In a long and close relationship with Law Office of T. Mark Halpern, who was highly experienced in international ship-sale and ship-finance transactions, we have opened many escrow accounts in international S&P deals for secondhand vessels.  He passed away in 2022 and we still provide escrow agent service. Typical escrow procedures we provide as escrow agent are as follows.

OUTLINE OF TYPICAL PROCESS

  • Signing of MOA between S&P parties, including clauses stipulating escrow arrangements
  • Opening of USD ordinary account at sellers’ bank under our name or using of our permanent USD special purpose account for escrow services (SMBC or SMTB in Tokyo)
  • Signing of Escrow Agreement for Deposit among S&P parties and us and/or Escrow Agreement for Balance between buyers and us
  • Remittance of Deposit from buyers to our escrow account
  • Remittance of escrow fee from parties to our escrow account
  • Remittance of Balance from buyers to our escrow account
  • Closing meeting, at which steps stated below occur upon closing 
  • Upon signing of PODA, Joint release instructions for Deposit from S&P parties to us
  • Upon signing of PODA, release instructions for Balance from buyers to us
  • Release of Deposit and Balance to sellers and any surplus and interest to buyers

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ESCROW ACCOUNT

Traditionally, joint bank accounts were used to hold the Deposit portion of the Purchase Price in secondhand ship-sale transactions.  However, it has become difficult or impossible to open joint bank accounts at many Japanese banks.  As an alternative, we open and hold escrow accounts under our name to receive and release such Deposits.

Also, MT199 swift was used to remit the Balance portion and we were not involved in the step of remitting Balance normally.  However, it also has become difficult to use MT199 swift for remittance at many intermediary banks.  As a solution, recently we receive, hold and release such Balance also.

ESCROW FEE

We provide S&P parties escrow agent services with reasonable flat fees.  The amount depends on the location of the bank branch where the escrow account is opened and where the closing meeting is held, but in the case of SMBC in Tokyo our pricing structure is as follows:

-for holding and releasing Deposit: USD3,000

(normally borne equally by S&P parties)

-for holding and releasing Balance & Extra: USD3,500

(normally borne solely by buyers but it is up to agreement between S&P parties)

-SMBC bank charges: lifting charge is borne by S&P parties and remittance charge is borne by escrow agent