Dutch yards may need to rethink contractual structures
ROTTERDAM-based law firm AKD says a recent decision of the Dutch courts means that shipyards in The Netherlands may no longer be able to rely on the right to retain a vessel while awaiting payment for work done. As a result of this unexpected decision, shipyards could be forced to completely rethink their strategy on obtaining security, at a time when money remains tight in the shipping industry.
The dispute before the Gelderland Court involved two tankers under construction at the Markerink yard in the Netherlands. Upon completion of building, it was the intention of Rijndec Quality Control to transfer ownership of the vessels to two separate affiliated companies, Rijndec Trading and Rijndec Shipping. The contracts for the completion of the building were signed by Rijndec Trading and Rijndec Shipping, not by Rijndec Quality Control. The project was financed by ING Bank, which held mortgages on both vessels.
After some time, it transpired that Rijndec Trading and Rijndec Shipping were no longer able to meet their financial obligations towards Markerink, whereupon the yard exercised a right of retention on the vessels and sought judgment against Rijndec Trading and Rijndec Shipping for a total amount of approximately 1.85m Euros. Soon thereafter, ING Bank and Rijndec Quality Control found a buyer for the ships, and maintained that, since the yard was never going to be able to recover the amounts due from Rijndec Trading and Rijndec Shipping, the vessels ought to be released.
The Gelderland Court agreed, holding that the yard was guilty of abusing the right of retention because it had no prospect of being paid by the debtors.
AKD partner Haco van der Houven van Oordt says, “It has until now been common practice that a yard is able to exercise a right of retention on a vessel on which it has performed work, until it has been paid. Even if a ship goes to public auction, the yard commonly maintains the right of retention - similar to a lien - and the buyer has to pay the yard all amounts due before being able to take possession of the vessel.
“Now, this surprising decision of the Gelderland Court will set alarm bells ringing for yards that do not have claims against the actual owners of vessels. Those yards, which have often relied on the right of retention, may be forced to reconsider their whole approach to such contractual structures. Of course this is currently only a single ruling from the lower court, but it is most definitely a step in the wrong direction for local shipyards at a time of continuing economic uncertainty.”
Note to editors
AKD’s Transport & Energy team provides a full range of legal services. AKD is a full-service firm with over 250 lawyers. www.akd.nl
Labels: abuse of right of retention, affiliated companies, AKD, Dutch shipbuiding dispute, inability to met financial obligations, security for claims
Moore Stephens to make representation on tonnage tax changes
International accountant and shipping consultant Moore Stephens is to make representation to Her Majesty’s Revenue & Customs in connection with recently issued draft revised guidance in respect of the UK tonnage tax regime, some of which it considers to be unhelpful.
Moore Stephens tax partner Sue Bill says, “None of the changes are fundamental. Indeed, some of them are helpful, for example the revised comments regarding the circumstances in which a tonnage tax company is regarded as only temporarily having ceased its activities and therefore eligible to be within the regime when it resumes activities. Such changes show that HMRC is prepared to be more flexible in certain circumstances.
“There are, however, a couple of areas where the update is unhelpful. For example, HMRC has said that it does not regard the recent decision in Euroceanica (UK) Limited v HMRC (2013) UKFTT 313 as binding. In Euroceanica, the First Tier Tribunal, which hears appeals against HMRC decisions relating to tax, held that interest received on a security deposit which was required in order to take out bank loans to acquire ships in the tonnage tax regime was within the tonnage tax ring-fence, and that therefore no further tax was payable. However, HMRC has now said that, as a general principle, it does not accept that interest arising on such security deposits is within tonnage tax. Given the First Tier Tribunal’s decision, it is difficult to see the justification for HMRC’s position.
“The revised guidance also includes the comment that the transfer pricing rules apply where a UK company lends funds to a UK tonnage tax company to which it is connected. This means that there is likely to be taxable notional interest receivable outside the tonnage tax ring-fence and no relief for any notional interest payable unless, for example, some or all of the loan is performing an equity function. It is well-known within the shipping industry that this is a potential problem but it is now clear that HMRC is not going to be flexible on this issue. This is unhelpful and means that tonnage tax groups must take care to minimise or eliminate any loans to tonnage tax companies being made by other UK companies in the same group, whether or not the lender is a tonnage tax company.”
Moore Stephens is assisting the UK Chamber of Shipping in making representation with regard to some of the proposed amendments, and will itself also be making separate representation to HMRC.
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 667 offices of independent member firms in 105 countries, employing 27,081 people and generating revenues in 2013 of $2.7 billion. www.moorestephens.co.uk
For more information:
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
Labels: Euroceanica decision, Moore Stephens, shipping, transfer pricing, UK Chamber of Shipping, UK tonnage tax
London P&I Club advises closer focus on masters’ night orders
The London P&I Club says its ship inspection department has recently observed a number of negative findings in connection with masters’ night order books.
In the latest issue of its StopLoss Bulletin, the club notes, “The value of masters’ night orders should not be under-estimated in the quest for the efficient and safe performance of a ship, particularly during port calls. Invariably, deep-sea masters function as ‘day-workers’ and, with an early morning ETA at the pilot station, there is a great deal for ships’ officers and crew to prepare after a long voyage. Efficient planning in advance can help an operation to be carried out in a controlled and safe manner with the minimum of stress for all parties.
The master’s night orders are traditionally a set of bespoke instructions for overnight bridge officers to digest and act upon to ensure that, by the time a ship reaches the pilot station, all required crew are at their stations and all physical preparations are made, and the ship is in all respects ready to enter port.
The club says, “When writing night orders, there are a number of points which could be included in the instructions to be considered by the master. These include calling the master with sufficient time available to appraise the full navigational situation and to develop proper night vision before reaching the pilot station or taking the con, and calling the pilot station to confirm ETA and berthing prospects. Masters’ night orders should also seek to ensure that day crew are called at a reasonable time so that items such as anchors are cleared, pilot boarding arrangements are safely in place, and flags/call signs are ready to be run up.
“Consideration should also be given to calling the duty engineer to ensure that engines are on standby suitably in advance of being required for manoeuvring. It is also important to endeavour to ensure that bridge manning is increased as required, that mooring ropes are prepared, and that bridge arrival checklists are completed, and required systems checked.
Labels: bridge officers, London P and I Club, marine liability insurance, masters' night orders, pilots
Liberian Registry provides MOL-funded medical supplies to Ebola-hit Liberia
The Liberian Registry has used a $10,000 donation from Mitsui OSK Lines (MOL) to procure medical supplies to help combat the spread of Ebola in Liberia.
The supplies, comprising essential materials and medical equipment such as PPE (Personal Protective Equipment) suits, gloves, goggles and respirators, arrived in the Liberian capital, Monrovia, on 5 November. They were shipped by air from the United States by TNT, which covered all shipment costs.
Scott Bergeron, CEO of the Liberian International Ship & Corporate Registry, the US-based organisation which manages the Liberian Registry, says, “We are extremely grateful to our client, MOL, one of the most powerful shipping companies in the world, for donating resources to the critical situation in Liberia. We are indebted, also, to TNT, for its generosity in covering all shipment expenses. For our part, we will ensure that all the materials are physically received and transferred to hospitals as directed by Liberia’s Minister of Health.”
The Liberian Administration is deeply saddened at the tragic loss of life resulting from the Ebola virus, and is committed to providing whatever assistance it can in these difficult times. Meanwhile, it has taken every precaution to ensure that the Ebola virus does not affect the Liberian Registry in either an operational or financial sense. The registry is managed from the United States, from where its global operations are administered. Its ships and crews, and its operations, are not directly affected by the virus in any way. The registry is operating as normal, and continues to offer the first-class service, innovation and financial strength with which it has become synonymous.
Meanwhile, the YCF Group, the parent organisation of the Liberian International Ship & Corporate Registry (LISCR, LLC), has been extremely active in the fight against Ebola, providing assistance to government, non-profit and community groups. Its ongoing help has included significant technical and equipment contributions towards setting up a national Ebola call centre in Liberia, and providing senior executives to manage a national Ebola task force. The YCF Group has also donated building materials to the C H Rennie Hospital in Kakata for improving its infrastructure and ability to quarantine Ebola patients more effectively.
Other initiatives undertaken by YCF include help in setting up community hand-washing stations, liaison with health authorities to publish Ebola awareness messages, the creation of a special radio bulletin designed to raise awareness about safeguards to protect health, and the launch of a Good Morning Liberia marketing campaign, which provides free credit every morning to enable subscribers to check on friends and family.
The Liberian Registry and the YCF Group are committed to providing a sustainable and state-of-the-art communications network during this emergency period. The registry is maintaining business as usual, while taking all necessary precautions to protect its employees, as well as providing meaningful support to the Ebola plight in Liberia, wherever it has the ability to do so.
The Liberian Registry is one of the world’s largest and most active shipping registers, and has long been considered the world’s most technologically advanced maritime administration. It has a long-established track record of combining the highest standards of safety for vessels and crews with the highest levels of responsive service to owners. www.liscr.com
Guidance to help shipowners and vessel masters prepare for the prevention of the spread of Ebola is available at:
Labels: $10, 000 donation, Ebola, Liberia, Liberian Registry, LISCR, medical supplies, Mitsui OSK Lines, MOL
ITIC warns on pitfalls of confidentiality agreements
ITIC has advised shipbrokers, consultants and other advisers not to sign confidentiality agreements which restrict their ability to do business.
Noting that it is increasingly being asked to comment on confidentiality (or so-called non-disclosure) agreements, ITIC says, “The use of such agreements has always been common when parties are considering doing business but need to provide information to the other party before they enter into a formal contract. In these circumstances, the party providing the information will protect its interests by insisting that the receiving party signs a stand-alone confidentiality agreement. Historically, this has been associated with transactions such as the sale of corporations but, more and more, ITIC is seeing it in a wide range of circumstances involving its members.
“Consultants and other advisers needing access to information to enable them to provide their services are frequently asked to sign confidentiality agreements. Increasingly, too, shipbrokers providing valuation services receive the same request. The important thing is to ensure that the wording of the agreement does not unnecessarily restrict the member’s ability to do business with other clients.”
ITIC has created an e-learning seminar which will explain common provisions in confidentiality agreements, and some of the pitfalls to avoid. The seminar is accessible at http://www.itic-insure.com/knowledge-zone/e-learning-seminars
ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com
For more information:
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
Labels: confidentiality agreements, Insurance, ITIC, non-disclosure, seminar, shipbrokers
Bureau Veritas launches Underwater Radiated Noise notation
Leading international classification society Bureau Veritas has developed a voluntary notation intended to assist shipbuilders and operators reduce underwater noise radiating from ships. The comprehensive set of standards and measuring services is grouped as NR614 Underwater Radiated Noise (URN). It aims to control and limit the environmental impact on marine fauna of all self-propelled ships and provide a standard and a system to assess compliance with specific vessel requirements for underwater radiated noise.
It covers both shallow and deep water conditions, sets out a dedicated comprehensive measurement procedure, explains how to manage measurement uncertainties and sets specific underwater noise level requirements.
Jean-Francois Segretain, technical director, Bureau Veritas Marine & Offshore Division, says, “Underwater noise radiating from ships is acoustic pollution, and there is no doubt that it will be the next big area to be tackled by regulators. This notation, backed by careful research with an extensive network of partners, means we can help designers, yards and operators to be ahead of regulation. And it makes commercial sense. Reducing underwater noise directly contributes to reduced noise and vibration levels on board, which improves passenger and crew comfort. There is also a strong link between fuel efficiency and noise. Quieter ships burn less, and we can help make ships quieter and so more efficient.”
One of the main drivers of the notation is to aid European stakeholders in fulfilling the requirements of the Marine Strategy Framework Directive. This aims to improve the environmental state of European waters by proposing mitigation solutions to be put in place by 2016, with their efficiency proved by 2020. The BV notation has been issued in parallel with the European research project AQUO, which is focused on underwater noise, and includes the work of 13 partners - shipyards, hydrodynamics research institutes and bio-acoustic experts - from eight countries, and an end user committee has been built to review the project, including BV's notation.
Several new expedition cruise projects have underwater noise reduction in their specifications and other passenger ship operators are discussing BV’s URN notation and its services and technical assistance for implementing noise reduction solutions. Bureau Veritas has signed a collaboration agreement with TSI S.L. a Spanish company that specialises in Dynamic and Acoustical design of quiet ships as well as noise and vibration measurements.
For a copy of NR614 e mail firstname.lastname@example.org
Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has 61,000 employees in around 1,330 offices and laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.
for corporate information www.veristar.com
for marine information
For more information:
+33 (0)1 55 24 71 98
Labels: classification societies, noise, pollution, ships
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