Bill No. 17 and Bill No. 25 amendments
Two bills were recently passed by the Republic of the Marshall Islands (RMI) Nitijela in October 2012and March 2013 respectively. These bills amend the RMI Maritime Act (the “Act”) to includeprovisions for vessels under construction to be registered and mortgages recorded on such vessels (BillNo. 17) and provisions allowing for the recordation of a financing charter to protect a vessel lessors’security interest (Bill No. 25).
Bill No. 17 allows a vessel under construction to be registered when the keel is laid or a similar act iscommenced. Documents for registration will be similar to those required in a traditional vesselregistration except that, in lieu of the Builder’s Certificate, the party seeking registration must providea certified copy of the construction contract and documentary evidence that construction of the vesselhas commenced. The RMI Maritime Administrator will then issue a Construction Certificate ofRegistry providing provisional registration of the vessel under construction. Upon completion ofconstruction, the vessel must meet statutory requirements to obtain full and permanent registrationunder the RMI flag. Further, the amendments allow a vessel under construction mortgage to berecorded with the RMI Maritime Administrator and for this mortgage to have the same priority as apreferred mortgage until the mortgage is discharged.
Bill No. 25 allows equipment lessors, who provide lease financing of vessels, to enjoy the samesecurity in collateral as a mortgagee enjoys under a preferred mortgage. New section 302A of the Actpermits the registration and recording of a financing charter as the equivalent of a preferred mortgageagainst the vessel and allows for the recordation of any renewals, amendments, supplements,assignments or other instruments related to a recorded financing charter. A financing charter must besigned and acknowledged by the documented owner and must include the name and official number ofthe vessel, the date of the financing charter contract, the names and addresses of the documentedowner and the charterer, and the aggregate of the nominal amount of all charter hire payments andpurchase option amounts payable, or which may become payable, under the financing charter,exclusive of any interest, indemnities, expenses, or fees. All other provisions applicable to a preferredmortgage will also apply to a financing charter. The amendments in Bill 25 bring the Act in line withthe United States Uniform Commercial Code.
“These amendments were made in response to requests from the international shipping community tobetter protect their interests in a vessel under construction and/or a chartered vessel,” said BillGallagher, President of International Registries, Inc. “We are fortunate to be able to work efficientlywith the RMI Nitijela to ensure that the most modern legal provisions are in place to provide anecessary competitive advantage in today’s challenging world markets,” he concluded.
Source: Marshall Islands