The registration of a mortgage over a Malta flagged vessel, in favour of an individual/corporate lender or a security trustee (the "Mortgagee"), requires the filing of a statutory mortgage instrument (the "Deed") at the Maltese Registry of Ships.  Once the mortgage has been registered and the time and date of registration has been recorded in the vessel's register and annotated on the Deed, the registered Deed is thereafter released in original to the Mortgagee and certified true copies thereof are also released to the registered ship owner (the "Mortgagor").

Maltese law also permits the transfer and/or assignment of registered mortgages wherein pursuant to sections 44 and 44A of the Merchant Shipping Act (cap. 234 of the laws of Malta) (the "MSA") the Deed can be completed overleaf and upon filing of same at the Maltese Registry of Ships, the mortgage may be transferred in favour of a new Mortgagee.

Once the underlying obligation has been extinguished, the mortgage securing such obligation will also need to be discharged.  The discharge of the security will require the filing of the original Deed with the Maltese Registry of Ships, duly completed overleaf.  Thereafter, upon instructions from the Mortgagee, the mortgage is discharged with the time and date of discharge being recorded in the vessel's register and on the Deed.

However, what happens if the original mortgage instrument has been misplaced and can no longer be found?

Maltese law affords two remedies in instances where the original Deed has been lost.  The chosen remedy will depend on the remaining duration of the registered security.

  1. RECONSTITUTION OF A LOST MORTGAGE INSTRUMENT
  • Section 48 of the MSA provides that a lost mortgage instrument can be reconstituted upon the request of the Mortgagee alone or together with the Mortgagor.
  • A sworn declaration (affidavit) referencing the loss of the original Deed, together with a copy of the lost Deed, would need to be filed at the Maltese Registry of Ships.
  • The registrar would then proceed to make a note in the register of the vessel that a reconstituted mortgage instrument has been issued and will annotate the copy of the lost Deed.

The annotated copy of the lost Deed will be deemed to be the reconstituted mortgage instrument and, should the security registered over the vessel be eventually transferred or discharged, the reconstituted mortgage instrument would need to be completed overleaf and filed at the Maltese Registry of Ships. The transfer or discharge will be registered pursuant to the reconstituted mortgage deed.

  1. SWORN DECLARATION
  • If it is noted that the Deed has been lost shortly before the security is scheduled to be transferred or discharged, the Mortgagee may issue a sworn declaration (affidavit) indicating that it is the holder of the Mortgage and that the original instrument has been lost.
  • Upon the filing of the sworn declaration, the registrar will treat such sworn declaration as the mortgage instrument.
  • Any mortgage transfers or discharges will be registered by virtue of the sworn declaration, a note to that effect will be entered in the register of the vessel and the sworn declaration will be annotated accordingly.

The above mechanisms afford the Mortgagee added protection should the original Deed be lost.  Not only do these confirm the continued validity of the mortgage despite the loss of the original Deed, but also provide the Mortgagee with peace of mind and remedies should the mortgage need to be transferred or discharged.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.