Singapore among the first to sign the United Nations Convention on the International Effects of Judicial Sales of Ships

27 September 2023

Singapore is among the first signatories of 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, (“Convention”) after signing the Convention in Beijing on 5 September 2023. The Ministry of Law (“MinLaw”) announced the signing of the Convention in a press release on 6 September 2023. The Convention was signed by a total of 15 countries at the signing ceremony.

The Convention has not entered into force as yet and will only do so 180 days after the date of the deposit of the third instrument of ratification, acceptance, approval, or accession. Singapore is expected to give effect to the Convention
by passing legislation to enact its provisions into law but no indication has been provided as to when this will occur.

Set out below is a summary of what to expect:

• The Convention is expected to implement a harmonised regime for giving cross border recognition of judicial sales of ships. Under the Convention, 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, subject only to a public policy exception.
• To enhance certainty and transparency, 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 and a certificate of judicial sale.
  The Convention also establishes an online central repository to which those instruments must be transmitted for publication so that they are freely accessible to any interested person or entity.
• The Convention does not deal with the domestic rules applicable to the conduct of the judicial sale, which will be carried out in accordance with the law of the State party of the judicial sale. However, the Convention provides for streamlined processes for the deletion and registration of ships in the registries of contracting parties on the basis of a certificate of judicial sale issued in accordance with the Convention.
• The Convention will bar the arrest of a ship in any State party for any and all claims arising prior to the judicial sale of that ship.
• The Convention will prevent forum shopping as the courts of the state of judicial sale will have exclusive jurisdiction to hear any challenges to the judicial sale.
• The Convention applies only among state parties but does not displace other legal bases for giving cross border effect to judicial sales.

Shipowners, potential purchasers, creditors, ship financiers, and other stakeholders in the maritime industry will benefit from greater certainty across borders that a judicial sale will confer clean title to a ship on the purchaser, and that the ship may not ordinarily be arrested after a judicial sale for a claim arising prior to the judicial sale. This may also translate to more competitive prices in judicial sales as the purchaser and its financier has greater certainty that the ship can be purchased with clean title, free and clear of all encumbrances occurring prior to the judicial sale.

Reference materials

The press release is available on the MinLaw website www.mlaw.gov.sg.

The list of signatories to the Convention and the text of the Convention are available on the United Nations Commission on International Trade Law (UNCITRAL) website www.uncitral.un.org.