Preferred Ship Mortgages

A Preferred Ship Mortgage is the most important form of security used in vessel financing transactions. It provides lenders with a legally enforceable charge over a vessel, ensuring repayment of loans while enabling shipowners to secure funding for vessel acquisition, fleet expansion, refinancing, and maritime operations. Given the high value of maritime assets, a properly structured and registered ship mortgage is critical for protecting the interests of both lenders and vessel owners. Under the Merchant Shipping Act, 1958, mortgages over registered Indian vessels are recorded with the Registrar of Ships and generally rank according to their order of registration. Ship mortgage transactions often involve a broader security package, including assignments of earnings, charter revenues, insurance proceeds, bank accounts, guarantees, and deeds of covenant. In the event of default, lenders may enforce their rights through vessel arrest, foreclosure proceedings, judicial sale, and debt recovery actions. Our maritime finance and admiralty law team advises banks, financial institutions, leasing companies, shipowners, investors, and maritime businesses on creating, registering, transferring, discharging, and enforcing ship mortgages. We provide strategic legal support throughout the financing lifecycle to safeguard commercial interests and maximize security value.