Is the scope of the mortgage guarantee of ships equal to the scope of the principal claim? Which one shall prevail when the scope of the mortgage guarantee in agreement is inconsistent with the registration? There are different opinions in practice. Some people believe that the amount of the registered principal claim shall prevail, not including interest therefrom, default fine and other costs. There are other opinions that the scope of the guarantee stipulated in the contract shall prevail.

Recently, NMC resolved a dispute between JiangSu Jingjiang Rural commercial Bank Dongxing sub branch and Hu Yongfu. In the case, the master contract is a financial loan contract, which stipulates the repayment method, repayment period, interest therefrom and calculation method of overdue penalty interest. The accessory contracts include a ship mortgage contract and a guarantee contract. The scope of guarantee includes the loan principal, interest therefrom and penalty interest. The mortgaged ship is a bulk carrier named "Jintai 528".The mortgage scope is the debt principal, interest therefrom, overdue interest, penalty interest under the loan contract and all costs of exercising creditor rights. The above contracts are signed under the true intention of the parties, and do not violate the mandatory provisions of Chinese laws and administrative regulations, they are legal and effective. Because the debtor has not paid off the principal and interest therefrom at maturity, and the overdue penalty interest has been incurred, the creditor sued the court to request the debtor, the guarantor, and the mortgagor to bear corresponding liabilities.

NMC analyzed and demonstrated the provisions of the substantive law, the change of the real rights of ships, the trend of legislation, and the practice of ship mortgage registration, referred to the registration of immovable , and finally determined that the agreement in the contract shall prevail. First of all, for the scope of the guarantee provided by the "Property Law of the PRC" and "Guarantee Law of the PRC" covers the principal claim and the interest therefrom, default fine, compensation for damages, etc, and allow the parties to make other agreements in the contract. Secondly, the real rights of a ship shall be changed when the ship is delivered, no registered required. Therefore, it is more reasonable to support the agreement of the parties as the scope of the mortgage guarantee of ships. Third, there are similar provisions for the scope of guarantees in the "Civil Code of the PRC", indicating that supporting the agreement as the scope of the mortgage guarantee of ships is in line with the trend of legislation. Finally, referring to the relevant provisions of the Supreme People’s Court on the scope of guarantees in the registration of immovable, and the ship mortgage registration authorities only register the amount of the principal claim on the certificate in practice, which is limited by technical conditions, so it cannot simply affirm that "the amount of principal claim" equal to "the scope of guarantee".