Navigating the turbulent waters of the global supply chain from geopolitical uncertainty, to evolving sanctions, and the adoption of decarbonisation: Insights from Reed Smith’s London International Shipping Week event.
Continue Reading Insights from Reed Smith’s London International Shipping Week event: Managing your supply chain risk

The world economy is shifting towards clean renewable energy sources, particularly offshore wind projects. This presents a significant investment opportunity for those interested in associated shipping assets. Here are some important reasons to consider joint ventures and investments in this sector.
Continue Reading The answer is investing in the wind – Joint ventures in offshore wind

“It is good that I make you build, of this ship which shall sail on the sea, the hull, the decks and the mast, and then on a sunny day, like on a wedding day, I have you dress her of sails and gift her to the sea.”

Whether it is, as for Antoine de Saint-Exupéry, a result of one’s poetic nature, or for more prosaic purposes, there are a variety of reasons for ordering new vessels. Some shipowners do so to satisfy their specific trading needs or to take advantage of more favourable credit and tax opportunities while others want to make the switch to new fuels and technology, take advantage of market rates as they repeatedly set new all-time highs or to expand or diversify activities; and sometimes for a combination thereof. From cruise ships to containerships, tankers, and bulk carriers, and offshore vessels, shipowners are always on the lookout for financial partners to assist with the capital needs associated with newbuilds. Various forecasts anticipate that the shipbuilding market will grow over the next few years, off the back of the industry effort towards green shipping and the ever growing appetite for seaborne trade.Continue Reading Ship finance without a ship? Addressing the risks of newbuild financing

In a late 2020 judgment (Aegean Baltic Bank SA v Renzlor Shipping Ltd and Ors [2020] EWHC 2851 (Comm)), the High Court provided important guidance on the position of a bank under security documents relating to a loan agreement, and its obligations when exercising its rights as assignee to the insurance policies over a vessel. The case also highlights the intricacies of disputes involving multiple applicable laws, and the difficulties faced by a party in breach of its disclosure obligations and subject to an order pursuant to which they are not entitled to adduce or rely upon any factual or expert evidence.
Continue Reading Assignment of insurances: The secured lender’s obligation to obtain proper recovery

As the global economic recession grows, so does the number of vessel arrests by maritime creditors.  We highlight below four trends observed in the vessel arrest cases that are multiplying in the U.S.  Some of these trends are tied to the particularities of the COVID-19 recession.  Others resurface at every economic downturn.  It is particularly important for preferred ship mortgagees to be aware, and beware, of these trends.

First, vendors may be more willing to move to arrest vessels during these uncertain times.  For example, a New York marina has arrested multiple vessels docked on its premises for non-payment of its fees.  This development is significant because the claims of some vendors may take priority over preferred mortgages.  Under U.S. law, maritime liens for necessaries provided to vessels in the U.S. take priority over foreign (i.e., non-U.S. flag) ship mortgages.  Maritime liens for necessaries provided outside the U.S. are generally subordinate to preferred mortgages, but the priority of preferred mortgage liens is subject to certain exceptions that are not always well delineated.  Whether the arrester’s claims are subordinate or not, it is critical for the mortgagee to intervene in the arrest action.  Otherwise, the mortgagee could lose its mortgage lien as a result of the action, without receiving any portion of the proceeds of the sale of the vessel.  However, timely intervention can be challenging, especially because the arrester is not always required to notify the mortgagee.  Publication of a notice of arrest in a local newspaper may constitute sufficient notice under U.S. law.  Prudent lienholders thus maintain a close watch on the trading patterns of vessels, and, if a vessel remains in a port for a longer time than usual, monitor court dockets to be ready to intervene and preserve their claims.
Continue Reading Recent Trends in U.S. Vessel Arrest Cases

If the shipping industry were a country on its own, it would be the sixth largest greenhouse gas emitter worldwide. Economic and regulatory pressures, including the much-discussed IMO 2020, have been building up and there is no question that it is time for all maritime stakeholders to start preparing for new decarbonisation challenges. In this

On 1 July 2018, Hong Kong celebrated the 21st anniversary of the end of British colonial rule and its return to the Motherland’s embrace.

1 July also marks the beginning of the second half of the year.  If Year 2018 were a soccer match, the players are now back on the field, feeling refreshed after the halftime break, and ready to kick-off the second half of the match.

For Hong Kong’s maritime industry, the game has so far been tough, just like last year, and the year before that.  Team Hong Kong has been playing on defence mode, struggling to hold its ground against strong rivals like Singapore and Shanghai.  With this comes the city’s realization that laissez faire, the style of governance that had once been a source of pride, may have passed its heyday.

With a bit of luck, though, and barring any contingencies with the US-China trade war, the second half of 2018 may see the tide turn for Hong Kong and its maritime industry, for there is good news to come.
Continue Reading Good News in Store for Hong Kong’s Maritime Industry in the Second Half of 2018

Recent developments

Whilst there is much in the news at the moment about the relaxing of the Jones Act in the aftermath of the recent (and on-going) hurricanes, we consider the financing risks of vessel modification outside the United States:

The United States Jones Act limits the transportation of merchandise by water between points in the United States in vessels built in the United States, documented under the U.S. laws, and owned by the U.S. citizens. Any vessel which is later rebuilt outside the United States will lose its coastwise trade endorsement.

A vessel is deemed to be built in the U.S. only if all major components of the hull and superstructure are fabricated in the U.S. and the vessel is entirely assembled in the U.S. (46 CFR 67.97). Prior to any work being performed on a U.S. flag vessel eligible for coastwise trading, a vessel owner must submit an application to the U.S. Coast Guard National Vessel Documentation Center (the “NVDC”) seeking determination whether the proposed work would jeopardize the vessel’s coastwise trade eligibility.  NVDC regulations at 46 C.F.R. § 67.177 set out a comprehensive scheme for determining whether work done abroad constitutes foreign rebuilding, namely, the two-pronged test – the “major component test” (46 C.F.R. § 67.177(a)) and the “considerable part test” (46 C.F.R. § 67.177(b)).  Under a recent Foreign Rebuild Determination Letter by the NVDC, a third element – the “cumulative effect test” – has been added to the other two tests.
Continue Reading Financing risks of vessel modification outside the United States

On 12 September Reed Smith hosted a panel for London International Shipping Week to discuss ‘Tomorrow’s Maritime World, Today’. Representatives from a cross-section of the industry (ship managers, financiers, lawyers, insurance specialists and marine technical specialists) each brought their unique experience to the discussion, making for a lively debate on three pressing topics in the