On February 28, 2015, the Supreme People's Court promulgated the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in Handling Ship Arrest and Judicial Sale (hereinafter, the "Provisions"), which came into effect on March 1, 2015. The Provisions are highlighted as follows.
The Provisions specifically provide for issues concerning the judicial sale of a ship under a bareboat charter. Article 23 of the Special Maritime Procedure Law specifically provides that if the bareboat charterer of a ship is liable in the event of a maritime claim and is the bareboat charterer or owner of the ship at the time of the ship arrest, the maritime court may arrest the ship. However, this law is silent as to whether a ship under a bareboat charter can be judicially sold. The Provisions adopt the position that "a ship that can be arrested can be sold," even though they specially provide that the objective of a judicial sale is to satisfy obligations arising from a bareboat charter's operation of such a ship.
As for the issue of concurrent arrest and judicial sale of a ship, the Provisions specifically provide that the maritime court may, upon application of different maritime claimants, arrest ships which have been arrested by the court or by another maritime court. If a maritime claimant applying for the ship arrest first does not apply for the judicial sale of the ship, another maritime claimant applying for the ship arrest may apply to the court that approves the arrest application for the judicial sale of the ship
In addition, the Provisions also stipulate issues concerning the reserve value of a ship during a judicial sale. Pursuant to the Provisions, the reserve price shall not be lower than eighty percent of the appraised value; and the reserve value may be reduced, if another judicial sale is required due to a failed sale, provided that the reduction shall not exceed twenty percent of the previous reserve value. A ship which is not sold as a result of two judicial sales may be disposed of for a price which shall not be lower than fifty percent of the appraised value. If the disposal is still unsuccessful, the ship may be disposed of for less than fifty percent of the appraised value, subject to the consent of the creditors entitling to over two thirds of the registered claims. If the disposal is still unsuccessful, the maritime court may release the ship.