Newbuilding supervision dispute

A technical management firm appointed a newbuilding supervisor to oversee the building of several chemical carriers. A dispute arose concerning two hulls which were scheduled for delivery in early 2009.

In his monthly report for December 2008, the newbuilding supervisor stated “there are no known matters at this stage with regard to the construction and commissioning of the hulls which may effect the scheduled target date”. On the basis of this report, the technical manager nominated the two vessels as performing vessels under a COA.

Upon completion of the sea trials, deficiencies with the tank coating of the first vessel were found. An independent surveyor was appointed and reported that the tanks were badly corroded and it appeared some remedial action had been taken by the yard to cover up poorly adhering paint. In respect of the second vessel, deficiencies were found in the form of “mud cracking” in the tank coating and further evidence that the yard had covered up areas of poorly adhering paint. The delivery of both vessels was delayed by two months until later in 2009 as significant work had to be done re-blasting and re-coating all cargo tanks on both vessels.

The technical manager brought a claim against the newbuilding supervisor for losses of USD 830,000. The newbuilding supervisor argued that the defects only became apparent at the sea trials and that they were not responsible for the yard’s failure to properly apply the paint. The main issue in the dispute was centred on what could realistically be detected by a newbuilding supervisor.

A key concern was in relation to one of the hulls, as the mud cracking and unauthorised repairs were evident in 20-30% of the total tank area. It became apparent that the newbuilding supervisor had possibly failed in his duty to adequately supervise the newbuilding, especially in failing to detect the yard’s attempt to cover up poorly adhering paint.

Negotiations to settle the claim led to a final agreed compensation of USD 350,000.