How is a mortgage of a ship in shipping finance established?
Although the Chinese Maritime Code does not contain specific provisions with respect to ship mortgage in shipping finance, it is not a legal vacuum.
Under Chinese law, mortgage of a ship shall be established by a contract in writing containing:
(a)nature and amount of the debts;
(b)time limit for performance by the debtor;
(c)name, condition, location and the ownership of the mortgaged ship;
(d)scope of the mortgage;
(e)other items the parties wish to include.
The debts mortgaged cannot exceed the value of the mortgaged ship, otherwise, the exceeding part will have no preferential right in satisfaction/ compensation.
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