China Shipbuilding Corporation v Nippon Yusen Kabukishi Kaisha and Anr (The ‘Setu Maru’, The ‘Saikyo’ and The ‘Suma’) - QBD (Com Ct)(Thomas J) - 11 January 2000

Shipbuilding contract containing 12 month guarantee period for defect rectification following acceptance of vessel - Defects appearing after end of guarantee period which were not and could not have been apparent at any time before expiry of guarantee period - Whether shipbuilders’ liability for the defects excluded notwithstanding that defects constituted breaches of express terms of the contract

The appellant builders built three bulk carriers for the respondent buyers under separate contracts. The buyers alleged that there were defects in the erection welding of their vessel and brought arbitration proceedings claiming damages from the builder. The arbitrators acceded to an application by the builders that they should determine as a preliminary issue whether, even if the buyers made good the allegations pleaded, the builder was nonetheless not liable under the terms of each of the shipbuilding contracts.