1. Introduction
A ship is a movable asset of high economic value and constitutes a fundamental unit of international trade. Unlike ordinary movable property, ships are subject to a public registration system, and legal actions such as ownership transfer, mortgage, and seizure are governed by specific legal rules. In Turkey, the Turkish Commercial Code (TCC) and relevant maritime registry laws play a central role in regulating ship ownership.
This article addresses the most common legal disputes surrounding ship sales, mortgaging, registration procedures, ownership transfer in international transactions, and related taxation issues.
2. Legal Nature of Ship Ownership
2.1. Is a Ship a Movable or Immovable Asset?
According to Article 931 of the TCC, a ship is classified as a movable property, but due to its mandatory registration, certain rules applicable to immovables also apply. This hybrid legal character significantly affects how ownership is transferred and secured.
2.2. Ship Registry
The ship registry officially records information such as:
- Ownership,
- Flag nationality,
- Technical details,
- Mortgages and encumbrances.
Ships attached to a Turkish port must be registered (TCC Art. 941). This registration serves both declaratory and constitutive purposes in various legal proceedings.
3. Ship Sale and Ownership Transfer
3.1. Domestic Sale
Ship sales in Turkey must be in writing, though notarization is not required. However, ownership is not legally transferred until the change is recorded in the ship registry.
Steps:
- A written sale agreement is executed between the parties,
- The transfer is registered with the ship registry,
- Only then is the ownership officially transferred.
🔹 Court of Cassation 11th Civil Chamber, 2019/5130 E., 2021/1744 K.
“A written sale contract alone is insufficient to transfer ownership of a ship; registry entry is required for legal effect.”
3.2. International Sales and Transfer of Title
In cross-border sales, the following legal issues arise:
- Which law governs the transaction?
Typically, the law of the ship’s registry applies. - When does title pass?
Some jurisdictions recognize transfer upon contract, others upon registration. - What taxes apply?
Value-added tax (VAT), customs duties, or other transactional taxes may apply depending on the involved jurisdictions.
Double taxation risks and international tax treaties should be assessed during contract negotiation.
4. Registration Procedures and Registry Disputes
4.1. Registration as a Legal Requirement
According to Article 942 TCC, ownership is only established through registration. Without registration, transactions like:
- Mortgages,
- Ownership transfers,
- Judicial seizures
are legally ineffective.
4.2. Common Registry Disputes
Frequent disputes include:
- Transfer of ownership not completed due to registration failure,
- Dual registration (same vessel in different countries),
- Harm to third parties due to outdated registry data,
- Undisclosed encumbrances later claimed against third parties.
🔹 TCC Art. 948/3:
“Information entered in the ship registry is presumed accurate and binding against third parties acting in good faith.”
5. Ship Mortgages and Security Interests
5.1. Establishing a Mortgage on a Ship
To secure a claim with a ship mortgage:
- A written mortgage agreement must be executed,
- It must be registered in the ship registry (TCC Art. 951).
The mortgage does not take legal effect without registration.
5.2. Priority and Enforcement
- If multiple mortgages exist, the order of registration determines priority,
- In judicial or voluntary sales, mortgage creditors are paid in registry order.
Failure to properly register mortgage rights can cause substantial loss in enforcement proceedings.
6. International Aspects: Taxation and Flag Change
6.1. Taxation in Cross-Border Transactions
In international ship sales:
- The buyer’s jurisdiction may impose import duties or VAT,
- In Turkey, exports of ships may benefit from VAT exemption, provided the transaction is properly documented,
- The parties should clarify in the contract who bears tax burdens and filing obligations.
Disputes often arise due to lack of clarity on tax residency, delivery location, and invoice terms.
6.2. Flag and Registry Change
If the buyer intends to register the ship under a new national flag:
- Deletion from the previous registry is required,
- Dual or incomplete registration may cause the ship to be considered stateless, resulting in major legal risks.
This may affect:
- Port entry clearance,
- Insurance validity,
- Legal enforcement of claims.
7. Conclusion and Evaluation
Ship ownership and registry transactions, both domestic and international, involve technical and legal complexities. Key takeaways:
- A written sale contract is insufficient without registry entry,
- Registration is legally constitutive for ownership and mortgage rights,
- In cross-border sales, parties must assess applicable law, registry jurisdiction, and tax rules,
- Mortgage priority must be preserved by proper registration,
- Flag change and registry transfer must be coordinated carefully to avoid regulatory gaps.
Engaging a qualified legal advisor with expertise in maritime and property registration law is essential to prevent disputes and protect financial and legal interests.
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