Lloyd's Maritime and Commercial Law Quarterly
PRIVATE, COURT-APPROVED SALES OF VESSELS AND AIRCRAFT IN MALTA
Jotham Scerri-Diacono*
A novel, legal procedure providing for court-approved, privately arranged sales has been introduced into Maltese Law, under subtitle V of Title VII of Part I of Book Second of the Code of Organisation and Civil Procedure (hereinafter the “COCP”),1 allowing creditors forcefully to sell vessels2 belonging to their debtors through “privately arranged” sales.3 The novelty of this legal mechanism is the direct involvement of the Maltese courts in a privately arranged sale carried out by a creditor of the indebted vessel: in other words, the sale of the vessel, although negotiated and arranged directly by the creditor, is carried out with the prior approval of the court and under its authority. The court’s sanction serves primarily to free, in the hands of the buyer, the subject vessel from all privileges and other encumbrances that otherwise would have attached to her.4 The new legal mechanism will be welcomed by creditors, augmenting the existing legal remedies that Maltese law already offers to creditors seeking to enforce their claims over vessels belonging to their debtors.
The mechanism is straightforward and relatively easy to implement. It is triggered by means of an application filed by a creditor in the superior courts.5 The special procedure, however, can only be exercised on the request of creditors holding “executive titles”.6 In Malta, instances of creditors holding executive title would be mortgagees,7 judgment-creditors,8 holders of promissory notes9 and creditors who have entered into an agreement with their debtor that is received before a notary public in Malta when the debt is certain, liquid and due.10 Within 10 days from the filing of the said application, the court appoints a hearing.11
The only other instance when a privately arranged, forced sale of a vessel can take place as a matter of Maltese law relates to those mortgagees forcefully selling their mortgaged vessel following an event of default.12 This remedy is and remains available to mortgagee in a given set of circumstances set out in the Merchant Shipping Act (“MSA”). Such cases
1. Ch.12 of the Laws of Malta.
2. In this Comment, “vessels” also includes aircraft.
3. COCP, ss 358–364.
4. Mortgages and a select number of other encumbrances will follow the vessel (droit de suite) in cases where the vessel is sold privately by a mortgagee in possession.
5. COCP, s.358.
6. Executive titles are listed ibid., s.253.
7. That is registered mortgages, in terms of s.42(2) of the Merchant Shipping Act, ch.234 of the Laws of Malta (hereafter “MSA”).
8. COCP, s.253(a).
9. Ibid., s.253(e).
10. And not consisting in the performance of an act: ibid., s.253(b).
11. Ibid., s.361.
12. MSA, s.42(1)(b).
CASE AND COMMENT
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