Republic

Maritime Law
Handbook
Editors:
Christian Breitzke
Jonathan Lux
Philome`ne Verlaan
This handbook has been prepared under the auspices of Committee A

(Maritime and Transport Law) of the Section on Business Law of the
International Bar Association
2012
Maritime Law Handbook

Suppl. 41 (April 2012) iii
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DISCLAIMER: The material in this volume is in the nature of general comment only. It is not offered
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Library of Congress Cataloging-in-Publication Data is available
Maritime law handbook/editorial board, Hans-Christian Albrecht . . . [et al.]; edited by Has-
Christian Albrecht and Roger Heward, p. cm.
Prepared under auspices of Committee A of the Section on Business Law of the International
Bar Association.
Rev. ed. of: Maritime law/edited by Lennart Hagberg. 1976ISBN 9065443320 (loose-leaf)
1. Maritime law. I. Albrecht, Hans-Christian. II. Heward, Roger. III. International Bar Association,
Section on Business Law, Committee A. IV. Maritime law.
K1155.4.M36 1987 8717920
343 0 .096-dc 19 CIP
[342.396]
ISBN 978-90-654-4332-8
This title is available on www.kluwerlawonline.com
# 2012, Kluwer Law International
Maritime Law Handbook was first published in 1987.

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iv Suppl. 41 (April 2012)
Republic of Vanuatu
Nancy L. Hengen
John Ridgway
Part II. Flag and Registration of Vessels

Mortgages of Vessels
Updated to 1 March 2012

Suppl. 41 (April 2012) Republic of Vanuatu Part II i
HENGEN/RIDGWAY

Republic of Vanuatu Part II ii Suppl. 41 (April 2012)
REPUBLIC OF VANUATU
Nancy L. Hengen
Nancy L. Hengen is a member of the Bar of the State of New York and a
partner in the firm of Holland & Knight LLP, New York, New York. She is a
graduate of Swarthmore College and the Harvard Law School.
John Ridgway
John Ridgway holds a Masters of Law degree from the University of Sydney
and a Graduate Diploma in Applied Finance from the Securities Institute of
Australia (Corporate Finance major). John is a licensed Investment Adviser for
the Capital Markets Development Authority in Fiji. John is admitted to practice
law in NSW and was first admitted to practice in Vanuatu in 1991.

Suppl. 41 (April 2012) Republic of Vanuatu Part II iii
HENGEN/RIDGWAY

Republic of Vanuatu Part II iv Suppl. 41 (April 2012)
REPUBLIC OF VANUATU
Table of Contents
LIST OF ABBREVIATIONS ix
Part II. Flag and Registration of Vessels and Mortgages 1
A. Flag and Registration of Vessels and Vessels under Construction 1
CHAPTER 1. Sources of law and the principal rules arising

therefrom. 1
1.1. Sources of Vanuatu law concerning
registration of vessels, and the
administration thereof 1
1.2. Entities entitled to document a vessel in
Vanuatu 2
1.3. Registration of securities (charges) 3
1.4. Flying the Vanuatu flag 4
1.5. Transfers into and out of the Vanuatu
registry 4
CHAPTER 2. Registration of a vessel 5

2.1. Type of register 5
2.2. Types of vessels eligible for registration 5
2.3. Type of ownership 6
2.4. Particulars recorded 6
2.5. Costs 6
2.6. Register errors 7
CHAPTER 3. Documentation required for registration 7

3.1. Generally 7
3.2. New buildings 9
3.3. After a forced sale 9
CHAPTER 4. Deregistration 10
4.1. After a sale 10
4.2. After a total loss 10
4.3. Mortgagees consent 11
4.4. Permission of governmental agencies 11
CHAPTER 5. Legal effect of registration 11
CHAPTER 6. International conventions for the unification of

certain rules relating to maritime liens and
mortgages 1926 and/or 1967 12
Suppl. 41 (April 2012) Republic of Vanuatu Part II v
HENGEN/RIDGWAY
CHAPTER 7. Bareboat-charter registration under the Vanuatu flag

of vessels which remain registered in another
country 12
CHAPTER 8. Bareboat-charter registration under a foreign flag of

vessels which remain registered in Vanuatu 14
CHAPTER 9. Registration of rights in respect of vessels under

construction 15
B. Registration of Mortgages on Vessels and Legal Nature of Mortgages 16
CHAPTER 10. SOURCES OF LAW 16
CHAPTER 11. THE REGISTER 16
CHAPTER 12. Vessels that may be mortgaged 18
CHAPTER 13. Who can be a mortgagee? 18
CHAPTER 14. Kinds of rights and/or claims for which a mortgage

can be registered 19
CHAPTER 15. Interest and costs 20
CHAPTER 16. Particulars recorded and other evidence of a

mortgage 20
CHAPTER 17. Further preconditions for the creation of a valid

charge by way of mortgage 21
CHAPTER 18. Priorities of registered mortgages inter sese 21
CHAPTER 19. Priorities between mortgages and other

encumbrances 21
CHAPTER 20. Relation of registered mortgages to unregistered

preferential rights 22
CHAPTER 21. To what does a registered mortgage attach? 22
CHAPTER 22. Effect of payment of debts secured by the mortgage 23
CHAPTER 23. Assignability of mortgages 23

Republic of Vanuatu Part II vi Suppl. 41 (April 2012)
REPUBLIC OF VANUATU
CHAPTER 24. Protection of mortgagees against seizure, etc. 23
CHAPTER 25. Effect of change of ownership of a vessel 23
CHAPTER 26. Mortgage protection in the case of deregistration of

a vessel 23
CHAPTER 27. Liability of mortgagees 24
CHAPTER 28. Submission to enforced execution under a mortgage 24

Suppl. 41 (April 2012) Republic of Vanuatu Part II vii
HENGEN/RIDGWAY

Republic of Vanuatu Part II viii Suppl. 41 (April 2012)
REPUBLIC OF VANUATU
List of Abbreviations
$ or US$ Dollars, lawful money of the United States of America
Ship A term interchangeable with the term vessel which is the
term mostly used in Vanuatu statutes
SOLAS Safety of Life at Sea Convention
Vanuatu Republic of Vanuatu
NRT Net registered tons
Vatu Currency of the Republic of Vanuatu

Suppl. 41 (April 2012) Republic of Vanuatu Part II ix
HENGEN/RIDGWAY

Republic of Vanuatu Part II x Suppl. 41 (April 2012)
PART II. Registration of Vessels and
Mortgages of Vessels
A. Flag and Registration of Vessels and Vessels

under Construction
1. SOURCES OF LAW AND THE PRINCIPAL RULES ARISING THEREFROM
1.1. Sources of Vanuatu law concerning registration of vessels,

and the administration thereof
The principal source of law on documentation of Vanuatu vessels, registration

of mortgages, and maritime liens is the Maritime Act Cap 131 (the Maritime
Act), as amended, first passed in 1981, and the Maritime Regulations Order
No. 25 of 1990 (the Regulations), which was originally adopted in 1981 to
implement the Maritime Act. While Vanuatu has an eclectic legal system that
draws upon such diverse sources as British law and the Napoleonic Code, the
Maritime Act and Regulations are largely based upon the law of the United
States. The principal sources of Vanuatu law for corporate questions relevant to
vessel ownership are the Vanuatu Companies Act Cap. 191 1986, and the
International Companies Act No. 32 of 1992, which came into effect on 18 May
1993. The first is substantially based on British company law whilst the latter is
modelled on the legislation of the British Virgin Islands. Of course, other sta-
tutes may have to be considered in certain situations.
Matters relating to vessel registration and mortgaging are administered by
Vanuatu Maritime Services Limited, under contract with the Government of
the Republic of Vanuatu to act as Maritime Administrator, located in New York
City. Legally responsible authority is taken in the name of the Commissioner of
Maritime Affairs or any duly appointed Deputy Commissioner. The Commis-
sioner and each Deputy Commissioner are required to maintain an office con-
taining properly indexed public registers. In practice and by design, the central
registry is effectively in New York City.
Applications for documentation of vessels under the flag of Vanuatu pursuant
to the Maritime Act must be made to:
The Office of the Deputy Commissioner of Maritime Affairs

Republic of Vanuatu
39 Broadway, Suite 2020
20th Floor
New York, New York 10006, USA

Suppl. 41 (April 2012) Republic of Vanuatu Part II 1
HENGEN/RIDGWAY
Telephone: 212-425-9600
Email: email@vanuatuships.com
Website: www.vanuatuships.com
The Commissioner of Maritime Affairs is also the Commissioner for Finan-

cial Services in Vanuatu. The Deputy Commissioner in the New York office is
the prime administrative officer for shipping matters and controls actions of all
special Agents and other Deputy Commissioners. Requests for information,
official application forms and registration cost quotations may be directed to
the above office.
Although the Maritime Act provides for enforcement of preferred mortgages
in Vanuatu by a proceeding in rem, admiralty proceedings are not frequent in
Vanuatu. In fact, no published decisions exist of judicial proceedings involving
documentation or mortgaging of vessels. Thus, apart from the text of the Mar-
itime Act itself, only a limited body of law exists from which to draw answers to
questions relating to documentation, mortgages and liens. However, the
structure of the Maritime Act draws heavily upon United States law. Moreover,
Section 11 of the Maritime Act expressly incorporates the nonstatutory general
maritime law of the United States to the extent that it does not conflict with the
Maritime Act or other Vanuatu Statutes.
In situations in which Vanuatus general law is not derived specifically from
post-independence statute(s), the Vanuatu Constitution provides that the laws
of England and France that were the laws of Vanuatu (New Hebrides) at inde-
pendence continue to be the law of Vanuatu unless amended or repealed.
In terms of statutes this means that a significant number of UK Acts are still
laws of Vanuatu because they were acts of general application in the British
colonies. One such is the Bankruptcy Act (because the Vanuatu legislature has
yet to enact its own statute on the subject).
1.2. Entities entitled to document a vessel in Vanuatu
The Maritime Act permits documentation (which is defined to mean regis-

tration, enrolment or licensing) of a vessel only by citizens or nationals of
Vanuatu, including corporations, partnerships and associations of individuals
created or incorporated under Vanuatu law. Although a limited liability
company is not specifically named in the statute, the Deputy Commissioners
Office has accepted vessel registrations in the name of a limited liability
company as owner as well. An International Company incorporated under
the International Companies Act No. 32 of 1992 fulfils the citizenship require-
ment for documentation of a Vanuatu flag vessel even though such an
International Company must not actually carry on business in Vanuatu.
Two categories of Vanuatu corporations may become owners of vessels to be
registered. Local Companies are incorporated pursuant to the Companies Act,
and these are companies which are engaged in doing business in Vanuatu.
Republic of Vanuatu Part II 2 Suppl. 41 (April 2012)
REPUBLIC OF VANUATU
International Companies comprise the second category, and they are precluded
by the relevant statutes from conducting business in Vanuatu. International
Companies are preferred because the procedures for their incorporation are
simpler, and the secrecy provisions in that Act more stringent. As an example
of the simplification under the International Companies Act, the members or
shareholders, officers, and directors may be of any nationality. Under the Com-
panies Act a company had to have at least one Vanuatu director. The procedures
for incorporating an International Company are not cumbersome.
An International Company is prohibited from acquiring or owning any
interest in immovable property situated in Vanuatu (other than some leases)
or carrying on banking business, trust business, insurance business (as defined by
relevant legislation), or company management business. However, an
International Company will not be treated as carrying on business in Vanuatu
if it (i) carries on business with another International Company or in furtherance
of the business of the International Company carried on outside Vanuatu, or (ii)
leases premises in Vanuatu from which to carry on its business as permitted by
the International Companies Act, or (iii) makes or maintains deposits with a
person licensed to carry on banking business in Vanuatu. An International
Company also may obtain professional services from its registered agent, attor-
neys, accountants, trust companies, insurance brokers or other similar persons
carrying on business within Vanuatu; it may prepare or maintain its books and
records within Vanuatu and hold meetings within Vanuatu of its directors or
members and hold shares, debt obligations or other securities in a company
incorporated under either Companies Act, or issue shares, debt obligations or
other securities to anyone resident in Vanuatu or any company incorporated
under the Companies Act.
The Maritime Act does not specify when a partnership should be considered a
citizen of Vanuatu. Consequently, the prudent course is to discuss any partner-
ship proposed to be a vessel owner with the Deputy Commissioner prior to
going too far with a partnership structure.
Moreover, the Deputy Commissioner may waive the statutory limitations of
Vanuatu citizenship upon showing of an absolute and genuine need. Waivers
are readily granted. If a waiver is granted, a certificate of good standing must be
submitted for the non-Vanuatu entity that will be the owner of the Vanuatu-
registered vessel.
1.3. Registration of securities (charges)
Both the International Companies Act and the Companies Act provide for
registration of securities (charges) granted by the relevant Vanuatu company
encumbering its assets in some way. The types of charge and the method of
registration are slightly different under each statute, but under both statutes such
charges include assignments of insurances or vessel earnings and may include
charges over or pledges of shares of the company.
HENGEN/RIDGWAY
Failure to register any relevant charge at the office of the Financial Services
Commissioner has the effect of voiding the charge against any potential liqui-
dator of the company. Any charge under the Companies Act must be registered
with the Commissioner for Financial Services within twenty-one days of its
creation or within twenty-one days of the instrument creating the charge arriving
in Vanuatu (if it has been executed outside Vanuatu). In the case of the
International Companies Act, the registration must take place within forty-two
days of the creation of the charge in any case, wheresoever it was created.
Section 407 of the Companies Act exempts any private exempted ship-
owning company from having to register charges under the Companies Act if
the charge is registered in the office of the Commissioner or Deputy Commis-
sioner of Maritime Affairs in accordance with the Maritime Act. It is this
provision which exempts mortgages over vessels from having to be registered
under the Companies Act. The exemption tends to apply only to mortgages
because other types of charges are not usually registered in the office of the
Commissioner or Deputy Commissioner of Maritime Affairs.
The International Companies Act, section 78A, grants a similar exemption to
ship-owning companies from registering charges that are otherwise registered
under the Maritime Act and again the effect is to exempt vessel mortgages only.
1.4. Flying the Vanuatu flag
Unless duly documented, vessels are not entitled to fly the Vanuatu flag.
Once so documented, however, that flag must be flown unless that right is
withdrawn upon the granting of a permission for bareboat-charter registration
in another country or permission for transfer to a foreign registry.
1.5. Transfers into and out of the Vanuatu registry
A vessel from a foreign state that becomes owned by an entity entitled to

register vessels may (but is not required to) be registered in Vanuatu upon
meeting the requirements for initial registration. If a Vanuatu vessel is sold to
an entity not entitled to register vessels in Vanuatu, the vessel must be deleted
from the Vanuatu register or a waiver of the ownership requirement must be
obtained from the Deputy Commissioner. If a vessel is to be transferred to a
foreign registry, permission for transfer must be obtained, but it is readily
granted so long as the seller is not in default in payment of taxes and other
charges due to Vanuatu and all mortgagees consent. If the vessel is to be deleted
from the Vanuatu flag, all mortgages must first be discharged or the consent of
all mortgagees obtained. A Vanuatu bareboat charterer of a foreign flag vessel
may obtain permission for Vanuatu bareboat-charter registration. Conversely,
the owner of a Vanuatu vessel that is bareboat-chartered may obtain permission
for bareboat-charter registration in the name of the bareboat charterer in a
REPUBLIC OF VANUATU
foreign state provided the foreign state so allows, and in order to do so the owner
must also secure the permission of mortgagees.
2. REGISTRATION OF A VESSEL
2.1. Type of register
The Deputy Commissioner maintains a central register for vessels in

New York; and, as a practical matter, that is the central registry for the filing
of documents under the Maritime Act and Regulations. Additional Deputy
Commissioners have been appointed in other locations worldwide to accept
documents and fees and to issue a provisional certificate of registry, all upon the
instructions of and under the control of the Deputy Commissioner in
New York. Special Agents of the Deputy Commissioner located outside of
New York have also been appointed. They are empowered to act only upon
instructions of the Deputy Commissioner in New York. The home port of all
Vanuatu vessels is Port Vila, the capital of Vanuatu, pursuant to section 16 of the
Maritime Act.
The Deputy Commissioners office in New York is open on business days
from 9 am to 5 pm, and otherwise by special arrangement. Records open to
public inspection are maintained with respect to recorded mortgages and certain
other instruments in the New York office. Duplicate copies are also maintained
in the home registry in Vanuatu.
2.2. Types of vessels eligible for registration
Any sea-going vessel owned by or on a bareboat charter to a citizen or national

of Vanuatu and engaged in foreign trade may be registered, regardless of where it
was built. Foreign trade is defined as trade between Vanuatu and a foreign
country or between one foreign country and another, and includes the trans-
portation of goods between the ports of Vanuatu and ports of foreign countries
and between the ports of one foreign country and another. Registration is not
restricted to self-propelled vessels. Barges, drilling rigs and other sea-going craft
meeting the necessary requirements may be registered; however, any yacht or
other vessel used exclusively for pleasure may be registered only if it is 50 net
tons or over and it must pay the appropriate fee accordingly. The Maritime Act
prohibits registration of vessels over twenty years of age determined from com-
pletion of first construction to 1 January of the year in which registration is
sought, but this limitation may be waived in exceptional circumstances by the
Deputy Commissioner if the vessel meets all other registration requirements,
and if it receives the top classification of one of the classification societies
recognized by the Deputy Commissioner. The Deputy Commissioner currently
confines waivers to situations in which he/she is satisfied that, in addition to
HENGEN/RIDGWAY
meeting all other requirements for registration, the vessel is needed to imple-
ment the operations of a Vanuatu shipowner or registration is otherwise
desirable to carry out the objectives of the Vanuatu maritime programme.
2.3. Type of ownership
Vanuatu flag vessels may be owned by individuals, corporations, limited

liability companies, partnerships trusts, associations of individuals and in
joint ownership subject to the requirements for citizenship and nationality
(or waiver thereof) mentioned in section 1.2. supra. Note that the Maritime Act
allows for waiver of the citizenship ownership requirement for registration but
not for bareboat-charter registration. Accordingly, an entity which is not a
Vanuatu citizen or national will not be granted a waiver to permit it to
bareboat-charter register a vessel under Vanuatu flag.
2.4. Particulars recorded
Each vessel must have a name approved by the Deputy Commissioner and an
official number and call letters assigned by that office. The register will also show
the vessels measurements, gross and net tonnage, principal dimensions and
other particulars descriptive of the identity of the vessel. In general, the Deputy
Commissioner requires more particulars than appear in the Certificate of
Registry.
2.5. Costs
Following are the principal costs associated with initial registration of Vanu-
atu vessels, but it is advisable to consult the Deputy Commissioners Office in
each individual case:
Registration Fee (negotiable):
Initial
500 NRT to 5000 NRT $1.05 per NRT
5001 NRT to 25000 NRT $0.435 per NRT
>25001 NRT $0.35 per NRT
Annual
Annual Tonnage Tax, per Net Ton
Up to 14,999 $0.25/NRT
15,000 to 24,999 $0.20/NRT
25,000 to 34,999 $0.15/NRT

REPUBLIC OF VANUATU
35,000 or over $0.10/NRT

Annual Fee: Marine Investigations, Nautical $725.00
Training and International Participation (plus
$.04 per NRT)
Annual Marine Inspection (Each Inspection) $725.00
Annual Marine Inspection for Fishing Vessels $350.00
(Each Inspection)
Provisional Certificate of Registry $200.00
Permanent Certificate of Registry $200.00
Temporary Radio Authority $50.00
Permanent Ship Station License $280.00
Publication and Forms $50.00
Registration Fees and Annual Tonnage Tax for vessels of dual tonnages are
payable on the higher of the two net tonnage figures. Tonnage taxes may be
reviewed annually under the Maritime Act, and the Deputy Commissioner has
the authority, which he/she has used, to offer discounts on fleet registrations. All
payments are in United States Dollars, drawn upon a US bank or the US branch
of an international bank. Unless otherwise instructed, payments should be made
to the Deputy Commissioner of Maritime Affairs Republic of Vanuatu.
Unpaid taxes and other fees owed under the Maritime Act constitute a lien
upon the related vessel with priority over all other liens except crews wages and
salvage.
2.6. Register errors
Errors in a vessels Certificate of Registry or in the recording index page of a

mortgage can be corrected administratively by informal procedure. However,
errors in recorded documents (such as a bill of sale or mortgage) require a
recorded correcting document.
3. DOCUMENTATION REQUIRED FOR REGISTRATION
3.1. Generally
To obtain provisional registration of a vessel not previously registered under

Vanuatu law, the owner must present: (1) a written application together with
evidence of authority of the individual who executes the application, accompa-
nied, if necessary, by requests for waiver of citizenship of owner or vessel age
requirements; (2) satisfactory proof of ownership, usually a bill of sale or
builders certificate, or proof of ownership under a prior foreign flag; (3) if a
transfer from a foreign flag, consent by the former country of registration to the
surrender of its marine document, or an actual certificate showing the vessels

HENGEN/RIDGWAY
deletion from the foreign ship registry; (4) proof that the vessel is free and clear
of recorded liens and encumbrances at the time of transfer; (5) proof that the
required marking of name, official number, tonnages, home port, and draft have
been made or that orders have been issued to the Master to make such markings;
(6) proof that the vessel is in a seaworthy condition (usually by submission of a
confirmation of class dated not more than ten days prior to the date of regis-
tration issued by one of the classification societies recognized by Vanuatu); and
(7) requisite fees.
The classification societies approved by Vanuatu at present are:
(a) American Bureau of Shipping;

(b) Bureau Veritas;
(c) China Classification Society (ZC);
(d) Det Norske Veritas;
(e) Germanischer Lloyd;
(f) Korean Register of Shipping;
(g) Lloyds Register of Shipping;
(h) Nippon Kaiji Kyokai;
(i) Polish Register of Shipping;
(j) Registro Italiano Navale;
(k) Russian Maritime Register of Shipping; or
(l) any other international ship classification society as may be authorized
by the Commissioner or a Deputy Commissioner.
The application must contain a declaration that states the particulars of the
vessel, the owner or owners and their respective shares, the mortgagees, the
vessels decision-maker, statements respecting the officers and crew, and certain
other forms and affidavits.
An initial provisional certificate of registry is valid for a period of thirty days.
However, the Deputy Commissioner may renew a provisional Certificate of
Registry up to a period of one year upon a showing of good cause. Moreover,
under section 33 of the Maritime Act, if an owner cannot comply with certain
requirements for obtaining a provisional or permanent Certificate of Registry
due to abnormal conditions existing in the country of foreign registration, the
Deputy Commissioner may waive such requirements. This provision is
intended to grant flexibility in situations where such items as permission for
transfer, deletion certificate or evidence that the vessel is free and clear of
recorded encumbrances cannot be obtained by the owner due to political cir-
cumstances beyond the owners control in the country of foreign registry.
After initial registration, a permanent Certificate of Registry should be
obtained as soon as possible. In part, this document will depend upon the
vessels classification society issuing a Vanuatu ITC 69 measurement certificate
and SOLAS certificates. Other matters, however, are more directly the owners
responsibility. For example, proof must be presented that the vessels new name,
home port, official number and net tonnage have been marked as required by
REPUBLIC OF VANUATU
law, and if a deletion certificate from the former foreign registry was not pre-
sented at initial registration, it should be presented within thirty days thereafter.
When a Vanuatu vessel is transferred to another owner for re-registration in
Vanuatu, a bill of sale duly acknowledged must be presented and recorded. Once
recorded, the bill of sale is binding on third parties without notice. A bill of sale
submitted in connection with re-registration must recite the entire existing Cer-
tificate of Registry; this is customarily handled by attaching a copy of the exist-
ing Certificate of Registry as an exhibit to the bill of sale. This is not a
requirement of initial registration. While bills of sale or other proof of owner-
ship presented on initial registration need not be recorded, they may be recorded
if duly acknowledged.
3.2. New buildings
The procedure for registration of a new building is identical to the procedure

for registration of a vessel previously registered in another country. Instead of a
bill of sale, however, proof of ownership is likely to be a builders certificate,
which requires information as to the time and place of building, the person for
whom it was built, the type of vessel, and the number of decks and masts,
tonnage, etc.
3.3. After a forced sale
(a) When a vessel is sold in a forced sale following a court order or legal
procedure in Vanuatu or another country, a Vanuatu flag vessel may be
reregistered if the sale procedure was a proceeding in rem and if it was
purchased by an entity qualified to own a Vanuatu flag vessel or which
obtains a waiver of the ownership requirement. Section 40(3) of the
Maritime Act absolves the purchaser from complying with the normal
requirement of surrendering the existing Certificate of Registry issued to
the prior owner, but all other requirements for re-registration of a Vanu-
atu vessel must be fulfilled. The documents in respect of the sale (usually
a court order directing the sale and a duly acknowledged bill of sale issued
by a court officer), together with an attorneys opinion as to the legal
effect thereof, will be recorded both as a discharge of prior mortgages and
as a conveyance.
(b) When a non-Vanuatu vessel has been sold in another country following a
court order in an in rem proceeding, the vessel may be documented in
Vanuatu if otherwise qualified on similar presentation of court docu-
ments, duly acknowledged, and of an opinion of counsel as to proof
of ownership. In addition, however, the Deputy Commissioner may
require evidence that the mortgages recorded in the former registry
have been deleted and that the former registration has been cancelled.
HENGEN/RIDGWAY
In any such case, the Deputy Commissioners office should be consulted

concerning the documentary forms to be relied on in order to ensure that
they will be accepted by that office.
4. DEREGISTRATION
4.1. After a sale
To sell or transfer a Vanuatu vessel, application for permission must be made

to the Deputy Commissioner naming the proposed transferee, its nationality,
and proposed new country of registry. Deregistration or cancellation of regis-
tration takes place only if the sale is not for re-registration of the vessel under the
Vanuatu flag. In order to obtain a certificate of cancellation from registration,
the existing Certificate of Registry, inter alia, must be surrendered to the Deputy
Commissioners office, but the surrender will not be accepted unless all mort-
gagees have consented thereto or all mortgages have been released or discharged.
Assuming that all mortgages of record are discharged, a certificate cancelling the
registration is available on delivery to the Deputy Commissioner of the original
of all Vanuatu documents, certificates and papers issued to the vessel (e.g.,
Certificate of Registry, radio station license, admeasurement certificate, SOLAS
certificates, and the like), together with three copies of the bill of sale showing
compliance with the permission. If any document is missing, an affidavit of loss
by a person having personal knowledge of that document, such as the former
master, may be necessary. Moreover, before cancellation, all charges, including
arrears in tonnage taxes, owed by the vessel or owner to Vanuatu must be paid. If
the sale is close to the years end, deletion should occur before the new year
begins; otherwise, the entire next years tonnage tax must be paid before the
certificate of cancellation will be granted.
Before permission will be granted for the sale of a vessel that is temporarily in
foreign bareboat-charter registry, the bareboat charter and foreign bareboat-
charter registry must be terminated and a new Vanuatu Certificate of Registry
obtained.
4.2. After a total loss
Upon the loss of a vessel, the certificate of registry, if it survives, should be

surrendered to the Deputy Commissioner. There is no explicit statutory autho-
rization empowering the Deputy Commissioner to delete a vessel which has
been lost from the registry. Section 52 of the Maritime Act does state that a
vessel may not be deleted from the registry so long as a mortgage remains
undischarged or the indebtedness secured thereby is unsatisfied. This provision
does leave open the possibility of the owner presenting evidence of satisfaction
of the mortgage debt, from the proceeds of insurance or otherwise, or simply
REPUBLIC OF VANUATU
obtaining mortgage releases preserving the mortgagees rights to collect indebt-

edness owed out of any of the owners assets. However, it is likely that upon
receipt of evidence of the loss satisfactory to the Deputy Commissioner, the
Deputy Commissioner will strike the vessel from the registry. The statute does
not address the effect on the interest of mortgagees or the status of any mortgage
under these circumstances.
4.3. Mortgagees consent
After a total loss of the vessel or similar occurrence, the Certificate of Registry,
if preserved, should be surrendered to the Deputy Commissioner for cancella-
tion. Technically, as discussed above, mortgagees consents or recording of
mortgage discharges are required before a certificate cancelling the registry
will be issued.
4.4. Permission of governmental agencies
The Deputy Commissioners permission is required for any sale (even

for re-registration under the Vanuatu flag), but this permission is readily
granted. The application for permission must state the reasons for the
proposed surrender of the Certificate of Registry, the buyers name and
nationality, the new country of registration, if any, or that the sale is for
re-registration in Vanuatu or for scrapping, as the case may be. Permission
should be applied for well before the sale. Permission will be granted only if
any arrears of tonnage tax have been paid, as well as all other charges due to
Vanuatu in respect of the vessel. Any corporate fees outstanding to the Vanu-
atu Companies office by the ship-owning company, where relevant, must
also be paid.
5. LEGAL EFFECT OF REGISTRATION
Registration entitles the vessel to sail under the flag of Vanuatu. A Certificate
of Registry of a vessel does not, however, establish title to the vessel; indeed, for
that purpose, the Certificate may not even be admissible in a judicial proceed-
ing. The best evidence of title is the chain-of-title documents that trace the title
of the vessel from its original building to its current owner. It is prudent practice
to record bills of sale, because an unrecorded bill of sale is not valid against any
person other than the grantor, his heirs, devisees and persons having actual
notice thereof. In registering a vessel, the Deputy Commissioner makes only
a prima facie determination that the owners evidence of title is sufficient for
registration. Any other questions affecting the vessels title must be decided by
the courts.
HENGEN/RIDGWAY
6. INTERNATIONAL CONVENTIONS FOR THE UNIFICATION OF CERTAIN RULES RELATING

TO MARITIME LIENS AND MORTGAGES 1926 AND/OR 1967
Vanuatu has ratified the following conventions: the International Conven-

tion for the Safety of Life at Sea, 1974, including the Protocol of 1978
(SOLAS), the International Loadlines Convention, 1966, the International
Convention on Marine Pollution, 1973 (MARPOL 73/78), the International
Convention on Civil Liability for Oil Pollution Damage, 1969, including the
Protocol of 1976.
7. BAREBOAT-CHARTER REGISTRATION UNDER THE VANUATU FLAG OF VESSELS WHICH

REMAIN REGISTERED IN ANOTHER COUNTRY
A citizen or national of Vanuatu who is the bareboat charterer of a vessel

registered under another jurisdiction may obtain provisional bareboat-charter
registration in Vanuatu by meeting a series of requirements contained in the
Maritime Act and the Regulations to the satisfaction of the Deputy Commis-
sioner. Written consent is required of the shipowner, any mortgagees, and the
foreign registry (or satisfactory evidence that the consent of the foreign registry is
not required).
Bareboat-charter registration is allowed for a period not exceeding five years.
If the foreign registry so permits, the bareboat-charter registration may be
extended for an additional period of five years upon the filing of various docu-
ments, provided that the vessel and the bareboat charterer continue to meet the
relevant requirements.
The charterer must submit two copies of the Application for Official Number
Call Sign and Registration showing the bareboat charterer as owner with all
questions (except for a few items) answered. In addition, a certified copy of
the bareboat charter, together with all annexes or addenda and any bareboat
subcharters, must be submitted. English translations are required for all docu-
ments in another language.
Additional documents required for filing are:
(a) official certificates from the foreign state of original registration showing
ownership of the vessel and recorded encumbrances;
(b) written consents of the shipowner and of the mortgagees to the bareboat-
charter registration;
(c) written consent of the foreign state of registration or satisfactory evidence
that such consent is not required; and
(d) a certified copy of the vessels existing foreign certificate of registry.
The Maritime Act provides for recording foreign mortgages covering the
vessel in the same order in which they are recorded in the foreign registry,
but section 31(3A) of the Maritime Act and section 21 of the Regulations permit
REPUBLIC OF VANUATU
the Deputy Commissioner to waive the requirement of recording foreign mort-

gages provided the written consents of all mortgagees, the owner, and the bare-
boat charterer are supplied. In addition, if such a waiver is obtained, the
bareboat-charter certificate of registry is endorsed to state that re-recordation
of the foreign mortgage in the Vanuatu registry has been waived and to state the
country of the primary registry. Rights under the foreign mortgages are not
prejudiced by the bareboat-charter registration, whether or not such foreign
mortgages are re-recorded in Vanuatu. The Maritime Act provides that they
have preferred mortgage status.
On completion of the formalities, the bareboat charterer will be issued a
provisional certificate of bareboat-charter registry containing the same provi-
sions as in the case of any other provisionally Vanuatu-registered vessel, except
that (a) the bareboat charterer will be shown in place of the owner, and (b) the
certificate will also bear the name and official number of the vessel as they
appear on the foreign states registry. The provisional certificate will include
such particulars as tonnage, dimensions and place of building. During the
period of Vanuatu bareboat-charter registration, the vessel must carry its Vanu-
atu provisional certificate of bareboat-charter registry on board, fly the Vanuatu
flag, and show Port Vila as its home port.
The Vanuatu bareboat-charter registration may be extended for an additional
five years. The charterer must file a new application, including a copy of the
bareboat charter, a certificate of ownership from the original state of registry,
and the consent of all mortgagees.
The bareboat-charter registration is also subject to cancellation upon sub-
mission to the Deputy Commissioner of the written consent of all mort-
gagees, the owner and the bareboat charterer, and the surrender for
cancellation of the bareboat-charter certificate of registry. A transfer of a
vessel during the period of the Vanuatu bareboat-charter registration renders
the bareboat-charter certificate of registry null and void, and the Maritime
Act requires it to be surrendered to the Deputy Commissioner within thirty
days of the transfer.
Because it is not anticipated that the owner will operate the vessel, the owner
will have no official evidence of registration. The provisional certificate of
bareboat-charter registry is evidence of permission for the charter.
Costs of a bareboat-charter registration vary somewhat from costs of initial
registration in Vanuatu. The one-time bareboat-charter registration fee is
$.35 per NRT, and annual fees (e.g., Annual Tonnage Tons, Investigation
IMO and Inspection fees) are paid two years in advance at the time of
bareboat-charter registration.
It is recommended that the required documents and forms be cleared in
advance with the Deputy Commissioner and, as for any other change of flag,
that the bareboat-charter registration take place when the vessel is in a port so
that it may immediately remove its foreign certificate of documentation and
take on board its Vanuatu provisional certificate of bareboat-charter
documentation.
HENGEN/RIDGWAY
Vessels permitted to fly the Vanuatu flag temporarily while under a bareboat
charter are required to comply with all requirements applicable to Vanuatu flag
vessels generally.
8. BAREBOAT-CHARTER REGISTRATION UNDER A FOREIGN FLAG OF VESSELS

WHICH REMAIN REGISTERED IN VANUATU
Bareboat-charter registration under a foreign flag is allowed only with permis-

sion of the Deputy Commissioner and then only in case of a bareboat charter
party under which the charterer wishes to fly the foreign flag and foreign flag
permits bareboat-charter registration.
Permission remains valid until the bareboat charters termination. The Vanuatu
flag may not be flown during the period of foreign bareboat-charter registration.
The current practice of the Deputy Commissioner is that satisfaction of
certain conditions is necessary to receive permission.
First, submission of the following documents:
(a) an application for permission which must identify the vessel, state the
name and other details in respect of the charterer, and state the date
contemplated for the commencement of and the earliest lawful termina-
tion of the bareboat charter;
(b) letters of consent by the owner and all mortgagees of record;
(c) a certified true copy of the bareboat charter with English translations, if
necessary, and within thirty days of the issuing of the Vanuatu permis-
sion, a certified copy of the foreign certificate of registry;
(d) proof that the foreign bareboat-charter registry will resolve questions of
validity and enforcement of mortgages and vessel title pursuant to the law
of Vanuatu;
(e) proof that the laws and procedure of the foreign bareboat-charter registry
provide for reasonable notice of the existence or possible existence of
mortgages in Vanuatu; and
(f) proof that the law of the foreign bareboat-charter registry provides that its
certificate of registry shall automatically terminate upon the termination
of the bareboat charter.
Upon application for permission, the owner must forthwith surrender its
Vanuatu Certificate of Registry; and, in its place, the Deputy Commissioner
will issue a Certificate of Permission of Foreign Bareboat-Charter Registration
and a restricted Certificate of Registry which states the vessel may not fly the
Vanuatu flag. The latter instrument is physically held by the Deputy Commis-
sioners office. The Certificate of Permission of Foreign Bareboat-Charter Reg-
istration is placed on board the vessel, and the surrendered Certificate of
Registry is physically held by the Deputy Commissioners central office in

REPUBLIC OF VANUATU
New York City until such time as the bareboat charter is terminated or expired
and the vessel is returned to the Vanuatu flag.
A fee of USD 200 must accompany the application for the Certificate of
Permission for Foreign Bareboat-Charter Registration. It is important to note
that the annual tonnage tax and other fees remain applicable.
Upon delivery of the vessel to the charterer under the bareboat charter, and
having obtained the right to fly the flag of a foreign jurisdiction, the vessels
status as a Vanuatu vessel is then suspended. Mortgages, however, remain of
record and fully enforceable under Vanuatu law.
Upon termination of the foreign bareboat-charter registration, the owner
must submit to the Deputy Commissioner the following material, whereupon
the vessel may receive a new Vanuatu Certificate of Registry:
(a) evidence of termination of the foreign bareboat-charter registration;

(b) the Certificate of Permission of Foreign Bareboat-Charter Registration;
and
(c) any fees prescribed by the Deputy Commissioner.
Once the Deputy Commissioner has permitted a vessel to be a bareboat-

charter registered in a foreign state, the right to fly the flag of Vanuatu is sus-
pended. Vanuatu recognizes that the named foreign state is the competent
authority to exercise exclusive jurisdiction and control over the vessel in accor-
dance with applicable international conventions and agreements. Vanuatu,
accordingly, would no longer regulate the number of officers and crew or
their nationality, or the certificates of masters and officers, or the rules with
respect to minimum wages, hire, vacation, social security, insurance and the like.
However, the Maritime Act requires that, at all times, the vessel shall be
equipped, maintained and navigated according to standards that are prescribed
by the relevant international conventions or agreements to which Vanuatu is a
party.
9. REGISTRATION OF RIGHTS IN RESPECT OF VESSELS

UNDER CONSTRUCTION
Vanuatu has no statutory provisions relating to the registration of legal rights

with respect to vessels under construction. A vessel under construction remains a
chattel owned by the builder or whoever else has ownership under the construc-
tion contract, until it reaches the status of completion entitling it to registration as
a vessel. Ocean-going vessels are not normally built in Vanuatu and no local
judicial precedents exist in respect of chattel mortgages of vessels or portions
thereof while under construction. Vanuatu has not ratified the Convention relat-
ing to Registration of Rights in Respect of Vessels under Construction of 1967,
although it is anticipated that it will do so. Vanuatu ratified the 1993 Geneva
Convention on Maritime Liens and Mortgages on 1 February 1999, and the
HENGEN/RIDGWAY
Convention came into force in Vanuatu in 1999. That Convention contains

retention provisions concerning vessels so long as they are in possession of the
shipbuilder.
B. Registration of Mortgages on Vessels and

Legal Nature of Mortgages
10. SOURCES OF LAW
Vessel mortgages under Vanuatu law are governed by Chapter 5 of the Mar-
itime Act (sections 50-67A) and Chapter 5 of the Regulations (sections 30 and 32).
The Maritime Act provides for preferred mortgages on vessels if they meet
the statutory requirements: the mortgage must include the whole of the vessel;
the mortgage must be recorded; the mortgage must state the amount secured
and the mortgages date of maturity; and the mortgage must not stipulate that
the mortgagee waives the preferred status thereof. A mortgage which secures
property other than a vessel must state a separate discharge amount for such
other property. A preferred mortgage may cover either a single vessel or more
than one vessel if all are owned by the same owner. A preferred mortgage
constitutes a maritime lien on the mortgaged vessel for the outstanding
mortgage indebtedness secured by the vessel.
As stated above, in 1999, Vanuatu ratified the 1993 Geneva Convention on
Maritime Liens and Mortgages.
11. THE REGISTER
Mortgages on vessels documented under Vanuatu law must be recorded

under the Maritime Act to be valid against third persons not having actual
notice of them. The Maritime Act provides for recordation in the office of
the Commissioner or the Deputy Commissioner. As a practical matter, this
currently means New York City, where the Deputy Commissioner maintains
a central office where there shall be recorded or filed, in properly indexed
public registers, documents such as bills of sale and mortgages. The Deputy
Commissioner is required to record mortgages in books indexed to show the
name of the vessel and the names of the parties to the transaction, the time and
date of recordation, the interest in the vessel transferred or affected, and the
amount of the mortgage and its maturity date.
To record a mortgage, a mortgage instrument must be presented to the
New York office of the Deputy Commissioner, signed by the owner of the
mortgaged vessel (persons in New York are frequently appointed attorneys-in-
fact for this purpose) and duly acknowledged in the form required by the Reg-
ulations. The mortgage must be in the English language or include an acceptable

REPUBLIC OF VANUATU
English translation. Assignments, supplements, amendments and assumptions

of mortgages and subordination agreements reordering the priority of recorded
mortgages may also be recorded. The original instrument must be presented in
five fully executed and acknowledged counterparts. Evidence of authority of the
person who executes a mortgage must also be presented. A recording fee of USD
425 must be paid for a mortgage; smaller fees are charged for other instruments
filed relating to a mortgage.
The New York Deputy Commissioner also permits mortgages to be presented
to other Deputy Commissioners and his special Agents for recordation. Under
this procedure, a copy of the form of the proposed mortgage must be submitted
for approval to the New York Deputy Commissioner not less than three days
prior to the intended recordation date. On the recording date, the duly executed
and acknowledged five original counterparts may be presented to a Deputy
Commissioner or a special Agent. Upon confirmation from the Deputy Com-
missioner or the special Agent that the five counterparts delivered to him are
identical to the copy previously approved by the New York Deputy Commis-
sioner, the New York Deputy Commissioner will assign and transmit to the
Deputy Commissioner or special Agent the relevant recording information. The
Deputy Commissioner or special Agent then marks the counterparts submitted
to him, returning three of them together with a completed Certificate of Own-
ership and Encumbrance to the person who submitted the mortgage counter-
parts and forwarding the others to the New York Deputy Commissioner.
No mortgage form is prescribed by statute; indeed, the term mortgage is
itself not statutorily defined. While a very short mortgage instrument containing
the essential information may be entitled to recordation, most mortgages are
considerably longer. In addition to containing the statutorily required informa-
tion, mortgages typically contain clauses granting the whole of the vessel to the
mortgagee as security for the secured obligation and describing other terms and
conditions of the financial transaction. The mortgage instrument must effec-
tively identify the vessel and the debt or obligation to be secured. The total
amount must be stated. The Deputy Commissioner may require written proof
of the amounts nominated in, and dates of, any documents showing evidence of
the debts secured by the mortgage submitted for recording.
A duly recorded mortgage does not lose its priority when all obligations
previously secured have been repaid so long as there is commitment from the
mortgagee that contemplates future advances in accordance with the terms of
the mortgage in the mortgage document and such advances are in fact made.
In such cases the total potential amount of the mortgage must be clearly stated as
either the maximum principal amount that may be outstanding at any one time
or the aggregate of all possible advances that may be made. The mortgage must
state a maturity date. In the case of obligations such as guarantees payable on
demand or obligations with respect to a letter of credit or indemnity, where the
date the obligation may become due is not fixed and certain, the customary
practice has been to state the maturity date as being on demand.

HENGEN/RIDGWAY
The mortgage amount stated is usually expressed in terms of a fixed

amount in some currency unit together with interest and performance of
mortgage covenants. While Vanuatu does not record a separate stated
amount as security for the interest and other costs, interest on the underlying
indebtedness can be structured in many different ways as the parties may
agree. The mortgage must cover the whole of the vessel even if there are
multiple owners.
It is preferable that the mortgage instrument be complete on its face, thereby
obviating any necessity for referring to unrecorded instruments for more
details. Accordingly, customary practice is to annex to the mortgage copies
of loan agreements, as well as any other instrument to which it is necessary to
refer for the mortgage terms and conditions and events of default. It is not
necessary to annex a loan agreement to the mortgage if the mortgage does not
refer to any part of the loan agreement for its terms. A mortgage customarily
includes a description of a range of remedies available to the mortgagee,
because the Maritime Act provides only the single remedy of arrest and judicial
sale. While it is not required that the mortgage state the addresses of the
parties, it typically does so.
The fee for recording a mortgage is USD 425 and includes the issuing of a
Certificate of Ownership and Encumbrance. Fees for recording related docu-
ments, such as amendments, discharges and so forth, may be less. If asked to
perform functions outside normal office hours, the Deputy Commissioner will
make an extra charge.
12. VESSELS THAT MAY BE MORTGAGED
Any vessel documented, whether provisionally or permanently, under Vanu-

atu law may be mortgaged. Vessels registered in another jurisdiction and only
bareboat-charter registered in Vanuatu may be mortgaged only in accordance
with the laws of their jurisdiction of registration, although Vanuatu permits (but
does not require) re-recordation of such mortgages.
13. WHO CAN BE A MORTGAGEE?
Any individual, corporation or other legal entity may be a mortgagee. The

Maritime Act contains no restriction on nationality or type of entity. There is no
prohibition against either a trustee or an agent being a mortgagee, and the
Deputy Commissioners Office advises it will accept both types of entities as
a mortgagee. However, the Deputy Commissioner may require that the princi-
pals for whom the trustee or the agent acts be disclosed so it would be prudent to
pre-clear any mortgage in favour of either type of entity with the Deputy Com-
missioner well in advance of recording.

REPUBLIC OF VANUATU
14. KINDS OF RIGHTS AND/OR CLAIMS FOR WHICH A

MORTGAGE CAN BE REGISTERED
Mortgages may be registered to secure an existing right or an obligation that is

capable of being expressed in a definite amount of a specific currency or cur-
rencies or units of account.
Mortgages including contingent commitments may also secure future
advances. The mortgage does not lose its priority because the originally secured
obligations are paid, provided that a commitment exists in the document of
mortgage that an advance or other value is to be given at a later time. A mortgage
is still entitled to priority pursuant to commitment if it secures future obliga-
tions, even if the lender may be relieved from the obligation of making the
advance because of a default or other event not within its control. When a
mortgage secures future or revolving advances, the mortgage must clearly
state a total amount in terms of the maximum principal amount to be outstand-
ing at any one time or in terms of the aggregate of all possible advances that can
be made.
A mortgage can secure a guarantee to pay an indebtedness arising from the
default of another provided the guarantee is for an ascertainable amount and it is
clear that the shipowner consents to the vessel constituting the collateral. If the
guarantee is payable on first demand, the mortgages maturity date is custom-
arily stated as being on demand. A mortgage may also secure obligations of
persons or entities other than the shipowner as a third-party mortgage. In these
cases the shipowner mortgages the vessel as security for loans made to other
entities (usually related ship-owning companies). Such transactions usually arise
where the loaned sum is significant and a single vessel is not necessarily suffi-
cient security to satisfy the lender.
Fraudulent conveyance issues may arise respecting a mortgage which
secures a shipowners guarantee or the debts of another. Vanuatu maritime
law contains no specific provisions concerning fraudulent conveyance but
general company law principles would suggest that Vanuatu ship-owning
companies, at least, should not run the risk of contracting into a situation
of insolvency.
The mortgage should be for a definite amount, although that amount may be
expressed in more than one currency or even recite an amount in terms of one
currency or its equivalent in any alternate currency. Obligations secured by a
mortgage may be expressed in any unit or units of account to which the parties
agree, including the currency of Vanuatu, currencies of any foreign state or
states, and equivalents or other units of account established by intergovernmen-
tal organizations. If the mortgage secures an amount under circumstances where
the unit of account may be altered from time to time, recordation should
include the words or an equivalent amount in any alternate unit of account
or similar language. In such a case, no mortgage amendment is required if the
obligation is subsequently denominated in a different unit of account.

HENGEN/RIDGWAY
In addition a mortgage may secure an additional amount arising out of currency

fluctuations, and such an amount may be separately defined and recorded as
part of the total amount.
15. INTEREST AND COSTS
Interest, interest upon interest, and costs may be secured by the mortgage
without being included in the stated amount, a term intended to apply only to
principal. A recording therefore usually specifies that the amount is, for
example, USD 1,000,000 together with interest and performance of mortgage
covenants. If interest is to be secured, a provision in the recorded instrument
must justify it.
Interest need not be expressed in terms of a simple rate. Formulae, reference to
markets or prime rates, the mortgagees costs of funding, and other methods are
allowed. A mortgage may secure such interest on the obligation as the parties
may agree. Accordingly, although no judicial decisions exist on the point, it is
believed that the Maritime Act removes mortgages from the operation of any
usury statute.
The extent to which interest can be claimed is affected by the statutes of
limitations. Limitation periods may apply in the case of mortgages; accordingly,
it is prudent for a mortgagee not to allow interest to accumulate in arrears too
long before seeking recovery, or to obtain a waiver of any reliance on a limitation
ban.
It is thought that costs are secured by a mortgage which explicitly states so but
the Maritime Act is silent on this point. Most mortgages contain covenants to
reimburse the mortgagee for a wide range of costs, such as: advances for the
benefit of the shipowner; insurance; crews wages; repairs; and legal fees and
other expenses of enforcement. The practical limit of the mortgagees right to
recover these sums may depend less upon the Maritime Act, which does not
mention them, than upon the discretion of the court distributing the proceeds
of the sale. No judicial decisions of record on mortgage enforcement in Vanuatu
exist and, therefore, there are no helpful precedents. It seems fair to say that the
Vanuatu courts are most likely to follow general legal principles and in the event
that costs are detailed as payable in the original contract, the court will accept
that payment thereof was the intention of the contracting parties. The issue of
legal costs arising would also be determined on general legal principles operative
in Vanuatu namely that the successful litigant is awarded costs.
16. PARTICULARS RECORDED AND OTHER EVIDENCE OF A MORTGAGE
A signed copy of the actual mortgage instrument is kept as a part of the

appropriate indexes in the central office of the Deputy Commissioner in
New York. The principal particulars of the mortgage are listed on its index
REPUBLIC OF VANUATU
recording page. A copy of a mortgage index page may be obtained from the
Deputy Commissioners office, although the Maritime Act makes no explicit
mention of it.
In the case of a mortgage on a vessel bareboat charter registered in Vanuatu, a
separate Bareboat Charter Mortgage book is maintained in which foreign mort-
gages on such vessels may (but are not required to) be recorded. The recording is
done in the same order as in the foreign registry.
Certified copies of mortgages are also available. On recording, the mortgagor
will receive two certified copies of the mortgage, one of which must be kept on
board the vessel and exhibited upon request pursuant to section 60 of the
Maritime Act. The mortgagee usually receives a third counterpart marked by
the Deputy Commissioner. A Certificate of Ownership and Encumbrance is
also available, which will show all mortgages current in respect of a particular
vessel.
17. FURTHER PRECONDITIONS FOR THE CREATION OF A VALID

CHARGE BY WAY OF MORTGAGE
A preferred mortgage must cover the whole of a vessel. It must also show the
interest of the mortgagor and the interest mortgaged. If it covers property other
than the mortgaged vessel, the mortgages priority status is not impaired if it
provides for a separate discharge of such property by the payment of a spec-
ified portion of the mortgage indebtedness. The mortgage must be acknowl-
edged. The mortgage acquires its status upon recording. Former technical
requirements that the mortgage be endorsed on the vessels Certificate of
Registry in order to create preferred mortgage status have been abolished.
Similarly, the formerly required affidavit of good faith is no longer necessary,
although this does not imply that a valid mortgage exists even though it is not
made in good faith.
18. PRIORITIES OF REGISTERED MORTGAGES INTER SESE
Recorded preferred mortgages rank, inter sese, in the order of recording unless a
recorded instrument (such as a subordination agreement) exists altering that
priority.
19. PRIORITIES BETWEEN MORTGAGES AND OTHER ENCUMBRANCES
No notices of maritime liens may be recorded other than mortgages and

instruments relating to mortgages, such as amendments, supplements,
assumptions, assignments, discharges, and subordination or coordination
agreements.
HENGEN/RIDGWAY
Upon a vessels sale in an in rem admiralty proceeding to enforce the preferred

mortgage lien, under Vanuatu law, the mortgage has priority over all claims
against the vessel except for certain liens: liens arising prior in time to the
recording of the preferred mortgage; liens for damages arising out of tort;
liens for crews wages; liens for general average and salvage, including contract
salvage; liens for unpaid tonnage taxes, fees, penalties and other charges due to
Vanuatu; and expenses and fees allowed and costs taxed by the court. Because
the order of liens is different in different sections of the Maritime Act, it is by no
means clear that the order of priority of the claims listed above will be exactly as
listed; it is, however, clear that they all come before a preferred mortgage. All
claims other than those listed above are inferior to mortgages whether or not
they constitute maritime liens or other claims that may be heard in a court of
admiralty. It should be remembered, however, that when a Vanuatu preferred
mortgage is enforced in a country other than Vanuatu, the law of the forum may
assert the right to govern priorities.
20. RELATION OF REGISTERED MORTGAGES TO UNREGISTERED

PREFERENTIAL RIGHTS
In a proceeding for the sale of a vessel to enforce a preferred mortgage, all

rights against the vessel are converted into rights against the proceeds from the
sale. Prior rights of retention and any possessory lien rank below mortgages
unless they constitute preferred maritime liens of the type mentioned in the
preceding section.
21. TO WHAT DOES A REGISTERED MORTGAGE ATTACH?
A registered mortgage attaches to the vessel that is the subject of the

mortgage and to its appurtenances. Generally, the term appurtenances
includes all articles necessary or intended for the navigation or operation of
the vessel and its intended business. These appurtenances may be covered by
the mortgage even when removed from the vessel (e.g., a spare propeller left in
a shipyard for repair), until the appurtenance is permanently replaced.
Although the mortgage may provide covenants with respect to insurance,
the mortgage lien itself does not attach either to the insurance or to its pro-
ceeds. The mortgage may extend to the unpaid freights of a vessel when a vessel
is arrested by a court or the mortgagee takes possession pursuant to the terms of
the mortgage or an order of the court. On the other hand, a mortgage probably
does not include property of a charterer placed on board temporarily or certain
leased equipment not permanently affixed to the vessel or necessary to its
navigation. The Maritime Act does not deal with these issues and no Vanuatu
case law exists as guidance.

REPUBLIC OF VANUATU
22. EFFECT OF PAYMENT OF DEBTS SECURED BY THE MORTGAGE
Ordinarily, a mortgage is discharged pro tanto by payment of the debt secured

thereby. When a mortgage is completely discharged, an instrument to that effect
must be recorded. Upon discharge, the next ranking mortgage automatically
advances in priority.
23. ASSIGNABILITY OF MORTGAGES
A mortgage may be assigned in conjunction with the transfer of the indebt-

edness secured thereby. Mortgages may be partially assigned in conjunction
with a partial transfer of the indebtedness. A partial assignment can be recorded,
but the record should clearly show exactly what interest was assigned. Instead of
assignment, a mortgagee will on occasion give various institutions participa-
tions that expressly provide that they do not assign an interest in the collateral
or the debt secured thereby but only a right to participate in payments as and
when received. Such participation does not make the participant a mortgagee; if
properly drafted, it need not be recorded.
24. PROTECTION OF MORTGAGEES AGAINST SEIZURE, ETC.
The interest of a mortgagee in a Vanuatu-registered vessel is not terminated by

the vessels forfeiture for violation of any law of Vanuatu unless the mortgagee
authorized, consented, or conspired to effect the illegal act, failure, or omission
that constituted the violation causing forfeiture.
25. EFFECT OF CHANGE OF OWNERSHIP OF A VESSEL
Because a recorded mortgage constitutes a preferred maritime lien covering

the vessel over which it is granted, change of ownership will not affect the status
of the mortgage or the rights of the mortgagee under the mortgage. Contem-
poraneously with the transfer of ownership, it is customary that either old
mortgages be discharged or, if the transferee intends to reregister the vessel
under Vanuatu flag, that the transferee assume (by a recorded assumption agree-
ment) the obligations of the transferor under each mortgage and under any
underlying instrument relating to the indebtedness secured by such a mortgage.
26. MORTGAGE PROTECTION IN THE CASE OF DEREGISTRATION OF A VESSEL
A vessel subject to a preferred mortgage may not be cancelled from the register
so long as a preferred mortgage has not been discharged. If the vessel has already
HENGEN/RIDGWAY
been registered in another country without having first obtained a Vanuatu

permission and deletion certificate, the mortgagee should not delay in exercising
its rights. Vanuatu will not reregister a transferred vessel in Vanuatu if an existing
mortgage has not been discharged, unless the vessel is simply being reregistered
in Vanuatu with the consent of the mortgagee and the purchaser will assume or
take subject to the mortgage (and the debt or obligation secured thereby). If the
vessel is an actual or constructive total loss, the same principles should apply.
Vanuatu will maintain a vessel on its register and continue to assess the owner
for tonnage tax until proper steps for registry deletion have been taken, includ-
ing discharge of any mortgages of record. This administrative action does not
impair the mortgagees lien or terminate its interest. See, however, the discussion
in A, Chapter 4.2. above.
27. LIABILITY OF MORTGAGEES
It is generally believed that a mortgagee not in possession has no liability for

the torts of the owner or the vessel. However, a mortgagee who actually assumes
possession or in some manner controls or influences the shipowner in the use
and operation of the vessel may be liable for the same torts for which the
shipowner would be liable. A mortgagee not in possession cannot be held liable
for the owners contracts unless the mortgagee has agreed to be so liable. Even
after entering into possession, except possibly for environmental claims, a mort-
gagee is not likely to be held responsible for earlier contracts to which it was not a
party, although contract breaches may give rise to liens against the vessel.
A mortgagee in possession, however, may have some liability to continue the
performance of a charterparty made by the owner and of which the mortgagee
had knowledge.
28. SUBMISSION TO ENFORCED EXECUTION UNDER A MORTGAGE
The lien of a preferred mortgage may be enforced in Vanuatu by a suit in rem

in admiralty, or otherwise in any foreign country in which the vessel may be
found pursuant to the enforcement procedure of that country. The mortgagee
may also bring suit in personam against the mortgagor in any court of compe-
tent jurisdiction. An admiralty proceeding in rem under the mortgage is not
precluded or impaired because the mortgagee may have additional rights under
the mortgage to property other than the vessel.


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Maritime Law

This handbook has been prepared under the auspices of Committee A

Maritime Law Handbook

Maritime Law Handbook was first published in 1987.

Maritime Law Handbook

Part II. Flag and Registration of Vessels

Updated to 1 March 2012

Maritime Law Handbook

Maritime Law Handbook

Maritime Law Handbook

Maritime Law Handbook

CHAPTER 1. Sources of law and the principal rules arising

CHAPTER 2. Registration of a vessel 5

CHAPTER 3. Documentation required for registration 7

CHAPTER 5. Legal effect of registration 11

CHAPTER 6. International conventions for the unification of

CHAPTER 7. Bareboat-charter registration under the Vanuatu flag

CHAPTER 8. Bareboat-charter registration under a foreign flag of

CHAPTER 9. Registration of rights in respect of vessels under

B. Registration of Mortgages on Vessels and Legal Nature of Mortgages 16

CHAPTER 10. SOURCES OF LAW 16

CHAPTER 11. THE REGISTER 16

CHAPTER 12. Vessels that may be mortgaged 18

CHAPTER 13. Who can be a mortgagee? 18

CHAPTER 14. Kinds of rights and/or claims for which a mortgage

CHAPTER 15. Interest and costs 20

CHAPTER 16. Particulars recorded and other evidence of a

CHAPTER 17. Further preconditions for the creation of a valid

CHAPTER 18. Priorities of registered mortgages inter sese 21

CHAPTER 19. Priorities between mortgages and other

CHAPTER 20. Relation of registered mortgages to unregistered

CHAPTER 21. To what does a registered mortgage attach? 22

CHAPTER 22. Effect of payment of debts secured by the mortgage 23

CHAPTER 23. Assignability of mortgages 23

Maritime Law Handbook

CHAPTER 24. Protection of mortgagees against seizure, etc. 23

CHAPTER 25. Effect of change of ownership of a vessel 23

CHAPTER 26. Mortgage protection in the case of deregistration of

CHAPTER 27. Liability of mortgagees 24

CHAPTER 28. Submission to enforced execution under a mortgage 24

Maritime Law Handbook

Maritime Law Handbook

Maritime Law Handbook

Maritime Law Handbook

A. Flag and Registration of Vessels and Vessels

1.1. Sources of Vanuatu law concerning registration of vessels,

The principal source of law on documentation of Vanuatu vessels, registration

The Office of the Deputy Commissioner of Maritime Affairs

Maritime Law Handbook

The Commissioner of Maritime Affairs is also the Commissioner for Finan-

1.2. Entities entitled to document a vessel in Vanuatu

The Maritime Act permits documentation (which is defined to mean regis-

1.3. Registration of securities (charges)

1.4. Flying the Vanuatu flag

1.5. Transfers into and out of the Vanuatu registry

A vessel from a foreign state that becomes owned by an entity entitled to

2.1. Type of register

The Deputy Commissioner maintains a central register for vessels in

2.2. Types of vessels eligible for registration

Any sea-going vessel owned by or on a bareboat charter to a citizen or national

2.3. Type of ownership

Vanuatu flag vessels may be owned by individuals, corporations, limited

2.4. Particulars recorded

Maritime Law Handbook