PRACTICE AREAS

Shipping Shipping finance

Legal advice at the stage of structuring

When structuring a shipping finance scheme, there are a variety of factors to consider due to the uniqueness of such scheme under which the ship herself is provided as security. A special way to set up the security (e.g. mortgage, assignment of charterparty and insurance claim) is required because almost all ships, except for domestic vessels, are registered under the flags of convenience (e.g. Panama, Liberia, and the Bahamas). Therefore, the regulations imposed on a particular scheme differ depending on where the vessel is registered. Where the project finance relies on the existence of a particular long-term charterparty, it is essential that shipping professionals give advice by relying on a broad knowledge of shipping including charterparties.

TMI can provide clients with necessary legal advice from the beginning of the project and work to enable clients to properly register and mortgage their vessels in collaboration with local lawyers and registries.

Financing agreements are closely linked with shipbuilding contracts or S&P (sale & purchase) contracts and ship management contracts because they are concluded at the stage where the ships are acquired. In order to avoid subsequent disputes, TMI provides a broad range of legal advice, including drafting and reviewing these contracts that are ancillary to the financing agreement.

 

Measures in the event of default

In the event of default by a shipping company or a shipbuilding company, such default may seriously affect all interested parties, including ship operators, charterers, suppliers and even cargo-interests. Where it results in bankruptcy, the impact will spread worldwide. In such circumstances, it is of utmost importance for all interests to correctly and quickly make an initial response with regard to credit protection, e.g. the arrest of ships.  In these cases, TMI will seek to solve them from multiple perspectives by structuring a team with both lawyers specialising in shipping and lawyers specialising in bankruptcy, as necessary.

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