i-law

Ship Building Sale and Finance

Page 483

Index

Index

  • alterations to vessel, standard form contracts 12–16
  • approval of plans, Newbuildcon 2007 30–31
  • arbitration: economic causes of disputes 45–46;
    • London, in 4;
    • Nipponsale 1999 102
  • arrest and sale:
    • cargo discharge costs, mortgagee’s liability 160–162;
    • cargo interests 156;
    • circumstances leading to 149–151;
    • common law jurisdictions, advantages of 151–152;
    • cost of a judical sale 162–164;
    • court-approved direct sales 153–156;
    • forum shopping 151–152;
    • sale pendente lite 152–153;
    • tortious liability of mortgagee 156–160
  • ‘as is’:
    • BIMCO Saleform 2012 133;
    • case law as to meaning 126–129;
    • condition at delivery 235–238;
    • consequences of Union Power decision 133–134;
    • interpretation under Sale of Goods Act 1979 115–121;
    • introduction to 112–114;
    • ordinary English meaning 124–126;
    • question as to meaning of 114, 124;
    • ship sales 138;
    • substantial meaning 129–133;
    • Union Power decision 121–124
  • assignment:
    • assignees distinguished 178–179;
    • mortgagees’ interest insurance see mortgagees’ interest insurance;
    • Newbuildcon 2007 41;
    • refund guarantees 78–79;
    • standard form contracts 21–22
  • AWES Standard Shipbuilding Contract 1978:
    • comparison with other forms 8–22;
    • introduction of 3;
    • use of 4
  • Baltic and International Maritime Council (BIMCO) 101
  • BARECON 2001:
    • ‘as is’ condition at delivery 235–238;
    • balance of rights and obligations 238–240;
    • compulsory insurance 197–198;
    • delivery of vessel 215–217;
    • description of vessel 217–220;
    • hire/purchase agreement 234–235;
    • indemnity 203–204;
    • insolvency (UK law 209–210;
    • US law 210–211);
    • insurance 201–203;
    • introduction to 188–189, 212–215;
    • liability for non-delivery 220–226;
    • maritime liens, prevention of 204;
    • newbuild vessels 212–215;
    • owners’ liabilities (in personam claims 189–191;
    • international conventions 191–193;
    • statutory 193–194)
    • US law 198–201);
    • owners remedies (insolvency (UK law)) 209–210;
    • insolvency (US law) 210–211;
    • provisions for 204;
    • repossession of vessel 204;
    • termination of charter 205–209);
    • in personam claims 189–191;
    • privity of contract 199, 200, 220, 229, 232, 239;
    • in rem actions 194–197;
    • repairs (charterers’ protection under guarantee clause 232–234;
    • overview of provisions 226–229;
    • owners’ obligations as to 229–231);
    • repossession of vessel 204;
    • termination of charter 205–209;
    • US law (common law liability 198–199;
    • insolvency 210–211;
    • statutory liabilities 199–201)
  • BIMCO BARECON 2001 see BARECON 2001
  • BIMCO Newbuildcon 2007 see Newbuildcon 2007
  • BIMCO Saleform 2012, meaning of ‘as is’ 133
  • breach of contract see remedies
  • builder’s guarantees, Newbuildcon 2007 36

  • Page 484

    builders’ responsibilities, Newbuildcon 2007 36–37
  • builders’ risks cover:
    • ICBR 1988 see ICBR 1988;
    • introduction to 80–83;
    • Mar CAR 2007 see Mar CAR 2007
  • ‘buyer may maintain an action’ for damages 52–55
  • buyer’s attendance at tests, trials and inspections, Newbuildcon 2007 32
  • buyer’s representatives, Newbuildcon 2007 31–32
  • buyers’ responsibilities, Newbuildcon 2007 36–37
  • buyer’s supplies, Newbuildcon 2007 31
  • cargo, arrest and sale see arrest and sale
  • changes to vessel, Newbuildcon 2007 32–33
  • choice of law see governing law
  • classification of vessel, Newbuildcon 2007 28
  • classification societies, sale contracts and 105–106
  • CMAC Standard Newbuilding Contract 2012:
    • comparison with other forms 8–22;
    • introduction of 3;
    • use of 4
  • co-assureds see mortgagees’ interest insurance
  • coatings, Newbuildcon 2007 28
  • compulsory insurance, bareboat charter 197–198
  • conflict of laws see governing law
  • construction law see prevention principle
  • construction quality, standard form contracts 4–6
  • constructive total loss, ICBR 1988 88–89
  • contract price adjustment, Newbuildcon 2007 29
  • contractors as co-assureds 83–86
  • contracts see ship sale contracts; shipbuilding contracts
  • counterclaim, exclusion of 77
  • counterparty, ship sales and 137–138
  • currency, choice of 28, 145
  • damage to vessel, meaning of physical damage 90–94
  • damages, liquidated damages 29
  • defects:
    • at delivery 33–34;
    • latent defect, damage or loss caused by 86–87;
    • liability for 20–21;
    • practical aspects 138
  • defences, availability under refund guarantees 73
  • delays:
    • avoidance of 143;
    • Newbuildcon 2007 35
  • delivery:
    • BARECON 2001 215–217;
    • defects 33–34;
    • documents see ship sales;
    • liability for non-delivery 220–226;
    • Newbuildcon 2007 34–35;
    • notices 33–34;
    • place of 143–144;
    • refusal to accept 46;
    • right to decline 19–20
  • demise charters see BARECON 2001
  • deposits:
    • different treatments in sale contracts 106–110;
    • practical aspects 141–142
  • derivatives:
    • classification of shipping derivatives 262–263;
    • EU Directive on markets in financial instruments 261;
    • introduction to 259–260;
    • legal nature of shipping derivatives 261–262;
    • risks (choice of law 265–266;
    • civil law analysis of 263;
    • limitation of third party risk 264–265)
    • protections from 263–264)
  • description of vessel:
    • BARECON 2001 217–220;
    • Newbuildcon 2007 27
  • design quality, standard form contracts 4–6
  • dispute resolution:
    • Newbuildcon 2007 39–40;
    • see also arbitration
  • drafting of refund guarantees 76–79
  • due diligence provision, Mar CAR 2007 94–96
  • economic causes of disputes 45–46
  • effective date:
    • Newbuildcon 2007 41;
    • refund guarantees 78
  • enforcement see remedies
  • English law as governing law 46
  • ‘entire agreement’ clause, Newbuildcon 2007 41
  • exclusions from liabilities, Newbuildcon 2007 36–37
  • expiry date, refund guarantees 78
  • financial guarantees, Newbuildcon 2007 42
  • financial provisions, Newbuildcon 2007 28
  • financing:
    • assignment 21–22;
    • finance leases 188–189;
    • hypothecs 22–23;
    • mortgages 22–23;
    • sanctions see sanctions

  • Page 485

    flags of convenience see open flags
  • force majeure, Newbuildcon 2007 35
  • forum, choice of 79
  • forum shopping 151–152
  • goods, vessel as 47
  • governing law:
    • derivatives 265–266;
    • English law as 46;
    • Newbuildcon 2007 39;
    • refund guarantees 79;
    • standard form contracts 4
  • guarantees see payment guarantees; refund guarantees
  • hypothecs, standard form contracts 22–23
  • ICBR 1988:
    • constructive total loss 88–89;
    • contractors as co-assureds 83–86;
    • latent defect, damage or loss caused by 86–87;
    • Mar CAR 2007 compared with 82–83, 97;
    • notices, provisions for 89–90;
    • origins of 81;
    • physical loss and damage, meaning of 90;
    • revision of 82, 97;
    • scope of 81–82;
    • subcontractors as co-assureds 83–86;
    • tsunami, losses caused by 87–88
  • in personam claims, bareboat charter 189–191
  • in rem actions, bareboat charter 194–197
  • indemnity, bareboat charter 203–204
  • insolvency:
    • bareboat charter (UK law 209–210;
    • US law 210–211)
    • EU Insolvency Regulation 167–169;
    • international procedures 164–167
  • inspections:
    • buyer’s attendance at 32;
    • practical aspects 138
  • instalments, Newbuildcon 2007 29
  • Institute Clauses for Builders’ Risks (ICBR) see ICBR 1988
  • insurance:
    • bareboat charter 197–198, 201–203;
    • compulsory insurance, bareboat charter 197–198;
    • joint names insurance, subrogation 184–185;
    • mortgagees’ interest see mortgagees’ interest insurance;
    • Newbuildcon 2007 37;
    • standard form contracts 6–7
  • intellectual property, Newbuildcon 2007
  • international insolvency law 164–167
  • interpretation of refund guarantees 75–76
  • ‘irrevocable and unconditional’, refund guarantees 77
  • Japan Shipping Exchange see Nipponsale 1999
  • joint names insurance, subrogation 184–185
  • latent defect, damage or loss caused by 86–87
  • Law of Property Act 1925, assignment under 176
  • lease finance 188–189
  • legal provisions, Newbuildcon 2007 35
  • liability:
    • arrest and sale 156–162;
    • for defects 20–21;
    • exclusions from 36–37;
    • non-delivery of vessel 220–226;
    • refund guarantees 72–73
  • liquidated damages, Newbuildcon 2007 29
  • London Marine Construction All Risks Wording (Mar CAR) see Mar CAR 2007
  • London Maritime Arbitration Association (LMAA) 4
  • loss of vessel:
    • constructive total loss 88–89;
    • physical loss and damage, meaning of 90–94
  • loss payees see mortgagees’ interest insurance
  • Mar CAR 2007:
    • changes introduced by 83;
    • constructive total loss 88–89;
    • contents of 82;
    • contractors as coassureds 83–86;
    • due diligence provision 94–96;
    • ICBR 1988 compared with 82–83, 97;
    • introduction of 82, 97;
    • latent defect, damage or loss caused by 87;
    • limitations of 82–83;
    • notices, provisions for 90;
    • physical loss and damage, meaning of 90–94;
    • problem areas 90;
    • right to recovery, protection of 96–97;
    • subcontractors as co-assureds 83–86;
    • tsunami, losses caused by 88
  • Marine Insurance Act 1906, assignment under 174–176
  • maritime liens: practical aspects 139;
    • prevention 204
  • memorandum of agreement (MOA) 136, 137, 138, 140–141, 142, 143, 144, 145
  • modifications to vessel, Newbuildcon 2007 32–33

  • Page 486

    mortgagees’ interest insurance:
    • assignment (assignees distinguished 178–179;
    • enforcement power following 174;
    • equitable 176–177;
    • Law of Property Act 1925 176;
    • Marine Insurance Act 1906 174–176)
    • co-assureds (distinguished 178–179;
    • mortgagee as 177–179;
    • subrogation 183–184)
    • importance of 187;
    • insurable interest, valuation of 171–172;
    • introduction to 170–171;
    • loss payees distinguished 178–179;
    • provisions as to 172–173;
    • other policies protecting mortgagees 181–182;
    • participation in shipowner’s policy 172;
    • policies 179–180;
    • subrogation (doctrine of 182–183;
    • exercise of rights 183–184;
    • names insurance 184–185;
    • mortgagees’ interest insurance 185–186)
  • mortgages:
    • seller’s mortgage, practical aspects 144;
    • standard form contracts 22–23
  • Newbuildcon 2007:
    • advantages of 42–43;
    • annexes 42;
    • approval of plans 30–31;
    • assignment 41;
    • bespoke contracts, use for 43–44;
    • boxes 26–27;
    • builders’ and buyers’ responsibilities 36–37;
    • builder’s guarantees 36;
    • buyer’s attendance at tests, trials and inspections 32;
    • buyer’s representatives 31–32;
    • buyer’s supplies 31;
    • changes to vessel 32–33;
    • choice of law 39;
    • comparison with other forms 8–22;
    • contract price adjustment 29;
    • currency, choice of 28;
    • delivery 34–35;
    • delivery defects 33–34;
    • dispute resolution 39–40;
    • effective date 41;
    • ‘entire agreement’ clause 41;
    • exclusions from liabilities 36–37;
    • finance (section 2) 28;
    • financial guarantees 42;
    • force majeure 35;
    • general layout 25–26;
    • instalments 29;
    • insurance 37;
    • intellectual property 39;
    • introduction of 3;
    • introduction to 24–25;
    • legal provisions (section 5) 35;
    • liquidated damages 29;
    • modifications to vessel 32–33;
    • notice of delivery 33–34;
    • notices 41;
    • options 41;
    • permissible delays 35;
    • popularity of 42;
    • production (section 5) 30;
    • refund guarantees 30;
    • sea trials 33–34;
    • set-off 29;
    • subcontracting 30;
    • sundry items (section 6) 41;
    • suspension and termination 37–39;
    • terms and conditions 27–42;
    • text of Appendix 1;
    • use of 4;
    • vessel (changes and modifications 32–33;
    • classification 28;
    • delivery 34–35;
    • delivery defects 33–34;
    • description 27;
    • general obligations 27;
    • notice of delivery 33–34;
    • protective coatings 28;
    • rules and regulations, compliance with 28;
    • sea trials 33–34;
    • section 1 28;
    • source of origin 28)
  • Nipponsale 1999:
    • applicability to pleasure craft 102–103;
    • arbitration 102;
    • content and form of 103;
    • deposits, treatment of 107–110;
    • introduction of 102
  • non-disclosure of ‘unusual’ facts 73–74
  • Norwegian Saleform:
    • applicability to pleasure craft 102–103;
    • content and form of 103;
    • deposits, treatment of 107–110;
    • revision of 101–102;
    • success of 101;
    • use of 102
  • notice of delivery, Newbuildcon 2007 33–34
  • notice of readiness (NOR), practical aspects 144
  • notices:
    • ICBR 1988 89–90;
    • Newbuildcon 2007 41;
    • refund guarantees 77
  • open flags (flags of convenience), sale contracts and 105
  • options, Newbuildcon 2007 41
  • origin of vessel, Newbuildcon 2007 28
  • payment see ship sales
  • payment refund guarantees see refund guarantees
  • pendente lite sale 152–153
  • permissible delays, Newbuildcon 2007 35
  • physical loss and damage, meaning of 90–94
  • place of delivery, practical aspects 143–144
  • pleasure craft, sale contracts 102–103
  • prevention principle:
    • Adyard Abu Dhabi v SD Marine Services 63–65;
    • critique of 56–57, 66–68;
    • development of 60–63;
    • introduction to 56–57
  • primary obligation see refund guarantees
  • privity of contract 199, 200, 220, 229, 232, 239

  • Page 487

    protective coatings, Newbuildcon 2007 28
  • protective language, refund guarantees 77
  • quality of design and construction 4–6
  • recovery by third parties, protection of right 96–97
  • refund guarantees:
    • assignment 78–79;
    • counterclaim, exclusion of 77;
    • drafting of key provisions 76–79;
    • effective date 78;
    • expiry date 78;
    • forum, choice of 79;
    • governing law 79;
    • interpretation of 75–76;
    • introduction to 63–65;
    • ‘irrevocable and unconditional’ 77;
    • liability 72–73;
    • Newbuildcon 2007 30;
    • notices, provisions for 77;
    • primary or secondary obligation (arisal of 72–73;
    • availability of defences 73;
    • comparison between 73;
    • events discharging guarantee 74;
    • non-disclosure of ‘unusual’ facts 73–74;
    • protective language 77;
    • Statute of Frauds 1677 74–75)
    • problem areas 69–70;
    • representations 79;
    • scope of 70–71;
    • set-off, exclusion of 77;
    • standard form contracts 7–10;
    • warranties 79
  • registered owner, identification of 139
  • remedies:
    • arrest and sale see arrest and sale;
    • ‘buyer may maintain an action’ for damages 52–55;
    • contractual 151;
    • economic causes of disputes 45–46;
    • enforcement in depressed market 46–52;
    • enforcement in ‘overheated’ market 52–55;
    • EU Insolvency Regulation 167–169;
    • inadequacy of 46;
    • international insolvency procedures 164–167;
    • introduction to 45–46;
    • reform of 51–52, 55;
    • Sale of Goods Act 1979 46–47, 52;
    • ‘seller may maintain an action’ for price 47–49;
    • specific performance, order for 49–50
  • repairs see BARECON 2001
  • repossession of vessel, bareboat charter 204
  • representations, refund guarantees 79
  • right to recovery, protection of 96–97
  • risk:
    • cover see ICBR 1988;
    • Mar CAR 2007;
    • derivatives see derivatives;
    • third parties 264–265
  • rules and regulations, compliance with 28
  • SAJ Standard Shipbuilding Contract 1974:
    • comparison with other forms 8–22;
    • introduction of 3;
    • use of 3–4
  • sale contracts:
    • ‘as is’, meaning of see ‘as is’;
    • classification societies 105–106;
    • differences between (case study) 106–110;
    • in English law 112–114;
    • forms see Nipponsale 1999; Norwegian Saleform; Singapore Ship Sale Form (SSF 2011);
    • introduction to 101–103;
    • open flags (flags of convenience) 105;
    • practical aspects see ship sales;
    • single ship owning companies 104;
    • uniform approach to 103–106, 110–111;
    • use of 112, 135;
    • see also Sale of Goods Act 1979
  • Sale of Goods Act 1979:
    • applicability to ship sales 115;
    • ‘as is’, meaning of see ‘as is’;
    • exclusion of statutory conditions 113–114;
    • practical aspects 138;
    • remedies 46–47, 52;
    • satisfactory quality (burden of proof as to exclusion 117–118;
    • customary meaning of 118–121;
    • exclusion of term 116–117;
    • implied term of 115–116;
    • Union Power decision 121–124)
  • Saleform 2012, meaning of ‘as is’ 133
  • sanctions:
    • background to 245;
    • introduction to 241–245;
    • Iranian banking cases 251–253;
    • Iranian insurance cases 246–251;
    • judicial approach to 256–258;
    • responses to 253–256
  • satisfactory quality see Sale of Goods Act 1979
  • sea trials see tests and trials
  • secondary obligation see refund guarantees
  • security interests, creation of 21
  • seller’s mortgage, practical aspects 144–145
  • set-off:
    • exclusion of 77;
    • Newbuildcon 2007 29
  • ship see vessel
  • ship sales:
    • arrest and sale see arrest and sale;
    • ‘as is’ basis 138;
    • avoidance of delays 143;
    • counterparty 137–138;
    • in current market 135–136;
    • defects 138;
    • delivery documents (local formalities 142–143;
    • scope of 142;
    • for completion 143);
    • deposits, treatment of 141–142;
    • inspections 138;
    • maritime liens 139;
    • memorandum of agreement (MOA) 136, 137, 138, 140–141, 142, 143, 144, 145;

    • Page 488

      notice of readiness (NOR) 144;
    • payment (choice of currency 145;
    • ‘old-fashioned’ approach 145–146;
    • pre-position funds 146;
    • problem areas 145);
    • place of delivery 143–144;
    • pre-contractual negotiations 136–137;
    • registered owner 139;
    • resolution of issues 139–140;
    • Sale of Goods Act 1979 138;
    • seller’s mortgage 144–145;
    • special purpose vehicle (SPV) 137;
    • vessel 138–139
  • shipbuilding contracts:
    • breach of see remedies;
    • economic causes of disputes 45–46;
    • English law as governing law 46;
    • introduction to 3–4;
    • modern categorisation of 58–60;
    • non-marine construction contracts compared with 58;
    • standard forms see Newbuildcon 2007; standard form contracts;
    • traditional categorisation of 57
  • shipping derivatives see derivatives
  • Singapore Ship Sale Form (SSF2011):
    • applicability to pleasure craft 102–103;
    • content and form of 103;
    • deposits, treatment of 107–110;
    • introduction of 102;
    • use of 102
  • single ship owning companies, sale contracts and 104
  • source of origin of vessel, Newbuildcon 2007 28
  • special purpose vehicle (SPV), ship sales and 137
  • specific performance, order for 49–50
  • standard form contracts:
    • alterations 12–16;
    • assignment 21–22;
    • governing law 4;
    • hypothecs 22–23;
    • insurance 6–7;
    • liability for defects 20–21;
    • list of 3;
    • mortgages 22–23;
    • payment guarantees 7–10;
    • quality of design and construction 4–6;
    • refund guarantees 7–10;
    • right to decline delivery 19–20;
    • sale contracts see sale contracts;
    • subcontracting 10–12;
    • supervision 12;
    • termination 16–19;
    • variations between 4, 10–23
  • Standard Form Norwegian Shipbuilding Contract 2000 (NSC):
    • comparison with other forms 8–22;
    • introduction of 3;
    • use of 4
  • Statute of Frauds 1677, refund guarantees 74–75
  • subcontractors:
    • as co-assureds 83–86;
    • Newbuildcon 2007 30;
    • standard form contracts 10–12
  • subrogation see mortgagees’ interest insurance
  • supervision:
    • Newbuildcon 2007 31–32;
    • standard form contracts 12
  • suspension of contract see termination
  • termination:
    • bareboat charter 205–209;
    • Newbuildcon 2007 37–39;
    • standard form contracts 16–19
  • tests and trials:
    • buyer’s attendance at 32;
    • sea trials 33–34
  • third parties:
    • derivatives risk 264–265;
    • right to recovery 96–97
  • Tokyo Maritime Arbitration Commission (TOMAC) 102
  • tsunami, losses caused by 87–88
  • Union Power case see ‘as is’
  • ‘unusual’ facts, non-disclosure of 73–74
  • vessel:
    • as goods 47, 50
    • newbuild 212–215;
    • Newbuildcon 2007 see Newbuildcon 2007;
    • sale of see ship sales
  • warranties, refund guarantees 79

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