The shipping industry has for years encountered issues with the recognition of the judicial sale of ships by a foreign court. The United Nations Convention on the International Effects of the Judicial Sale of Ships (the "Convention") paves the way towards greater harmonisation and commercial certainty for purchasers where the judicial sale occurs in one jurisdiction and registration of that vessel is sought in another jurisdiction.

The judicial sale of a vessel confers clean title, free and clear of all encumbrances, to a purchaser of that vessel. While the majority of the jurisdictions currently recognise the clean title acquired by purchasers, there are still a handful which refuse to recognise and give effect to this. As a result, purchasers of vessels sold by judicial sales may nonetheless face claims from creditors which arose prior to the judicial sales. In addition to the possibility of arrests of the vessel by these creditors, the bona fide purchaser could also face difficulties in the deletion of the vessel from its registry, and in the subsequent re-registration of the vessel in another jurisdiction.

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