As the number of shipyards in distress, and cancelled contracts,
increase in the current difficult market, the risks associated with
shipbuilding projects is on the rise. Even where the builder is
still solvent and the buyer still wants the ship, the pressure on
both sides is forcing them to take harder positons and amplifying
the costs of managing these kinds of projects.
In this article, we cover a number of issues that give rise to
difficulties in shipbuilding projects, many of which find
themselves in the spotlight in the present environment. We also
consider some practical points which may assist the parties
involved.
Whilst contract terms vary, the issues discussed below are
broadly applicable to all newbuilding contracts. That said, we
refer to the most widely used form of newbuilding contract, the
Shipbuilders' Association of Japan form (the SAJ). This form,
or modified versions of it, are widely used in Asia where the
majority of commercial ships are
