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Pledge over concession on a maritime domain

Summary/Abstract: It is unlikely that banks will ever use the proposed form of security – a pledge over concession rights. Pursuant to the Properties Act, any provisions of the pledge agreement contrary to the principles of pledge, and particularly the provision pursuant to which the pledged property shall, in the event of default, become the pledgee’s property, shall be null and void. The Properties Act gives to the pledgee right to enforce its claim through the court, or through out-of-court sale, and not through de-possession or use of the pledged property. Pursuant to Article 34 of the Maritime Domain and Seaports Act the concession shall be withdrawn if the pledgee (such as bank) does not meet the conditions applicable to the concessionaire and does not obtain the approval from the authorities. Thereby, it seems, banks are excluded automatically from potentially becoming pledgees over the concession rights. As security banks will normally take assignment of the concessionaire’s rights and benefits under the concession agreement and pledge of shares in the concessionaire. In the event of default the bank will through out-of-court settlement transfer the shares to a new investor in order to secure the performance of the concession and repayment of debt.

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