Legal Uncertainty Surrounding Judicial Sales of Ships

Ann Fenech noted that the principal issue in judicial sales of ships lies in the significant risk of undisclosed encumbrances not being extinguished. Purchasers, charterers and financiers expect to be able to acquire a ship with full transparency, at market value, and free of third-party claims. In practice, however, such vessels are often subject to rearrest, and the transactions themselves may be contested. Banks and investors therefore decline to finance the acquisition of an asset burdened by such a risk. As a result, what was meant to serve as an efficient mechanism for handling an asset in a shipowner’s bankruptcy becomes an obstacle to commercial turnover.

Stages in the Development of the Instrument

The idea behind the Convention dates back to 2007, when a preliminary study of issues relating to the judicial sale of ships was proposed at a meeting of the Executive Council of the Comité Maritime International. It was subsequently decided to place the matter on the agenda of the 2008 CMI conference in Athens. At that conference, a report entitled “A Brief Discussion on Judicial Sales of Ships” was presented, addressing the international recognition of foreign judicial sales of ships. Following the Athens conference, and with the approval of the CMI Executive Council, an international working group was formally set up. The draft convention prepared by CMI and approved by the CMI Assembly in 2014 came to be known as the “Beijing Draft.” Further work on the text was then entrusted to UNCITRAL Working Group VI, which held six substantive meetings between June 2018 and February 2019. The work of the group was further complicated by the coronavirus pandemic, with hours-long sessions having to be conducted online. Ann Fenech remarked that this was perhaps the most challenging stage in preparing the final instrument.

Within the framework of the International Maritime Organization (IMO), and at the initiative of the working group with the organisation’s active support, a large-scale repository was developed: the Global Integrated Shipping Information System (GISIS). The system provides open public access to information on ships, including certificates issued following judicial sales, thereby enhancing the clarity and reliability of the procedure.

On 7 December 2022, the United Nations General Assembly adopted the final draft of the Convention on the Judicial Sale of Ships. In 2024, six of the world’s ten leading flag states signed it. In 2025, Panama, the world’s second-largest ship registry, acceded to the Convention. Ann Fenech remarked that what drove the Convention’s successful and rapid uptake was widespread recognition by flag administrations of the instrument’s importance. The drafters also wanted the instrument to be flexible, brief (only 15 articles long), clear and readily capable of being incorporated into national legislation. The authors believe that it was precisely this approach that determined its success and rapid uptake. It took only three ratifications for the Convention to enter into force, the last of which was obtained as early as August 2025. As a general rule, the ratification of multilateral international instruments takes between 20 and 40 years, whereas the Beijing Convention was adopted and entered into force within just six years.

Key Provisions of the Convention

The President of the Comité Maritime International discussed five articles she called key to the instrument. Article 1 clearly states the purpose of the Convention, namely, to regulate the international effects of the sale of a ship by judicial order. At the same time, any judicial sale must confer clean title to the ship on the purchaser, as Article 6 further emphasises. For the purpose of extinguishing encumbrances, Article 4 provides for notice of judicial sale. Such notice is to be sent to the registry of ships, mortgagees and holders of registered charges, the shipowner, the bareboat charterer, and the bareboat charter registry. The notice must also be published in a media outlet available in the state of sale and in the IMO repository (GISIS). In this way, the notice reaches the widest possible range of creditors and interested parties, thereby minimising the risk of transactions being challenged. Article 8 eliminates the risk of rearrest: upon production of the certificate of judicial sale, the court must dismiss the application for arrest and order the release of the ship. The only exception to the prohibition on arrest is where doing so would be contrary to public policy. Finally, Article 9 vests the courts of the state of judicial sale with exclusive jurisdiction over claims seeking to challenge the effects of such a sale.

The courts of a State Party shall decline jurisdiction in respect of any claim or application to avoid a judicial sale of a ship conducted in another State Party that confers clean title to the ship or to suspend its effects.

Article 9(2) of the Convention

Challenges the Convention Seeks to Overcome

Judicial sales of ships have long been, and remain, a common practice. The speaker noted that in 2025 the average price achieved in a judicial sale was USD 23 million per vessel. Yet despite the substantial volumes involved in judicial sales, their international effects remained uncertain until the Convention was adopted. Ann Fenech illustrated the point with an example from her own legal practice, referring to the case concerning the rearrest of the vessel Bright Star. In the winter of 2018, Jebmed SRL obtained the arrest of the vessel in Jamaica, after which it was sold by a Jamaican court free of encumbrances. In June 2018, the Bright Star, which had come under new ownership following a judicial sale, was on passage from Russia to Venezuela with 30,000 tonnes of grain. She was instructed to stop in Malta’s territorial waters for bunkering and, once in port, was rearrested by the Maltese authorities on the motion of Jebmed SRL. The Maltese court ruled the arrest unlawful, but the case dragged on for five years, and the judgment took effect only in 2022. Ann Fenech noted that a similar pattern can be seen in the United Kingdom, where it takes an average of four years to obtain a court judgment setting aside a maritime arrest. Even where judicial proceedings have been commenced, the parties cannot be certain as to the fate of the arrested vessel, since the position on the lawfulness of the arrest depends to a significant extent on domestic law. The Beijing Convention addresses this difficulty by establishing a uniform and harmonised framework for the treatment of encumbrances following the judicial sale of ships. ■