The Judicial Sale Lottery: Fragmentation Of Maritime Law And The Strategic Advantage Of Distressed Debt Investors
- IJLLR Journal
- Nov 13, 2025
- 2 min read
Joseph Thomas, Bharata Mata School of Legal Studies (BSOLS)
ABSTRACT
The paper, “The Judicial Sale Lottery: Fragmentation of Maritime Law and the Strategic Advantage of Distressed Debt Investors,” interrogates the fractured architecture of international maritime jurisprudence and its unintended consequence, transforming judicial ship sales into a jurisdictional lottery favouring distressed debt investors over traditional maritime lienholders. At its core, the work argues that divergent national interpretations of arrest conventions and lien priority rankings have enabled senior secured creditors to exploit jurisdictional inconsistencies to their advantage, thereby recalibrating the equilibrium between maritime finance and operational justice.
The analysis begins by tracing the cyclical volatility of global shipping finance, wherein regulatory retrenchment posts the 2008 financial crisis precipitated a vacuum in traditional maritime lending. This vacuum, in turn, catalysed the ascendance of hedge funds and private equity as dominant actors in distressed maritime debt markets. These investors, armed with discounted preferred ship mortgages, deploy aggressive enforcement strategies—chiefly vessel arrest and judicial sale, thus weaponizing legal fragmentation into a commercial asset. The study’s comparative framework juxtaposes the 1952 Brussels Convention and the 1999 Geneva Convention, highlighting their partial harmonisation of maritime claims but conspicuous omission of lien hierarchy and title recognition standards, which collectively sustain systemic uncertainty.
Within the Indian context, the discourse delves into the collision between the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and the Insolvency and Bankruptcy Code, 2016. Through an incisive examination of Raj Shipping Agencies v. Barge Madhwa (2020), it elucidates how Indian courts have harmonised the principles of lex rei sitae and lex concursus, affirming the supremacy of in rem proceedings in preserving maritime assets and crew welfare. This pragmatic judicial balance, while fostering creditor confidence, reveals a deeper structural dichotomy between asset-based territoriality and insolvency universalism.
