Ship Mortgage

ENTRANCE

Maritime trade, due to its historical development, is an activity requiring high capital, having an international dimension, and possessing its own unique legal institutions. Ships, one of the most important elements of this field, are among the assets that need to be legally protected due to both their economic value and commercial functions. Institutions of security are of great importance, especially in terms of financing ships, protecting creditors, and ensuring the sustainability of maritime trade. In this context, ship pledging stands out as one of the most important types of real security in Turkish maritime trade law.

A ship mortgage is a legal institution that grants the creditor a real right over the ship, enabling the collection of a debt through its liquidation in the event of non-payment. Although a ship is movable property, its economic value and permanent registration place it under a legal regime similar to immovable property.

1. The Concept and Legal Nature of Ship Mortgage

A ship mortgage is a limited real right established on a ship as security for a debt. This right grants the creditor the authority to liquidate the ship in the event of non-payment of the debt and to receive priority satisfaction from the proceeds. A ship mortgage does not terminate the debtor's ownership rights; however, it creates a limitation on these rights, providing a strong security for the creditor.

Legally, a ship pledge falls under the category of real security rights and possesses the nature of an absolute right. A ship pledge is a subsidiary (dependent) right, and its existence and continuation depend on the existence of the debt secured by the pledge. When the debt is extinguished, the ship pledge automatically terminates.

1. Subject of Ship Mortgage

Ship mortgages can only be established on vessels registered in the Turkish Ship Registry. Registration is a requirement of the principle of transparency, aiming to enable third parties to learn about the real rights of third parties on the vessel. It is not possible to establish a ship mortgage on vessels not registered in the registry.

III. Scope of Ship Mortgage

Regarding the limits of the mortgage's collateral function, the Turkish Commercial Code system refers to the general regulations concerning mortgages in the Turkish Civil Code. Within this framework, according to Article 1018 of the Turkish Commercial Code, a ship constitutes collateral for the debt items regulated in Articles 875 and 876 of the Turkish Civil Code. According to these provisions, the collateral scope of a ship mortgage includes the principal debt, collection costs, default and contractual interest, and necessary expenses incurred for the preservation of the ship, including insurance premiums.

The subject of a mortgage is the entire vessel, and its components and accessories are, as a rule, also included within the scope of the mortgage. However, if the accessories are separated from the vessel during its normal operation, or if these accessories are transferred to third parties and removed from the vessel before being seized in favor of the creditor, the mortgage on those accessories is terminated. Similarly, if integral parts are separated from the vessel for purposes other than a temporary separation, thus severing their actual connection with the vessel, the mortgage does not cover these elements; however, if the vessel is seized in favor of the creditor before the separation, the mortgage protection continues. On the other hand, the compensation paid in the event of the expropriation of the vessel, and the compensation claims that the ship owner may assert against third parties arising from the loss or damage of the vessel, are included within the scope of the mortgage because they constitute a substitute for the economic value of the vessel.

1. Establishment of Ship Mortgage

For a ship lien to be established, both the material and formal conditions stipulated by law must be met.

1. Pledge Agreement

A ship pledge is based on a pledge agreement between the ship owner and the creditor. This agreement must be in writing. The agreement must clearly state the debt secured by the pledge, the amount of the debt, and the identification information of the ship.

2. Registration in the Registry

A ship pledge is created upon registration in the ship registry. Registration is constitutive, and the right to a pledge cannot be acquired without registration. In this respect, a ship pledge has a structure similar to a real estate mortgage.

1. Provisions of Ship Mortgage

A ship lien gives the creditor the right to demand the liquidation of the ship. If the debt is not paid on time, the creditor can request the sale of the ship through enforcement proceedings and will be primarily satisfied from the sale proceeds.

A lien on a vessel remains in effect even if the vessel is transferred to a third party. The new owner acquires the vessel along with the lien. Furthermore, if there is more than one lien, the order of registration determines the priority order.

1. Termination of Ship Lien

A ship lien automatically terminates upon the extinguishment of the secured debt. Other reasons for termination include the complete destruction of the ship, waiver of the lien, or removal from the registry.

CONCLUSION

Ship liens are one of the strongest real security institutions in Turkish maritime law, ensuring the protection of creditors. The existence of an effective security mechanism for an asset with high economic value like a ship is essential for the safe and sustainable operation of maritime trade.

The detailed regulation of the ship pledging institution in the Turkish Commercial Code has both increased legal certainty and ensured compliance with international maritime trade practices. In this respect, ship pledging is a fundamental legal instrument that concerns not only individual creditor relationships but also the entirety of maritime trade.