Implementation of Convention Provides Greater Guarantees for Banks - International Law Office

On February 26 2009 Parliament approved Law 10,086, which made Albania a party to the International Convention on Maritime Liens and Mortgages. The law entered into force on March 17 2009. The International Convention on Maritime Liens and Mortgages was issued and signed by the United Nations in Geneva on May 6 1993.

According to the convention, mortgages, hypotheques and registrable charges effected on seagoing vessels shall be recognized and enforceable in states that are signatory parties to the convention provided that:

• such mortgages, hypothèques and charges are effected and registered in accordance with the law of the state in which the vessel is registered;
• the register and any instruments required to be deposited with the registrar in accordance with the law of the state in which the vessel is registered are open to public inspection, and extracts from the register and copies of such instruments are obtainable from the registrar; and
• either the register or any instrument referred to above specifies at least:
  • the name and address of the person in whose favour the mortgage, hypotheque or charge has been effected or that it has been issued to the bearer;
  • the maximum amount secured, if that is a requirement of the law of the state of registration or if that amount is specified in the instrument creating the mortgage, hypothèque or charge; and
  • the date and other particulars which, according to the law of the state of registration, determine its ranking in relation to other registered mortgages, hypotheques and charges.

Furthermore, according to the convention, the ranking of registered mortgages, hypotheques or charges between themselves and their effect in regard to third parties shall be determined by the law of the state of registration. However, all matters relating to enforcement shall be regulated by the law of the state where enforcement takes place.

The adoption of the convention will give Albanian banks and credit Institutions greater guarantees for the recognition and enforcement of their security interests (ie, mortgages, hypotheques and charges) over seagoing vessels. Therefore, an increase in the range and number of movable assets offered as collateral to Albanian banks and credit institutions by clients is expected. At present, the number of movable assets used as collateral by banks and credit institutions operating in Albania is limited to securing charges over bank deposits, machinery and vehicles, as these types of property are easier to enforce and have a greater chance of success.

For further information on this topic please contact Jona Bica at Kalo & Associates Law Firm by telephone (+355 4 2233 532), fax (+355 4 2224 727) or email (j.bica@kalo-attorneys.com).