Mortgagees’ Duties (Again)

In the case of Den Norske Bank ASA (the "Bank") v Acemex Management Company Limited ("Acemex") the Court of Appeal decided that a ship mortgage is not inherently different from a mortgage of land. The Court repeated some of the basic principles set out in the judgment of Silven Properties Limited v Royal Bank of Scotland (the "Silven Judgment") which had been handed down eight days earlier.

The Bank had lent three companies (the "Borrowers") US$6 million for the purchase of three vessels. The security for the loan consisted of mortgages on the vessels and a guarantee from Acemex. The Borrowers were in default under the loan facility in a number of respects, which led to the Bank enforcing its security by arresting one of the vessels, the "Tropical Reefer", in Panama. At that time it was carrying a cargo of bananas, en route from Ecuador to Germany where they were to be sold. However, since the bananas were perishable cargo and the vessel was to be sold in Panama, they had to be