Cruise ship refurb payout

Posted: 16th August 2016

Cruise Liner 5Contractual deadlines can be very tight and the financial consequences of breaching them are often severe. In one case which underlined the point, a cruise ship operator won Euros 770,000 in damages from a shipyard after a major refurbishment of its flagship was held up for a month, largely due to strike action.

The contract price was over Euros 14 million and covered major engineering and outfitting works. The High Court found that the shipyard – one of the largest in the world – was responsible for the delay in completion of the works and awarded the operator the maximum sum in liquidated damages permitted by the contract.

The operator had also claimed more than £3 million in compensation after a problem with the vessel’s engine cooling system led to the cancellation of two voyages. The Court found that the shipyard had breached its duty to use reasonable skill and care in cleaning the system and in reporting on its condition.

However, in rejecting that part of the operator’s claim, the Court found that those breaches did not cause any loss. A proper compliance with the shipyard’s cleaning duty would not have revealed the need for remedial work. There was also no evidence that the shipyard should have been aware of and informed the operator of any problems which the latter did not itself observe.