Shipbuilding Law Blog

Transocean Drilling UK Limited v Providence Resources PLC [2016] EWCA Civ 372. Transocean (Owner of the rig ‘GSF Arctic III’), entered into a drilling contract with Providence for the hire of a semi-submersible drilling rig. The contract was based on a standard industry agreement ‘LOGIC’ form, with agreed adaptions. There was a loss time of over 27 days due to defects in the rig and also a further 10 hour’s delay because of failure of a crew to tighten a blanking plug properly. Consequently, there were various disputes between the parties pertaining to remuneration payable to Transocean in respect of what became known as the ‘disputed period’. Providence claim against Transocean for spread costs, comprising the costs of personnel, equipment and services contracted from third parties, which it alleged were wasted as a result of the delay. At first instance, Mr Justice Popplewell (“the Judge”) held that Transocean was in breach of contract and that Providence was entitled to...

“The prospect of some heads of [warranty] claim having a 12 month time limit, and other claims having no time limit at all, and uncertainty as to which category specific claims fell into would be a goldmine for lawyers - and far removed from what the parties stated in their shipbuilding contract and what would have reflected their reasonable and objective intentions . Per Messrs Mark Hamsher, Christopher Moss and Lindsay Gordon (Arbitrators). Neon Shipping Inc v Foreign Economic 7 Technical Corporation Co. of China & China Chang Jiang National Shipping Group Corporation Jinlin Shipyard [2016] EWHC 399 (Comm). Defective Cranes, Construction of Language, Time-bar, Sale of Goods Act - Implied Term - Fitness for Purpose. Facts: Shipbuilding contract for the design, build and supply of a 57,000 dwt bulk carrier governed by English law and containing an arbitration clause.  Clause 13 of the contractual Building Specification provided under “General Description of ...

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 Co...

“… 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.  Permi...

Bluewater Energy Services BV v Mercon Steel Structures BV & 2 Others [2014] EWHC 2132 (TCC) Claims arising under a sub-contract for the fabrication of a tower based soft yoke mooring system for installation as part of the development of the Yuri Korchagin Field in the Caspian Sea.  “There are numerous issues which the parties have been unable to settle. The main factual disputes concern the causes of delay and liability for any delay and the events leading up to termination. There are many financial claims which depend on particular issues of contractual interpretation or fact.”   At Para 19. Zhoushan Jinhaiwan Shipyard Co Ltd v Golden Exquisite Inc & 2 Others [2014] EWHC 4050 (Comm) “In each case the Buyer has purported to exercise a contractual right to cancel the contract on account of delay in delivering the vessel.  In each case the Yard has sought to argue that the cancellation was wrongful on the ground that a relevant part of the...

In shipbuilding contracts, the parties may occasionally agree that the contact will only become effective after signing and provided certain contingent conditions are fulfilled. Common contingent conditions include payment of the first instalment and provision of refund or payment guarantees. Such contingent conditions may be classified into condition precedent or condition subsequent. Condition Precedent - A condition is precedent if it provides that the contract is not effective until some specified undertakings are fulfilled. See Article 16 of AWES. Where a party is required to do something before the commencement of a contract, there will be no contract until that condition is met. Thus in Haugland Tankers v RMK Marine [2005] EWHC 321 (Comm), the term of an Option Agreement provided that Buyer could exercise the Option by the service of notice together with payment of a commitment fee to Seller. The Buyer served notice to declare the Option but did not pay the com...