4.6 Amendments and deletion – with qualifications regarding mortgages
Registered rights can be transferred, and legal protection for such transfer is obtained by registration. And registrations may be electronically deleted according to MC Sections 28 (deletion of ship), Section 29 (deletion of rights).
Mortgages on a vessel can be registered electronically or by use of a paper document. However, mortgages raise special issues when they are in paper form, because MC Section 24 paragraph five first sentence says:
“The provisions of Section 23 do not apply to the transfer of mortgages, or to the pledging of mortgage deeds governed by rules applicable to negotiable debt instruments.”
The electronic mortgage is not considered to be such an instrument:
“Legal protection for transfer of a negotiable instrument is connected to the actual handing over of the debt instrument … Such delivery … presupposes that the instrument is a paper document”
Accordingly, a second sentence has been added to paragraph five:
“The first sentence does not apply to mortgages registered electronically.”
A registered paper based mortgage that is “a negotiable debt instrument”, may, however, be deleted electronically in some instances. MC Section 29 paragraph two accepts such deletion
“when the holder of the right according to what has been registered, is with a Norwegian financial institution licensed to operate as a bank according to the Act on Finance Institutions Section 2-7, a bank with a branch office in Norway and its main office in another EØS-state with the right to operate as a bank in Norway according to the Act on Finance Institutions Section 5-2, or an institution named in the Act on Finance Institutions Section 1-6 paragraph one, and the bank or institution asks for deletion without presenting the original document. In such cases the bank or the institution is responsible for any loss that may occur as a consequence of the document being neither destroyed nor given endorsement of deletion from the Ship Register.”
The Ministry has remarked that it is a drawback that other foreign banks than those listed, do not have the same possibility for requiring such electronic deletion, but the benefits of the rule outweigh this – in particular in larger refinancing operations where a number of originals would otherwise have to be presented (Prop. 129 L (2022–2023) p. 24).