Shipping 2014: South Africa

New building contracts

1. When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?
   
   Usually shipbuilding contracts are negotiated on standard forms such as the SAJ form produced by the Shipbuilders’ Association of Japan and the AWES form produced by the Association of European Shipbuilders and Shiprepairers. South African law generally recognises freedom of contract and accordingly parties to a contract are entitled to vary the terms by agreement. However, the Ship Registration Act No. 58 of 1998 provides that a ship is ‘transferred by registration of a bill of sale in the prescribed form’ and, consequently, ownership can only be transferred at that time and in that manner if a vessel is to be registered.