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Dry Docking -Technical and Financial Management

A shipowner when trying to fix or shortlist a drydock, invites quotes from various likely drydocks. Amongst the other things, the policy, reputation and work culture of the yard should be given prime importance. To appoint a reliable agent is key to optimize the process and avoid conflicting interests between yard and ship owner. Once shortlisted, one of the most important things to be done is to establish a clear and transparent contract with the yard.  In any agreement with the drydock authorities the accountability of the shipowner or the yard must be very clearly understood and stated. The terms must be crystal clear. The responsibility of the yard / drydock, for any damage caused during the drydocking operation must be clearly specified in the contract. Point worth noting being, a shipping company dry-docks her ships only once in a way. The yards on the other hand, are deep into the business. It is like home ground for them. The meaning, between the lines, of each clause, must be carefully read. Moreover, since rules may keep changing, ship owners must be very clear about the legal implications.

In a recent case of accident in a dry-dock, the cause was attributed to the placement of blocks inappropriately. During the initial dock inspection of the vessel’s bottom, it was discovered that large parts of the duct keel plating had been damaged over considerable length.

Apparently, an outdated docking plan was given to the yard. The yard, upon sensing an error, repositioned the keel blocks without consultations with the owners. Now, the question of liability was raised in the midst of the complex situation and unclear terms. A very important area to check is the limitation amount. Owners must also ensure clarity of terms in respect of liability for any such unforeseen event. The cost of repairs and subsequent liabilities can be enormous. The yard has responsibility to compensate any losses only to the extent of agreed limitation amount. The ship owner and/or its hull and machinery insurers will be liable for much larger part of the losses. The yard’s limitation of liability should be in reasonable proportion to the value of the vessel and the scope of work. The yard authorities must provide evidence of a ship repairer’s liability insurance, covering at least the agreed limitation of liability. The Insurers of the vessel shall be kept informed of the entire picture. The ship can receive damage to her hull or may even capsize in want of precise calculations and arrangements. Capsizing of ship in pivoted condition with reduced stability and damaged bottom block can cause catastrophic damage.

Following terms must be clearly stated in the agreement:

After the terms are established, shipowner must provide the drydock authorities, updated docking plan and detailed repair specifications. A proper risk assessment must be carried out prior to the pre docking meeting. During the meeting, various issues like controlling the process, documentation, contingencies, etc are defined and agreed. In order that a certain important area is not neglected a careful thought must be given to various areas of concern. The managing of these areas must be planned nicely by the senior officers, attending superintendent and the ship’s agent. They include:

A standard drydocking agreement can be as follows:

Thus, it can be seen that there are several clauses, which can end up in disputes and heavy claims. Many of these clauses look like open pipes with no concluding ends. A very careful study of these clauses and drafting is required to ensure protection of shipowner’s interests.

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