The Republic of the Marshall Islands (the “Republic”) is pleased to announce that on March 10, 2000, its legislative body, the Nitijela, passed a ground-breaking amendment to the Maritime Act of 1990. This amendment permits the registration of a vessel into the Marshall Islands that is still subject to a recorded mortgage in its present country of registry. The new amendment provides the necessary means for foreign mortgage liens to accompany the vessel into the registry. This “tacking” legislation provides the continuation of the preferred status of the mortgage without interruption.

Under the statute, the mortgage’s deletion or release of record by the prior state of registry as a condition of the vessel’s deletion from that registry does not affect the priority of the mortgage lien under the amended Marshall Islands law. The mortgage lien's priority will date from the original recording date of the foreign mortgage.

In addition to submitting to the Maritime Administrator the required recorded foreign mortgage, a simple mortgage instrument will be required to be signed and recorded when the vessel is documented in the Marshall Islands. This instrument will change the governing law of the mortgage to now reflect Marshall Islands Law as the law governing the mortgage. The resulting Marshall Islands mortgage will be valid and enforceable with respect to an Admiralty Action in Rem.

This new amendment to The Maritime Act was discussed and endorsed by a roundtable of lawyers, a majority of whom represent the New York Maritime Legal Community. We appreciate their assistance in preparing this cutting-edge legislation.

We would also like to remind owners that we are offering to register vessels in the Marshall Islands through June 30, 2000 free (except yachts and fishing vessels) of registration, documentation, mortgage recording, marine inspection, marine investigation and international participation fees as well as an annual tonnage tax exemption until December 31, 2000. Furthermore, that the annual tonnage tax for Marshall Islands registered vessels has been set at a fixed US$00.20 per net ton through calendar year 2004.

A request for a copy of this important legislation or any other information on vessel registration procedures in the Republic of the Marshall Islands may be obtained from any IRI office.