Lloyd’s List , 21.09.2011, page 1

2. “Non payment under period charters – practical and legal issues” by David Pitlarge, Hill Dickinson LLP

3. “Cosco's market processes lead to concerns”, Financial Times, 22 August 2011“Cosco dispute threatens dry bulk industry”, Financial Times, 29 August 2011“Shockwaves ring as Cosco reneges on contracts”, Financial Times, 29 August 2011

4. Lloyd’sList, 21.09.2011, page 1

5. “…I’m afraid that we are going to see some very unpleasant bankruptcies. The money is going to run out at these types of rates and I am sorry to say that there will be a lot of blood on the carpet this time, said Mr Davis." Richard Meade: “Jim Davis reveals a view into shipping's financial abyss”, Financial Times, 20 September

6. “The head of the world’s largest shipping market has expressed concern over the behaviour of one of the world’s biggest shipping companies after China’s Cosco apparently reneged on contracts with several shipowners worldwide amid a sharp market downturn” Robert Wright: “Cosco’s market processes lead to concerns”, Financial Times, 22 August 2011

7. “Cosco ship were reportedly arrested – ordered not to leave port – when angry shipowners and other creditors won court orders to have ships seized as collateral against unpaid fees” Robert Wright: “Cosco’s market processes lead to concerns”, Financial Times, 22 August 2011

8. “…,China Cosco, a Hong Kong-listed subsidiary of the sprawling, state-controlled group, said the “adjustment of hire rates” was part of its “normal operations” and consistent with its business philosophy.” Robert Wright: “Cosco’s market processes lead to concerns”, Financial Times, 22 August 2011

9. “Cosco did not respond to a request for comment. It has previously said it is withholding some payments under a “cost-reduction programme” to maximise value for shareholders.” Robert Wright: “Cosco faces threat of worldwide ship seizures”, Financial Times, 23 August 2011

10. Non payment (1) • Continuing the contract: the basic principle- election • in the t/c context: “The Puerto Buitrago” [ 1976] 1 Lloyd’s Rep 250 • Damages adequate • wholly unreasonable to demand performance and claim continual remuneration (no legitimate interest) “The Dynamic” [ 2003] EWHC 1936- burden on charterer

11. Non payment (2) • Damages: • The cost of replacement ( charter/ market) if there is an available market • Damages not likely to be available for simple non payment and will not follow withdrawal ( see “The Kos” [2010] 1 Lloyd’s Rep 87).

12. Anticipating problems • Guarantees • Formal requirements -writing, executed for or on behalf of guarantor: “ The Maria D” [ 1991] 2 Lloyd’s Rep 311; Mehta –v Fernandes SA [2006] 2 Lloyd’s rep 244; Golden Ocean –v- Salgaocar [2011] EWHC 56 • Immediate liability of the guarantors: “Star Reefers” –v- JFC [2011] EWHC 2204 • Variation of the principal contract • Contingencies: demands etc. • The lien • Standard form NYPE , clause 18… do not forget “sub-hires” • Jurisdiction and bankruptcy (Cosco -v- Armada and STX [2011] EWHC 216)

13. Anticipating problems • Penalties: liquidated damages should not be deterrent • “The Paragon” [2009 ] 2 Lloyd’s Rep 688: hire adjustment to market rate 30 days before maximum date- penal • Azimut-Benetti-v- Healey [2011] 1 Lloyd’s Rep 473: construction contract, 20% retention in favour of buyer - enforceable • Netting Clauses – are the parties really the same?

14. Anticipating problems • Default provisions- ( see below) • Dispute resolution clauses: • Scott -v- Avery: B-v-S [2011] EWHC 691 • mediation clauses • Parties and authority: “The Sibohelle” [2011] EWHC1150

15. Default – knock on effects • Inability to pay / admitting inability to pay/ suspending payments • ISDA; loan agreements; c/p default clauses

16. Insolvency procedures • Advantages: moratorium, breathing space • Chapter 11: debtor in possession • Jurisdiction: EU-COMI; liberal US approach

17. For further information please contact:David Pitlarge, Hill Dickinson LLP david.pitlarge@hilldickinson.com+44 (0) 20 7280 9251