The Comité Maritime International, (CMI), the international body responsible for drafting the majority of international maritime conventions since its inception in 1897 – has for a number of years been aware that there are challenges relating to the international recognition of the judicial sale of ships.

Judicial sales are realities which occur when ship owners fail to pay their creditors.  Creditors of a vessel are diverse, ranging from shipbuilders and financiers, both of whom are often the mortgagees of a vessel to various service providers – ship repairers, suppliers of provisions and bunkers and crew who frequently face the greatest challenges when they are left abandoned on vessels without an end in sight, which in turn lead to many sleepless nights for numerous port authorities.

These are all diverse angles of a vessel in distress forcing a creditor to take action against the vessel and selling it in a judicial sale – an important factor being that the vessel must be sold to the new buyer free and unencumbered.

This is paramount because no potential new owner in his right senses is going to be remotely interested in purchasing a vessel which has numerous financial issues, unless the vessel is sold free and unencumbered and clean title passed on to the buyer.

Those of us involved in this sector know that subsequent to a judicial sale the creditors then need to focus their efforts on getting paid from the purchase price deposited in court. However, it is obvious that for a vessel to fetch the best price ensuring more money for distribution, the buyer needs the certainty that the judicial sale will be recognised all over the world ensuring it is not rearrested by some other previous creditor. The buyer also needs comfort that the existing flag of the vessel will recognise such a transfer of ownership and enable the smooth deletion of the vessel.

Sales emanating from European courts are recognised in other EU Member States thanks to the Brussels 1 Regulation and the Recast. The problem arises outside Europe because there is currently no international convention on the international recognition of judicial sales.

The CMI has drafted an international convention on the international recognition of judicial sales after taking into account the law in the several jurisdictions represented at CMI by the diverse maritime law associations. The CMI has approached the United Nations Committee on Trade Law (UNCTRAL) with a view to encouraging it to embark on future work on cross border issues related to judicial sales. The Commission encouraged the CMI to advance the proposal by holding a Colloquium so as to provide additional information to the Commission.

As a result, the Malta Maritime Law Association (MMLA), a member of the CMI, was entrusted with the organisation of the Colloquium in Malta at rather short notice and thanks to the co-operation of the Maltese Ministry of Transport, Infrastructure and Capital Projects the CMI together with the ministry and the Malta Maritime Law Association were able to co-host this Malta Colloquium.

It was my pleasure as president of the MMLA to welcome 180 delegates from over 52 countries to the Malta Colloquium. The event was expertly moderated by Suzanne Shaw, vice president of the MMLA, and addressed by Stuart Hetherington, the president of CMI, Transport Minister Ian Borg and Ryan Harrington, senior legal adviser to UNCITRAL

Two of the highlights of the Colloquium were the two panels moderated by myself and Alexander von Ziegler, made up of  expert practitioners – Camila Mendes Vianna Cardoso, from Kincaid Mendes Vianna Advogados Rio De Janiero,  Jan-Erik Potschke from Ahlers and  Vogel Hamburg,  Lawrence Teh from Dentons Rodyk & Davidson Singapore, Charles Buss from Watson Farley and Williams London, Brooke Shapiro from Winston & Strawn New York, Tilman Stein from  Deutsche Bank Hamburg, Peter Laurijssen from  CMB Belgium, Cornelia Zammit German from Falzon Group Malta, Ivan Sammut, the  Maltese registrar of ships, and Norman Martinez  from the International Maritime Law Institute. The panellists were carefully chosen to ensure as wide a geographical spread as possible.

They explained issues arising in their parts of the world referring also to the efficient procedures available in Malta for the judicial sale of ships. They discussed difficulties ranging from how a mortgagee bank needs to ensure that a vessel gets the best possible price in the quickest possible time, the difficulties faced by unpaid bunker suppliers and the importance of a clean title being passed on to a new owner, to a flag administration’s need for certainty and how the only way forward is to work towards a uniform recognition standard through the adoption of an international instrument on the recognition of judicial sale of ships.

A report will now be prepared for presentation to UNCITRAL highlighting the deliberations which took place at the Malta Colloquium underlining that it is in the interest of global trade to have certainty and that certainty can only come through an international instrument ratified by as many States as possible.

Ann Fenech is president of the Malta Maritime Law Association, an executive council member of the CMI and managing partner of Fenech & Fenech Advocates.

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