The lender on the hook?

James Turner, of Quadrant Chambers, and Jenny Salmon, of Holman Fenwick Willan LLP, examine the ship finance implications of the recent court decision in The Kyla

Shipowners put their most valuable assets at the mercy of the waves and weather every day so as to earn freight or hire, yet there are few more perilous ways to employ an asset. The mortgagee bank, whose principal security may be the ship itself, will therefore commonly insist on assignment of the owner's hull and machinery insurance policy to protect its position in the event of loss of or damage to the mortgaged vessel.