Shipbuilding Contracts - the value of Defence Club cover

Shipbuilding over recent years has shown a dramatic increase in terms of ship numbers and also the yards involved. The subsequent financial crisis of 2008 has led to a rise in the number of disputes under newbuilding contracts, as shipyards which took on a significant number of contracts find themselves

racing to meet delivery deadlines, or running into financial difficulties as credit lines dry up.

Although shipbuilding contracts are frequently based on one of a number of standard forms, in reality each contract is different with terms varying widely. The contract terms will be dependent on the yard, the type of ship involved, the financing arrangements, and the buyer's requirements for compliance

with specifications and design, quality of workmanship and delivery timing.

The attached review summarises some of the areas in which disputes can arise.1