Shipbuilding Law Blog

Shipbuilding Refund Guarantees governed by English law – Chinese Court prohibits Bank and its overseas branch from making any payment to Buyer under the Bank’s guarantees – English Court  recognized  Chinese Court judgement but ruled that Bank must pay Buyer.    Spliethoff’s Bevrachtingskantoor BV v Bank of China Ltd [2015] EWHC 999 (Comm)   Buyer claim against the Bank of China (BOC) under two refund guarantees issued by BOC to secure repayment obligations of a Builder (Chinese Shipyard) and Co-Seller (together “Sellers”) in respect of two shipbuilding contracts for construction of two new ships identified as Hulls 38 and 39.  Proceedings in London: Buyer terminated the contract in respect of Hull 38 as the ship was not delivered on time, and claimed repayment of the instalments. Sellers commenced Arbitration in London, disputed Buyer’s right to cancel and contended that Buyer’s cancellation was a repudiatory breach of the Hull 38 Contract. Delivery of Hull 39 was als

“… delays in construction are prima facie the responsibility of the Builder, unless they are excused by a provision of the contract.”. Per Leggatt J at para 68. In the case of Zhoushan Jinhaiwan v Golden Exquisite Inc & 2 others [2014] EWHC 4050 (Comm), Buyer cancelled the shipbuilding contracts as delivery of the vessels were delayed more than 270 days after the delivery date. Shipyard argued that the cancellation was wrongful as some of the delays was caused by Buyer’s own breach of contract which amounted to a repudiatory breach. On appeal from two arbitrations, Mr Justice Leggatt identified three types of delays in the contract. They were permissible delay, non-permissible delay and excluded delay. Non-Permissible Delay Under Article III.1 (b) of the contract Buyer could deduct a specified sum from the final instalment for each day that the delivery of the vessel was delayed by more than 30 days but less than 210 days after the Delivery Date specified.  Permissib