SSEK Indonesian Legal Consultants founding partner Dyah Soewito, senior foreign legal advisor Michael D. Twomey and Stephen Igor Warokka, an associate at the firm, have contributed the Indonesia chapter of the new Getting the Deal Through global guide to Ship Finance. SSEK Legal Consultants has one of the leading shipping practices in Indonesia. SSEK advises multinational and joint venture shipping and offshore drilling companies on all aspects of their operations in Indonesia, including advising on the establishment of joint venture companies, the opening of representative offices and the acquisition and sale of vessels. SSEK is ranked as a tier-one shipping firm by The Legal 500 and is highly recommended for its shipping practice by Asialaw.
The following is an excerpt from the Indonesia chapter of the Getting the Deal Through global guide to Ship Finance written by SSEK Legal Consultants.
What types of ship mortgages exist and what obligations may a ship mortgage secure? Can contingent obligations, including swap obligations, be secured? Are there standardized forms?
There is only one type of ship mortgage. While a form of ship mortgage deed is provided in the Indonesian shipping regulations, in practice, parties can submit their own mortgage form. However, there is no guarantee the Directorate General of Sea Transportation (DGST) will accept any mortgage form that is not similar to the short form provided in the regulations.
If parties choose to use the short form provided by law, they can enter into a separate deed of covenants but the deed of covenants will not be registered with the DGST. Parties can agree to secure any obligation, including contingent obligations, but the mort√Çgage deed will need to specify the amount being secured by the mortgage.
Give details of any required form for ship mortgages in your jurisdiction?
The ship mortgage deed form is an attachment to Minister of Transportation Regulation No. PM 13 of 2012 regarding Vessel Registration and Nationality. A standard ship mortgage deed must contain at least:
- the number and date of the deed;
- the name and location of the vessel registration official;
- the names and domiciles of the mortgagor and mortgagee;
- the number and date of the vessel registration deed or change of ownership deed;
- certain data concerning the vessel, for example, the name of the vessel, the vessel measurements and the number of the vessel registration deed;
- the basis of the mortgage, namely, information on the underlying agreement setting forth the obligation being secured; and
- the mortgage value.
Who maintains the register of mortgages? What information does it contain and where are such filings to be made? What is the effect of registration?
The DGST maintains the register of mortgages. There is a central register maintained by the DGST in Jakarta and a local register at any local DGST office authorized to maintain a register of mortgages. The central register contains information on all vessels registered in Indonesia, while the local registers only contain information on the vessels registered at the local DGST office. The register usually contains information on the mortgage deed, including the names and addresses of the mortgagor and mortgagee and the date of the mortgage deed. The registration results in the creation of a valid security interest being placed over the vessel in favor of the mortgagee.
Must the total amount of the mortgage be stated therein? Must the mortgage contain a maturity date? Must the underlying debt instrument be filed with or attached to the recorded mortgage?
Yes, the total amount of the mortgage must be stated in the mortgage deed although the amount need not equal the amount of the underlying debt. The mortgage does not contain a maturity date. Due to its accessory nature, once the underlying loan is settled, the mortgage registration must be revoked. A copy of the underlying debt instrument must be filed with the DGST office at which the mortgage will be registered.
Can a mortgage be registered in the name of an agent or trustee for the benefit of multiple lenders?
Yes, a mortgage can be registered in the name of an agent or trustee for the benefit of multiple lenders if the underlying loan agreement so provides and if there is valid authorization from the lenders to the agent or trustee to act on behalf of the lenders.
If the mortgagee is an agent or trustee for a lending syndicate, must any filings be made upon transfer of a portion of the underlying debt among existing lenders or to a new lender?
Any change to the information in a mortgage must be reported to the DGST office where the mortgage was registered, following which the mortgage will be amended accordingly.
If the mortgagee transfers its interest to a new lender, agent or trustee what filings are required? Is the mortgagor's consent required?
An application for an assignment of mortgage must be submitted to the DGST office where the mortgage was registered. The mortgagor's consent is required.
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