The finance charter instrument : an examination of the novel security measure introduced by Act No.1 of 2025

Abstract

Act No.1 of 2025 introduced the Finance Charter Instrument into Maltese law as a novel registrable security right aimed at protecting finance lessors in lease-based ship financing arrangements. This reform raises a central legal question, why should a finance lessor, who already retains title to the vessel, require an additional statutory form of protection? This dissertation examines the legal nature, operation and effectiveness of the FCI within the Maltese maritime framework, with particular focus on its interaction with existing security mechanisms, its treatment in insolvency, and its enforceability. The dissertation is structured across six chapters. Chapter 1 outlines the research context, questions and methodology. Chapter 2 analyses the pre-2025 framework, focusing on ship mortgages, judicial sale and maritime privileges, while identifying limitations in relation to lease-based financing. Chapter 3 examines the introduction and legal character of the FCI. Chapter 4 considers its interaction with mortgages, privileged claims and insolvency. Chapter 5 evaluates its practical effectiveness, while Chapter 6 presents the main findings and recommendations. This dissertation concludes that the FCI represents a significant development within Maltese maritime law. It strengthens the position of finance lessors by introducing a registrable real security right capable of ranking within the existing hierarchy of claims and surviving the insolvency of the finance charterer. However, its protection remains limited, as it does not displace higher-ranking claims nor attain the procedural strength of a ship mortgage as an executive title. It is therefore best understood as a targeted reinforcement of Malta’s maritime security framework rather than a replacement of existing securities.