ABSTRACT
The mortgagor or owner is free to continue operating and trading the vessel as a profit-making possession provided that he does not act in such a way as to jeopardize or put at risk the ship as security for the mortgage loan and thus prejudice the mortgagee's position. Acts governing ship mortgages are the Merchant Shipping Act 1894 with minor amendments by the Merchant Shipping Act 1988. The relevant sections of the 1894 Act are sections 31 to 46 inclusive. The Merchant Shipping Act 1894 thus provides that only registered ships, can be subject to the statutory legal mortgages. Any other mortgage relating to ships or shares must take effect as a purely equitable mortgage. Mortgages are registered in the order in which they are produced to the Registrar for the purposes of registration. The mortgagor may sell the vessel to another person even though the vessel is mortgaged, since he remains the legal owner.
