The Beijing Convention on the Judicial Sale of Ships

The signing ceremony for the Beijing Convention on the Judicial Sale of Ships is set to take place on the 5th September 2023 in Beijing.

Hereunder is a preprint of the Convention along with an Explanatory note. The Explanatory note has been prepared by the UNCITRAL Secretariat and provides detailed article-by-article remarks on the text to assist those involved in studying or applying the Convention.

Preprint Judicial Sales Of Ships With Explanatory Note

Objective

Adopted by the General Assembly on 7 December 2022, the United Nations Convention on the International Effects of Judicial Sales of Ships, also known as the “Beijing Convention on the Judicial Sale of Ships”, establishes a harmonized 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 as to the title that the purchaser acquires in the ship as it navigates internationally, the Convention is designed to maximize 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.

Key provisions

The basic rule of the Convention is that a judicial sale conducted in one State Party which has the effect of conferring clean title on the purchaser has the same effect in every other State Party (article 6). The basic rule is subject only to a public policy exception (article 10).

The Convention regime prescribes additional rules which establish how a judicial sale is given effect after completion. The first is a requirement that the ship registry deregister the ship or transfer registration at the request of the purchaser (article 7). The second is a prohibition on arresting the ship for a claim arising from a pre-existing right or interest (i.e. a right or interest extinguished by the sale) (article 8). The third is the conferral of exclusive jurisdiction on the courts of the State of judicial sale to hear a challenge to the judicial sale (article 9).

To support the operation of the regime and to safeguard the rights of parties with an interest in the ship, the Convention provides for the issuance of two instruments: a notice of judicial sale (article 4) and a certificate of judicial sale (article 5). It also establishes an online repository of those instruments which is freely accessible to any interested person or entity (article 11).

The Convention regime is “closed”, in the sense that it applies only among States Parties (article 3), but “not exclusive”, in the sense that it does not displace other bases for giving effect to judicial sales, for instance under more favourable domestic law regimes (article 14).