CHILE Law and Practice Contributed by: Ricardo Rozas, Max Morgan and Stefano Perretta, JJR Abogados
In addition, dual registration of national merchant ves - sels would be acceptable when, for reasons of obvi - ous convenience to domestic interests, the President of Chile authorises the bareboat charter of national vessels for a certain period. In such cases, the vessel must fly a foreign flag, although her Chilean registra - tion will continue in effect. 1.6 Registration of Mortgages The registration of mortgages is kept by DIRECT - EMAR. As regards documentary requirements, mort - gages, liens and prohibitions related to vessels over 50 gross tons must be registered, for their validity, in the Mortgage, Liens and Prohibitions Registry men - tioned in 1.3 Domestic Legislation Applicable to Ship Registration . The naval mortgage must be granted by public deed. The mortgage deed and the contract to which it refers may be the same. When the mortgage is granted abroad, it shall be governed by the law of the place of its granting. For registration in Chile, the mortgage shall be recorded – at least – in a written document whose signatures are authorised by a minister of faith or by a Chilean consul. 1.7 Ship Ownership and Mortgages Registry Registries are available to the public. Generally, Chile’s ship finance market mirrors interna - tional best practices, although a good part of the ship finance is placed abroad. As regards debt financing, the key terms and operative provisions of typical ship loan financing in Chilean jurisdiction in loans backed by ship mortgage may include: • loan-to-value (LTV); • repayment and tenor; and • interest rate and covenants (as regards ship mort - gages, see 1.3 Domestic Legislation Applicable to Ship Registration , 1.6 Registration of Mortgages and 1.7 Ship Ownership and Mortgages Registry ). 2. Ship Finance and Leasing 2.1 Ship Loan Finance
In addition, beyond ship mortgage, other items may include the assignment of insurance policies and/or charter income, share pledge over special purpose vehicles (SPVs) and additional documents, such as guarantee assignments, refund guarantees, account pledges and customary lender update covenants. On the other hand, equity financing may comprise issues such as SPV incorporation, shareholders’ agreements and investors’ profiles. 2.2 Ship Leasing As opposed to ship mortgages, ship leasing transac - tions are not subject to specific local maritime regula - tions and thus must be dealt with under Chilean gen - eral provisions on lease or foreign law. In this respect, global trends show a marked rise in ship leasing – especially sale-and-leaseback and bareboat charters – with Asia-Pacific leading growth. This aligns with Chile’s maritime trade environment, suggesting likely adoption there as well. 3. Marine Casualties and Owners’ Liability 3.1 International Conventions: Pollution and Wreck Removal Pollution The key legislation, rules and conventions in force in Chile for regulating sea pollution are as follows: • the CLC 1992 on hydrocarbon spills from vessels carrying oil in bulk as cargo; • the CLC 1969 and supplementary norms set forth by the Navigation Law on hydrocarbon spills from vessels not carrying oil in bulk as cargo or spillage of other hazardous substances; • the International Convention for the Prevention of Pollution of the Sea by Oil, 1954 (the “OILPOL Convention”) (with its amendments of 1962 and 1969); • the Convention on the Prevention of Marine Pollu - tion by Dumping of Wastes and Other Matter, 1972 (the “London Convention”); • the International Convention for the Prevention of Pollution from Ships, 1973 (as modified by the Protocol of 1978) (MARPOL (73/78)); and
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