Banque Worms v Owners of the ship ”Maule” and Anr - Privy Council (Lord Browne-Wilkinson, Lord Lloyd, Lord Hope, Lord Hutton and Sir John Balcombe) - 24 February 1997

Whether ship’s mortgagee entitled to arrest vessel pursuant to obligations under a loan agreement notwithstanding that no instalment was outstanding on the day the writ was issued

The vessel Maule was registered at Limassol in Cyprus. She was mortgaged by her owners to the plaintiff bank in the form required by Cyprus law, which was the same as the Merchant Shipping Act 1894. The owners of the Maule were one of three shipowning companies in the same group. Those three companies entered into a separate Loan Agreement with the plaintiffs. One of the other shipowning companies owned a drilling vessel. Clause 7.01(g) of the Loan Agreement provided that if the owners of the drilling vessel had not secured employment for that vessel by 31 December 1993 the plaintiffs should be entitled to give notice requiring the sale of the vessel within 60 days.