A Legal Study On Avoidance Of Banks' Risks In Financial Lease Of Ships

Being a form of financial lease, ships' financial lease, involving maritime legal relation, is adjusted by maritime law and relative norm of laws and international conventions. Regulations governing general financial lease can't settle the special legal problems in ships' financial lease.A bank in a ship's financial lease has two statuses under different circumstances, i.e. the lessor or the lender.Being the lessor, a bank should perform a contract for sale and a contract for lease. As for the former, such legal problems as alteration of ownership of a ship, registry of claims, attribution of ownership of a ship under construction, bearing of risks and liabilities, insurance rising from such a ship will occur between the bank and the seller, who may be either the original owner or the shipyard. To the latter contract, legal relation is between the lessor and the lessee. It involves registry of relevant rights, insurance, responsibilities taken by shipowner, arrest and auction of a ship under financial lease, ect. Being a lender, a bank, not possessing the ownership, usually gets the right of ship mortgage established on the ship. A useful method to protect a bank's interests is to free the right of ship mortgage from infringement, including establishment, registry, period of the right, and the problems alike. Through the above analysis, last chapter made a conclusion in which all the risks were classified according to means of avoidance and suggestions were put forward respectively.