UK Law and Practice Contributed by: Quentin Bargate and Elliot Bishop, Bargate Murray
refund guarantees), while preparing the documenta - tion needed for prompt registration and mortgage reg - istration on delivery. 1.5 Temporary Registration of Vessels UK law permits provisional (temporary) registration, typically for a limited period to allow a vessel to oper - ate while outstanding registration formalities are com - pleted. Separately, the UK Ship Register provides for bareboat charter registration (Part IV) for vessels on bareboat charter to a qualifying UK charterer for the duration of the charter. Full “dual registration” (ie, two concurrent registrations conferring nationality) is not generally permitted. How - ever, bareboat charter arrangements can, in effect, operate alongside an underlying “primary” registry, with the primary registry’s nationality element typically suspended for the bareboat period, depending on the relevant foreign law and registry practice. 1.6 Registration of Mortgages Mortgages over UK-registered ships are recorded by the UK Ship Register (Registrar General of Shipping and Seamen/MCA) on the register for the relevant part. A registered mortgage is created/registered by lodging the mortgage instrument in the prescribed form together with the required particulars (includ - ing the vessel details, the mortgagor and mortgagee details and execution evidence) and payment of the applicable fee. In practice, the Registrar will require appropriately executed documents (including corporate author - ity where relevant), and where documents are not in English, a certified translation is typically provided. Scanned copies are commonly accepted for process - ing, subject to any requirements for wet-ink signatures and/or production of originals for particular applica - tions. 1.7 Ship Ownership and Mortgages Registry The UK ships register is a public record in the sense that registration details may be obtained by third par - ties. In practice, a third party can obtain an official extract (commonly a “Transcript of Registry”) from the UK Ship Register for a particular vessel upon request and payment of the relevant fee.
The transcript typically confirms key particulars such as the vessel’s registered ownership, registered mort - gages and other registered entries. This is routinely used by financiers, counterparties and advisers as part of due diligence and enforcement planning.
2. Ship Finance and Leasing 2.1 Ship Loan Finance
English law-governed ship finance remains common in transactions with a UK nexus and in international financings choosing English law and jurisdiction/arbi - tration. Typical debt financings are documented on a facility agreement (often Loan Market Association- style), with conditions precedent, representations, undertakings and events of default, together with comprehensive security and covenant packages. Security commonly includes (as applicable) a first- priority registered ship mortgage, assignments of earnings and charter hire, insurances and requisition compensation, charges over accounts (including a retention or earnings account), share security over the owning SPV, guarantees (corporate and, where appro - priate, personal) and security over material contracts. Depending on the structure, financiers may also seek security over management agreements, hedg - ing arrangements and intercompany receivables, and may require cash collateral or reserves (eg, for dry- docking) as part of the overall risk allocation. 2.2 Ship Leasing Leasing and sale-and-leaseback structures are wide - ly used in the international shipping market and are frequently documented and/or supported from Lon - don, including transactions involving alternative credit providers and, in particular, overseas institutions. The key commercial drivers include balance sheet treat - ment, access to longer tenors, and the ability to match amortisation profiles to employment. A lessor/lessee relationship is typically asset-based: the lessor retains title and the lessee’s core obliga - tion is to pay hire and return the vessel (or purchase it under an option), with termination/re-delivery and repossession rights as central remedies. By contrast, lender/borrower structures are credit-based: the bor -
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