The Risk Of Banks In Ship Financing Lease And Evasion,

Shipping finance is the main resource for purchasing vessels, both new buildings and second-hand acquisitions. Nowadays, it's impossible for a ship owner to develop its business solely by her own equity, especially in the situation of quick development of technology. The more technology is involved in the new buildings and the bigger the vessels are, the greater capital is required to expand the fleet. This means a demand for a source of capital used to purchase ships provided by shipping finance is constant and stable.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 later 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.