COVID-19 and its consequences on shipbuilding contracts
Overview
The spread of the COVID-19 virus is causing significant issues in the shipbuilding industry, but English law has no general concept of force majeure, and this is a key factor in the relationship between shipyards and shipowners.
Shipyards are facing disruption to newbuilding, repair and conversion projects due to the impact of the virus on their labour force and the ability of their subcontractors to meet their commitments to supply materials and equipment necessary for the completion of such projects.
As a result, shipyards in China, and elsewhere, have sought to invoke the force majeure provisions under their contracts with shipowners because of COVID-19 in order to obtain ‘no fault’ extensions of the delivery dates under these contracts.
This in turn has caused issues for shipowners who are now facing potential delays to the delivery of the vessels that they have contracted to buy, repair or convert, especially where those vessels are for delivery into a specific project or long term charter or the conversion works are linked to compliance with the 2020 low sulphur fuel cap.
Because most contracts are subject to English law, shipbuilding contracts must have an actual force majeure clause for the shipyard to claim force majeure and the burden of proof is on the shipyard.
On BIMCO’s website, members can read the full article that looks at force majeure provisions in standard form shipbuilding contracts and how these might operate in the context of COVID-19.
Feedback or a question about this information?
Posted:
03 March 2020
VPS Bunker Alerts
Veritas Petroleum Services (VPS) publish regular Bunker Alerts based entirely on fuel samples and have kindly permitted BIMCO’s Members to access this information.
The Bunker Alerts are not intended to be an evaluation of overall bunker quality in the port or area concerned, but usually highlight a specific parameter within the fuel which has raised a quality issue.
Latest ice reports for members
Latest piracy reports
Latest industry releasable threats
Related publication
eBook explanatory notes for BARECON 2017
This eBook includes a sample copy of the BARECON 2017 contract and the related explanatory notes in the latest version.Related training
Commodity Trading & Chartering Masterclass Online
- Online, Online
- 03 February, 2025
Commodity Trading & Chartering Masterclass Online is a series of 10 online sessions delivered over 5 days. Each day will run for 2x75 minutes with a short break...
ELSEWHERE ON BIMCO
Contracts & Clauses
All of BIMCO's most widely used contracts and clauses as well as advice on managing charters and business partners.
Learn about your cargo
For general guidance and information on cargo-related queries.
BIMCO Publications
Want to buy or download a BIMCO publication? Use the link to get access to the ballast water management guide, the ship master’s security manual and many other publications.
About a new business partner
We can help members check new business partners. We also help to recover millions of USD (undisputed) funds every year.
