Key Word： Maritime injunction; Ship inspection certificate; Ship registration; Lien dispute; Performance deadlock

 Case Summary:

In May 2020, Yuanyi Ship Service Co., Ltd and Meiermeitu Shipbuilding Co., Ltd. entered into a Shipbuilding Contract, stipulating that Meiermeitu Shipbuilding Co., Ltd.  would construct a large vessel in 8 months by processing materials. The shipbuilding cost was calculated per ton, with a rate of CNY 2,980 per ton. Various factors during the shipbuilding process resulted in serious delays in the construction period. After negotiation, Meiermeitu Shipbuilding Co., Ltd. provided a "Shipbuilding Contact Reply" letter, committing to complete the ship's launch before July 10, 2022, and complete the handover procedures before August 10, upon receiving the additional payment of CNY 1.7 million from Yuanyi Ship Service Co., Ltd.. The ship construction payment shall be settled in accordance with the contract. On July 4, 2022, Yuanyi Ship Service Co., Ltd. paid CNY 1.7 million to Meiermeitu Shipbuilding Co., Ltd. Meiermeitu Shipbuilding Co., Ltd. completed the ship inspection on October 27, 2022, and obtained the certificate of ship's inspection. However, they withheld the ship inspection certificate on the ground that Yuanyi Ship Service Co., Ltd. failed to pay shipbuilding fee and refused to assist in handling ship registration procedures. Yuanyi Ship Service Co., Ltd. applied to Nanjing Maritime Court for a maritime injunction and provided a guarantee, requesting the court to order Meiermeitu Shipbuilding Co., Ltd. to deliver the ship, ship inspection certificate, and assist in processing ship ownership registration. Later, Yuanyi Ship Service Co., Ltd. withdrew its request for delivery of the vessel in view of its actual control of the vessel.

Judgment:

After examination, the court After examination, the court ruled to grant the petitioner, Yuanyi Ship Service Co., Ltd.'s application for a maritime injunction. Meiermeitu Shipbuilding Co., Ltd. submitted a reconsideration application, but the court held that the failure of Meiermeitu Shipbuilding Co., Ltd. to deliver the ship inspection certificate and register the ownership of the ship in accordance with the agreement had resulted in the inability of the ship built by Yuanyi Shipping Co., Ltd. with huge investment to operate normally, which had caused real and imminent damage to Yuanyi Ship Service Co., Ltd.. Meiermeitu Shipbuilding Co., Ltd. asserted its right to retain the ship based on unpaid shipbuilding costs, which did not conform to legal regulations or the agreement between the parties. The dispute regarding shipbuilding costs could be resolved separately. Therefore, the court rejected the reconsideration application of Meiermeitu Shipbuilding Co., Ltd. and upheld the original ruling.

Significance:

The long construction period, large capital demand, and high market risk of shipbuilding make it easy for parties involved to dispute issues such as ship price, ship delivery, and ship quality during the performance of the contract, resulting in the construction of ships that cost huge amounts of money but cannot be put into use in a timely manner. In this case, even though the shipowner had effectively taken control of the vessel, the shipyard refused to deliver the ship inspection certificate and handle the ship registration procedures, the ship could not operate normally, which not only greatly affected the legitimate rights and interests of the shipowner, but also directly transmitted the legal risks to the downstream of the ship transaction chain, resulting in a series of compensation disputes. Faced with the complex scenario, the court gave full play to the procedural advantages of maritime injunctions, which are "short, flat and fast", and ordered the shipyard to assist the shipowner in handling the relevant ship registration procedures. In order to protect the shipyard's claim for ship construction funds, the court required the shipowner to provide sufficient guarantees and informed the shipyard of its right to make separate claims, in order to properly balance the interests of both parties. In the face of the deadlock in the performance of the shipbuilding contract, the court adhered to innovation and put aside the disputes between the two parties, speeding up the turnover of the ship delivery. This is an innovative measure of judicial assistance to the high-quality development of the shipbuilding industry. At the same time, the court facilitated the mediation throughout the dispute resolution process, and finally reached a package solution on the handling of the ship registration certificate, the payment of the remaining ship construction funds and other matters, which completely resolved the disputes between the two parties.