Ship Mortgage Under Turkish Maritime Law
Under maritime law, Mortgage is a lien, registered on a ship or the share thereof, granting the creditor with the priority over the other creditors and the right to collect his/her receivables by requesting the liquidation of the ship in subject. This right covers the ship and all its attachments, accessories and leases, if any.
Ship mortgage is formed by the registration of the mortgage agreement in the ship registry via a written contract between the parties. For foreign ships that are not registered in Turkey, ship mortgage may be formed via an entry in the flag certificate obtained by the local Turkish consulate.
While ships are considered movable property in civil law due to their mobility, due to their high value, commercial significance and the difficulty of safekeeping, the procedure of liquidating mortgaged ships is subject to the same procedure as the liquidation of immovable properties. Furthermore, due to their high economic value, ships are one of the most important assets that shipowners can show as collateral against the debt when they apply for bank loan. This is why ship mortgage is very common in practice and the procedure of liquidating ships is an important subject in maritime law.
In Turkish maritime law, liquidation of a mortgaged ship may be enforced either by a court order or a payment order. In order to enforce the a liquidation of a mortgage by a court order, the mortgage contract registered on the ship must have been approved by the ship registry directorate. Furthermore, the said mortgage contract must stipulate that the debt is acknowledged unconditionally and that it has fallen due. If these conditions are met, the execution office serves a payment order and demands the payment within 30 days. Unless the debtor challenges this order before court or pays the debt within 30 days, the ship may be liquefied.