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Showing posts from November, 2014

Force Majeure – taking all necessary steps to recover the delay

The progress of a shipbuilding project may be affected by events that could delay the contractual delivery date. Such delays are often classified as Permissible or Non Permissible delays.  Permissible Delays are those caused by Force Majeure or other Events that would entitle the Shipyard to an extension of time for delivery of the vessel. Some force majeure clauses require Shipyard “to take all necessary steps to recover the delay” but are silent on details and costs implications.   Does it mean that the Shipyard must take acceleration measures to recover the delay at its own expense?

Subjecting the Effective Date of a Shipbuilding Contract to an “Agreement to Agree” is unwise.

In shipbuilding contracts, the Parties may occasionally agree that the contact will only become effective provided certain contingent conditions are fulfilled; for example receipt of the first instalment, refund or payment guarantees. In such situation, subsequent communications between the parties must be carefully managed. Thus in Covington Marine Corporation v Xiamen Shipbuilding [2005] EWHC 2912 (Comm), the parties agreed that a shipbuilding contract shall become effective from the date of its execution provided 5 conditions were fulfilled within a certain time. One of the conditions was that the parties must agree on the supplier of the main engine within ten banking days from the date of the contract. Three weeks after contract signing the Seller enter into contracts to build 3 vessels for other customers and refused to perform the contract. Buyer accept the repudiation. During the arbitration, the Seller raised jurisdiction issues and denied that any binding contr