Malta's top court has again backed a mortgage holder in a row over the arrest of a ship despite its being auctioned to a new owner.
In February, the Superior Courts of Appeal ruled in favour of financier Jebmed in the case of the 23,000-dwt Bright Star (built 2011, ex Trading Fabrizia).
The bulker was sold at auction in Jamaica by the ship’s mortgagee in January 2018.
The buyer was Bluefin Marine of Greece for $10.3m in the face of strong buying interest.
However, the ship was arrested on 19 June 2018 while bunkering in Maltese territorial waters at the request of Italy-based Jebmed.
Jebmed argued that the judicial sale held in Jamaica failed to “acknowledge the effects of a Maltese registered mortgage” on the vessel.
Lawyers representing Bright Star argued that once the vessel was sold to Bluefin, such sale was made “free and unencumbered”.
After the February ruling, lawyers for the ship filed new proceedings relating to whether the mortgage registered on the vessel prior to the judicial sale in Jamaica remained attached to the same ship.
Appeal reversed
The application was made in the ship's name, not in Bluefin's.
The vessel's lawyers won this second lawsuit, but the Superior Courts of Appeal have now revoked the decision of the court of first instance.
It said the Jamaican sale can never be recognised as “free and unencumbered” when the mortgage registered on the vessel was never recognised.
As a result, the mortgagee’s interests never passed on to the proceeds of the sale, it added.
Legal counsel for Jebmed, DF Advocates, told TradeWinds the court was defending the mortgagee’s rights in full.
"This should be great news to financiers of vessels registered in Malta, which boasts to have one of the largest ship registries around the world," it added.
