Our experienced shipbuilding and maritime team advises and represents shipyards, marinas and shipowners. From newbuilding contracts to ship arrest, we cover every stage under both Turkish and English law.
Turkish shipyards build mega yachts, chemical tankers and fishing vessels, and carry out conversion projects, for foreign buyers, most of them European shipowners. Much of the order book is export work, and the other party to the contract is usually an owner from a country such as Norway, the Netherlands or Italy.
Most of these contracts are governed by English law, with disputes referred to arbitration in London. Turkish shipyards therefore have to manage their own projects under a foreign legal system. With a solicitor and Turkish lawyers in one team, we advise on Turkish and English law under one roof.
Our Maritime Law Practice →We advise and litigate for clients across shipbuilding and shipping, with contract drafting at the heart of what we do. Our work covers:
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We draft and negotiate shipbuilding contracts based on the SAJ form and BIMCO NEWBUILDCON, acting for shipowners or shipyards. We advise on payment instalments, refund guarantees, delivery dates and liquidated damages at every stage, from first draft to signing.
Read More →Contracts for dry-dock repairs, lengthening and conversion projects, and ship recycling. We draft the scope of work, extra work and delay notice provisions so they leave no room for argument.
Time and voyage charters, bareboat charters, towage and service contracts, and disputes over freight, cargo damage and demurrage.
Marina operation and transfer agreements, berthing and marina lease agreements, port service contracts, and concession and licensing procedures.
Registration and deletion of ships in Turkey and abroad, changes of flag, discharge of ship mortgages, and the closure and liquidation of single-ship companies.
Shipbuilding and ship repair disputes in LMAA and ICC arbitration; maritime claims and ship arrest proceedings before the Turkish courts; release of vessels against a bank letter of guarantee or a P&I letter of undertaking. We aim to resolve disputes as early, and at as little cost, as possible.
Payment instalments, the refund guarantee, the delivery date, permissible delay, and the tiers and cap of liquidated damages are all fixed at this stage. So are the governing law and the arbitration clause.
We track change orders, notices of delay and force majeure, and class and acceptance trials. Correspondence from this period may later become evidence, so a clear correspondence procedure needs to be in place from the start.
We prepare the protocol of delivery and acceptance, the outstanding works list and the guarantee period and retention arrangements, and record the moment title and risk pass.
We negotiate guarantee claims and delay compensation and, where needed, take the matter to LMAA arbitration or to court. The same team that worked on the contract stays on the file.
Client confidentiality means we do not name names. Each example below sets out the sector, the work and the outcome.
Under a contract governed by English law with an LMAA arbitration clause, the refund guarantee and liquidated damages tiers were rebalanced in the shipyard's favour. All three vessels were contracted on the same wording.
Outcome · One contract wording for three vesselsTransfer of the operating rights, transfer of the berthing agreements to the incoming operator and restructuring of the lease. We carried out the review and completion on behalf of the acquiring party.
Outcome · Uninterrupted operationsFor a tug arrested in a Turkish port, we ran the security and objection process. The charter claim was balanced against a counterclaim.
Outcome · Arrest lifted in 9 daysFollowing the sale, deletion from the flag state register, discharge of the mortgage and closure of the single-ship company were completed in parallel in two countries.
Outcome · Parallel process in two countriesShort answers to questions we often hear in shipbuilding and shipping. If your question turns on the wording of a contract, send us the draft and we can make an initial assessment together.
Works on shipbuilding contracts, commercial relations between the UK and Turkey, and strategic legal advice.
Get in Touch →A refund guarantee is a bank guarantee securing the repayment, with interest, of the instalments the shipowner pays during construction if the contract is terminated in the shipowner's favour. The guaranteed amount usually increases as each instalment is paid, and the guarantee should remain valid for as long as any arbitration is likely to last, not merely until the delivery date.
For the shipyard, three points matter: whether the guarantee is payable on first demand, or contains wording that suspends payment once the dispute is referred to arbitration; whether its wording matches the termination grounds in the contract exactly; and whether the negotiation with the bank runs alongside the contract negotiation. In return, asking the shipowner for a payment guarantee or a parent company guarantee keeps the contract balanced.
SAJ and NEWBUILDCON-type contracts first define a permissible period of delay. Once that period is exceeded, liquidated damages accrue at a daily rate up to an overall cap, and once the cap is exceeded the shipowner has a right to terminate. The main points of negotiation are the cap as a proportion of the contract price, how the daily rate relates to actual loss, and whether delays caused by class, suppliers and force majeure count towards the calculation.
Under English law, liquidated damages are enforceable as long as they protect a legitimate commercial interest and are not disproportionate. Under Turkish law, a debtor who is a merchant generally cannot ask for a contractual penalty to be reduced (Article 22 of the Turkish Commercial Code). The cap therefore has to be set correctly at the contract stage, as there is very little room to correct it later.
English law is not a disadvantage in itself; the real risk is signing on the other side's template. Acting for shipyards, we focus on: payment instalments that match the yard's cash flow, and a right to terminate if the shipowner defaults; clear provisions on how change orders affect price and time; a permissible delay list that covers delays caused by class, suppliers and the shipowner; liability limited to liquidated damages, with indirect losses excluded; and title passing on delivery.
The arbitration clause should settle from the outset the LMAA Terms, the number of arbitrators and an expedited procedure for smaller disputes. Because a solicitor and Turkish lawyers work together in our team, we negotiate with London counterparties in the same legal language.
For the maritime claims listed in the Turkish Commercial Code, an interim attachment (arrest) order can be obtained from the court where the vessel is located. The claimant is required to provide security, and the order is enforced immediately. Every day the vessel is detained is a direct cost to the shipowner, so speed is essential.
The arrest is lifted by providing security: once the court accepts a bank letter of guarantee or a P&I club letter of undertaking, the arrest is lifted and the dispute continues in the main proceedings or in arbitration. Objections to the arrest order and to the amount of security can be pursued at the same time. A security channel arranged in advance and a properly made application to the competent court can cut the time a vessel is detained from weeks to days.
Articles from our team on maritime arbitration, ship arrest and shipbuilding.
All Insights →Our work in other sectors that overlap with shipping.
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If you have a question about shipbuilding or shipping, get in touch for advice or more information. We work from our offices in Istanbul and London.
