05.03.2025
In virtue of a recent amendment to Malta’s Merchant Shipping Act brought about by Act No. I of 2025 enacted on 4th February 2025, it is possible for an interest in a finance charter in a Maltese ship to be registered. In such case, the debt or obligation resulting from the finance charter may be secured by the registration of the finance charter instrument as a charge over a Maltese vessel, which charge is enforceable erga omnes.
The term “finance charter” refers to the chartering or lease of a ship under terms where the possession, operation or control of that ship is given to a bareboat charterer or to a lessee including through a demise or bareboat charter or similar agreement, the principal purpose and intention of which is to finance the acquisition, operation, administration or management of that ship.
The rights arising in favour of the lessor of a ship in a finance charter may be secured through the registration in that ship’s register of a finance charter instrument executed by the bareboat charterer or lessee as the finance charterer in favour of the ship owner as lessor who shall acknowledge same in writing, in the presence of, and attested by a witness or witnesses.
The introduction of the possible recordation of a finance charter instrument is a welcome development in Maltese law giving the parties the flexibility to have the owner’s interest as lessor recorded in the vessel’s register in a finance charter scenario in line with the reality that a significant segment of ship financing is today carried out via finance charters as opposed to traditional bank financing whilst at the same time recognising the need to ensure that all rights of any mortgagee remain fully protected notwithstanding the registration of any finance charter instrument.
Please do not hesitate to get in touch on shipping@dingli.com.mt should you wish to have more information on this topic.