JUDGMENT
The Appellant Shipyard had agreed to construct and sell 14 vessels to the Respondent Buyer on an amended Shipbuilders’ Association of Japan (“SAJ”) form.
The first two vessels were delivered, but the Buyer rejected the next four which remained at the yard occupying berths, which prevented the Shipyard from delivery of vessels seven and eight.
The court held that the Shipyard was not entitled to an extension of time ("EOT") on the grounds claimed:
Extract from the contract, Article VIII.1
Cause of Delay:
If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to … other causes beyond the control of the SELLER …, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended…for a period of time which shall not exceed the total accumulated time of all such delays…
Extract from the contract, Article VIII.2
Notice of Delay:
Within seven (7) business days from the date of commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail confirmed in writing, of the date such delay commenced, and the reasons therefore.
Where the same contractual provisions exist in a shipbuilding contract, then In the event of a delay caused by the Buyer that is beyond the Shipyard’s control, the Shipyard should follow the relevant notification provision, notifying the Buyer in order to secure an EOT.
Similarly, where a Shipyard pursues a modification, the Buyer should be notified pursuant to the relevant notification clause in the contract.
Authored by
Michael Dickin