ARGENTINA Law and Practice Contributed by: María Belén Espiñeira, Espiñeira Maritime Lawyers
In order to promote domestic shipbuilding and expand the national merchant fleet, Argentina has enacted the Naval Industry Promotion Law (No 27,418) and the Law on the Development of the Argentine Merchant Fleet and Regional Fluvial Integration. Of particular rel - evance to ship finance, the Law on the Development of the Argentine Merchant Fleet and Regional Fluvial Integration strengthens the maritime privilege frame - work applicable to ship mortgages by confirming that a ship mortgage ranks immediately after the first-pri - ority group of maritime privileges and ahead of the second-priority group. In addition, the law expressly grants privileged status to ship construction credits of a mortgage or pledge nature, integrating them into the maritime privilege system and thereby enhancing legal certainty and predictability for lenders and shipbuild - ers involved in newbuilding financing. 2.2 Ship Leasing Ship leasing transactions in Argentina have not expe - rienced a significant increase in recent years. Tradi - tional bank lending continues to be the predominant source of vessel financing, while private equity funds, alternative credit providers and Chinese leasing hous - es are more common in other jurisdictions than in the Argentine market. Under a leasing structure, owner - ship of the vessel remains with the lessor, while the lessee is granted the right to use and operate the ves - sel and assumes the related commercial and opera - tional risks. By contrast, under a loan structure, own - ership lies with the borrower and the lender’s rights are exercised through contractual claims and security interests, most notably ship mortgages. Enforcement regimes also differ. Ship mortgages are enforced through judicial proceedings before Argentine courts. Enforcement is subject to mandatory local law, includ - ing the system of statutory maritime privileges, and typically involves arrest and judicial sale of the vessel. As a result, mortgage enforcement is inherently court- driven. By contrast, leasing enforcement is based on ownership rather than on security interests. Under Argentine law, the lessor remains the legal owner of the vessel during the lease term. As a result, in the event of default, the lessor is entitled to seek repos - session of the vessel on the basis of the duly reg - istered leasing agreement. Although repossession in practice requires court involvement and co-ordination with the relevant maritime authorities, the procedure
is generally more direct than the enforcement of a ship mortgage, as it does not require a judicial sale of the vessel nor does it involve competition with mari - time liens. In practical terms, mortgage enforcement is focused on the realisation of the security through the sale of the vessel, whereas leasing enforcement is focused on the recovery of the possession of the vessel. Sale and leaseback transactions are not com - mon in Argentina and are generally limited to isolated cases. 3. Marine Casualties and Owners’ Liability 3.1 International Conventions: Pollution and Wreck Removal Argentina is not a party to any international conven - tion covering wreck removal. Hence, domestic legis - lation applies (ie, the Argentine Navigation Law and Law 16,526 concerning the legal regime applicable to wreck removal operations, Sections 12 to 18). Regarding pollution, Argentina ratified the 1992 Pro - tocol amending the International Convention on Civil Liability for Oil Pollution Damage and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971, thus becoming a party to those conventions. Argentina is not a party to the 2003 Protocol establish - ing an International Oil Pollution Compensation Sup - plementary Fund. In addition, Argentina has not ratified the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, nor the International Convention on Liability and Compensation for Damage in Connec - tion with the Carriage of Hazardous and Noxious Sub - stances, 1996, and its amending protocols. Regarding marine pollution prevention, Argentina has ratified the following international conventions: • the International Convention Relating to Interven - tion on the High Seas in Cases of Oil Pollution Casualties, 1969;
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