Auctions of boats, ships and aircraft: procedures and legal particularities

The acquisition of a pleasure boat, commercial vessel or aircraft by a auction can represent an excellent opportunity. However, these procedures, which are the responsibility of auctionsThese are governed by complex legal rules that are often unfamiliar to the general public. Whether it's a forced sale after seizure or an auction to get out of a joint ownership situation, the bidder's path is marked out by specific stages. This article provides a complete overview of these mechanisms, clarifying the essential distinctions between the sale of a ship, boat or aircraft.

What goods are covered by these auctions?

There is a wide range of goods on offer. An auction can involve an imposing commercial vessel, or a simple pleasure boat. It is common to find in this category a family sailboat from a certain year, a RIB or a small speedboat. Potential buyers need to examine each lot in detail, which may include the boat alone or a combination of trailer and on-board equipment. The nature of the engine is also an important factor: it may be a diesel inboard engine or a petrol outboard, from popular brands such as Yamaha. For a petrol engine, checking the condition of the fuel system is a point to watch.

Each type of asset, from a cruising yacht to a private aircraft, is subject to a specific legal regime. Understanding this distinction is the first step in approaching an auction with confidence. The Transport Code provides the legal basis, but different procedural rules apply depending on the category of asset.

Forced sale of ships: a highly regulated procedure

The forced sale of a ship, often the result of a battle against unpaid debts, is the most formalised procedure in France. It is conducted under the close supervision of the courts to guarantee the rights of creditors and the security of the buyer. Our firm has an established practice in the field of vessel seizureregularly supports its customers in this process.

The central role of the enforcement judge (JEX)

Since 2016, article R. 5114-29 of the French Transport Code has entrusted the organisation of the sale to the enforcement judge (JEX) of the place where the vessel was seized. This judge is the orchestra conductor: he or she verifies the validity of the seizure and ensures that an enforcement order exists. It should be noted that the writ of execution need not be final. A simple interim injunction may be enough to set the procedure in motion. It is the JEX that sets the upset price and the terms of the sale, without the need for formal specifications, as is the case in real estate matters.

Advertising the sale: informing potential buyers

To ensure transparency, the judge orders strict publicity formalities. Posters must be put up in key places such as the ship's mainmast, the court of justice, the port quay, the chamber of commerce or the local branch of the maritime affairs department. The sale cannot take place less than a fortnight after these publications and announcements in the legal press. Increasingly, information is also available online on a website dedicated to this type of event, with a calendar often posted the week before the sale.

The auction process and the winning bid

The auction takes place in accordance with rules that are based on those for the seizure of real estate. Bids must be placed by a lawyer. The successful bidder, the last bidder, is required to deposit the price with the Caisse des dépôts et consignations within a very short period of 24 hours. If he fails to pay, the sale is automatically cancelled and he may have to make up the difference if the vessel is resold at a lower price. This mechanism, similar to the repeat bidsThis involves significant financial risks. If no offer is made, the creditor is not declared the owner; a new sale is organised with a reduced bid.

The effects of the auction: transfer of ownership without guarantees

The auction judgment transfers ownership of the vessel to the buyer. Above all, it has a "purgative" effect: it removes the liens and mortgages that encumbered the vessel. The buyer therefore obtains a property free of previous debts. On the other hand, it is essential to note that this sale takes place without any guarantee against hidden defects, in accordance with article 1649 of the French Civil Code. The auction also terminates existing contracts, such as charter contracts, and the duties of the captain on board.

Distribution of the price among creditors

Only creditors who have lodged an objection may participate in the distribution of the proceeds of the sale. The procedure varies depending on the number of creditors. If there is only one creditor, the process is rapid. If there are several creditors, the JEX supervises an amicable distribution phase, which may become judicial if there is disagreement over the distribution of the funds.

The specifics of the forced sale of boats

The forced sale of inland waterway vessels follows a similar logic to that of ships, but with a few adaptations. The JEX retains jurisdiction to set the upset price and the conditions of sale. Publicity is also required, via posters and publication in a legal gazette. The distribution of the price is also governed by the distinction between a single creditor and multiple creditors. The formalities, although present, are slightly less stringent than those governing the sale of ships.

The specific procedure for the forced sale of aircraft

There are several fundamental differences between aircraft auctions. Firstly, jurisdiction does not lie with the JEX but with the judicial court. Secondly, the procedure is governed by the "minimum bid" rule derived from the Geneva Convention. According to article L. 6123-3 of the French Transport Code, the sale cannot take place if the sale price does not cover claims ranking higher than those of the creditor who initiated the seizure. This rule is designed to protect priority creditors. Lastly, publicity periods are longer, generally six weeks before the sale, to enable information to be provided on an international scale. A court commissioner is often involved to oversee the material aspects of the procedure.

Sale by auction: an alternative to seizure

Less frequently, a sale by auction is used to put an end to shared ownership (joint ownership or co-ownership). In the case of jointly owned boats and aircraft, the rules governing forced sales are applied by analogy. In the case of ships, there is a specific system, known as "joint tenant ownership", which organises the sale when the joint owners can no longer agree on the operation of the ship. A majority of the co-owners may decide to sell the vessel by auction, or the court may order the sale in the event of a deadlock.

The complexity of these procedures requires detailed analysis and in-depth knowledge of transport law and enforcement procedures. Each category of asset, whether a sailing boat, a container ship or a private jet, is subject to a body of rules that must be mastered. If you would like us to assist you in your search for or participation in an auction, contact our firm for tailor-made legal advice, a true partnership that will help you secure your acquisition project.

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