Changes

This case concerned two appeals by the Claimant, Jiangsu Guoxin Corporation Ltd as Seller, brought pursuant to s 69 of the Arbitration Act 1996, against two partial final awards dated 20 November 2018 awarded by the Tribunal. The Seller contended that it was entitled to rely on the Prevention Principle and to an extension of time due to alleged unlawful rejection by the Buyer, Precious Shipping. This decision determined that, on the facts of the case, the prevention principle Prevention Principle did not apply and after examining the relevant provisions provided for in the Articles of the shipbuilding contracts (“the SBC’s”) on amended Shipbuilders Association of Japan (SAJ) forms. The , the Court dismissed the appeals.

This decision makes clear that if the shipbuilding contract contains a provision for an extension of time which covers the delay in question, it will be almost impossible for the Seller or yard to rely on the prevention principle in respect of that delay. It is noted here that the wording of the definition of permissible delays in the SBC, such as Article VIII.1 of the SAJ form, is very important in determining whether the yard would be able to rely on the prevention principle since, as in this case, the definition is most likely wide enough to include delays caused by the Buyer. On the other hand, another popular form used for newbuilding contracts such as BIMCO’s NEWBUILDCON, may give more possibility for the prevention principle to apply due to the more restrictive nature of clause 34(a)(i)(10), [please put - see footnote for the text wording of this provision into a footnote] - which might not include some delays by the Buyer. This recent decision also highlights the importance of complying with the notice requirements under the SBC – such as the notice to be provided to the Buyer for a time extension claim by the yard under Article VIII.2 of the SAJ form.