January 2023 · UN adopts global Convention on the Judicial Sale of Ships

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The United Nations General Assembly adopted the United Nations Convention on the International Effects of Judicial Sales of Ships on 7 December 2022.

The General Assembly authorized a signing ceremony for the Convention to be held as soon as practicable in 2023 in Beijing and recommended the Convention be known as the “Beijing Convention on the Judicial Sale of Ships”.

In most States, courts have the authority to order the sale of a ship to satisfy a claim that is brought against the ship or the shipowner. Such a claim is typically brought to foreclose a ship mortgage (in the event of default in repayment) or to enforce a maritime lien against the ship. The judicial sale procedure is typically preceded by the arrest of the vessel.

While the international community has achieved significant progress in harmonizing rules on the arrest of ships, much less progress has been achieved in harmonizing rules on the judicial sale of ships, which remain subject to widely varying domestic laws. The Beijing Convention will enhance legal certainty by creating a uniform regime for the international effects of judicial sales of ships.

The Convention is expected to provide legal protection for purchasers of ships sold by judicial sale, while safeguarding the interests of shipowners and creditors. It does this by providing uniform rules that the clean title acquired by the purchaser in the ship will be recognized internationally, while requiring a certificate of judicial sale only to be issued if certain safeguards are met, including notification of the shipowner, creditors and other interested parties.

It is expected that these safeguards will positively impact the price at judicial sales of ships, to the benefit of both shipowners and creditors, including lien holders and ship financiers. The International Maritime Organization will act as the repository of notices and certificates of judicial sales under the Convention.

The General Assembly calls on Governments and regional economic integration organizations to consider joining the convention to strengthen the international legal framework for shipping and navigation.