Shipping Offshore Update June 2016
BAREBOAT CHARTERS – charterer’s maintenance and redelivery obligations
Difficult market conditions motivate cost savings wherever possible and this includes expenditure relating to the general maintenance of vessels. There has been an increase in disputes concerning the condition of vessels at the time of redelivery under a bareboat charter. Questions arise as to what is the charterers’ duty of maintenance under a bareboat charter and how can the parties best position themselves to avoid disputes?
International arbitration rules – differences matter
Commercial agreements require careful consideration of the proposed treatment of disputes before they arise. Both the forum for dispute resolution and the rules to be applied should be agreed as part of the contractual negotiation.
Laying up the lay up agreement
The first reported London arbitration decision in 2016 raises a number of interesting points in connection with lay up agreements and how much can be claimed for continuing to provide services after the original contract has been terminated.
THE NEW FLAMENCO – keeping in step with damages and mitigation
The Court of Appeal’s decision in The New Flamenco acknowledges the difficulties of laying down general principles of law in connection with an innocent party’s obligation to mitigate its loss following a repudiatory breach of contract. The case arose in the context of assessing damages for early redelivery where there was no available market at the time of the breach against which to measure the loss.
A penalty shoot out
One of the significant differences between civil and common law jurisdictions is that whereas the former generally see no objection to fixed sums being paid in the event of a breach that may not reflect a loss that is incurred, common law jurisdictions will strike down such clauses where they amount to a penalty rather an a genuine pre-estimate of a loss likely to flow from a breach.
NYPE 2015 – a major revision
On 15 October 2015, the Association of Ship Brokers and Agents, Baltic and International Maritime Council (“BIMCO”) and the Singapore Maritime Foundation jointly published a revised New York Produce Exchange (“NYPE”) 2015 form.
SUPERMAN – a new BIMCO contract is born
January 2016 saw the publication of the new SUPERMAN agreement published by BIMCO which governs the contractual relationship between third party ship managers and shipowners for the provision of technical supervisory services during construction, repair and conversion projects.
All change in the London insurance market
The insurance landscape in England is about to change fundamentally with the biggest shake-up for over a century. On 12 August 2016 the Insurance Act 2015 will come into force and will amend the Marine Insurance Act 1906 in areas such as warranties and disclosure. Furthermore, the Enterprise Act 2016 will come into force on 4 May 2017, and will, among other things, impose an obligation on insurers to pay claims promptly.
NORWAY – BRAZIL: maritime transport cooperation
The bilateral cooperation between Norway and Brazil is extensive within several industry sectors as well as in connection with matters relating to the environment and education. New areas of cooperation are constantly being developed and the most recent step forward is the signing of a memorandum of understanding on maritime transport.
PETROBRAS – the wounded giant seeks a way forward
Over a period of the last three years Petrobras, the Brazilian state-run oil company has reached both the unprecedented heights of success and some terrible blows. Corruption scandals, government interference in management and low oil prices have come together to form the perfect storm that has severely wounded the oil giant as well as the supply chain which both supports and depends on it.
IRANIAN SANCTIONS – a six month review
On 2 June 2016 the governments of the US, EU, UK, France and Germany issued a joint statement confirming that there are now extensive economic opportunities for companies and financial institutions to do business in Iran. The EU is actively exploring areas of cooperation with Iran, including the use of export credits to facilitate trade, project financing and investment.
Some relief for offshore contractors
There was some relief for offshore contractors when the Court of Appeal recently handed down its judgment on the construction of a consequential loss exclusion clause in a drilling contract on an amended LOGIC form between Transocean Drilling UK Limited and Providence Resources Plc.¹
OW Bunkers – the final say
On 11 May 2016, the Supreme Court handed down judgment in the long running OW Bunkers case. The decision is unlikely to be welcomed by owners who now face the prospect of having to pay twice for bunkers: once to their immediate supplier, who, as in the OW Bunkers case may be insolvent, and again to the physical supplier of the bunkers.