Further Rethinking Maritime Finance Leasing: Ijara As An Alternative For Preserving Registered Ownership
This piece compares the Conditional Sale – Lease in/Lease Out structure (“CSA Structure”) with the Islamic Ijara leasing model (“Ijara Structure”) which is governed by Sharia principles. Both structures offer an alternative for:
shipowners who want to retain registered title with their vessel; and/or
lessors who wish to reduce operational risks of being ‘owners’ of a vessel.
Each structure shares the notable features that the registered ownership of the vessel with the relevant flag remains with the lessee and, as a result, the lessor can take the benefit of the mortgage over the asset.
Despite these similarities, and driven by religious and ethical considerations, the two structures are fundamentally different in design and execution, diverging in terms of their treatment of beneficial ownership, risk allocation and contractual obligations.
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Published by Watson Farley & Williams.
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