Lloyd's Shipping & Trade Law

Shipbuilding contracts: implication and interpretation Shipbuilding contracts – use of the vessel in standardised trades

At the IMO’s Legal Committee LEG102 in 2015, a Draft Convention on the judicial sale of ships was considered. The Legal Committee’s verdict was that CMI should demonstrate a “compelling need” for such a convention, and should seek to get IMO member states and other UN agencies on board with the project. The Draft Convention will be considered again at LEG103 in June 2016. Will CMI be able to demonstrate a compelling need for a Convention?

Two recent cases on bunker supplies shed further light on the legal situation surrounding supplies. In both cases, a string of contracts and the use of middlemen had caused there to be confusion as to who was liable when the piggy-in-the-middle failed to fulfill its obligations.

In Yemgas FZCO and Others v Superior Pescadores SA (The Superior Pescadores) [2016] EWCA Civ 101, the Court of Appeal considered the fairly straightforward question of which set of Hague Rules to apply – the original 1924 set or the amended set. On 24 February 2016 Longmore, and McCombe LJJ dismissed the appeal from the decision of the first instance judge.

The Res Cogitans: the facts. On 4 November 2014 bunkers were supplied to the vessel Res Cogitans, which was owned and managed by the owners. The bunkers had been ordered from OW Malta as the immediate bunker supplier based on the OW Group’s standard terms, under which the owners were given a 60-day credit period, prior to which they were permitted to use the bunkers only for the propulsion of the vessel.

For those who have not followed the bunker saga, the brief issue considered in the Supreme Court judgment is this: the contract under which bunkers were supplied contained a combination of clauses resulting in property in the bunkers not being passed to the shipowner at any point. Did the contractual bunker supplier then have the right to sue for payment? An arbitration panel, the first instance judge and the Court of Appeal had all said that they did, but this required some legal aerobatics.