In a significant development, 15 countries, including China, Saudi Arabia, Singapore and Switzerland, signed the UN Convention on the International Effects of Judicial Sales of Ships to promote legal certainty and predictability at the international level by creating a uniform regime for the international effects of ‘judicial’ sales of ships.

The Beijing Convention on the Judicial Sale of Ships, as it is now known, was developed by the United Nations Commission on International Trade Law (UNCITRAL) to address the problem of bona fide new owners and those financing the purchase of vessels who, for instance, find themselves dealing with previous creditors laying claim to the ship as security for a loan.

The convention was opened for signatures at a ceremony in Beijing on September 5, according to the United Nations.

The convention establishes a harmonised regime for giving international effect to judicial sales, while preserving domestic law governing the procedure of judicial sales and the circumstances in which judicial sales confer clean title. By ensuring legal certainty to the title that the purchaser acquires in the ship as it navigates internationally, the convention is designed to maximise the price that the ship is able to attract in the market and the proceeds available for distribution among creditors, and to promote international trade.

The UN General Assembly has called on all states wishing to strengthen the international legal framework for shipping and navigation to consider becoming a party to the convention.

The International Maritime Organisation (IMO) said it was supporting the establishment of the convention by acting as the repository for these notices and certificates of judicial sale. Information on pending and completed judicial sales of ships will be accessible online via a dedicated module on IMO’s Global Integrated Shipping Information System (GISIS) platform.

With the Convention on the International Effects of Judicial Sales of Ships having now been adopted, the IMO is encouraging member states to ratify the agreement. Article 21 of the convention provides that it will enter into force 180 days after the date of deposit of the third instrument of ratification, acceptance, approval or accession.

Maritime transport plays a leading role in international trade, and it is estimated that more than 90 per cent of global traded goods are transported by sea. This makes the ship a vital asset, without which global commerce would not be possible. However, matters related to international shipping are often afflicted with legal difficulties arising from lack of international harmonisation.