Merchant Shipping Act (Cap. 234), article 37D

37D. (1) Subject to the provisions of this article, a registered mortgage and any finance charter instrument shall attach to the ship or share therein in respect of which it is registered until it is discharged: Provided that where the ship ha s been forfeited in accordance with this Act, the interest of the mortgagee and, or of any les sor under a finance charter instrument in the ship shall terminate if the mortgagee or the lessor under a finance charter instrument has authorised, consented to, or cons pired, to the act, failure or omission in consequence of which t he ship is forfeited. (1a) Where a ship has been sold pursuant to an order or with the approval of a competent court within whose jurisdiction the shi p was at the time of the sale, such sal e of the ship shall be conside red to give the purchaser a title which is free from all privileges and encumbrances and any mortgage, finance charter instrument or encumbrance registered over th at ship shall be deemed to be discharged and shall be remove d from the ship’s register: Provided that the interest of the mortgagees, or of the lessor under a finance charter instrument as well as of any other cred itor in the ship including their respective ranking, if any, shall be p assed on to the proceeds of the sale of the ship in accordance with the app licable law in that jurisdiction: Provided further that where a ship has been sold by a mortgagee in possession pursuant to his rights in accordance with article 42(1)(b) and it is stated in the bill of sale that the ship is being sold free from such encumbrance, then the rights arising from such regist ered mortgage and any finance charter instrument registered on the ship shall no longer be exercisable in relation to that ship. 28 CAP. 234.] MERCHANT SHIPPING  Cap. 16. (2) Any hypothec or privilege w hether general or special to which a ship may be subject under the provisions of the Civil Code shall not continue to attach to it when the vessel is transferr ed to third parties. (3) Without prejudice to any other cause which may at law extinguish an obligation the special privileges specified in ar ticle 50 are not extinguished by the sale of the vessel, except in ca se of a sale made pursuant to an order or with the approval of a compet ent court made according to the forms prescribed by law, or where, subsequent to a voluntary sale a period of one year has elapsed from the date of the registration, recording or annotation of t hat voluntary sale in the registry to which the ship belongs or whe re no such registration, recording or annotation are entered in that registry from the date of closure of the register of the ship i n such registry subsequent to such voluntary sale, unless within such period of one year an action for the recovery of the claim secu red by such privilege has been brou ght before a co mpetent court. Mortgage of ship or share.  Amended by: XXXVII. 1988.20; XXII. 2000. 27; XIII. 2004.61; VIII. 2010.61; I.2025.19.