Maritime mortgages: a question of priority

Mannion, Peter William

Maritime mortgages: a question of priority

Thesis / Dissertation

1996

Abstract

The use of a ship, her cargo and appurtenances as a means of securing a debt in relation to that ship, incurred by her master or owner, has a history that can be traced back to Roman law. Early references to the practice may be found in the Digest of Justinian Book 42 dealing with privileges over property, where Paulus is quoted as saying: "Anyone who has lent money for the purposes of building, equipping or even purchasing a ship, is entitled to this privilege" or where Marcian; states: "A claim for money advanced for the building, purchase, fitting out, or equipping of a ship in any way, or one in respect of the sale of a ship takes precedence after a claim by the imperial treasury. " Both today would in all likelihood constitute a mortgage. In seeking to trace the origins of the maritime mortgage the 'Rolls of Oleron' present an early definitive recording of what may be described as being a 'pledge' of a ship's equipment by the master if he required money for the expenses of the ship in a foreign port. This process is likely to have given rise to what later become known as a 'bottomry' bond, believed to be the early forerunner of the maritime mortgage bond, and described by Lord Stowel in the [Atlas] 1827 as: "The hypothecation or bottomry bond known to the civil law, and acted upon with a undoubted authority by this Court." This form of bond, which had a similar form over cargo known as the 'respondentia' bond, allowed the master who was short of cash or credit, to acquire money to effect repairs to his ship and her equipment so as to complete her journey. Lord Stowell opined5 that this process was well known in Roman law, known as the usura maritima or foenus nauticum. It allowed the lender, whose security was contingent upon the safe arrival of the vessel at her determined port, to value his risk. This was so because the loss would be his entirely if the vessel came to grief along the way. The lendor therefore set his interest accordingly, with that eventuality in mind.

Keywords

Marine and Environmental Law

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Masters

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