The University of Southampton
Courses

LAWS6140 Ship Finance

Module Overview

The construction and sale of ships is dependent upon finance. Either the costs of construction or the price at which ships are bought and sold (as appropriate) require large sums to be raised from a financier, usually a major bank or groups of banks. As such ship finance is a form of project finance where the project is the building or purchase of the ship and its associated income earning potential. A significant factor dictating the availability and the terms governing the provision of ship finance is the ability of the ship owner to provide security to the financier(s) for the repayment of sums advance. This 15 CATS module will examine the common loan and security structures employed in ship finance as such it will draw upon foundational principles of contract and property and demonstrate how they utilised within ship finance.

Aims and Objectives

Module Aims

The aims of the module are: - to introduce students to loan finance structures and common loan terms employed in ship finance; - to enhance student’s understanding of the functions of security in effecting the repayment of credit and the role of security within the insolvency process; - to give students a sound knowledge and understanding of the fundamental principles governing the grant and operation of real security for the repayment of credit over: - tangibles, in the form of ships, and - intangibles, in the form of income streams from charter parties and insurance proceeds. - to give students a sound knowledge and understanding of the grant and operation of personal security in the form of guarantees and performance bonds. - to provide students with an appreciation of the international dimensions associated with ship finance; - to consider alternative financing vehicles than loan finance.

Learning Outcomes

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

  • Common loan structures and terms.
  • Common forms of real security and personal security and their role in the structuring the financing of ship construction and ship purchase.
  • Principles governing the attachment, perfection and priority of security interests for: - the purchase of an existing ships; - the construction of a new ship; and - choses in action (in particular charter party and insurance receivables).
  • The role of personal security in the form of guarantees and performance bonds.
  • Powers and remedies of the lender in the event of the borrower’s default and/or insolvency.
  • Common issues affecting the financing of ship purchase and ship construction including: - governing law & international considerations; and - alternative financing mechanisms.
Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

  • Identify, analyse and synthesise relevant domestic and international legal sources relating to ship finance.
  • Critically evaluate the structure and functions of security for the repayment of credit and their employment within ship finance.
  • Critically evaluate the implications of the international environment of the maritime industry upon effective financing and security vehicles.
  • Formulate and present a coherent and logical legal argument supported with appropriate evidence.
  • Given a factual scenario, identify the relevant legal facts and legal issues and provide advice upon the resulting legal rights and responsibilities of the legal subjects within that factual scenario with appropriate use of supporting evidence.
Transferable and Generic Skills

Having successfully completed this module you will be able to:

  • Identify and locate relevant primary and secondary (including electronic) sources.
  • Analyse, synthesise and critically evaluate primary and secondary materials.
  • Formulate and present a coherent and logical argument supported with appropriate evidence.
  • Given a factual scenario formulate an effective solution to the problem posed.
  • Effectively communicate in writing in the English language.

Syllabus

The syllabus will focus upon loan financing for the purchase of an existing ship and the construction of a new ship. - Common loan structures and terms. - The function and structuring of security for the repayment of money advance for the construction of ships and the purchase of ships. - The fundamental principles and differing approaches governing the attachment, perfection and priority of ship mortgages and the assignment of receivables from charter parties and marine insurance policies. - Personal security offered by guarantees and performance bonds. - The implications of borrower’s default or insolvency and the performance of the security. - Common issues affecting the financing of ship purchase and ship construction including: - Governing law & international considerations; - Alternative financing mechanisms.

Special Features

N/A

Learning and Teaching

Teaching and learning methods

Teaching methods include: - Weekly seminars, incorporating individual student presentations with opportunities for group presentations (the balance between individual and group presentations will depend on the number of students in the module); - Occasional guest presentations by practitioners within the ship finance industry. Learning activities include: - Directed reading, as per distributed reading lists; - Additional reading as provided on Blackboard lists; - Attendance at weekly and guest seminars; - Engagement with daily business reports in news media, whether online or in newspapers, to promote an understanding of contemporary issues affecting ship financing.

TypeHours
Independent Study130
Teaching20
Total study time150

Resources & Reading list

Goode, R (2008). Legal Problems of Credit and Security. 

Harwood, Stephenson (2006). Shipping Finance. 

Beale, Bridge, Gullifer and Lomnicka (2012). The Law of Security and Title-Based Financing. 

Taking Security: Law & Practice. 

Assessment

Formative

Tutorial

Summative

MethodPercentage contribution
Closed book Examination  (2 hours) 100%

Repeat

MethodPercentage contribution
Closed book Examination  (2 hours) 100%

Referral

MethodPercentage contribution
Closed book Examination  (2 hours) 100%

Repeat Information

Repeat type: Internal & External

Costs

Costs associated with this module

Students are responsible for meeting the cost of essential textbooks, and of producing such essays, assignments, laboratory reports and dissertations as are required to fulfil the academic requirements for each programme of study.

In addition to this, students registered for this module typically also have to pay for:

Textbooks

The key texts and materials are already available in the University’s library resources. There are thus no particular additional cost implications.

Please also ensure you read the section on additional costs in the University’s Fees, Charges and Expenses Regulations in the University Calendar available at www.calendar.soton.ac.uk.

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