A trawler has been laid up in the port of Lorient for eight months. The shipowner no longer pays its crews or its shipyard, the bank holds a judgment and the port authority is losing patience. Arrest as a protective measure is no longer enough: the vessel has to be sold.
From protective arrest to arrest in execution
A protective arrest immobilises the ship. An arrest in execution (saisie-exécution) leads to its sale. It requires an enforceable title: a judgment, an arbitral award declared enforceable, or a notarial deed. Where the ship is already under protective arrest, conversion allows the creditor to move from one procedure to the other without releasing its security.
The stages of the sale
The French Transport Code lays down a procedure specific to ships, distinct from the sale of ordinary movable property. It begins with an order to pay served on the debtor (Article L. 5114-23 of the French Transport Code). The court, seised by the enforcing creditor, sets the reserve price and the terms of sale (Article L. 5114-24 of the Transport Code). The sale takes place by public auction (Article L. 5114-25 of the Transport Code), after advertising governed by the regulatory part of the Code.
The reserve price is a strategic moment. Set too high, the sale fails; set too low, the ship goes to an opportunistic buyer at the expense of every creditor. An expert report on the vessel’s condition and on the second-hand market is invaluable.
Distribution of the proceeds
Once the ship has been knocked down at auction, creditors can no longer proceed against it: their rights are transferred to the proceeds, by way of opposition (Article L. 5114-27 of the Transport Code). Only creditors who have filed an opposition share in the distribution (Article L. 5114-29 of the Transport Code). A creditor who fails to file in time is excluded, even if it held a maritime lien.
Distribution follows the ranking of claims: legal costs, maritime liens, mortgages, then unsecured claims. Maritime liens, which appear on no register, are often the surprise of the distribution: crew wages, port dues, salvage charges.
The buyer’s side
Buying a ship at a judicial sale has its advantages: the buyer takes the ship as it stands, and the creditors’ rights are transferred to the price. The ship is sold as is, without warranty, and the buyer must check its administrative status (registration under the French flag, or francisation, navigation documents, certificates) before bidding.
What the firm checks first
- The enforceable title and its service.
- The condition of the ship and its market value.
- The known creditors: lienholders, mortgagees, crew, port.
- The timetable: order to pay, judgment, advertising, auction hearing.
- The oppositions to be filed against the proceeds.
For the firm’s services, see Ship arrest and Maritime litigation.
Further reading
- Ship arrest: the deadline to bring the main action that creditors forget
- Shipowner in receivership or liquidation: filing a claim and what happens to the vessel
- Abandoned vessel in a French port: port powers, forfeiture and claims
This analysis is part of the firm’s work in maritime law.
Frequently asked questions
Is an enforceable title needed to force the sale of a ship?
Yes. A protective arrest can be made without a title; an arrest in execution cannot.
Can a lienholder lose its rights?
If it does not file an opposition against the proceeds after the auction, it takes no part in the distribution (Articles L. 5114-27 and L. 5114-29 of the Transport Code).
Does the buyer take on the ship’s debts?
The creditors’ rights are transferred to the price. The buyer must, however, check the ship’s administrative status.