Shipbuilding Repair Contracts AttorneyatLawPartner Axel wre Advoco Advokatfirma

Shipbuilding & Repair Contracts Attorney-at-Law/Partner Axel Øwre Advoco Advokatfirma DA Ui. O/NIFS October 20, 2010

Scope • Chapter 4 in Scandinavian Maritime Law, 2 nd ed. 2004, page 83 - 106 or • “Innføring i Sjørett 7. utgave 2010, side 67 – 90” 2

Starting point Ship Management Customer 1 Customer 2 Customer 3 Charterer ? Ship owning Company Financing Insurance 3

Shipbuilding contracts Shipbuildi ng Contract Builder/Seller (“Shipyard”) (a sales contract) Buyer/Purchaser (“Ship owning Company”) Question 1: Just Builder & Buyer ? 4

Shipbuilding contracts-cont’d Contractor/Seller Sales Contract Purchaser/Buyer Shipbuildi ng Contract Builder (“Shipyard”) 5 5

Shipbuilding contracts-cont’d Purchaser/Buyer (Owner/Leasing Company) Charter Bareboat Charterer Party Shipbuildi ng Contract Builder (“Shipyard”) 6

Shipbuilding – standard contracts • Yard friendly contracts SAJ Form – Japanese Shipbuilders. Often adjusted, but need to be adjusted to secure balance AWES Form – Association of West European Shipbuilders Norwegian standard Shipbuilding Contract [Duis p 17 – 67] • Buyer friendly contracts Few owners do have their own standard, but those who has need to be a major in order to gain accept for such a document • Agreed contracts Standard form Shipbuilding Contract 2000 – considered to be balanced Bimco’s Newbuildcon 2007. Different organized but risk wise meant to be in line with Standard form Shipbuilding Contract 2000 • Does market competition means anything for the content of a shipbuilding contract? 7

Shipbuilding contracts-cont’d A few topics worth focusing on, apart from main dimensions and characteristics, speed, warranty of quality etc. : • Design responsibility • Buyer’s supplies • Contingency fund • Buyers representative • Security for instalments paid to the Builder by the Purchaser • Who is the Owner during the building period 8

Shipbuilding – the future • • • Even more competition Labour costs Subsidies Japan >> Korea >> China >> India (? ) >> ? Where – not necessarily in just one country • (In this respect and with effect as from 01. 07. 2009 an alteration in the Norwegian Maritime Code Section 31 went into force. ) • Who sets the standard ? • Environmental requirements – need for long term strategy • Other risk factors 9

Interested parties in additon to the Builder and the Buyer Among such parties you may find: • Contractors • Authorities • Insurance companies • Financial institutions • Charterers 10

Repair Contracts • In general • Some basic differences regarding facts and power to negotiate when comparing with shipbuilding • Formalities – efficiencies and thoroughness; advice and decisions – who decides? 11

Repair Contracts cont. • • Standard contracts ? [Repaircon Duis p 2 – 11] General conditions Individual repair contracts Scope of work sometimes more difficult to define compared with shipbuilding contracts. Why? • What about quality of work? 12

Repair Contracts cont. • Delivery time • Price and manner of payment • Sanctions available for breach of contract • Other damages www. advoco. no 13