The applicant, Nordic Bank Plc (Nordic), sought an order from the Court determining the priorities of several claims against the sale proceeds of the defendant ship Seagull and payment accordingly. This application was served on the plaintiffs in Actions No 357/84, 370/84, 374/84 and 114/85 at their addresses for service. Plaintiffs in Actions Nos 357/84 (plaintiff 357) and 114/85 (plaintiff 114) against the proceeds of the sale of the ship opposed this application. Both plaintiffs had obtained judgment by default in their respective cases.

Plaintiff 114 argued that, by virtue of the provisions of the International Convention for the Unification of Certain Rules of Law Relating to Maritime Mortgages and Liens 1926 (the MLM Convention 1926) its claim for loss or short delivery of cargo ranked in precedence to Nordic's mortgage claim. Article 2.4 of the MLM Convention 1926 creates a maritime lien for loss of cargo and art 3 provides that mortgages rank after this lien. In accordance with the Ministerial Decision No 54123/80 for the registration of the ship in Greece, published in the Greek Gazette, No 1179, dated 21 November 1980, issued pursuant to Greek law that governs the registration and the status of the ship, preferred mortgages rank after the privileged claims specified in art 2 of the MLM Convention 1926 and, therefore, plaintiff 114 ranks in priority over Nordic, whose claim is based on a foreign mortgage. This is based on Greek law, which is applicable in the present proceedings, as the ship was registered in Greece. Nordic's claim is based on a foreign mortgage, not registered in Cyprus, and, therefore, it might be considered only as an equitable mortgage, which has no priority.

Held: Judgment in favour of Nordic.

The submission of counsel for plaintiff 114 raises the question of the law to be applied. It has to be determined whether the lex fori, or the lex loci, the law of the flag, applies. The proper law for the determination of priorities is the lex fori. The law applicable in this country is the Constitution, the statute law of Cyprus, English law in its admiralty jurisdiction on the date preceding Independence Day and any Acts of the Imperial Parliament the operation of which was extended during colonial rule to this country.

The MLM Convention 1926 was not part of English law before Independence Day. It was not ratified and its operation was not extended to the colony of Cyprus by the Imperial Government during colonial rule, so as by succession of state to be ratified by the Republic of Cyprus, in accordance with the provision of art 1693 of our Constitution and is not binding upon this Court. Under our law cargo claims carry no maritime lien and rank in priority after all mortgage claims.

Foreign mortgages need not be registered, and indeed there is no statutory provision or machinery for their registration in Cyprus. Nordic's claim is based on its first Preferred Mortgage on the ship Seagull dated 25 February 1982, duly registered in the Ship's Register in the Ship's Register in Piraeus. On the authority of The Colorado, if it is necessary to determine the nature of the right created under this mortgage, the Court may look to the law of the contract, but there is no need in this case.

Nordic ranks in priority to plaintiff 114.