Removal of ship records Contractual Issues Øyvind Axe/ Partner, Wikborg Rein & Co Cefor Seminar Wednesday 20 November 2013 in Oslo 1
Discussion Points • Sale and Purchase – main focus • Change of technical management 2
Sale and purchase – point of departure • S&P contracts on Norwegian Saleform (1993/2012) ("MoA") • Condition of vessel on delivery "as is" • Inspections – Certificate of Class • Background law – Sales of Goods Act 3
Sale and purchase – point of departure (cont.) • Superficial inspection prior binding agreement – vessel and class records • Inspection post signing of MoA – log books and engine log books to be available • Buyer gets what it sees (or saw at the inspection) • Visible and hidden defects – "as is" • Certificate of Class – paper obligation • Limited possibility to claim defects post delivery, English law even more (?) 4
Maintenance systems and maintenance records • Frequently not addressed in the negotiations on the MoAs • "with continous survey, maintenance and machinery clean and fully up to date" – seen from time to time • Clause 8 (Documentation) of the MoA – no specific provision on maintenance records • Not specifically addressed in the MoA – market practice? 5
Why do Sellers not want to hand over the maintenance records? • Routine to reset these systems prior delivery? • Strict limitation of liability for the Sellers • "as is" –physical condition of the vessel itself normally "no go" • Section 19 of Sales of Goods Act – liability for Sellers even if "as is" in case of: ‒ "Misrepresentation" ‒ failure to give essential information ‒ (condition significantly worse) 6
Why do Sellers not want to hand over the maintenance records? (cont.) • Maintenance records – a "dangerous" source of information for a Buyer who wants to forward claims? • Sellers rely on strict limitation on post sale liability, (and rightfully so) • Disclosure of maintenance records and plans may cause more claims, but not necessarily more liability • Buyers casting their net? • Know how? • Trade secrets 7
Remedies 1. Clause 8 of the MoA: ‒ "Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same" ‒ general perception – do not cover maintenance plans/records ‒ may be used as a basis for requiring the records on or post delivery ‒ do count on that it will sustain ‒ specific wording should be included, but need address also the records and plans as such (documentation), in addition to compliance (condition) ‒ Change of Class 2. Sellers position can be protected by specifically addressing that information provided shall not extend the liability they would otherwise have 8
Management Agreements: • Variety of forms – Shipman 1998/2009 commonly used The problem: Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services UNLESS same is proved to have resulted solely from the negligence , gross negligence or wilful default of the Managers or their employees or agents, or sub-contractors employed by them in connection with the Vessel • Relatively "weak" limitation of liability • Presumably same issue as with Sellers – records can give factual basis for claims against the managers • Know how/trade secrets 9
Remedies: • Owners have the possibility to require the under Shipman per Clause 18 (e) " On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make available, all documentation, information and records in respect of the matters covered by this Agreement either related to mandatory rules or regulations or other obligations applying to the Owners in respect of the Vessel (including but not limited to STCW 95, the ISM Code and ISPS Code) to the extent permitted by relevant legislation" , and • Clause 22 (f) " On the termination, for whatever reason, of this Agreement, the Managers shall release to the Owners, if so requested, the originals where possible, or otherwise certified copies, of all accounts and all documents specifically relating to the Vessel and its operation" 10
Contact details OSLO LONDON KOBE Tel +47 22 82 75 00 Tel +44 20 7367 0300 Tel +81 78 272 1777 Fax +47 22 82 75 01 Fax +44 20 7367 0301 Fax +81 78 272 1788 oslo@wr.no london@wr.no kobe@wr.no BERGEN SINGAPORE SHANGHAI Tel +47 55 21 52 00 Tel +65 6438 4498 Tel +86 21 6339 0101 Fax +47 55 21 52 01 Fax +65 6438 4496 Fax +86 21 6339 0606 bergen@wr.no singapore@wr.no shanghai@wr.no www.wr.no Legal disclaimer: This presentation comprises a general description of certain rules of Norwegian 11 law. It does not constitute legal advice, and should not form the basis for any commercial decisions.
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