WORKING GROUP VI: JUDICIAL SALE OF SHIPS

The Mandate

Mandate

Security Interests, 2002 - 2018 

Working Group VI commenced its current focus area of security interests in 2002.

 

From its 1st session in 2002 until its 34th session in 2018, the mandate of Working Group VI was Secured Transactions.  Working Group VI produced the following documents:

 

  • UNICTRAL Model Law on Secured Transactions

 

  • Draft Guide to Enactment of the UNICTRAL Model Law on Secured Transactions

 

  • Draft Practice Guide to the UNCITRAL Model Law on Secured Transactions (for users such as parties to transactions, judges, arbitrators, regulators, insolvency administrators and academics to maximise the benefits of secured transactions law).

 

 

Judicial Sale of Ships, 2019 to date 

The current mandate of Working Group VI is the development of an instrument about the “Judicial Sale of Ships” intended to confer clear title to purchasers of ships purchased under judicial sale. 

 

The draft instrument considered at Working Group VI’s 35th session held on 13 – 17 May 2020 in New York, was a draft convention prepared by the Comité Maritime International (CMI) on the recognition of foreign judicial sales of ships, known as the ‘Beijing Draft” (see (link) A/CN.9/WG.VI/WP.82).  Working Group VI decided the Beijing Draft provide a useful basis for its deliberations about judicial sales of ships.  Working Group VI continued its deliberations at its 36th session in Vienna on 18 – 22 November 2019. 

 

During the 36th session, Working Group VI decided the instrument ought be a convention rather than a model law.

 

The proposed 37th session that was due to be held in New York on 20- 24 April 2020 was postponed due to the COVID-19 pandemic.  The tentative dates for the next session are 14 – 18 December 2020 in Vienna.

This page was last updated in July 2020. 

 
 
 

Judicial Sale of Ships

According to the International Chamber of Shipping, the international shipping industry is responsible for the carriage of around 90% of world trade, making it the life blood of the global economy.  There are over 50,000 merchant ships trading internationally, transporting every kind of cargo.  The world fleet is registered in over 150 nations and manned by over one million seafarers of virtually every nationality.[1]   The top 35 flags of registration by tonnage may be viewed at [link].[2] 

 

The proposed instrument being developed by Working Group VI is intended to provide the maritime industry and ship financiers involved in that global trade uniformity that a ship sold by judicial sale has clear title.

 

The practical effect sought by the Beijing Draft was that where a prospective purchaser of a ship subject to judicial sale of a ship received clear title:

  1.  The prospective financier of the ship could be confident its secured interests would not be undermined by pre-judicial sale creditors;

  2. Would remove the current uncertainties of deregistration of the ship from its flag state and transfer of registered ownership to the prospective purchaser and registration of a financier’s secured interests in the ship;

  3. The ship could call at any port without risk of arrest by a creditor of the ship who pre-dated the judicial sale; and

  4. The purchase price ought not be adversely affected at judicial sale, benefitting pre-judicial sale creditors of the ship seeking distribution of the pool of funds from the sale proceeds. 

[1] www.ics-shipping.org as at 9 July 2020.

[2] Ibid.

What's next?

The forefront of WG VI's work can be gleaned from its latest reports from its 35th and 36th meetings, which took place in 2019. The reports from each of these sessions are available below:

Also helpful is the Agenda which was planned for the 37th meeting, which was scheduled to take place in New York in April 2020, but was postponed on account of the Covid-19 pandemic. See the agenda below:

 

UNCCA Resources

The 35th meeting of Working Group VI which occurred in New York between 13 and 17 May was attended by UNCCA's own Chair, the Honourable Neil McKerracher, who generously produced the below report on the progress and efforts undertaken at this session, in the context of the Beijing Draft. His Honour’s report is accessible in full below:

 

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