Abstract: The rule against fruitless auctions primarily originates from Paragraph 1, Article 6 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts (hereinafter the "Auction and Sale Provisions"), which provides special stipulations for determining the reserve price in ship auctions. In judicial practice involving the disposal of seized property, many courts opt not to proceed with auctions of properties that may present a risk of being fruitless. However, this practice reveals a conceptual misunderstanding. A deeper understanding of the true intent of Article 6 of the Auction and Sale Provisions is warranted. In the context of ship auctions, maritime courts should fulfill their duty of review and apply the rule against fruitless auctions prudently and reasonably. Once the applicant for enforcement has been duly informed and reminded, and still insists on proceeding with the auction, the maritime court may approve the application.

Keywords: Rule against fruitless auctions; Auction reserve price; Declaration of intent

I. Conditions for Applying the Rule Against Fruitless Auctions in Ship Auction Procedures

Article 6 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts (Fa Shi [2020] No. 21), newly amended and implemented on January 1, 2021, provides: "After the reserve price has been determined, if, based on the current reserve price, the auction proceeds are unlikely to yield any remaining amount after satisfying the priority claims and enforcement costs, the people's court shall notify the applicant for enforcement before proceeding with the auction. If the applicant for enforcement applies for the continuation of the auction within five days of receiving the notice, the court shall grant the request, but the reserve price shall be re-determined. The new reserve price must exceed the total amount of the priority claims and enforcement costs. If the auction fails under the preceding provision, the auction costs shall be borne by the applicant for enforcement." This clause constitutes a special provision for auctions in enforcement cases involving priority claims and is also the legal basis for restricting or prohibiting fruitless auctions. Although ship auction procedures are subject to special regulations such as the Special Maritime Procedure Law of the People's Republic of China, they still fundamentally follow the general rules provided in the Civil Procedure Law of the People's Republic of China. As such, fruitless auctions may also occur in ship auction cases. Accordingly, the following conditions govern the application of the rule against fruitless auctions in ship auction procedures:

(i) The Auctioned Ship Is Encumbered with Priority Claims

Priority claims on a vessel mainly refer to maritime claims that give rise to maritime liens on the ship, or secured claims such as those backed by mortgages, pledges, or possessory liens attached to the vessel. The existence of such priority claims on the ship is a prerequisite for the potential occurrence of a fruitless auction. When general claims compete with priority claims and must yield to the latter, it becomes possible that the applicant for enforcement may ultimately receive no proceeds from the auction. It is important to note that even a creditor who has obtained a prior seizure order may not be entitled to proceeds from the auction if the auction is deemed fruitless. [1]

If all applicants for enforcement are general creditors, they may recover their claims either based on the order of seizure or through participation in distribution or bankruptcy proceedings, depending on the overall financial status of the judgment debtor. Regardless of the method, the creditor who first applies for the seizure and auction of the vessel will still benefit from the auction, and the issue of a fruitless auction will not arise.

(ii) Based on the Determined Reserve Price, the Auction Proceeds Are Unlikely to Yield Any Remaining Amount After Satisfying the Priority Claims and Enforcement Costs

The reserve price refers to the minimum transaction price that must be met for the auction item to be successfully sold. [2] In ship auctions, the reserve price is generally determined with reference to both the appraised value and the market value. The appraised value objectively reflects the ship's worth and provides a scientific and reliable reference for setting the reserve price. [3] The market value serves as a benchmark to ensure that the reserve price aligns with prevailing transaction conditions.

The legal framework for determining the reserve price is as follows. Article 10 of the Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by the People's Courts (hereinafter the "Online Auction Provisions") stipulates that the reserve price for an online auction is the starting bid. [4] Meanwhile, Article 6 of the Auction and Sale Provisions specifies that if, based on the initial reserve price, the auction proceeds are unlikely to yield any remaining amount after satisfying the priority claims and enforcement costs, a new reserve price must be set that exceeds the total amount of such priority claims and enforcement costs. It should be understood that "reserve price" in this context refers not only to the price set for the first auction but to the reserve price applicable to each round of auction. If the initial reserve price exceeds the total amount of the priority claims and enforcement costs, but the reduced reserve price in a subsequent auction falls below that threshold, the rule against fruitless auctions should still apply. In other words, if there is a risk of a fruitless auction, the reserve price in each round of auction must be greater than the total amount of the priority claims and enforcement costs. [5] This requirement applies even to second and third auctions, and if all three auctions fail, the reserve price must still not fall below the amount needed to cover the priority claims and the court's enforcement costs. This approach better aligns with legislative intent and helps to safeguard the lawful rights and interests of the judgment debtor and other stakeholders. [6]

(iii) The Applicant for Enforcement Cannot Be Deemed to Benefit from the Court's Auction of the Ship

When a creditor holding a priority claim applies to the court to seize or detain the judgment debtor's property and subsequently requests an auction, the court's auction conduct will ultimately benefit the applicant due to the priority nature of the claim. Therefore, such cases do not fall under the category of fruitless auctions. However, if multiple priority claims exist on the vessel, a question arises as to whether a lower-ranked priority creditor's request to auction the ship should be subject to the rule against fruitless auctions. Some scholars argue that regardless of whether the applicant is a general creditor or a lower-ranked priority creditor, if the applicant is unlikely to benefit from the court auction, the rule against fruitless auctions should apply. [7] This is because the essence of the rule is to regulate auctions that pose a risk of being fruitless, rather than to regulate the nature or identity of the creditor.

II. Common Misunderstandings in the Practical Application of the Rule Against Fruitless Auctions

(i) The Court Proceeds with the Auction Without Verifying the Encumbrances on the Auctioned Property

Compared to the applicant for enforcement, the court is in a better position to conduct a comprehensive investigation into the judgment debtor's property. It is the court's responsibility during the enforcement stage to verify the financial and legal status of the judgment debtor's property involved. If the encumbrances on a ship are not carefully verified during the sale process, the legitimate rights and interests of the parties may be compromised. In a resumed enforcement case handled by the Mianyang Intermediate People's Court of Sichuan Province [8], the court failed to accurately verify the encumbrances on the auctioned property. As a result, the reserve price set was lower than the total amount of the priority claims and enforcement costs, leading to no remaining funds available for general creditors after the auction. The court acknowledged that this procedural defect, caused by its failure to perform due diligence, impaired the lawful rights of the applicant for enforcement and the holder of security interests. Therefore, it ruled that the auction should be annulled.

Nevertheless, since judicial enforcement procedures carry the authority of the state, conducting an auction without verifying the encumbrances and then subsequently annulling the auction not only wastes judicial resources but also undermines the authority of the judiciary. This highlights that verifying the encumbrances on the auctioned property is a critical step in the auction process.

(ii) The Reserve Price Set by the Court Is Lower Than the Total Amount of Priority Claims and Enforcement Costs

Setting the reserve price higher than the total amount of priority claims and enforcement costs is intended to protect the interests of general creditors and to avoid situations where no proceeds remain for distribution upon the auction. However, in practice, some courts have set reserve prices significantly below this threshold for auction, which not only deprives the general creditors as applicants for enforcement of protection but also fails to satisfy the priority claims in full.

For example, the People's Court of Huanghua City, Hebei Province, held that the property exchange center, when determining the reserve price, failed to adequately consider the total amount of priority claims and related costs. Consequently, the auctioned property was sold for an amount obviously below the amount of the priority claims attached to the property. The court found that this practice harmed the interests of the relevant parties and therefore annulled the auction. [9] In other cases, courts have also ruled that auctions with reserve prices set below the value of priority claims of the bank as a creditor constitute typical instances of fruitless auctions and should be annulled accordingly. [10] The People's Court of Lianyun District, Lianyungang City, for example, ruled that in auctions involving real estate, the reserve price must exceed the total amount of the priority claims and enforcement costs. [11] In that case, the reserve price set was not only significantly below the value of the priority claims but also failed to account for the enforcement costs. The court found that this violated legal provisions, seriously disrupted auction procedures, and infringed upon the rights of the objecting party. Likewise, in a similar case adjudicated by the Second Intermediate People's Court of Hainan Province, the court determined that the original reserve price set by the Ledong County People's Court did not fully consider the total amount of priority claims and associated costs. The property was auctioned at a price markedly below the value of the priority claims, leaving the applicant for enforcement unable to recover any amount. This constituted a fruitless auction, violating Paragraph 1, Article 6 of the Auction and Sale Provisions, and harming the rights of the parties. The court therefore annulled both the auction and the original enforcement ruling. [12] Nonetheless, when courts set reserve prices lower than the total amount of priority claims and enforcement costs, resulting in the subsequent annulment of the auction, such actions can damage judicial credibility.

(iii) Suspending or Revoking a Fruitless Auction Without Consulting the Applicant for Enforcement

In practice, some courts have suspended or revoked auctions deemed potentially fruitless without first consulting the general creditors who applied for enforcement. For instance, in a resumed enforcement case, [13] the Beijing First Intermediate People's Court suspended an auction on the grounds that the auctioned property, after covering the limited claims and enforcement costs, was unlikely to yield any remaining proceeds. To prevent a fruitless auction, the court decided to suspend the proceedings without first soliciting the applicant's opinion. In another case, the judgment debtor argued that auctioning the property would constitute a fruitless auction, as the proceeds would not be sufficient to satisfy the bank's priority claim, and therefore requested the auction be revoked in order to protect their property from being sold. The Shenzhen Intermediate People's Court of Guangdong Province took the view that if the appraised value of the subject property is significantly lower than the amount of the secured claim, a forced auction would likely yield proceeds insufficient to cover the secured debt and enforcement costs, thus constituting a fruitless auction. As a result, the court decided not to enforce the auction. [14] If the applicant still insisted on proceeding with the auction, a new reserve price exceeding the total amount of the secured claims and enforcement costs would have to be set. However, this would also increase the risk of auction failure or of the auction ending in a high-priced debt offset, or even a refusal of debt offset followed by the lifting of the seizure order. In consideration of these risks, the court terminated the enforcement proceedings and lifted the execution measures on the involved property.

The practice of courts directly suspending or revoking auctions solely based on the reserve price calculation and the perceived risk of a fruitless auction—without consulting the applicant—is problematic. According to Article 6 of the Auction and Sale Provisions, the court is required to notify the applicant for enforcement of the potential fruitless nature of the auction. Yet in practice, many courts fail to fulfill this obligation of notification and reminder. This not only violates the applicant's right to be informed, but also effectively transfers the decision-making power—originally granted by law to the applicant—to the court itself, thereby severely impairing the rights of the applicant. Meanwhile, by refraining from conducting the auction, the court also provides the judgment debtor with an opportunity to transfer or conceal assets.

III. The Application of the Rule Against Fruitless Auctions in Ship Auctions 

(i) From the Legal Perspective: Article 6 of the Auction and Sale Provisions Vests Decision-Making Power in the Applicant for Enforcement

Article 6 of the Auction and Sale Provisions stipulates that where the auction proceeds, based on the current reserve price, are unlikely to yield any remaining amount after satisfying priority claims and enforcement costs, the court shall notify the applicant for enforcement before proceeding with the auction. If the applicant for enforcement applies for the continuation of the auction within five days of receiving the notice, the court shall grant the request, but a new reserve price must be set. This provision shows that the court's duty is merely to notify the applicant for enforcement of the potential risk of receiving no proceeds—a protective measure that serves the parties' rights. The provision thus places the decision-making power regarding whether to proceed with a potentially fruitless auction in the hands of the applicant for enforcement. The applicant is free to decide whether to proceed, based on their own judgment and autonomy of will. The rule is premised on respecting party autonomy.

Furthermore, Article 6 also clearly provides that if the applicant for enforcement chooses to proceed with the auction despite the fruitless nature, they will bear the cost of a failed auction. Therefore, the decision and corresponding obligation to set a new reserve price rests solely with the applicant. Neither the judgment debtor nor any other interested party is entitled to invoke this article to request a reset of the reserve price. [15] If the rule had intended to give such discretion to the court, it would have been worded as follows: "If, after determining the reserve price, the auction proceeds are unlikely to yield a remaining amount after satisfying the priority claims and enforcement costs, the court shall notify the applicant for enforcement and rule to suspend or revoke the auction." Hence, from a legal standpoint, if the applicant insists on proceeding with the auction, the court is still required to carry out the auction process.

(ii) From the Perspective of Reason: Premium Auction Results Occur Frequently

In ship auction procedures, the court engages a qualified ship appraisal agency to assess the current market value of the vessel involved. The valuation method generally involves subtracting accumulated depreciation due to operational wear and tear from the market price of a new vessel, thereby arriving at the residual value, i.e., the present value. [16] Given the high value and technical complexity of ships, valuation of hull components is primarily based on condition reports following inspection. However, the true market value of a ship can only be determined once it enters the market. There is often a variance between appraised values and actual market prices, and even the reserve price used in auctions may not accurately reflect the final sale value. Whether an auction is fruitful must not only take into account the interests of the applicant in a specific case, but also the potential interests of other applicants across different cases. This consideration involves both efficiency and practical value. [17] The final transaction price of a ship at auction is significantly influenced by fluctuations in the shipping market. Although failed ship auctions are not uncommon, available data show that premium auction outcomes, where ships sell for more than the reserve price, are becoming an increasingly common trend. [18]

In light of this, it is questionable to presume, based solely on an appraised reserve price, that the proceeds of a ship auction would be insufficient to satisfy the non-priority claims of applicants for enforcement, thereby disregarding the possibility of a premium auction outcome. Given the high value and technical nature of ships, it is unreasonable to rely solely on appraisal results to determine the ship value. Neither appraisal agencies nor courts can predict the final outcome of an auction. From the standpoint of reason, it is inappropriate to prematurely rule out the potential for a premium auction outcome.

(iii) From the Human-centered Perspective: Respecting the Applicant's Genuine Intention and Safeguarding the Exercise of Their Rights

Judicial enforcement is one of the most crucial mechanisms within the broader system for resolving disputes, acting as a protective barrier. When a legally effective judgment enters the enforcement phase, it often indicates that the prevailing party's rights have yet to be effectively realized. Applying to the court to enforce property involved in the case is not only a means of legal relief for the party, but also the most powerful judicial guarantee for the realization of their rights. From the perspective of protecting the parties' right to relief, smooth enforcement procedures provide strong protection for their lawful rights and interests, and are closely linked to their substantive claims. Applicants for enforcement actively pursue enforcement for their own interests. For them, the enforcement procedure is the final judicial channel through which their rights can be realized.

The court, as the authority responsible for both adjudication and enforcement, plays an indispensable role throughout this process. In ship auction procedures, if the applicant for enforcement holds only a general claim and the auction proceeds are insufficient to satisfy that claim after covering the ship's priority debts, the court, out of consideration for the applicant's rights and interests, may remind or inform them that the auction is likely to be fruitless, thus helping them avoid incurring appraisal and valuation costs with no financial recovery. However, if the applicant, fully aware of the possible fruitless nature of the auction, still insists on proceeding, the court should listen to the party's opinion, respect their genuine intention, and make every effort to safeguard the exercise of their rights. If courts apply a "one-size-fits-all" approach to deny applicants the opportunity to pursue enforcement of their lawful rights, then for these applicants, who have no alternative means of securing compliance with the judgment, this would represent the end of their legal remedies. From a human-centered perspective, the inability to exercise applicants' rights effectively would erode confidence in the judiciary and diminish its credibility.

IV. Procedural Requirements for the Application of the Rule Against Fruitless Auctions in Ship Actions

(i) The Court Must Investigate and Verify the Encumbrances on the Auctioned Ship

When an applicant files a motion to enforce a ship through the court, and provides information about the vessel's condition or leads, the court must, in accordance with its duties, conduct further investigations into the judgment debtor's property. The encumbrances on the vessel include registration of ownership, mortgage registration, bareboat chartering, etc. These details can be obtained from the maritime (or fisheries) authorities that handle ship registration, and known mortgagees can be contacted to clarify the nature and amount of their claims. Additionally, when the ship is detained, the court should record relevant details during the vessel seizure procedure and inquire with the crew regarding maritime liens on the vessel, such as crew wages and other priority maritime claims.

Through this series of investigative and verification actions, the court can lay a solid foundation for subsequent auction procedures. This helps to avoid procedural defects arising from an inaccurate understanding of the ship's encumbrances at an early stage and enables the court to manage enforcement efficiently and effectively.

(ii) The Court Must Carefully Verify the Reserve Price to Ensure It Exceeds the Amount of Priority Claims

Once a ship is seized upon the application of a general creditor, enforcement judges can often contact the mortgagee—usually a financial institution—via the ship's registration information and verify the amount of the mortgage. However, whether the ship is also subject to maritime liens or claims, and the specific amounts thereof, generally requires judicial proceedings for confirmation. These maritime-related special rights are inherently less transparent, making ship auctions more procedurally complex than those involving immovable property. Specific steps are required, such as the issuance of special auction notices, registration of maritime claims, and litigation to confirm those claims. During the period between the seizure and the final auction of the ship, the vessel remains under the management of the shipowner or bareboat charterer. [19] During this time, costs such as crew wages and essential maintenance expenses continue to accrue. These costs are dynamic and increase over time. Although such expenses can be paid in advance from the auction proceeds, they will inevitably reduce the amount available for distribution.

In practice, some local courts have failed to strictly scrutinize reserve prices, resulting in starting bids lower than the combined total amount of priority claims and enforcement costs, thereby harming the interests of applicants for enforcement. Considering the unique nature of ship auctions, maritime courts may adopt a narrow interpretation of the requirement that "the reserve price shall exceed the total amount of priority claims and enforcement costs," as follows: 1. At the time of auction, the priority claims may be narrowly defined as including only the mortgage amount, excluding maritime liens. This is because under relevant laws, such as the Special Maritime Procedure Law, a maritime lien must be exercised through a formal application for ship arrest. [20] If the ship has already been arrested due to a maritime lien, the general creditor need only participate in the distribution process and need not file a separate seizure request. Conversely, if the ship was seized based on the general creditor's application, then according to the auction notice, maritime claims must go through registration, litigation, and distribution procedures. If the reserve price had to be determined only after calculating all maritime lien amounts, the process would be lengthy and would increase custody and maintenance costs, thus violating the principle of economic efficiency. 2. Currently, all maritime courts across China are actively promoting online judicial auctions for vessels. In such auctions, enforcement costs primarily involve appraisal, valuation, and publication expenses. When the applicant for enforcement has already paid the appraisal deposit, these costs may be deducted from the starting bid.

Given that auctions are a relatively costly enforcement measure, their implementation must balance the interests of the parties involved with social costs and broader public benefits. It must also take into account the interests of other enforcement parties and stakeholders. Most importantly, the enforcement mechanism must ensure that the applicant's adjudicated rights are realized in a timely manner. The rule against fruitless auctions should not become a shield for the judgment debtor to evade enforcement or a barrier discouraging priority creditors from exercising their rights. In ship auctions, maritime courts should use the confirmed amount of priority claims known at the time of auction to set the reserve price, ensuring it exceeds the amount of such claims.

(iii) After Fulfilling the Obligation of Notification and Reminder, the Court Should Leave the Decision on Fruitless Auction to the General Creditor

Where priority claims exist on the auctioned property, the determination of whether a fruitless auction situation exists should be subject to the court's review. In other words, the court holds both the right and the duty to examine whether the auction would be fruitless. This view is consistent with prevailing judicial opinions in practice. [21] To protect creditors' lawful rights and interests, courts may seize and auction the judgment debtor's property. In practice, some courts guide or encourage applicants for enforcement to protect their rights through lawful means, explain the possible outcomes of a fruitless auction, and respect the applicant's decision to proceed with a potentially fruitless auction. The court then lawfully auctions the judgment debtor's property. [22] For example, the Jiangcheng District People's Court of Yangjiang City, Guangdong Province, when addressing whether a potentially fruitless auction could proceed, [23] held that the court had fulfilled its legal obligation to inform the applicant prior to the auction. Since the applicant still submitted a written request to proceed with the auction, the court acted in accordance with the law, and its decision was upheld by the court of second instance.

In ship auction procedures, pursuant to Article 6 of the Auction and Sale Provisions, when a risk of fruitless auction arises, the maritime court must notify the applicant for enforcement before proceeding with the auction. If the applicant still requests to proceed, the court may continue the auction. Since the law grants the decision-making power to the applicant, the maritime court need only fulfill its obligations to inform and remind, that is, inform the applicant of the possible fruitless nature of the auction and remind them of the potential risks—namely, that the auction proceeds may not be sufficient to satisfy their claim and that they may be liable for auction-related costs such as the appraisal deposit. If the applicant still insists on proceeding, the maritime court should continue with the auction in accordance with Article 6 of the Auction and Sale Provisions. This approach both protects the rights of the applicant and aligns with the principles of fairness and efficiency in judicial enforcement.

Conclusion

In practice, some courts, when handling enforcement cases involving fruitless auctions, have taken the view that fruitless auctions are detrimental not only to the applicant for enforcement and prior-ranking creditors but also waste judicial resources. Since auctions are a relatively costly enforcement measure, their implementation must weigh the interests of enforcement parties, social costs, and public benefits. Some courts thus opt to directly terminate or revoke auctions they deem fruitless. However, under the Auction and Sale Provisions, the decision as to whether an auction should proceed lies with the applicant, not the court. Considering the specific procedures involved in ship auctions, maritime courts should, after completing their obligations of investigation, verification, notification, and reminder, adopt a narrow interpretation of Article 6 of the Auction and Sale Provisions. They should allow the applicant for enforcement to decide whether to proceed with a potentially fruitless auction and let the market determine the final sale price, thereby improving both the quality and efficiency of ship disposal.

Author: Shu Jian, Zheng Jiatong

References

[1] Tang Hong, Analysis of Relevant Legislation and Practice of Real Estate Auctions in Civil Enforcement, Master's Thesis, Xiangtan University, 2016, p. 22.

[2] Lu Zhengmin, Legal Responses to Inaccurate Real Estate Valuation in Compulsory Auctions, Journal of Anhui University (Philosophy and Social Sciences Edition), Issue 2, 2018, p. 124.

[3] Luo Sumei, The Nature and Legal Regulation of Judicial Ship Auctions, Master's Thesis, Southwest University of Political Science and Law, 2014, p. 11.

[4] Article 10 of the Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by the People's Courts: "Online judicial auctions shall set a reserve price, which serves as the starting bid. The starting bid shall be determined by the people's court with reference to the appraised value; if no appraisal has been conducted, the market price shall be used as a reference, with the parties' opinions solicited. The starting bid shall not be lower than 70% of the appraised value or market price."

[5] Chen Ming, Application of the Principle of Restricting Fruitless Auctions in Enforcement Procedures, People's Judicature, Issue 11, 2016, p. 105.

[6] Liu Wenbiao, Discussion on Reserve Price Determination in Fruitless Auctions Based on a Case Study, http://www.dyzxw.org/html/article/201407/15/177620.shtml.

[7] Chen Ming, Application of the Principle of Restricting Fruitless Auctions in Enforcement Procedures, People's Judicature, Issue 11, 2016, p. 105.

[8] See Enforcement Ruling (2015) Mian Zhi Hui Zi No. 1-2, Mianyang Intermediate People's Court, Sichuan Province.

[9] See Enforcement Ruling (2016) Ji 0983 Zhi Yi No. 34, Huanghua Intermediate People's Court, Hebei Province.

[10] See Enforcement Ruling (2020) Hei 10 Zhi Fu No. 24, Mudanjiang Intermediate People's Court, Heilongjiang Province.

[11] See Enforcement Ruling (2018) Su 0703 Zhi Yi No. 27, Lianyungang Lianyun District People's Court, Jiangsu Province.

[12] See Enforcement Ruling (2019) Qiong 97 Zhi Fu No. 55, Second Intermediate People's Court, Hainan Province.

[13] See Civil Judgment (2020) Jing 01 Min Zhong No. 3922, Beijing First Intermediate People's Court.

[14] See Enforcement Ruling (2018) Yue 03 Zhi No. 1059-2, Shenzhen Intermediate People's Court, Guangdong Province.

[15] Chen Ming, Application of the Principle of Restricting Fruitless Auctions in Enforcement Procedures, People's Judicature, Issue 11, 2016, p. 104.

[16] Luo Sumei, An Exploration of Legal Regulation of Judicial Auctions for Ships, World Shipping, Issue 2, 2015, p. 56.

[17] Zhu Zicong & He Mingbo, Escaping the Misconceptions of Fruitless Auctions: Establishing the Concept of Auction Efficiency, People's Court Daily, August 8, 2019.

[18] According to the Guangzhou Maritime Court, 141 ships were successfully auctioned between 2017 and 2020. While some auctions failed or were resolved via debt offset, the average premium rate remained positive: 93% in 2017, 99% in 2018, 64% in 2019, and 109% in 2020.

[19] Paragraph 1, Article 7 of the Provisions of the Supreme People's Court on Several Issues Concerning the Seizure and Auction of Ships: "During the period of ship seizure, the ship shall be managed by the owner or the bareboat charterer."

[20] Article 28 of the Maritime Code: "A maritime lien shall be enforced by the court by arresting the ship that gave rise to the said maritime lien."

[21] See Enforcement Ruling (2020) Hu 01 Zhi Fu No. 187, Shanghai First Intermediate People's Court.

[22] See Enforcement Ruling (2020) E 09 Zhi Fu No. 41, Xiaogan Intermediate People's Court, Hubei Province.

[23] See Enforcement Ruling (2020) Yue 17 Zhi Fu No. 30, Yangjiang Intermediate People's Court, Guangdong Province.