisfy the test in the Meridian case [1995] 3 All ER 918 PC?
8. What should happen when a ship officer identifies a deficiency, for example,
in a lifeboat, in order to have a safety management system compliant with the
ISM Code?
15
9. Who issues the certificates of compliance for the ISM Code?

10. Where the shipowner has contracted with a manager for a ship, who has
responsibility for safety compliance, including the ISM Code?
Reminder of learning outcomes
Having completed this chapter, and the Essential readings and activities, you
should be able to:
• explain the role of ship registration, distinguishing between its public and
private roles
• discuss the notion of flags of convenience and the argument based on the
requirement of ‘genuine link’
• explain who is entitled to register a UK ship
• identify the obligations of owners and managers under the international
regulations concerning the safety of ships, the International Safety
Management Code (ISM Code)
• analyse the principles of attributing liability to the shipowning or ship
management company.
Feedback to activities: Chapter 2

You will find the answers in the Essential reading referred to above.
Activity 2.4
Read carefully Vol. 2, Chapter 3 of Sheppard, dealing with the ISM Code.
Activity 2.5
Read the Essential reading and the relevant section of MSA 1995.
Activity 2.6
No feedback provided.
Back
Read Sheppard Vol. 2, Chapter 5, section 3.4.
Back
These activities require a good understanding and analysis of the ISM Code.
Activity 2.13
This activity requires a careful reading of the relevant case.
Activity 2.14
This activity integrates Activity 2.13 with Activities 2.10–2.12.
Back
16
Chapter 3: Ship mortgages
Introduction
The second role of ship registration concerns the private law aspects.
Schedule 1 to the MSA 1995 deals with these aspects. Section 7 defines
mortgages of registered ships as an instrument (created in accordance
with the relevant regulations) which makes the ship security for the
repayment of a loan or the discharge of any other obligation. The
statutory mortgage must be registered by the registrar when they are
presented with it. Under s.9 the mortgagee is granted the power to sell
the ship if money is due.
Thus, a bank lending money to a UK shipowner is entitled by the MSA
1995 to register the mortgage and obtain, in addition to its contractual
rights, statutory entitlements to the ship.
The actual contractual ship mortgage transaction is special to shipping
finance which, unlike mortgages to secure loans for land purchases, is
accompanied by voluminous documents. Apart from the mortgage on
the ship, there is also collateral security granted to the mortgagee. This
is necessary because of the nature of the subject matter of the security,
being a floating object, and thus subjected to high risks of loss by perils
which are insurable.
Learning outcomes
• explain whether or not the nature of a ship mortgage is the transfer of
property to the mortgagee
• describe the effect of the formalities required by statute for the perfection of a
mortgage, and priorities between various security holders
• analyse the rights and obligations of both the mortgagor and the mortgagee
• explain the principles regarding the rights of third parties in the event the
mortgagee enters into possession of the ship under mortgage.
Essential reading
• Sheppard, Vol. 2, Chapter 6.

• Meeson, N. and J. Kimbell Admiralty jurisdiction and practice. (Abingdon:
Informa Law (Lloyd’s Shipping Law Library), 2017), 5th edition
[ISBN 9781138916678].
• Goddard, K.S. ‘“Yes, we have no bananas”: reflections on ship mortgages and
The Tropical Reefer’ [2006] LMCLQ 202.
• Osborne, D. ‘Comment: ship mortgages and charterers’ [2007] LMCLQ 439.
17
3.1 Nature of a ship mortgage

Essential reading
• Sheppard, Vol. 2, Chapter 6, sections 1–5.
• Merchant Shipping Act 1995 (MSA), Schedule 1, Part 1, paras.1, 7–14. Available
via Lexis in the Online Library.
• Merchant Shipping (Registration of Ships) Regulations 1993 (SI 1993/3138).
Available via Lexis in the Online Library.
The nature of a ship mortgage is statutory under most legal systems.

Under English law it is governed by the statutory provisions of the
Merchant Shipping Act 1995, Schedule 1, and the accompanying
Merchant Shipping (Registration of Ships) Regulations 1993. The
registration of a ship mortgage under the Act perfects the mortgage
and creates a statutory security. This is necessary to protect the lender,
mortgagee and their property rights on the ship and has the effect
of giving notice to others of those rights. The registration date is
important and determines the priority of the registered mortgagee
over other secured creditors, except maritime liens. Maritime lien
holders have priority over the registered mortgagee.
3.1 How does the MSA 1995 deal with ownership of ships? What are the owner’s
statutory rights?
3.2 Who is regarded in law as the owner of the ship which is mortgaged to the
lender? Support your answer using the relevant paragraph of the statutory
provisions of the MSA 1995.
3.3 What would be the status and legal position of an unregistered mortgagee?
3.2 Priority of a ship mortgage as a secured

creditor and conflict of laws
Essential reading
• Sheppard, Vol. 2, Chapter 6, sections 6 and 7.
The contractual obligations of a mortgage agreement apply from

the date of its creation. However, the statutory provisions prescribe
priority on the basis of the time of registration over other mortgages.
Unregistered mortgages are equitable under English law (The Angel
Bell [1979] 2 Lloyd’s Rep 491; The Shizelle [1992] 2 Lloyd’s Rep 444
(concerning unregistered mortgages of unregistered ships)). This is a
practical arrangement which ensures clear priority rules.
The interests of the financiers of the ship are naturally of very high
priority. However, maritime liens are of higher priority in public policy
aspects as well as of necessity. Sometimes shares in the ship or the
certificate of registration of the ship may be pledged to a lender as
a security. This is a lower form of security in terms of priority but its
strength is that the lender has possession of the very thing that will be
needed in case the ship is agreed to be sold. You should read about the
position of a pledgee of goods in The Odessa [1916] 1 AC 14.
18
A difficulty in priorities of claims has arisen in relation to some maritime

claims which attract a maritime lien in some jurisdictions but not in
others. For example, the claim of a ship repairer against the ship for
a debt does not attract a maritime lien under English law, although
it does under the law of the USA. Thus, it has taken priority over a
mortgage in those jurisdictions. If the ship repairer’s contract is subject
to the law of the USA, and the court which decides the priorities is in
England, a conflict of laws issue arises. This conflict has been resolved
by the Privy Council, applying English law, in favour of the mortgagee;
read The Halcyon Isle [1981] AC 221.
3.4 How is mortgage priority determined under the MSA 1995?
3.5 What is the significance of a priority notice in this context?
3.6 The decision of the Privy Council in The Halcyon Isle has been argued against
on the basis of the law applicable to the contract and principles of conflicts
of law. Is this argument convincing?
3.3 Rights and obligations of a mortgagor

Essential reading
Apart from the statutory provisions governing the rights and duties
of the parties to the loan agreement and the security for the loan, the
contract also contains a series of covenants (contractual terms) which
outline the obligations of the borrower (the mortgagor) until the loan
is discharged. The purpose of the covenants is to ensure that the object
of the security is not depreciated by the occurrence of various insurable
risks. Thus, one of the covenants obliges the borrower to insure the
ship and assign the benefit of the insurance policy to the mortgagee,
as a collateral security, in case the ship is lost by perils of the sea.
Another important covenant is that the borrower will discharge claims,
particularly those which attract a maritime lien and, thus, would take
priority over the mortgagee. In addition the borrower must employ
the ship in a prudent manner and assign the benefit of the earnings
to the mortgagee as an additional collateral security. There are further
obligations stipulated in the covenants which you will find below.
The consequences of a breach of these covenants will be specified in
the contract. Usually a default in payment or impairment of the security
would entitle the mortgagee to take steps, as permitted by the statute
and the contract, to realise their security by taking possession of the ship,
and subsequently proceed with enforcing their power of sale (see below).
Save for these obligations, the borrower can employ their ship, subject
to giving the required notices to the mortgagee, and their ownership
rights are not restricted unless they are in breach of the contract and
pose a threat to the security of the mortgagee.
Once the debt is discharged, the mortgagor has a right of redemption
of their property, which means they have a right to take their property
free of the burden (encumbrance) of the mortgage.
19
3.7 Summarise the obligations of the mortgagor under statute.
3.8 Summarise the rights of the mortgagor, under common law, as derived from
Collins v Lamport (1864) 4 De G J & S 500, Fletcher & Cambell v City Marine
Finance [1968] 2 Lloyd’s Rep 520 and Knightsbridge Estates Trust v Byrne [1939]
Ch 441.
3.9 Why in The Maule [1997] 1 WLR 528 did the Privy Council allow the
mortgagee to take possession of and sell the ship under mortgage
without giving notice to the borrower, although no money was due to the
mortgagee for the relevant period?
3.4 Rights and obligations of a mortgagee

Essential reading
The mortgagee has a right to take possession of the mortgaged ship

and interfere with the mortgagor’s possession, control and operation
of the ship, when there is a default in payment of the capital or interest
of the loan, or a threat to their security (The Blanche (1887) 6 Asp MLC
272; The Myrto [1977] 2 Lloyd’s Rep 243).
The mortgagee can either choose to manage and trade the ship,
or proceed with private or judicial sale (The Calm C [1975] 1 Lloyd’s
Rep 188; Cuckmere Brick Ltd v Mutual Finance Corp [1971] Ch 949;
Downsview Nominees v First City Corp [1993] AC 295). These rights
are exercisable only to the extent that it is necessary to enforce the
mortgagee’s security.
Whether an increase in default interest amounts to a penalty so as not
to be a valid reason for taking possession, see First Commercial Bank v
Mandarin Container [2004] Hong Kong, unreported, but see a summary
at http://archive.onlinedmc.co.uk/first_commercial_bank_v__
mandarin_container.htm. For agreed liquidated damages to amount
to a penalty there must be unconscionable, oppressive or extravagant
conduct by the party seeking to enforce the provision.
While in possession, the mortgagee has certain rights on the earnings
of the ship (Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch 507), as
well as obligations to use the ship as a prudent man (Marriott v Anchor
Reversionary Co (1861) 2 Giff 457). If the mortgagee proceeds with
the sale of the ship, although they do not owe a general duty of care
towards the mortgagor, they do not have a duty to achieve the best
price on sale, and the mortgagee can use their best endeavours to
obtain the market price (Tse Kwong v Wong Chit Sen [1983] 1 WLR 1349);
it is in fact a duty to act in good faith (China and South Sea Bank v Tan
Soon Gin [1990] 1 AC 536 PC; Den Norske Bank v Acemex Management,
The Tropical Reefer [2004] 1 Lloyd’s Rep 1; Close Brothers Ltd v AIS
(Marine) 2 Ltd (The Ocean Wind 8 of Hartlepool) [2019] 1 Lloyd’s Rep 510).
In case of a surplus in the price after payment of the loan to
themselves, the mortgagee is in a fiduciary relationship to hold the
surplus in trust for the mortgagor (Downsview Nominees v First City Corp
20
[1993] AC 295). The effect of a private sale by the mortgagee is that it

does not extinguish maritime liens, although a sale by the court does.
In the case where there is a shortfall from the sale the claim can be
brought against the guarantor (see for example Close Brothers Ltd v AIS
(Marine) 2 Ltd (The Ocean Wind 8 of Hartlepool)).
3.10 Explain whether and when a mortgagee can take possession of the
mortgaged ship and the legal basis for such right.
3.11 What actions does the mortgagee have to take in order to lawfully exercise
their rights?
3.12 Examine in detail the situations in which there would be a default or a
threat to the security of the mortgagee.
3.13 When the mortgagee takes possession of the ship, what rights and
obligations are attached to it?
3.14 When can a mortgagee sell the mortgaged ship and what duties do they
have in such a case?
3.15 What are the advantages and disadvantages for a mortgagee of exercising
the power to sell the ship instead of arresting it and requesting the judicial
sale of the ship? (This question requires the study of Module A of the course.)
3.5 Rights of third parties affected when the

mortgagee enters into possession
Essential reading
• Sheppard, Vol. 2, Chapter 6, sections 10 and 11.
You have now learned that the mortgagee has certain rights by statute
and contract when their security is threatened. However, when the
mortgagee exercises those rights, it is likely that third parties, such as
charterers of the ship, have contractual rights under a contract with the
mortgagor.
The issue here is this: if the mortgagee enters into possession, it
will inevitably result in the interruption of the performance of the
charterparty unless the mortgagee decides to continue the trading
of the ship as a manager. Does the law or equity protect the rights
of charterers, and what would be the solution if there is a conflict
between their rights and those of the mortgagee? Certain principles
have been established, as you will learn from the relevant reading.
3.16 State the principle derived from Collins v Lamport in relation to the position
of the charterer whose contract with the owner of the ship was entered into
subsequent to the mortgage.
3.17 Contrast the Collins v Lamport decision with the decision in The Myrto and
summarise the principles derived from this case.
3.18 Contrast the position of the charterer when the charterparty had been
entered prior to the mortgage as derived from De Mattos v Gibson (1858) 4
de G & J 276 and The Celtic King [1894] P 175.
21
1. Explain how ship registration links with the ownership and funding of ships.
2. What rights does the MSA 1995 establish for the registered shipowner?
3. What rights does the MSA 1995 establish for the mortgagee of a registered
ship?
4. Why are there unregistered ships? What is the position of the mortgagee of an
unregistered ship? (Read The Shizelle [1992] 2 Lloyd’s Rep 444.)
5. Explain the way para.9 of Schedule 1 to the MSA 1995 operates and whether it
restricts or permits additional powers of sale to be agreed contractually.
6. Explain if and when a mortgagee is obliged to respect contractual obligations
undertaken by the shipowner and which concern the operation of the ship.
should be able to:
• explain whether or not the nature of a ship mortgage is the transfer of
property to the mortgagee
• describe the effect of the formalities required by statute for the perfection of a
mortgage, and priorities between various security holders
• analyse the rights and obligations of both the mortgagor and the mortgagee
• explain the principles regarding the rights of third parties in the event the
mortgagee enters into possession of the ship under mortgage.
22

You will be assisted in your answers by paras.1, 7, 8, 9, 10, 11, 12, 13 of Schedule 1 to the
MSA 1995.
Back
Activities 3.6
In order to answer read one or more of the following.
• Berlingieri, F. ‘Lien holders and mortgagees: who should prevail?’ [1998] LMCLQ
157.
• Cohen, M. ‘In defence of The Halcyon Isle’ [1987] LMCLQ 152.
• Myburgh, P. ‘Recognition of priority of foreign ship mortgages’ [1992] LMCLQ 491.
• Tetley, W. ‘In defence of The Ioannis Daskalelis’ [1989] LMCLQ 11.
Back
For the rights and obligations of the mortgagor under statute you will be looking at
paras.1 and 10 of Schedule 1 to the MSA 1995.
Read further about endangering the security of the mortgagee in The Manor [1907]
P 339; The Law Guarantee and Trust Society v Russian Bank [1905] 1 KB 815; The
Myrto [1977] EWCA Civ J0527-3, [1977] 2 Lloyd’s Rep 243.
Back
See Sheppard, Vol. 2, Chapter 6, section 9.
Activity 3.15
Compare the consequences of judicial sale with those of taking possession and
selling.
Back
The central point here (under 3.16 and 3.17) which may justify an injunction being
granted in favour of the third party is in cases where the mortgagee interferes with
the rights of third parties when he is not justified in doing so, whereupon he will be
committing an actionable wrong, known as the tort of interference with third parties’
contractual rights (read an overview of this in Sheppard, Vol. 2, Chapter 6, section 10).
The principle under 3.18 is that if the mortgagee has knowledge of the charterparty,
he will be bound by it and equity will not permit him to interfere, save for a change of
circumstances which would result in the impairment of the mortgagee’s security.
Back
23
Notes
24
Chapter 4: Shipbuilding contracts
Introduction
In previous English decisions the courts treated a shipbuilding contract
as one for the sale of goods. However, it is not just that, as it also
involves a contract for construction. This is very important because it
has, in recent years, been appreciated (see Hyundai v Papadopoulos
[1980] 2 Lloyd’s Rep 1 and Stocznia Gdanska v Latvia Shipping [1998] 1
WLR 574 HL) that there are some accrued rights of the parties during
the construction of a ship, and therefore the contract involves an
ongoing contractual relationship until delivery of the completed vessel
to the owner.
So it has been settled that a shipbuilding contract has a hybrid nature
of both construction and sale of a ship.
Learning outcomes
• distinguish when there is a binding contract and when there is not
• advise on the rights and obligations of the parties to the contract
• determine the remedies of each party in case of default of the other.
Essential reading
4.1 The contract

Essential reading
The negotiations leading up to the contract formation are significant

in ensuring what the parties want. The parties must not misrepresent
their position in order to induce the contract. There are statutory
remedies for misrepresentation (s.2 of the Misrepresentation Act 1967).
To have a binding contract there must be an offer and unconditional
acceptance, intention to create a legal relationship and a promise given
by each party to do something in return for the promise of the other
(this is known in English law as the ‘consideration’ of the contract). For
example, the builder promises to carry out the building of the ship to
specification and deliver it complete, and the buyer promises to pay
the price in stages of the building.
For a contract to be binding there must be no inconsistent or uncertain
terms, and matters of substance must not be left to be agreed at a later
stage (by contrast see Fast Ferries v Ferries Australia [2001] 1 Lloyd’s
Rep 534).
25
Like all types of English law contracts, a shipbuilding contract will

contain three types of express contractual terms:
• Some terms are classified as conditions; these are very important
terms, breach of which goes to the root of the contract and will
entitle the other party (if they choose) to accept the breach as
terminating the contract. The breach is known as ‘repudiation’ of
the contract by the guilty party.
• There are other less significant terms, known as warranties, which
(except in insurance contracts in which a warranty is equivalent to
a condition) will entitle the innocent party to claim damages for
breach and not to treat the breach as terminating the contract.
• The third type of terms is called ‘intermediate’ or ‘innominate’; this
means that the remedy for breach will depend on the nature and
consequences of the breach.
Whether a term is a condition or warranty or an intermediate term
will depend on the construction (interpretation) of the contract as a
whole (Hong Kong Fir Shipping v Kawasaki Kisen Kaisa [1961] 2 Lloyd’s
Rep 478).
There are also implied terms derived either from statute (the Sale of
Goods Act 1979 (SOGA), as amended by the SOGA 1995) or relating to
compliance with the description of the goods (Ashington Piggeries v
Christopher Hill [1972] AC 441, 503–04 HL). As a test, the shortcoming of
goods must be of a substantial ingredient of the description so that a
reasonable person would regard the goods as distinct from what they
contracted for (Diana Prosperity [1976] 1 WLR 989 HL), and must be of
satisfactory quality and fitness for purpose, which are essential in this
type of contract (Slater v Finning [1996] 2 Lloyd’s Rep 353 HL).
See Neon Shipping Inc v Foreign Economic & Technical Cooperation of
China [2016] 2 Lloyd’s Law Rep 158 where the implied requirement that
the ship’s equipment was ‘reasonably fit for that purpose’ is discussed.
Then there is the specification for the building and other specialised
terms particular to the obligations of the parties at each stage of the
construction of the ship.
4.1 Explain what would constitute a misdescription of the ship.
4.2 At what time would there be a binding contract if the parties stated in the
pre-contract email that the contract was subject to the buyer obtaining
approval for the finance of the project from the parent company?
4.3 At what time would there be a binding contract if the deal was subject to
the signing of a Memorandum of Agreement?
• Curtis, S. The law of shipbuilding contracts. (Abingdon, Informa Law, 2012)
4th edition [ISBN 9781842145388].
The standard terms of shipbuilding contracts can be found in the appendices.
26
4.2 Basic rights and obligations of the parties and

remedies for breach
Essential reading
The basic obligations of the builder are to build as per specification for
a fixed price, to perform trials and deliver on time. The basic obligation
of the buyer is to pay the price in stages of the building and the
balance upon satisfactory delivery, which they are obliged to accept,
after trials and possible modifications.
The property and risk pass to the buyer upon delivery and payment,
or when the parties intended them to pass. The contract contains
standard terms from the builder. There are certain statutory and
contractual protective terms in favour of the builder in the event of
default by the buyer:
• for repudiatory breach see Spettable Consorzion v Northumberland
Shipbuilding (1919) 121; Stocznia Gdanska v Latvian Shipping [2002]
2 Lloyd’s Rep 436
• on the right of instalments see Hyundai Heavy Industries v
Papadopoulos [1980] 2 Lloyd’s Rep 1.
In addition, there is a guarantee provided to the builder by a
guarantor in case of a financial default by the buyer (on construction
of guarantee, see Gold Coast Ltd v Caja [2002] 1 Lloyd’s Rep 617). The
rights of the ship builder under the guarantee are, in many cases, in
dispute. The ship builder wants unconditional payment on demand
when there is a default by the buyer because it has significant financial
risk. The guarantor wishes to avoid or exempt payment or at least to
pay only where there is a confirmed default under the contract by the
buyer. The categorisation of guarantees depends on who the guarantor
is and the exact language. A recent example of this problem is
Shanghai Shipyard Co Ltd v Reignwood International Investment (Group)
Co Ltd [2020] EWHC 803 (Comm). The ship is the ultimate security for
the builder in case of non-payment.
The buyer also has rights and remedies under contract, statute and
common law for breach by the builder (default depends on the
magnitude of the breach and the possibility of correction: McDougall
v Aeromarine [1958] 2 Lloyd’s Rep 345). On delay in delivery see
Matsoukis v Priestman [1915] 1 KB 681 and Cape v Hatteress [1982] 1
Lloyd’s Rep 518.
Pay attention to the interpretation of contractual terms by the court.
For instance, the following decision of the Court of Appeal may seem
strange to a non-lawyer, but it is based on pure construction of the
contract as agreed.
In BMBF (No.12) v Harland & Wolff Shipbuilding [2001] 2 LLR 227 CA
the arbitrators’ award was restored and the first instance decision
overruled. Basically, on the wording of clause 15(2) of the contract,
when the ship is offered by the builder for delivery and the buyer
claims defaults, the buyer has a choice either to cancel the contract
27
or to take possession of it in an unfinished state and complete the

building, although they will still be obliged to pay the due instalments.
The buyer will have a right to deduct from the remaining instalments
their costs incurred to complete the ship.
Note also that the damages that can be recovered by the buyer in
the case where the ship is deficient will be subject to the contractual
arrangement. Thus in Star Polaris LLC v HHIC-PHIL Inc [2017] 1 Lloyd’s
Rep 203 the contract excluded any consequential losses and this also
excluded the diminution in the value of the ship.
For a further decision by the CA on construction of the contract see
Stoczia Gdanska v Latvian Shipping Co [2002] 2 Lloyd’s Rep 436, CA.
In this case, non-payment of the keel instalment leading to a notice
of rescission under the contract was a breach of a condition of the
contract, thus amounting to an actual repudiatory breach (at p.450).
4.4 What can a buyer do if there is an increase in the price of the building during
the contract stages? When would this be justified? Support your explanation
using authorities given in the text.
4.5 Which remedies are available to the builder under contract in the case of
default by the buyer?
4.6 Consider and explain what is to happen to the parties’ accrued rights after
cancellation of the contract by the builder for repudiation by the buyer. What
is to happen to the property under construction after termination of the
contract?
4.7 What remedies could the buyer have in the event of delay in delivery by the
builder?
4.8 State the circumstances in which the buyer may rightfully reject the ship,
and the buyer’s remedies in the event of their rejection or rescission.
4.9 Compare and contrast the remedies of the buyer in the event of their
rightful rejection of the ship with the remedies of the builder in the case of
their termination of the contract for breach by the buyer.
4.10 How can the buyer protect themselves for defects in the ship discovered
after delivery?
1. What are the consequences of the legal position that a contract for the
construction of a ship is both a contract for the sale of goods and a contract
for construction.
2. What is the effect of a recap communication which is expressly stated as
‘subject to details’ on the existence of the contract under:
(a) English law
(b) US law.
Read Anderson, H.E. III ‘Subject to details and charter party negotiations’ (2001)
26 Tulane Maritime Law Journal 61. Available via HeinOnline in the Online
Library.
3. How is a contractual term characterised under English law and what are the
consequences of breach for each category?
4. Who is the owner of a ship under construction? When does ownership pass?
Why does this matter?
28
5. Discuss whether the implied terms under s.14 of the Sale of Goods Act 1979
apply to a contract of a newly built ship and whether they can be excluded by
contract.
6. Does the building yard have any lien of the ship under construction?
7. What can the builder do if there is no payment in time and in full? What type
of contractual breach would that be?

should be able to:
• distinguish when there is a binding contract and when there is not
• advise on the rights and obligations of the parties to the contract
• determine the remedies of each party in case of default of the other.
29

Activity 4.1
Back
Activity 4.4
All answers can be found in the Essential reading. In practice, it is very important to
examine the contractual terms as each contract is different.
It is always important to look at what the contract provides.
Back
30
Chapter 5: Ship sale and purchase
Introduction
The sale of second-hand ships largely depends on negotiations
between the representatives of the parties. The representatives,
known as sale and purchase brokers, used to make their proposals in
telexes and when agreement was almost close to become a binding
agreement, they confirmed those terms in the so called ‘recap’
telex (‘recap’ is short for recapitulation). The contents of the telex
could constitute a fully binding agreement to be transferred to the
Memorandum of Agreement (the MOA), but this would depend on
whether the parties were in full agreement (‘ad idem’) on all essential
terms. Invariably, the provisional terms were subject to obtaining
approvals from third parties, or verifying certain other facts. Whether
or not the intention of the parties was to have a binding contract at
this stage would depend on the construction of the telex exchanges
between them. If the contract was subject to essential terms to be
agreed, there would not be a binding agreement under English law.
If there is a binding agreement, then the parties’ obligations are
specified in the contract, which will provide that each of the parties
will have to do certain things before the ship can be ready for delivery
to the buyer. The pre-delivery stages are outlined in this chapter. For
example, it is essential for the buyer to inspect the ship with an expert
and, if necessary, request the seller to rectify any defects which the
seller agrees to carry out.
The condition of the ship on delivery is specified in the standard form
of contract, which contains standard terms as varied by the parties.
Learning outcomes
• explain when there is a binding contract and when there is not
• illustrate how the courts have interpreted the terms of the contract
• advise the parties to a contract about their respective obligations during the
stages of the contract
• explain the principles applicable to the remedies of the respective parties for
breach of contract by the other.
Essential reading
31
5.1 Negotiations stage and binding contract

Essential reading
• Sheppard, Vol. 2, Chapter 8, section A.
During the negotiations the parties owe no duty to make full disclosure
of their position to the other party under English law, but they must
not misrepresent facts to induce the contract. The parties must express
their intention clearly to prevent an ambiguous contract which may
not be binding. They are masters of their contractual fate. They may
have agreed all basic terms but they may not wish to be bound
until certain other terms are agreed. To this extent, they must make
their intention clear. Contracts have been held not to be binding
because the parties did not make clear what they wanted. There are
some examples given of such circumstances, which you must try to
understand by doing the activities below.
5.1 Would there be a binding agreement if the Memorandum of Agreement
(MOA) which contains the standard terms had not been signed?
5.2 If an agreement to purchase a ship was concluded ‘subject to further terms
and conditions’, explain whether or not there would be a binding agreement.
5.3 When one party to the agreement agrees to nominate a buyer, would
there be a binding agreement before that nomination is communicated
to the seller? Find the ground of distinction between the decisions in The
Blankenstein [1985] 1 WLR 435, [1985] 1 Lloyd’s Rep 93 and The Action [1987]
1 Lloyd’s Rep 283.
5.4 What difference would the following phrases make to determining whether
or not there was a binding contract:
• the contract was made ‘subject to contract’
• the contract was made ‘subject to details’
• the contract was made ‘subject to necessary modifications’?
5.5 Would there be a binding contract if the parties left blanks in their
exchanges about the particulars of the vessel?
5.6 Now summarise the principles as derived from Pagnan v Feed Products
[1987] 2 Lloyd’s Rep 601 concerning how the courts will proceed to interpret
an agreement in order to decide whether or not there is a binding contract.

• Goldrein, I. et al Ship sale and purchase. (London: Lloyd’s of London Press, 2013),
6th edition.
32
5.2 Important terms of the contract

Essential reading
The standard statutory implied terms of the Sale of Goods Act 1979
as amended in 1995 will apply if the law of the contract is English. The
property will pass to the buyer when the parties intend it to pass. The
sale of a second-hand ship is normally an agreement to sell, not a sale
contract yet. Before the final stage, during which the seller will give
notice of readiness, the ship is not yet in a deliverable state and the
parties’ intention is that the property shall not pass when the contract
is made but upon payment on the day of delivery.
The term of when the deposit is payable is important, breach of which
entitles the seller to cancel the contract (regardless of whether or
not the MOA was signed) provided there was, in all other respects, a
binding contract (see The Blankenstein [1985] 1 Lloyd’s Rep 93). In such
a case the deposit is payable to the seller as a right accrued prior to the
acceptance of the repudiatory breach (see The Griffon [2014] 1 Lloyd’s
Rep 471). This can be reversed but requires very clear wording.
Payment of the deposit is linked to the buyer’s right to inspect the
vessel which leads to the inspection stage of the sale process. Such
inspection has two parts: inspection of documents, and physical
inspection of the ship. This inspection of the ship afloat will be decisive
as to whether or not the sale will become definite. If the buyer is
satisfied with the ship they will give notice of acceptance, otherwise
the deposit will be returned.
There follows the completion stage during which the classification
society will inspect the ship in the dry-dock to confirm whether or not
there are any defects. If there are not, the classification society will issue
a clean certificate that the vessel is in class. Invariably, however, there is
something to be done to a second-hand ship before it can be classed;
therefore, the classification society will make recommendations which
the seller has to follow. If they do not, the buyer will have the right to
reject the ship, or make a claim for defects. (An example of this is The
Great Marine (No.2) [1990] 2 Lloyd’s Rep 250.)
If all goes well, the seller will give notice of readiness for the delivery
of the documents and physical delivery. The buyer must pay the price
within a certain time after the notice of readiness. The seller has already
undertaken that the ship will be free of maritime liens and any other
debts. Usually disputes arise when the ship is not in the condition as it
was at the time of inspection, or when it is encumbered with maritime
liens or other debts. You will find out how the relevant clauses in this
area have been interpreted by the courts.
The Sale of Goods Act 1979 applies to the sale of used ships and
therefore an implied term as to satisfactory quality is to be implied
under s.14(2). This could be negated by the conduct of the parties or
by custom in the business or expressly excluded in the contract. The
general requirement to accept a ship ‘as is’ or ‘as was’ is not such clear
wording (The Union Power [2013] 1 Lloyd’s Rep 509).
33
5.7 Does the vessel have to be in a deliverable state at the time in which the
notice of readiness is served by the seller or at the time of delivery?
5.8 Find out the difference in the wording of the notice provision between the
Norwegian Sale Form 1987 (NSF) and the amended clause in the NSF 1993.
What is the consequence of such difference?
5.9 What would the consequences be in the event the seller fails to comply
with the notice provision? Which clause specifies the consequences?
5.10 What are the components of clause 9 of the NSF 1987 and the NSF 1993?
Explain what each sentence of the clause contains and the remedies for
breach of each provision.
5.11 What is the meaning of the word ‘encumbrances’ and of the words ‘free from
… any other debts whatsoever’ in the first sentence of clause 9? What is the
meaning of the words ‘to indemnify the buyers against all consequences of
claims’ in the second sentence? Is there any overlap between the two sentences?
5.12 What are the obligations of the seller under clause 11 of the NSF 1987 and
NSF 1993? Explain the meaning of the words ‘fair wear and tear excepted’
and of the words ‘free of recommendation by class’.
5.13 What is the meaning of the words ‘free of average damage’ and ‘present
class maintained’ in clause 11 of the NSF 1993?
[ISBN 9781842145876] on the clauses discussed above.
5.3 Parties’ respective remedies for default

Essential reading
In this section you will read and practise problems about the seller’s
and buyer’s remedies under both the contract and the statute for losses
suffered due to breach by the other party. In any claim for loss suffered
the loss must have been caused by the breach, and the innocent party
must do its best to mitigate its loss.
5.14 What is the seller’s remedy in case the buyer fails to pay the deposit?
Contrast the present position of the amended clause 13 of the NSF 1987
with that which existed prior to that time, for example see The Blankenstein.
5.15 How does the Court of Appeal read clause 13 of the NSF 1993 in The Griffon
[2013] EWCA Civ 1567, [2014] 1 Lloyd’s Rep 471?
5.16 What is the seller’s full remedy under both the contract and the Sale of
Goods Act 1979, if the buyer fails to pay the purchase price?
5.17 Does an acceptance of the vessel in an ‘as is’ condition exclude the implied
terms under s.14 of the Sale of Goods Act 1979? (Read The Union Power
[2012] EWHC 3537 (Comm), [2013] 1 Lloyd’s Rep 509.)
5.18 State the buyer’s remedies in case of default by the seller in the readiness
of the ship.
34

[ISBN 9781842145876].
1. The owner of the vessel Teos seeks your advice on the following aborted sale:
On 15 July 2017, he agreed to sell the Teos to a company to be nominated by
the buyer at a price of USD 5 million, delivery on 1 September, all other terms
as per a Norwegian Sale Form subject to reasonable modifications. No MOA
was drawn up.
On 20 July the buyer formed a company in the name of Prometheus to be
nominated as buyers but they did not communicate this to the seller; so the
deposit which was due on that day was not paid and the seller withdrew from
the sale. In fact, the seller found another buyer who was prepared to pay a
higher price for his ship.
The original buyer now claims damages for breach of contract and your client
says there was never a binding agreement.
How would you advise him? Would your answer differ if the contract was
‘subject to details’?
2. Seller S agreed to sell two of her ships to B. The agreement provides that the
buyers are to ‘buy now’.
The price has not yet been paid but in the voyage to the delivery port, one
ship is sunk due to a collision. The insurers paid the seller for the loss pursuant
to the insurance policy.
The buyer claims the insurance proceeds from the seller; was he the owner at
the time of the loss? How would you advise the seller?
3. The buyer of a used ship sold under the Norwegian Sale Form discovered that
the ship’s equipment was deficient and precluded the ship from performing
several types of contracts. Discuss the buyer’s options.

should be able to:
• explain when there is a binding contract and when there is not
• illustrate how the courts have interpreted the terms of the contract
• advise the parties to a contract about their respective obligations during the
stages of the contract
• explain the principles applicable to the remedies of the respective parties for
breach of contract by the other.
35

You will be able to find answers to these questions from The Blankenstein [1985] 1
WLR 435, [1985] 1 Lloyd’s Rep 93; The Great Marine (No.2) [1990] 2 Lloyd’s Rep 250 and
The Bay Ridge [1999] 2 All ER (Comm) 306, [1999] 2 Lloyd’s Rep 227 (see Sheppard,
Vol. 2, Chapter 8, section 4).
Activity 5.3
You will glean the answer from The Blankenstein and The Action.
Read The Solholt [1981] 2 Lloyd’s Rep 574, The Gladys (No.2) [1994] 2 Lloyd’s Rep
402, The Junior K [1988] 2 Lloyd’s Rep 583, The CPC Gallia [1994] 1 Lloyd’s Rep 68,
Granits v Benship [1994] 1 Lloyd’s Rep 526, The Messina [1995] 2 Lloyd’s Rep 567, The
Ray Bridge (see summaries in Sheppard, Vol. 2, Chapter 8, sections 4 and 5); see also
Thoresen (Bangkok) Ltd v Fathom Marine Co [2004] 1 Lloyd’s Rep 622.
Activity 5.6
Back
Activity 5.7
Look at the different wording of the relevant clauses in these cases regarding notice of
readiness (in the Essential reading).
Read the cases and relevant clauses in Sheppard, Vol. 2, Chapter 8, sections 9 and 15.
Back
You will find the answers if you read again Sheppard, Vol. 2, Chapter 8, sections 13–16.
You need to understand The Veracruz [1992] 1 Lloyd’s Rep 353, 358, A v B [1989] 2
Lloyd’s Rep 423, Nimenia v Trave [1986] QB 802, [1983] 2 Lloyd’s Rep 600, The Assios
[1979] 1 Lloyd’s Rep 331, The Great Marine (No.1) [1990] 2 Lloyd’s Rep 245 (summaries
for some are given in the sections referred to above).
Back
36
Sample examination questions

These questions appeared in the October 2017 paper.
Question 1
1. Discuss with reference to case law:
a) the conditions under which the mortgagee has the right to take possession
of the mortgaged ship and
b) the rights and obligations of the mortgagee in possession.
Question 2
The Donald T is a British registered bulk carrier. It is owned by Ka Shipping.
Ka Shipping obtains a loan from the BBank for the purpose of repairing and
refurbishing the Donald T. The loan is secured by a mortgage. However the
repairs, undertaken in the UK, require additional funding. The repair yard permits
the Donald T to sail following assurances that additional payments will be made.
Ka Shipping succeeds in obtaining a lucrative charterparty which could have
paid off the additional repair costs within three months. However, the Donald
T arrives at the port of loading late and the charterer cancels the contract. The
reason for the delay is an engine problem pointing towards deficient repairs.
The Donald T undertakes further repairs in the US. To finance the additional
repairs a loan secured by a mortgage is obtained by FastLoan Ltd. After its repair
it is time chartered at a significantly lower hire rate. The time-charterer deducts
from hire significant amounts during the first three months for increased bunker
consumption. Ka Shipping pays out only part of the mortgage instalment to
BBank and part of the wages to crew members. The Donald T is expected to arrive
at the port of Southampton in a few days and it appears it will be arrested by the
crew.
BBank asks for your advice on whether they could and whether they should enter
into possession of Donald T.
37
Advice on answering the questions

Outline answer (quotes from Sheppard):
Question 1
The introduction requires a statement that the MSA 1995, Schedule 1, para.7 creates in
the ship mortgage ‘a statutory security perfectible by registration’. The purpose is that
the lender is not left only with a personal claim against the debtor but ‘gets an interest
in, or a right against, the property of the debtor’ (but does not get ownership – MSA
1995, Schedule 1, para.10).
a) the condition under which the mortgagee has the right to take possession
may arise from statute, common law and contract under the 1995 MSA.
No express right to take possession – but reference to Schedule 1, paras.9 and 10 must
be made.
This power of sale is available under para.9 ‘if the mortgage money or any part of it is
due’.
Common law: The provisions of the Act do not change the common law position
that the mortgagee only has the right to take possession of the ship if there has been
default in payment or a threat to his security in a sense that the security would be
impaired. If the mortgagee takes possession without this requirement fulfilled (and in
the absence of contractual provisions) he may be liable for damages and costs (The
Cathcart, The Blanche, The Manor, in section 9.1.1 of Chapter 6 of Sheppard, Vol. 2).
When the security is impaired is a difficult question of fact – examples included an
impecunious mortgagor (De Mattos v Gibson), an unprofitable charterparty or a
combination of factors. References to The Myrto, The Manor, Law Guarantee and
Trust Society v Russian Bank of Foreign Trade and their facts needed.
Contract: The contract will be the source of such rights to the mortgagee in other
circumstances and, more importantly, even where there is no default in payment. The
Maule and its facts are of relevance here.
b) the rights and obligations of the mortgagee in possession
These rights also arise by statute (the power of sale), in common law but most
importantly in contract.
Statute: the power of sale is given under Schedule 1, para.9 to the MSA 1995.
The power of sale is exercised for the interest of the mortgagee and can materialise at
any point (Cuckmere Brick Co Ltd v Mutual Finance Ltd).
The duty is to act in good faith when the mortgagee in possession deals with the asset
of the mortgaged property. This is based on equity (reference to the cases in Sheppard,
Vol. 2, Chapter 6, section 9.4.3 will get extra marks). Any excess money is held in trust for
the borrower. Den Norske Bank v Acemex Management (The Tropical Reefer).
Common law: Possession by the mortgagee makes it responsible for the borrower’s
contractual obligations for pre-existing contracts and will enjoy the benefits of such
contracts including freight earned (Liverpool Marine Credit Co v Wilson).
The mortgagee in possession can lawfully use the ship as a prudent man would use
the ship if it were his own (Marriott v The Anchor Reversionary Co). The mortgagee
in possession has an equitable duty to manage the ship with due diligence so that it is
profitable.
Back
38
Question 2
Outline answer:
The answer must deal with three issues:
1. The right of BBank to take possession of the ship
2. Any restrictions of this right due to third party rights
3. Benefits or disadvantages of entering into possession with respect to other
claimants.
1. The right of BBank to take possession.
The right to take possession can be based on statute, common law and contract.
It can be exercised when there is default of payment or the mortgagee’s security is
impaired (see The Myrto, for example). In the specific case BBank has both received
only part of the payment but also the overall situation indicates a shipowner
unable to deal with its financial obligations and perhaps in an unprofitable
charterparty. Therefore, there is a right to take possession.
2. Had BBank known of the charterparty before granting the loan it would be bound
to respect it except where the situation had changed or there were aspects not
disclosed to the mortgagee (DeMattos v Gibson, The Odenfeld). On the facts
this does not appear to be the case and therefore the question is whether the test
in Collins v Lamport, that the charterparty is to be respected except where the
security is impaired (answered above).
The effect of OBG v Allen (which distinguished between inducing breach of
contract and causing loss by unlawful means as two separate torts) means
for mortgagees that it would be very difficult for a charterer to prove that the
mortgagee either intended to cause a breach of contract, or that he employed
unlawful means to cause loss when he interfered with the contract in trying to
protect its security. Thus BBank does not face significant challenges here except if
the covenants provide restrictions.
3. If BBank enters into possession it will take over the existing obligations and benefits
of the mortgagor. Thus it will be entitled to freight if payable but will also need
to discharge the cargo and pay port dues as well as wages for the crew for the
period they are in possession. It is thus a balance of these considerations. Not
entering into possession would mean that the ship will be arrested and sold. The
priority of BBank will be below that of crew members but will depend on whether
the mortgage is registered or not and whether the second loan is registered as a
mortgage and when, as priority depends on date of registration and not on the
date the loan was obtained. The repair yard’s claim would not take priority over the
mortgage because it is not considered a maritime lien (The Halcyon Isle).
Citing case law from Sheppard will gain higher marks.
Back
39
For further information on the range of programmes we offer,
please visit our website (london.ac.uk) or contact us at:
The Student Advice Centre
University of London
Senate House, Malet Street
London WC1E 7HU
United Kingdom
Telephone enquires: +44 (0)20 7862 8360
Online enquiries: sid.london.ac.uk
Follow us on:
london.ac.uk/facebook london.ac.uk/flickr london.ac.uk/instagram london.ac.uk/issuu
london.ac.uk/linkedin london.ac.uk/twitter london.ac.uk/youtube
london.ac.uk

001B Admiralty Law Sg2021

Uploaded by

Copyright:

Available Formats

001B Admiralty Law Sg2021

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

001B Admiralty Law Sg2021

Uploaded by

Copyright:

Available Formats

Master of Laws (LLM)

Postgraduate Diploma in Laws

Revised edition, 2021

̆ Dr Aleka Mandaraka-Sheppard (LLB, LLM, PhD, Dip.IArb), formerly Head of the

Published by the University of London

1.1 Admiralty law

1.1.1 Study sequence

1.2 Course aims and outcomes

Course learning outcomes

1.3 Introduction to Module B

Learning objectives for Module B

Learning outcomes for Module B

1.4 How to use this Study Guide

1.4.1 Case-law and statutes

References to other important books and materials are also made

Useful further reading

1.5 Preparation for the course

1.5.1 Self-assessment questions

In addition to the learning objectives and outcomes for each module,

and writing technique is not precise enough or where you have

1.6 Allocating your time

1.7 The examination

1.7.1 How to approach the examination questions

Examination questions are generally in two forms:

logical flow. In general there should be at least three sections:

examination – a part of functional knowledge. Missing out one or more

Chapter 2: Ownership and management

2.1 Registration of British ships and ownership

The flag state has extensive obligations to ensure the seaworthiness

Useful further reading

2.2 Management of ships

A whole range of activities is undertaken by managers. Commercial

2.3 International Safety Management Code

The implementation of the ISM Code is made mandatory through

For such liabilities to be attributed to the company, the persons who

Useful further reading

9. Who issues the certificates of compliance for the ISM Code?

Feedback to activities: Chapter 2

Chapter 3: Ship mortgages

Useful further reading

3.1 Nature of a ship mortgage

The nature of a ship mortgage is statutory under most legal systems.

3.2 Priority of a ship mortgage as a secured

The contractual obligations of a mortgage agreement apply from

A difficulty in priorities of claims has arisen in relation to some maritime

3.3 Rights and obligations of a mortgagor

3.4 Rights and obligations of a mortgagee

The mortgagee has a right to take possession of the mortgaged ship

[1993] AC 295). The effect of a private sale by the mortgagee is that it

3.5 Rights of third parties affected when the

Feedback to activities: Chapter 3

• Myburgh, P. ‘Recognition of priority of foreign ship mortgages’ [1992] LMCLQ 491.

• Tetley, W. ‘In defence of The Ioannis Daskalelis’ [1989] LMCLQ 11.

Chapter 4: Shipbuilding contracts

4.1 The contract

The negotiations leading up to the contract formation are significant

Like all types of English law contracts, a shipbuilding contract will

4.2 Basic rights and obligations of the parties and

or to take possession of it in an unfinished state and complete the

Reminder of learning outcomes

2.3 International Safety Management Code

3.2 Priority of a ship mortgage as a secured

3.5 Rights of third parties affected when the

4.2 Basic rights and obligations of the parties and