Shipping 2026

MALTA Law and Practice Contributed by: Ann Fenech, Adrian Attard, Lara Saguna Axiaq and Martina Farrugia, Fenech & Fenech Advocates

2.2 Ship Leasing Over the last ten to 15 years, as many major banks adopted more conservative lending policies aimed at reducing exposure to non-performing loans, the ship - ping industry has witnessed a shift away from tradi - tional lending towards alternative financing structures. The advantages of alternative capital funding include, inter alia: • greater flexibility and speed; • lighter regulatory requirements compared to banks; • the ability to provide substantial funding; • access to new types and forms of finance; and • in certain cases, more competitive pricing. The sale-and-leaseback transaction typically funded by non-traditional leasing houses (particularly those in Asian markets) has emerged as one of the most attractive funding solutions for Maltese ship-owners. These structures allow owners to unlock capital while retaining use of the vessel. Leasing is often described as providing access to the asset without transferring title. Such transactions are generally structured to have minimal impact on the day-to-day shipping operations of the ship, while the financier retains ownership as security and recovers its investment through amor - tised lease payments over the agreed term, together with the negotiated return. A fundamental distinction between sale-and-lease - back structures and traditional loan financing lies in the nature of the underlying legal relationships. Lend - ers finance ownership, relying on security interests and contractual covenants; on the other hand, les - sors monetise ownership, relying primarily on title and the right of repossession. As a result, enforcement mechanisms differ materially. A lender may accelerate the loan, enforce its mortgage, arrest the vessel, and sell it privately or through judicial auction. A lessor, by contrast, may terminate the lease, repossess the vessel, re-charter or sell it, and pursue the lessee for unpaid hire and other contractual damages. The enforcement of mortgage and lease defaults also differs in terms of the nature of the right being exer - cised. As discussed previously, under Maltese law

a mortgage constitutes an executive title, meaning that once the mortgagee has issued written notice of default to the mortgagor it may proceed directly to enforce its rights. Conversely, a lease default is a contractual dispute between the parties, requiring liti - gation before, and determination by, a court of law. Apart from traditional bank financing, the sale-and- leaseback transaction is arguably the most prevalent form of alternative financing involving Maltese ves - sels. Malta’s strong position as a maritime flag, its flexibility for owners (allowing for non-Maltese owner - ship of Maltese vessels) and charterers, including the statutory option to issue operational flag certificates in the name of the charterer (as disponent owner) and the ability to register a finance charter instrument in favour of the financier have collectively contributed to Malta attracting a considerable volume of sale-and- leaseback activity. 3. Marine Casualties and Owners’ Liability 3.1 International Conventions: Pollution and Wreck Removal Malta is a party to the following: • the 1972 Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter; • the 1973 International Convention for the Preven - tion of Pollution from Ships, as modified by the Protocol of 1978 relating thereto and by the Proto - col of 1997; • the 1992 Protocol of the International Convention on Civil Liability for Oil Pollution Damage 1969, and the Protocol of 1992 to Amend the 1971 Inter - national Convention on the Establishment of an International Fund for Compensation for Oil Pollu - tion Damage; • the 1990 International Convention on Oil Pollu - tion Preparedness, Response and Co-operation (OPRC); • the 2000 Protocol on Preparedness, Response and Co-operation to Pollution Incidents by Hazardous and Noxious Substances (the “OPRC-HNS Proto - col”);

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