The United Nations (UN) Convention on the International Effects of Judicial Sales of Ships, also known as the Beijing Convention on the Judicial Sale of Ships, was signed into law yesterday in the Chinese capital.
The document, adopted in December last year by the UN General Assembly, is aimed at solving cross-border recognition of judicial sale of ships.
China’s vice minister of commerce Wang Shouwen said he expects the convention to play a positive role in promoting the transaction of ships.
“Beyond the commercial benefits, the signing of the convention negotiated by various states, is a good reflection of multilateralism – with countries coming together to collectively establish a common framework to address a shared challenge,” commented Eng Dih Teo, chief executive of the Maritime and Port Authority of Singapore. Singapore was among the first group of 15 countries to sign the convention.
According to an update from law firm Stephenson Harwood, the convention paves the way towards greater harmonisation and commercial certainty for purchasers where the judicial sale occurs in one jurisdiction and registration of that vessel is sought in another jurisdiction.
“The judicial sale of a vessel confers clean title, free and clear of all encumbrances, to a purchaser of that vessel. While the majority of the jurisdictions currently recognise the clean title acquired by purchasers, there are still a handful which refuse to recognise and give effect to this,” Stephenson Harwood noted.
As a result, purchasers of vessels sold by judicial sales may nonetheless face claims from creditors which arose prior to the judicial sales. In addition to the possibility of arrests of the vessel by these creditors, the bona fide purchaser could also face difficulties in the deletion of the vessel from its registry, and in the subsequent re-registration of the vessel in another jurisdiction, something this new UN legislation looks to phase out.
