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How is a mortgage of a ship in shipping finance established?

How is a mortgage of a ship in shipping finance established?

Although the Chinese Maritime Code does not contain specific provisions with respect to ship mortgage in shipping finance, it is not a legal vacuum.

Under Chinese law, mortgage of a ship shall be established by a contract in writing containing:

(a)nature and amount of the debts;

(b)time limit for performance by the debtor;

(c)name, condition, location and the ownership of the mortgaged ship;

(d)scope of the mortgage;

(e)other items the parties wish to include.

The debts mortgaged cannot exceed the value of the mortgaged ship, otherwise, the exceeding part will have no preferential right in satisfaction/ compensation.


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