First countries sign new Convention on the International Effects of Judicial Sales of Ships

A new Convention on the International Effects of Judicial Sales of Ships has been signed in Beijing.

The international trading and shipping community has a new International Convention designed to bring stability and certainty to shipping responsible for carrying 90% of World Trade.

The UN Convention on the International effects of judicial sales of ships was signed in Beijing, China, on Tuesday morning in a signing ceremony which was organised by the Chinese Government and UNCITRAL at the Beijing National Convention Centre.

The Convention will ensure that ships purchased in judicial sales free and unencumbered will not be subjected to re-arrest by the vessel’s previous creditors, that registrars of ships will delete the vessels sold, as will the previous mortgages and encumbrances and that they will in turn register the ships in the names of the new owners and register mortgages in the names of the new financiers.

The failure to give such effects has had a negative impact on potential purchasers who would be reluctant to pay the best price in judicial sales in the interest of all the creditors if they ran the risks of having the ships they purchased re arrested by old creditors. Financiers are also reluctant to finance ships without such assurances.

It was at the Malta Colloquium in 2018 that the international shipping industry concluded that such a convention was important and UNCITRAL agreed to take on the draft convention prepared by the Comite Maritime International (CMI) and started the deliberations on this draft. The draft was finally concluded in June 2022 and it was adopted by the General Assembly of the United Nations on the 7th of December 2022.

In April of this year a symposium was held in Malta under the auspices of the Ministry of Foreign Affairs, UNCITRAL and the CMI and three Maltese Ministers of State, the Minister of Transport, Home Affairs and Foreign Affairs pledged their support for the Convention.

The Convention was signed on Tuesday by 15 countries: China, Burkino Faso, Comoros, El Salvador, Grenada, Honduras, Kiribati, Liberia Sao Tome & Principe, Saudi Arabia, Senegal Sierra Leone, Singapore and Switzerland in the presence of numerous state representatives.

The Convention will come into force when it is ratified by 3 State Parties. The EU has pledged its support for the Convention and the Commission has already approved a policy to be adopted by the EU Council which will clear the way for EU Member states to sign and ratify the Convention.

Present at the signing ceremony was Mr. John Busuttil Maltese Ambassador to China. Dr. Ann Fenech, the President of the Comite Maritime International (CMI) who was the CMI co-ordinator for the project at UNCITRAL from 2018 to 2022 was present and invited to give a Key Note  speech at the Symposium which followed the signing ceremony. She said “this is a historic moment for the CMI, for UNCITRAL and for the international maritime community.”