Irrespective of how the construction of a vessel is financed, the shipyard and its financiers will require that the buyer pays a percentage of the contract price before delivery. This pre-payment may be lost to the buyer if proper security is not put in place. The provision of refund guarantees is the most common way in which this is achieved, but progressive title transfer may in some cases be an alternative method for securing the buyer's position.
In some transactions, a non-Norwegian company may wish to register its ship with the Norwegian International Ship Register. This can be done only if the ship is managed by a shipping company that has its head office in Norway. This requirement has a bearing on the contractual structures and financing schemes that can be put in place and also raises issues concerning enforcement.
When a ship has reached the end of its life, the owners are faced with the decision of how to dispose of it in a manner that is both commercially viable and environmentally sustainable. The controversial practice of beaching vessels in less-developed countries has prompted initiatives to tighten regulations on the recycling of ships.
The International Convention for the Control and Management of Ships' Ballast Water and Sediments recently achieved the required number of signatories and will thus enter into force in September 2017. The convention is expected to have a significant impact on ships engaged in international trade, requiring them to manage their ballast water and sediments to certain minimum standards and install onboard ballast water management systems.
As the Norwegian aquaculture industry continues to grow, so does demand for well boats. These sophisticated vessels not only transport fish, but also undertake complex tasks such as delousing and sorting fish. Damage to or loss of the fish handled by these vessels can result in substantial losses. Therefore, owners and charterers of well boats should regulate the risks associated with such services in their charterparties.
In recent years there has been a decrease in the number of vessels registered in the Norwegian International Ship Register due to strong competition from other registries. The government-appointed Trading Limit Committee has now proposed significant changes in order to make it more attractive for owners to register their vessels in the Norwegian International Ship Register.
The Maritime Code states that a maritime lien becomes time barred one year from the date when the secured claim arose, unless the vessel is arrested and the arrest leads to a forced sale. A recent Supreme Court decision shed light on the level of activity that is required from a creditor after an arrest has been secured in order to maintain a maritime lien.
Where a seller grants a buyer the right to defer payment of part of the purchase price, the seller is in effect giving the buyer a credit for the part of the purchase price which is deferred. Seller's credit is commonly used in the sale of goods in shipping and offshore construction contracts. Although versatile and functional, the use of seller's credit may give rise to legal challenges which are best addressed at an early stage.
The shipbuilding market has experienced both peaks and troughs during the past few years. The global financial crisis has affected market conditions, which in turn have impacted on shipbuilding contracts. Owners considering placing new orders may be able to negotiate terms that were unachievable in the pre-crisis era. Given existing market conditions, buyers lose nothing by requesting a particular term or provision.