Palau

Mortgage Recordation

A vessel under the Palauan flag can be used as security for the repayment of a loan or discharge of other obligations by way of mortgage filed in the standard form provided by the PISR. A valid mortgage, which includes the whole of any vessel, has preferred status from its date of recordation.

Once a vessel is registered, registration of mortgage may be effected immediately on presentation of the relative documents.

A preferred mortgage may secure all debts or obligations arising, or that may arise between the parties, as a result of a transaction which is subject to the provisions of a preferred mortgage, whether such obligations are present, future, actual or contingent and the preferred mortgage shall also set forth, in addition to the other terms and conditions, the maximum amount and the maturity date of the facility, or a statement of the date of termination of the facility, if this is different to the maturity date.

Recordation of the mortgage date and hour at which PISR proceeds with recordation is the date and hour at the location of the relevant head office of the PISR at which such recordation takes place and is effected.

A certified extract of a preferred mortgage, recorded with PISR, is acceptable as evidence of the recordation of a mortgage, including also the date of recordation thereof. In this regard, a certificate of ownership and encumbrance shall also, upon request, be issued evidencing all recorded mortgages, encumbrances and related instruments with respect to the vessel.

Discharge of a Mortgage

Upon a certificate of satisfaction of preferred mortgage provided by the mortgagee, a discharge of the mortgage indebtedness, shall forthwith file a certificate of such discharge and duly executed by the mortgagee, their successors or assigns, with PISR, which shall thereupon record the certificate.

Maritime Leins

The following rank as maritime liens, under Palauan law:

Claims for:
• Wages and other sums due to the master, officers and other members of the vessel’s crew in respect of their employment on the vessel, including costs of repatriation and social security contributions payable on their behalf;
• Master’s disbursements or liabilities made or incurred on account of the vessel; and
• unpaid fees, penalties and other charges, such lien having priority over all others save those for crew’s wages and salvage;
• Claims for repairs, supplies, towage, use of dry dock or marine railway, or other necessaries, to any foreign or domestic vessel upon the order of the shipowner or person authorised by the owner; and

Claims based in tort arising out of physical loss or damage to property caused by the operation of the vessel, other than loss of or damage to cargo, containers or passengers effects carried on the vessel

The Preferred Mortgage lien has priority over all claims against the vessel, except maritime liens:

• for damages arising out of a tort;
• for fees under s.729 (Fees: collection, penalties and liens) of the Act;
• for crew’s wages;
• for general average;
• for salvage (including contract salvage); and
• for expenses and fees allowed and costs awarded by the relevant Court.