The recent lawsuit filed by the owners and managers of the M/V Dali, the vessel that struck and destroyed Baltimore’s Francis Scott Key Bridge, against Hyundai Heavy Industries raises significant questions about shipbuilders’ post-delivery liability. If successful, the case could challenge long-standing industry norms and reshape the legal landscape for shipbuilding contracts governed by English law. Haynes Boone Partners William Cecil and Andreas Dracoulis authored an article for Maritime Reporter and Engineering News to discuss the lessons that can be learned from this lawsuit and these shipbuilding contracts.
Read an excerpt below.
The owners and managers of the M/V Dali, the ship that destroyed Baltimore’s Francis Scott Key Bridge, have brought a claim in the Pennsylvania Court against the vessel’s shipbuilder, Hyundai Heavy Industries Co. Ltd. The M/V Dali was completed and delivered by HHI in 2015, so is 10 years old.
The owners/managers allege strict products liability for defective design and manufacturing, breach of implied warranties, negligent misrepresentation, negligence and an indemnity and/or a contribution. The owners/managers are claiming the cost of damage to the vessel, a contribution/indemnity for any damages sustained by the owners/managers in claims by third parties in respect of personal injury/death or damage to property (referred to as the Limitation Action) and other damages. These claims have not been quantified, but are likely to be very substantial. Perhaps not surprisingly in view of the issues discussed in this article, the owners/managers’ claims say almost nothing about the underlying shipbuilding contract concluded with the builder.
If successful, these claims would break open shipbuilders’ normal limited liability for defects in the vessel after delivery, as provided for in most international shipbuilding contracts (at least those subject to English law) and which form an integral part of the shipbuilding bargain. Given the recent focus on increasing US shipbuilding and ship ownership, this could be of extra significance to builders.
This article explores the normal post-delivery defects regime in shipbuilding contracts and considers examples of attempts by shipowners to get around this regime and claim additional liability from the builder. The issues are approached from an English law perspective, which is a common choice of governing law under shipbuilding contracts.
Read the full Maritime Reporter and Engineering News article here.
