NIGERIA Law and Practice Contributed by: Adedoyin Afun and Michael Abiiba, Bloomfield LP
Foreign Mortgages A duly registered foreign mortgage on a foreign-owned and bareboat-chartered vessel (duly registered under the Nigerian flag) may be notated at the NSRO for the duration of the bareboat charter to a Nigerian citizen or a Nigerian body corporate or partnership. For the notation of a registered foreign mortgage on a foreign-owned and bareboat-chartered vessel (that is duly registered under the Nigerian flag) with the NSRO, the required documents include: • a formal letter of application by the mortgagee or its authorised representative; • an executed copy of the foreign law-governed deed of mortgage; • a copy of the transcript of registry (or any other similar document) confirming the registration of the foreign law-governed deed of mortgage with the relevant foreign ship registry; and • evidence of payment to the NIMASA of the pre - scribed fees for foreign mortgage notation. 1.7 Ship Ownership and Mortgages Registry In Nigeria, the ship-ownership and mortgage registries are not available to the public. A person who is not the owner of a vessel must apply formally to the NSRO to conduct a search on the sta - tus of registration of a ship or mortgage over a ship. The key terms and operative provisions of a typical ship loan financing agreement in Nigeria include the following. • Purpose: defines the use of the facility and the specific project/transaction it intends to fund. • Conditions precedent: specifies the documents, approvals and requirements to be satisfied before the lender will permit the borrower to drawdown on the facility. • Conditions subsequent: sets out the documents, approvals and requirements (including timeline) 2. Ship Finance and Leasing 2.1 Ship Loan Finance
that the borrower must fulfil after the initial draw - down of the facility. • Utilisation: outlines the process for submitting drawdown requests and the terms on which the lender will disburse the facility. • Payment terms: provides the framework for man - datory and voluntary prepayments, interest, fees, taxes, etc. • Security: sets out the securities to be provided by the borrower to secure its obligation under the facility documents. • Indemnities: obliges the borrower to reimburse the lender for defined losses/costs/liabilities aris - ing from certain events relating to the financing arrangement. • Undertakings: sets out the covenants that the borrower agrees to be bound by for the tenor of the facility – environmental, financial, information, sanctions and AML, vessel facility tenor. • Representations and warranties: factual and legal assurances given by the borrower, which form the basis on which the lender advances the loan. • Insurances: specifies the insurance cover for the vessel. • Event of default: identifies the circumstances that entitle the lender to accelerate the loan, enforce its security. • Governing law and dispute resolution: the facil - ity agreement typically confirms Nigerian law and Nigerian courts as the governing law and primary forum for resolving disputes arising under the transaction. It is also common for the lender to retain an exclusive right to refer disputes to arbitra - tion, notwithstanding the court jurisdiction provi - sions, with the terms of the arbitration agreement expressly set out therein. The key terms and operative provisions of a typical ship mortgage in Nigeria include the following. • Covenant to pay: the mortgagor undertakes to pay all the secured obligations to the lender (as mortgagee) (free of any taxes and deductions) in accordance with the terms of the facility agreement and the mortgage. • Legal mortgage: establishes a registered legal mortgage over the vessel in favour of the mortga - gee as security for the secured obligations. It will
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