Legal distribution of Risk on International Shipbuilding Contracts

Abstract

This article seeks an appropriate response to the issues that the parties to international shipbuilding contracts struggle with and they are lawsuits arising from disputes related to the manner of risk distribution in these contracts as well as the variety of associated cases and their referral to arbitration tribunals or international courts. Identifying existing or perceived risks in international shipbuilding contracts and the quality of management and distribution of these risks among the contracting parties have a significant impact on the life and survival of the contract and on achieving the desired result and the ultimate goal of the contract. A wide range of financial, legal, political, technical and economic risks are involved in the contract, the distribution of which must also be detailed. besides, national, regional and international legal rules and requirements in the field of maritime standards restrict and regulate the freedom of will of the parties. The main risks include design, technical or qualitative risk and financial risk. The effects and guarantees of each of these risks vary and the way out of them should be foreseen in the clauses of the contract or other similar documents in the light of the principle of sovereignty of the will and it should also be specified which party bears the burden of these risks. Risk, as the case may be, is borne by the party to the contract who has the greater capacity, power and from technical, legal or financial point of view has the capacity to compensate and procure it. Depending on the case, the design risk is borne by the design provider (owner, builder or design consultant), technical or quality risk is borne by the builder until the end of the warranty period, and financial risk is borne by the financing applicant

Keywords

• types of risk
• management of risk
• international shipbuilding contracts
• disclaimer
• consequences of risk and sanctions