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Can cash buyers of vessels to be scrapped deploy them for trade?

What if a vessel is sold for scrapping with a ‘for demolition only’ clause in the agreement, but buyers end up trading the vessel. Is there any relief available to sellers for this contractual breach by buyers? In Apr'19, CSK Glory was sold to a one-ship company whose agents were GMS Dubai. One of the clauses in the sale agreement was that vessel is sold for demolition only and shall not trade. Prices for scrap metal were at a peak then.

As things turned out, prices dropped sharply and loss would have been around $760k for buyers. Freight market for Capesizers however had risen and buyers fixed the vessel for trade. Two laden voyages had already been completed and sellers were now trying to claim damages and force the buyers to stop trading the vsl.


As per the court, once vsl was sold, the seller had no interest in her. Also, it was difficult to prove that buyer's breach had caused the seller to lose profit / incur any expense. Seller’s argument that this vsl had contributed to oversupply of tonnage was a non-starter. A single capsizer could not have had a significant or measurable financial impact. But, given the contractual breach by the buyer, injunction was granted refraining them from further trading the vessel and nominal damages were awarded to the seller.



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