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News & Insights 11 December 2017
On 16 November 2017, the Superior Court of Justice (SCJ), Brazil’s highest court (in respect of non-constitutional claims) recognised a Liberian ship mortgage involving an FPSO (i.e. a floating, production, storage and offloading vessel) located offshore Brazil.
On 16 November 2017, the Superior Court of Justice (SCJ), Brazil’s highest court (in respect of non-constitutional claims) recognised a Liberian ship mortgage involving an FPSO (i.e. a floating, production, storage and offloading vessel) located offshore Brazil.
The SCJ reversed the Appeals’ Court decision which had adopted a narrower approach and refused to recognise the validity of the Liberian mortgage on the grounds that (1) it had not been registered with the Brazilian Maritime Registry and (2) Liberia is not a signatory to any international convention pursuant to which Brazil was obligated to recognise the Liberian mortgage.
The decision of the SCJ is welcomed as it provides legal certainty surrounding the enforcement of foreign law mortgages over ships trading in Brazil and allays the concerns of parties involved in secured lending transactions, particularly in relation to offshore oil and gas assets.
The decision of the SCJ whilst not binding, is persuasive. A further appeal to the constitutional court is technically possible but unlikely.
Category: Offshore & Renewables
