2.3 The effects of registration
We shall not investigate the effects of complying or disregarding the obligation to register a ship, these being questions of public law. Regarding private law, the starting point is that between the parties to a right, registration does not alter either party’s position.(1) The formalities required for registration and the Registrar’s scrutiny of the document may of course have important evidentiary effect. Registration is relevant in relation to protection against third parties.(2)Prop. 129pg in the second sentence “The Register’s positive credibility is that one is entitled to assume that the information in the Register is correct. The negative credibility is that one who enters into a contract with the titled owner is entitled to assume that encumbrances which are not in the Register are not relevant.” The basic rule is that the right first registered has priority over rights registered later or not at all. However, if the holder of a voluntary created right knew or ought to know at the time of registration that there existed an older right not registered (and so was not acting “in good faith”), the older one has priority – regardless of whether the older one is a voluntary right or not. Registration may also lead to legal extinction when we have an older right that is incompatible with the registered one. An example, if A acquires a ship and at the time of registering his title no encumbrances were registered (and A was in good faith), existing encumbrances are extinguished. The holder of an execution lien and the bankruptcy estate are entitled, however, to rely on the time of registration; knowledge of older non-registered rights is immaterial. The creditors have one further advantage: if a voluntary right is registered at the same time as an execution lien or an arrest decision, the non-voluntary right ranks first, and in the event of bankruptcy the general rule is that in order to be respected by the bankruptcy estate, the right must be registered at latest the day before bankruptcy was declared.
The above concerns competition between rights deriving from the owner of the ship. Registration is also of importance when the owner’s position is contested – e.g. a previous owner contends that the transfer of ownership to A is invalid, and consequently that the mortgage that A has issued to B is invalid. Section 26 has rules on such an issue:
“No objection that a registered title derives from an invalid document can be raised against any person who has registered a right contractually acquired by him from the registered holder of the title, and who acted in good faith when entry in the journal was made. However, such objection can be raised if the document is forged or falsified or is void by reason of minority or was made under duress, cf. Act Relating to Conclusion of Agreements Section 28.”
When a document for registration arrives at the Register, it is entered into “the journal of documents” according to “the day and minute when it was received for registration” (MC Section 14), and an extract of the document is temporarily noted on the ship’s page in the Register. The Registrar will check the document and attachments (MC Section 15 has a number of requirements regarding the contents of documents and attestations of signatures etc.). If the requirements for registration are not complied with, registration will normally be refused and the document returned (with possibility of appeal according to MC Section 19), and the temporary note in the Register will be deleted. When everything is in order, the document shall be noted in the Ship Register, i.e. the temporary qualification is deleted. The document sent for registration is then returned to the person who presented it, or to a person designated by him (MC Section 14 paragraph four). On registration, a certificate of registration is added to the document (MC Section 17). The priority depends upon the time of entry in the journal of documents (MC Section 23 paragraph two) upon initial receipt of the document for registration, not the time when the temporary qualification in the Register is deleted. The time of entry is more precisely defined in Regulation 593/1992 Section 11:
“Documents shall be entered in the journal consecutively according to the date and time when they are received for registration. Documents reaching the Registrar in the same mail shall be regarded as having been received at the same time. Documents arriving by morning mail shall be regarded as arriving at 10.00 hours. The document journal number, date and time shall be noted on the document.”