Shipping Offshore Update December 2017
Who bears the risk of concurrent delay?
A recent decision of the English Court has endorsed a decision by parties to “contract out” of responsibility for concurrent delay. This decision is important because, where parties agree to “contract out” of this responsibility, contractors may not be able to rely on the prevention principle as grounds for obtaining an extension of time for delay in construction contracts.
An overview of the health, safety and environmental regime in Nigeria’s offshore oil and gas sector
As a result of tightening up of the health, safety and environment (HSE) standards applicable to Nigeria’s offshore oil and gas sector, operating companies embarking on new projects in Nigerian waters need to carefully assess the risk and financial burden of these new requirements before committing themselves or their assets to these projects.
Third party funding of disputes
Disputes are expensive particularly when involve large construction projects where there have been changes to the scope of work and cost overruns. Contractors face a difficult choice when trying to close the final account of either negotiating a resolution on any terms available or funding litigation which they cannot afford.
Autonomous vessels and the digital future
With reports that the first fully automated cargo ship will be launched in 2018 and, after a period of manned operation, will begin operating fully autonomously by 2020, the unmanned future for vessels appears to be just over the horizon. The success of such a technological leap will depend on public perception being able to adapt and accept unmanned vessels. It will also require applicable laws and regulations to be rewritten.
Management of foreign owned ships in the NIS
In some transactions a non-Norwegian company may wish to register its ship in the Norwegian International Ship Register (“NIS”). This can only be done if the ship is managed by a shipping company who has its head office in Norway. This requirement has a bearing on the contractual structures and financing schemes that can be put in place and also raises issues concerning enforcement.
CARGO CONSIDERATIONS - owners’ lien on cargo
In another cargo-related development, the English High Court has confirmed when it will order the sale of liened cargo which is the subject of arbitration proceedings.
Cargo considerations - Protection given by letters of indemnity
When delivering cargo in the absence of original bills of lading owners should take care to ensure that the terms of the Letter of Indemnity are drafted carefully.
“Export financing” for non-export shipbuilding
In its recent National Budget Proposal for 2018, the Government has proposed a NOK 10 billion state loan and guarantee program for the construction of vessels at Norwegian shipyards intended for use in Norway.
A choice with consequences – progressive title transfer versus refund guarantees
Irrespective of how the construction of a vessel is financed, the yard and its financiers will require that the buyer prepays a percentage of the contract price prior to delivery. This prepayment may be lost to the buyer if proper security for that prepayment is not put in place. Provision of refund guarantees is the most common way this is achieved, but progressive title transfer may in some cases be an alternative method for securing the buyer’s position.
Update on Independent Guarantees under Chinese law
In China, independent guarantees are widely used. However, until recently there has been little or no guidance under Chinese law as to how these guarantees are to be interpreted.
Jurisdiction clauses and choice of law in direct actions
In significant decisions by the European Court of Justice (ECJ C-368/16) and the Danish Supreme Court (dated 9 October 2017) in a direct action brought in Denmark against a marine liability insurer, the validity of jurisdiction clauses and choice of law in such actions has been considered.
The New Flamenco – the Supreme Court dances in a different direction
In the Court of Appeal ( 1 LLR 383), time-charterers of the New Flamenco successfully overturned the High Court judgment against them, reinstating the arbitration award in their favour. The question was whether charterers liability for loss of profit should be extinguished by the profit that owners were able to make in selling the vessel earlier than would have been the case because of charterers’ repudiation.