Malta is expected to sign an important United Nations convention on Wednesday in a ceremony that will see a special UN book brought to the country for the occasion.

Verdala Castle will host a United Nations convention inviting foreign dignitaries from Europe and around the world to add their signatures to an international maritime treaty.

The treaty aims to provide certainty to purchasers of ships sold in ‘judicial sales’ – when vessels are sold by authorities to settle outstanding debts – by ensuring such ships are not rearrested by old creditors. 

But as well as foreign representatives, the convention will also see the official UN treaty book brought to Malta for the signing, an event considered to be an exceptional event by legal experts. 

It is hoped that through the convention, international shipping – responsible for transporting around 90% of world trade and of which Malta is a significant player – will become more stable and attractive to investment.

First signed by 15 countries in Beijing in September, the UN Convention on the International Effects of Judicial Sales of Ships was introduced to combat what maritime experts say was an unstable situation resulting from illegitimate claims of old creditors against legitimate buyers of ships in judicial sales. 

When ship owners are unable to settle their debts, often the only way forward is the arrest and judicial sale of the ship with the sale price used to pay off the debts.  

But legal experts say legitimate buyers who purchase such vessels may face serious challenges when hit by claims from old creditors who refuse to consider the matter settled, despite the ship passing to a new owner.

When ship owners are unable to settle their debts, often the only way forward is the arrest and judicial sale of the ship with the sale price used to pay off the debts

They argue this puts off potential buyers, who can sometimes struggle to see the registration of the ship’s previous owner, or its mortgagees removed in favour of their own.

This can lead to so-called ‘double arrests’, with such vessels being arrested for a second time despite having been bought ‘clean’ by new owners, with the convention aiming to put a stop to these tactics. 

Maritime lawyer and Comité Maritime International president Ann Fenech – the CMI coordinator at the United Nations Commission on International Trade Law – said it would “ensure stability” for the sector and promote interest in judicial sales.

She said the move would lead to better sale prices, with buyers more confident their new vessel would not be rearrested and provide more certainty to crews keen to be paid and repatriated to their families.

Stressing its importance for Malta, one of the largest flags in the world, Fenech said it was important for buyers and their financiers to be able to invest in such vessels “without fear they will be rearrested in other jurisdictions."

The convention has already been signed by China, Burkina Faso, Comoros, El Salvador, Grenada, Honduras, Kiribati, Liberia, São Tomé and Principe, Saudi Arabia, Senegal, Sierra Leone, Singapore, Syria and Switzerland, Ecuador, Tanzania, Belgium and Luxembourg.

Following the EU signing up in March, European countries including Malta are now free to add their signatures to the convention. It is expected that various EU countries will sign on Wednesday.