Vol 21 (2024) - Issue 4

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Eurobank S.A. v Momentum Maritime S.A. [2024] EWHC 210 (Comm) (29 January 2024)

Synopsis
The Court granted summary judgment in favour of Eurobank S.A. (‘Eurobank’) against Momentum Maritime S.A. (a borrower and, along with other borrowers and guarantors, the ‘Defendants’). The case revolved around mortgaged vessels and the duties of a mortgagee upon arrest, taking possession and exercising a power of sale in respect of a vessel.
The case does not create any new law, but the Court confirmed the principles from Den Norske Bank ASA v Acemex Management Co Ltd (The Tropical Reefer) [2003] EWCA Civ 1559 (‘The Tropical Reefer’), including that when a marine mortgagee exercises a power of arrest this does not amount to taking possession and the mortgagee’s sole duty is to exercise the power of arrest in good faith for the purpose of obtaining repayment of the secured debt. More generally (that is, of relevance in the context of both maritime mortgages and mortgages more generally), a mortgagee: (a) assumes a duty to take reasonable care of the property only when it takes possession; and (b) owes equitable duties concerning the conduct of the sale only when it exercises its right of sale. In confirming these principles, the Court also rejected the Defendants’ argument that the scope of the mortgagee’s duty should be flexible and depend on the facts.