Gearbulk v Stocznia Gdynia

The builder failed to construct and deliver three vessels. The buyer terminated the contracts, then recovered under the refund guarantees the pre-delivery instalments of the contract price plus interest. He also commenced arbitration against the builder, claiming damages for repudiatory breach and for the losses that they suffered as a result of the Yard's failure to build the vessels. Claims were in excess of US$125 million.

The Court of Appeal ruled that the contracts did not exclude the buyers' rights to claim damages at large and that the buyers had not lost that right by reason of claiming for repayment of the pre-delivery instalments paid under each of the contracts pursuant to the terms of the refund guarantees.

In a case that has had wide ranging implication for the industry, this Court of Appeal case clarified the exposure of a builder for damages if a shipbuilding contract is terminated by a buyer in circumstances where the builder is in breach.

The builder failed to construct and deliver three vessels. The buyer terminated the contracts, then recovered under the refund guarantees the pre-delivery instalments of the contract price plus interest. He also commenced arbitration against the builder, claiming damages for repudiatory breach and for the losses that they suffered as a result of the Yard's failure to build the vessels. Claims were in excess of US$125 million.

The Court of Appeal ruled that the contracts did not exclude the buyers' rights to claim damages at large and that the buyers had not lost that right by reason of claiming for repayment of the pre-delivery instalments paid under each of the contracts pursuant to the terms of the refund guarantees.