top of page

Purchasing a ship? Check if it is free of pre-existing debts

Judicial sale of a vessel usually results in her being sold ‘free and unencumbered’. It would come as quite a shock to the buyer if it later transpires that such was not the case. That is what happened in the The Bright Star [2019].

Trading Fabrizia, a Maltese flagged vsl, ran into financial problems and was arrested in Jamaica by Jebmed, the mortgagee of the vessel. There were a few other competing claimants, such as bunker suppliers, crew etc. Judicial sale was ordered. Jamaican court had reserved $3m for Jebmed, but such required them to take fresh legal action in Jamaica. She was auctioned to Bluefin Marine, who later reflagged her and renamed to ‘Bright Star’.

When the vessel entered Maltese waters for bunkering, it was 're-arrested' by Jebmed. Maltese top court held the arrest was valid and said that Jamaican Supreme Ct. had failed to recognize the effects of Maltese registered mortgage. Jebmed should have been the first creditor to be paid from the proceeds of the sale.

It cannot be guaranteed that same outcome will be achieved in every jurisdiction. Creditors seeking to arrest a vessel should carefully select the jurisdiction for arrest. Also, buyers of vessels should satisfy themselves that vessel is ‘infact’ free of all pre-existing debts.


1 view0 comments


Recent posts

bottom of page