Commercial Code

A person holding a claim as set forth in one of the following has a statutory lien on the ship and its equipment:

a claim to compensation for loss or damage due to harm to an individual's life or person that has arisen in direct connection with the operation of the ship;

a claim for the salvage charges or a claim based on the sharing of a general average to be borne by the ship;

a claim that can be collected pursuant to the National Tax Collection Act (Act No. 147 of 1959) or using procedures for collecting national taxes and that arises in connection with the ship's entry into a port or use of a port or in connection with other operation of the ship; or a claim for pilotage charges or towage charges;

a claim for costs necessary for continuing a voyage; and

a claim held by the master or a mariner arising from an employment contract.

If statutory liens based on claims set forth in the items of the preceding Article (hereinafter referred to as "statutory liens on a ship" in this Chapter) are in conflict with each other, the order of priority of those statutory liens follows the order set forth in the items of that Article; provided, however, that a statutory lien on a ship based on the claim set forth in item (ii) of that Article (limited to one for the salvage charges) takes precedence over any other statutory liens on the ship that have arisen earlier.

If two or more persons hold statutory liens on a ship which are of the same rank, those persons are paid in proportion to the amount of their claims; provided, however, that for claims set forth in items (ii) through (iv) of the preceding Article, if the statutory liens arise at different times, the one arising later takes precedence over one arising earlier.

If a statutory lien on a ship and any other statutory lien conflict with each other, the statutory lien on the ship takes precedence over the other statutory lien.

If a shipowner transfers a ship, the transferee, after registering the transfer, must issue public notice to the holders of statutory liens on the ship indicating that they must file their claims within a fixed term. In such a case, the term in question may not be made shorter than one month.

A statutory lien on a ship is extinguished if the holder does not file a claim within the term referred to in the preceding paragraph.

A statutory lien on a ship is extinguished one year's time after it arises.

A registered ship may be made the subject matter of a mortgage.

A mortgage on a ship extends to its equipment.

Provisions concerning mortgages on real property apply mutatis mutandis to a mortgage on a ship. In this case, the phrase "if an obligee does not enforce the mortgage by filing a petition for auction within two months" in Article 384, item (i) of the Civil Code is deemed to be replaced with "if an obligee does not enforce the mortgage by filing a petition for auction or give notice to the third party acquirer that the obligee has not approved its offer within two months, or if the obligee giving that notice does not enforce the mortgage by filing a petition for auction within one week after the obligee becomes able to file it".

If a mortgage on a ship and a statutory lien on a ship conflict with each other, the lien takes precedence over the mortgage.

If a mortgage on a ship and a statutory lien (excluding a statutory lien on a ship) conflict with each other, the mortgage is treated as being of the same rank as the first-ranked statutory lien prescribed in Article 330, paragraph (1) of the Civil Code.

A registered ship may not be made the subject matter of a pledge.

The provisions of this Chapter apply mutatis mutandis to a ship under construction.