Update: UNCITRAL Working Group of the Judicial Sale of Ships

By Brian F. Murphy, Senior Vice President, Berkley Offshore and Vice Chair, IUMI Legal and Liability Committee

When a shipowner fails to pay its creditors, the vessel is seized and is then frequently sold at a judicial sale. Problems arise when the new owner takes possession and then has the vessel seized again in another country for the debts and encumbrances of the prior owner, since the country of the port that the vessel is calling does not recognise the sale or change of title of the country where it was recorded. This failure to recognise clean title internationally creates a number of legal and financial issues and needs to be addressed by an international instrument.

Such an instrument was drafted by the Comité Maritime International (CMI) and presented by Switzerland, and became the sole topic of a UNCITRAL Working Group held 13-17 May 2019 in New York. IUMI had representation at this session and read a statement expressing the views of IUMI which support the development of an international instrument for cross-border recognition of the judicial sale of ships.

Subsequent Working Groups were convened and, at the most recent session held 27 June – 15 July 2022 in New York, the document was finalised and is now officially a Convention. A quote from Ann Fenech, who spearheaded this initiative along with several other key players, succinctly describes the successful week:

“Wonderful news from New York.  This week we successfully concluded the final reading of the Convention.  We had a few challenges on the way which were overcome and yesterday afternoon the Commission approved the final text of the Convention which will be known as ‘The Convention on the International Effects of Judicial Sales of Ships’ shortened to the ‘Beijing Convention on Judicial Sales’”.

It is anticipated that the General Assembly will adopt the Convention at its next meeting in the autumn and a decision will be made as to when the signing ceremony will take place.

Congratulations to Ann and the entire UNCITRAL Working Group for their tireless efforts to move this forward to its completion.