Cap. 234 Art. 38Mortgage of ship or share.  

(1) A registered ship or a share therein may be made a security for any debt or other obligation by means of an instrument creating the security (in this Act called a "mortgage") executed by 

the mortgagor in favour of the mortgagee in the presence of, and attested by, a witness or witnesses.

(2) A mortgage is indivisible notwithstanding the divisibility of the underlying debt or other obligation which it may secure.

(3) A mortgage shall attach to any proceeds from any indemnity arising from collisions and other mishaps as well as any insurance proceeds.

(4) It shall be lawful for a mortgage to be executed and registered in favour of a security trustee appointed or acting under a trust for the benefit of persons to whom a debt or other obligation is due. Such security trustee shall, in any such case, be recognised as the mortgagee of the particular mortgage and shall be entitled to exercise all the rights in relation to that mortgage as are accorded to mortgagees by this Act or any other enactment. Any such security trust shall be governed by the provisions of article 2095E of the

Civil Code when the applicable law is the law of Malta.

(5) A mortgage registered in accordance with this Act may be drawn up to secure the payment of a principal sum and interest, a current account, as well as the performance of any other obligation, including a future obligation due by the debtor to the creditor:

Provided that a mortgage drawn up in accordance with this Act shall be valid at law even if it does not indicate the monetary value of the indebtedness in the mortgage: Provided further that in order for future obligations to be secured by the mortgage, each of the following conditions shall be met:

(i) a maximum sum by way of principal for which the mortgage is granted shall be expressly stated in the registered instrument;

(ii) such maximum sum shall be recorded in the register by the registrar; and

(iii) the mortgage shall be registered in favour of a credit institution in an approved jurisdiction or such other organisation as may be permitted by means of a notice issued by the Minister.

(6) The Minister may make regulations to further regulate the operation of security granted to secure future obligations.

(7) For the purposes of this Act, the term ''account current''

means any indebtedness of a mortgagor in favour of a mortgagee arising and determinable in accordance with an underlying obligation and all the provisions of the Commercial Code relative to the contract of account current including the provisions of article 264 thereof shall not apply thereto unless expressly agreed to by the parties.