Recent years have seen tough operating conditions for those involved in the transport of goods round the world. With the volume of trade declining rapidly and a surplus of tonnage after the good years, earnings have plummeted and a number of companies have found themselves in financial difficulties, with high profile companies seeking financial protection from their creditors.

This may involve a period of re-organisation from which the company may emerge to trade again, or the company may cease operating altogether. In either case the creditors may find themselves having to receive significantly less than the amount that they are owed by the defaulting company, or maybe nothing at all.

These tough operating conditions and high-profile defaults have shown that there are no certainties any more. Added to this, the complications caused by the international nature of shipping, with different jurisdictions and legal systems, and sophisticated corporate structures, may make it appear that there is little that can be done if another party defaults.

Whilst it is true that there are no guarantees in shipping, there are steps that can be taken before fixing, during the course of a charter and after it terminates to ensure that the best possible protection is obtained. Risk cannot be eliminated altogether, but this publication aims to explore some of the ways that the risk of a contractual counterparty defaulting, and its consequences, can be reduced.

Read more in the attached resource: