AIYON Abogados commemorates its 10th anniversary at its headquarters in Bilbao, marking the culmination of a great year of celebrations

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AIYON Abogados celebrates its 10th anniversary at its headquarters in Bilbao, after a decade in which it has consolidated its position as a national and international leader in maritime and transport law, reaffirming at all times its commitment to professional excellence and personalised service to its clients.

Our boutique firm celebrated its tenth anniversary with a wonderful event held at La Torre de Iberdrola on 2 October, attended by clients and partners, as well as representatives from the logistics and transport sector at national and international level. An event that brings a great year of celebrations to a close, after a decade of hard work and shared enthusiasm.

Founded in 2015 by a team of expert lawyers, all specialising in maritime law, transport, international trade and insurance, the firm has grown to have offices in Madrid, Cadiz and Algeciras, in addition to its headquarters in Bilbao, which hosted the event. Its multidisciplinary team of solicitors, with an average of more than twenty years’ experience in the sector, offers a comprehensive 360º legal service (24/7) within its areas of expertise, as well as in any other area of law with the help of its regular collaborators.

During these ten years of work, the AIYON team has demonstrated its ability to adapt to the challenges of the sector. Over the years, the firm has advised companies and professionals of all kinds, handling both small queries and actively participating in large-scale projects. In addition to being appointed to assist in major maritime accidents occurring at sea, the firm’s solicitors are at the forefront of new technologies being implemented in the sector, such as offshore platforms and, more specifically, floating offshore wind farms. Our close collaboration with local engineering firm SAITEC Offshore Technologies is proof of this.

AIYON Abogados has not only consolidated its presence in the domestic market, but we are also one of the main collaborating firms for numerous companies in the sector based in other countries, including multinationals and insurance companies with an international presence, prestigious law firms and P&I Clubs, and institutions such as the IOPC Funds (IMO). In this way, we position ourselves as a leading law firm, offering tailored legal advice and solutions.

In a global and constantly evolving environment, the solicitors at AIYON know that the sector always requires dynamic measures tailored to each case and each client. The five partners, Mikel Garteiz-goxeaskoa, Verónica Meana, José Antonio Domínguez, Enrique Ortiz and Zuberoa Elorriaga, whose work has been recognised by specialist British directories such as The Legal500 and Chambers & Partners, lead a team of young professionals who aspire to contribute to the firm’s growth in the coming years so that, in another decade, we can all once again commemorate the good work of our firm and its hallmark, which combines the serious, professional and dedicated practice of its profession with an approach that is always friendly and attentive.

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MORUs and Maritime Law: A New Legal Challenge from a Spanish and International Perspective

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Mikel Garteiz-goxeaskoa, partner of AIYON Abogados S.L.P.

In recent years, the shipbuilding and energy industry has witnessed a profound transformation driven by the transition to sustainable energy sources. In this context, MORUs (Mobile Offshore Renewable Units) emerge as one of the key elements for the exploitation of renewable resources in the sea. These floating structures, designed to generate wind, solar, wave or tidal energy, represent a considerable technical advance, a challenge for the shipbuilding industry, but also, without doubt, a major legal challenge.

The Comité Maritime International (CMI), a non-governmental organisation in consultative status with the United Nations, has positioned itself as one of the main forums for the development of a uniform international legal framework for maritime affairs. Founded in 1897, the CMI’s main objective is the progressive harmonisation and unification of maritime law. In 2023, in view of the growth in the navigation of our seas by these new offshore structures, the CMI set up an international working group to study the legal status of MORUs and, in order to gather information on how these units are treated in different legal systems as part of this process, launched a questionnaire addressed to national maritime law associations.

The Spanish Maritime Law Association actively participated in this initiative, constituting a group of legal experts coordinated by Jose Sánchez-Fayos and myself. Its aim was to analyse the legal treatment of MORUs within the Spanish regulatory framework, the conclusions of which were presented at the Spanish Maritime Law Association National Congress held in Madrid in June 2025.

One of the central questions that arises when dealing with the MORU phenomenon is their legal status: are they legally ships or not? This is not a purely technical question as the answer will depend on whether or not essential maritime law regimes apply to them, such as the Convention on the Arrest of Ships, the LLMC maritime claims limitation regime, the rules on nationality and flag, maritime privileges or the possibility of being registered and mortgaged as a ship – essential for financing their construction. Ultimately, their legal qualification determines not only their administrative treatment, but also the legal architecture that guarantees their operation, financing, insurance and conflict resolution.

In the Spanish case, Law 14/2014 on Maritime Navigation establishes a typology of shipping vehicles that distinguishes between ships, vessels, naval artefacts and fixed installations. Most MORUs, not being self-propelled and not intended for navigation in the strict sense of the word, cannot be considered as ships. They do not easily qualify as vessels either. Thus, it can be concluded that most MORUs should be classified as naval craft, defined as floating structures not intended to sail, but capable of being towed and of accommodating persons or equipment.

This classification has important practical consequences as MORUs, identified as naval artefacts, can be entered in the Register – although this will require adjustment to accommodate them – and can benefit directly from the ship mortgage regime foreseen for ships. However, the 1999 Convention on Arrest of Ships does not apply to them, which prevents them from being arrested according to the procedures established for ships, something that we believe should be changed given the mobility of these artefacts.

On the other hand, as far as insurance is concerned, Article 406 of the Maritime Navigation Act admits the application of marine insurance to naval artefacts if they are subject to risks inherent to navigation, which opens the door to coverage during phases such as towing, installation or operation at sea.

Looking at the responses from other countries, France, for example, has recently passed the APER Law (2023), which explicitly excludes these structures from the concept of ship and creates a specific legal framework for them, recognising their stationary nature. Denmark, on the other hand, adopts a broader interpretation of the concept of ship, allowing MORUs to be registered as such in the Danish maritime register, which facilitates their insurance and financing. In the United States, the case law of the Supreme Court in Lozman v. City of Riviera Beach has set a standard by considering any structure that is reasonably capable of being used as a means of maritime transport to be a vessel, which has allowed some MORUs to be classified as such. In China, although the legal concept of ‘maritime mobile unit’ could be applied to MORUs, in practice there is still no possibility to register them as property in a public register. Brazil, on the other hand, allows their registration only if they are construed as vessels under the guidelines of the maritime authority.

As far as the registration aspects in Spain are concerned, it is noted that, for the time being, there is no specific framework in Spain that allows the registration of MORUs in the ship register of the Directorate General of the Merchant Navy as a category of its own, except by means of an analogue application. This is a major constraint that the DGMN should address as soon as possible so as not to prevent them from accessing financing through ship mortgages and using them as collateral in transactions. Furthermore, the absence of express recognition as ships limits their access to limited liability regimes, but not to the rights of innocent passage or transit through the sea, which are regulated by conventions such as the United Nations Convention on the Law of the Sea (UNCLOS).

The conclusions reached underline the need to adapt part of the Spanish -and in general, the international- legal framework to this new technological reality. It is proposed to review the registration regime and clarify its status in relation to liability, seizure and navigation rules. In short, the aim is to provide these units – essential for the energy transition – with the necessary legal security to operate effectively in international waters and in the exclusive economic zone of coastal states, as well as to ensure that there are no obstacles to their constructive financing, which is essential for their acceptance by the shipbuilding sector.

The emergence of MORUs is an opportunity for maritime law to evolve in step with technology. The work of the CMI and national contributions, such as in this case that of the Spanish Maritime Law Association group, constitute a fundamental first step in building a clear, predictable and future-proof legal framework for the sea.

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The Role of the Spanish Ports in Today’s Global Landscape

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In a context of geopolitical uncertainty marked by international conflicts and some crises inherited from 2024, Spanish ports have acquired a strategic role. Spain, with its consolidated maritime tradition, has become a key logistics hub within Europe, positioning itself as a global trade reference due to its geographical location and connectivity.

This is reflected in the growing economic impact of Spain’s general interest ports, which have significantly increased their contribution in recent years. According to a study on the economic impact of Spanish ports, they generate 24.3 billion euros and support 250,000 jobs, accounting for 2.2 percent of national GDP and 1.4 percent of total employment. Spain’s strategic position, at the crossroads of Europe, Africa and America, further reinforces its global logistics significance. The Strait of Gibraltar alone handles between 10 and 25 percent of global maritime trade, consolidating Spanish ports as critical infrastructures in international shipping routes.

Among the Spain’s main ports, the following stand out:

  • Santander/Bilbao: Essential for trade with the UK and Northern Europe.
  • A Coruña/Vigo: Key connections with the Americas, while facilitating north-south trade between Europe and Africa.
  • Algeciras: Spain’s largest port and one of Europe’s top transshipment hubs, maintaining critical links with Africa, the Americas and Asia.
  • Valencia: A leading container port, with strong commercial ties to China and Southeast Asia.
  • Barcelona: A crucial gateway to the Mediterranean and North Africa, with historically high cargo volumes.

This being so, recent geopolitical changes have significantly impacted Spanish ports, compelling them to redefine strategies and adjust priorities in response to new global challenges.

  1. US-China tensions. The expansion of China’s Maritime Silk Road has reinforced Beijing’s presence in the Mediterranean, reshaping trade dynamics. In 2025, new sanctions and ongoing technological disputes could disrupt trade flows, potentially affecting Spanish exports to Asia.
  1. The war in Ukraine and NATO expansion. The energy crisis has shifted trade benefits toward Mediterranean ports, often at the expense of Northern European hubs. Spain has capitalized on this shift by positioning itself as a key LNG importer from the Americas and Africa, leveraging agreements such as the EU-Egypt-Israel trilateral memorandum on natural gas exports to Europe.
  1. The Panama Canal crisis. A potential political crisis or rising transit costs through the Panama Canal could pose challenges for Valencia, Barcelona and Algeciras, which rely heavily on the canal for trade with South America’s Pacific coast. Any disruption could affect rout viability and overall trade volumes.
  1. Decarbonisation and the EU Green Deal. The shift towards a more sustainable maritime transport presents challenges. Spanish ports must adapt to stricter CO₂ regulations while ensuring they remain competitive in global trade.

In order to maintain their global position, Spanish ports must focus on key strategic areas.  Investing in modern infrastructure and digitalisation will be essential for adapting to evolving technological and environmental regulations. Strengthening rail and logistics connectivity will enhance landside efficiency and improve cargo distribution. Additionally, expanding the Green Maritime Corridor in 2025 will further consolidate Spain’s role in sustainable global trade.

Spanish ports must continue evolving towards a more sustainable, technologically advanced mode, fully integrated into international logistics networks.

Only by doing so will they successfully face current and future geopolitical and economic challenges, consolidating their position as key players in global trade.

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Algeciras Hosts the First Celebration of the 10th Anniversary of AIYON Lawyers

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On Thursday, 29 May, the entire AIYON Abogados team celebrated the firm’s 10th anniversary at an event held at the Hotel Alborán in Algeciras, attended by our clients and friends, as well as our regular collaborators, with whom we form a solid team of lawyers and experts.

At this pleasant event, we brought together leading operators and various stakeholders from the logistics and transport sector in Algeciras and the rest of the province of Cádiz, as well as some local authorities, to commemorate a significant milestone in our professional career.

Multiple local media outlets reported this news, which undoubtedly fills us with pride for the effort and dedication that the team has put into achieving this goal, but above all for its five partners, Enrique Ortiz (head of the Cadiz office), Verónica Meana (head of the Madrid office), Mikel Garteiz-goxeaskoa and Zuberoa Elorriaga (heads of the Bilbao office) and José Antonio Domínguez (head of the Algeciras office); partners who work side by side with the rest of the team in handling all kinds of matters related to their specialities.

Founded in 2015 in the city of Bilbao, AIYON Abogados is one of the few specialist law firms currently operating in Spain that provides advice in the areas of maritime law, transport law (both land and air), insurance law and international trade, addressing all of its clients’ legal needs thanks to a highly qualified and multidisciplinary team of lawyers and a network of trusted collaborators in other areas of law (criminal, tax, commercial, and labour), enabling them to offer a 360º legal service. In fact, last March, we were once again highlighted by the prestigious British legal guide Chambers & Partners in the category of ‘Shipping – Maritime Law’ for Spain, and we also contributed to the chapter on Maritime Law in Spain for the guide The International Comparative Legal Guides, 2025 (ICLG).

This is the firm’s first celebration in this momentous year 2025, which will be followed by a second celebration in Bilbao after the summer, serving as the grand finale to commemorate a decade of work and joint effort, with all eyes set on the next 10 years. Congratulations, AIYON Abogados!

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How is the Arrival of Stowaways in Spanish Ports Managed?

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We would like to thank the Catalan newspaper El Nacional.cat  for the collaboration of our colleagues Jose Antonio Dominguez Castro and Zuberoa Elorriaga for their article on stowaways.

Specifically, the Catalan newspaper reports on the arrival of stowaways in the Port of Barcelona on different ships, which poses a challenge for the different actors affected by this eventuality. Although the newspaper points out that the arrival of stowaways in the Port of Barcelona is scarce, it confirms that this does not mean that this phenomenon does not exist, but that it generally does not transcend despite the fact that it is a reality which, in the 21st century, is still present in maritime life and in the different Spanish and European ports. According to data from the Ministry of the Interior to which the publication had access, between 2016 and 2024 a total of 137 stowaways arrived at the Port of Barcelona: 11 (2016); 20 (2017); 15 (2018); 47 (2019); 15 (2020); 13 (2021); 9 (2022); 3 (2023), and 4 (2024). The authorities state that their provenance is unknown and point out that ‘they have embarked through unregulated procedures unknown to the ship’s captain’.

As El Nacional.cat points out, our firm, in collaboration with the shipowners involved, the responsible authorities, shipping agents and P/I clubs, has managed complex situations arising from this reality in Europe, which undoubtedly always pose a challenge for our team. In this sense, our partner José Antonio Domínguez , a lawyer from the Algeciras office with accredited experience in cases of management of stowaways arriving at the Port of Algeciras, explained in detail to the newspaper the multiple steps and actions that must be taken with all the agents affected once stowaways are detained on a ship on its arrival at a Spanish port, without forgetting the human factor that all this entails, as we are talking about people in an irregular and precarious situation who must be treated with respect and humanity.

Enrique Ortiz, Partner of AIYON Cadiz, Participates in the Round Table Organised by the Propeller Club of Algeciras

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On the 29th of April, an interesting meeting took place in Algeciras, organised by the Propeller Club of Algeciras, which brought together many of the most relevant members of the maritime and transport sector in the Bay of Algeciras, including Enrique Ortiz), our partner responsible for the Cadiz office.

The round table was attended by the presidents of the three major associations of companies operating in the Port of Algeciras, such as the Association of Service Companies of the Bay of Algeciras (AESBA), the Association of Freight Forwarders, International Forwarders and Similar of the Bay of Algeciras (ATEIA-OLTRA) and the Port Community of the Bay of Algeciras (Comport), and was moderated by Mr. Manuel Piedra.

During the meeting, José Antonio Fernández, Manuel Cózar and José Manuel Tejedor analysed the current situation, as well as the future of the logistics-port community of the Port of Algeciras. In general, the participants agreed in demanding better tools for the port facilities and the region in the form of better infrastructures, more space for the activity of the companies in the sector, as well as adequate and up-to-date training to improve the service provided.

The dismissal of Mr. Álvaro Rodríguez Dapena as president of Puertos del Estado, considered a strategic ally for Algeciras, also had a place in the round table. The president of Comport regretted that it is a ‘huge loss for the Port’.

Another recurring theme that was also discussed, and which not only affects the Port of Algeciras but all areas of logistics and transport at national level, was the shortage of qualified personnel in sectors such as consignment, customs or port services. The lack of a maritime-port training centre in the region was highlighted, as well as the urgent need to promote dual training, improve technical training and provide companies with more customs representatives.

In relation to the so-called ‘Green Strategy’ followed by the Port of Algeciras, the speakers advocated the need to advance in compliance with European regulations, but pointed out that some of the measures should have a ‘more practical’ sense in order to be able to adapt better to the needs of the operators.

In general, it was a very complete and pleasant meeting in which Enrique Ortiz was able to take note of the different aspects discussed, as well as to reinforce the links that our firm has with the community of the Bay of Algeciras, and its different actors.

AIYON collaborates with the ‘Diario del Puerto’ in its report ‘Legal Allies’

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The special report entitled ‘Legal Allies’, recently published by the specialised newspaper of the logistics and transport sector, ‘Diario del Puerto’, has counted on the collaboration of our colleagues Verónica Meana and Zuberoa Elorriaga, among other professionals of the sector.

After analysing the various questions posed to us, which covered different aspects of our work and included our vision for the future in the face of new challenges, we discussed aspects such as the value of advice and prevention in conflict areas, the most common deficiencies and lack of knowledge in the sector, the role we play as lawyers and its importance in the transport sector, as well as the future challenges facing the world of transport, our lawyers provided their perspective, based on their broad and varied experience.

For her part, Zuberoa Elorriaga commented that the lack of the proper coordination and joint vision that should exist between the purchase and sale operation and the subsequent transport operation can give rise to claims and disputes, which could be avoided with good prior advice. We are talking about both the logistics operation and the insurance that accompanies it.

It considers that the transport phase must be highlighted as an essential complement that complements and perfects the sale and purchase from which it derives. Therefore, correct management of routes and delivery times to avoid delays or damage to the goods is essential, a task that always involves a cost if we want to guarantee a correct service at the hands of professionals.

Verónica Meana, in turn, explained that the EU’s growing demands to reduce emissions are forcing the transport sector to look for alternatives, such as the use of electric vehicles or cleaner fuels. All of this is causing concern among operators about the high costs of adapting their fleets, whether by sea, air or land, which will be required by the new regulation.

In addition, she points out that the delay in adopting digital solutions for optimising operations or complying with environmental regulations, and the lack of robustly implemented protocols among employees of transport companies to make them less susceptible to cyber-attacks, are factors that can be improved with good research and planning.

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AIYON Abogados, a Decade at the Service of Maritime and Transport Law

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‘El Canal Marítimo y Logístico’ took advantage of the celebration of the annual meeting of AIYON Abogados S.L.P. to meet in Bilbao with the five partners of the firm. Close to celebrating 10 years in the market, each of them pointed out the strengths of their multidisciplinary team of lawyers, as well as the different challenges they face on a daily basis from their offices located in Madrid, Cadiz, Bilbao and Algeciras.

We invite you to rea the article in its entirety from the link at the end of this article, highlighting below some of the statements made by the partners.

As expert lawyers in chartering and leasing of vessels, both for general cargo and project cargo, AIYON has also been specializing in off.shore construction projects. In this regard, AIYON’s partner in Bilbao, Mikel Garteiz-goxeaskoa, states, ‘This experience has given us the opportunity to assist from our Bilbao office local companies such as SAITEC Offshore Technologies, S.L., in projects as innovative as the launching and installation of its DemoSATH floating offshore wind platform in the BIMEP test area (Armintza), in the open sea two miles off the coast, and in waters 90 meters deep, as AIYON aspires to be a benchmark for companies operating in this sector due to its in-depth knowledge of Maritime Law in all its areas’.

With regard to the specific offshore wind sector, Mikel Garteiz-goxeaskoa highlights the firm’s strengths: ‘In addition to our knowledge and experience, we also have a large international network of collaborating lawyers, also specialized in these matters, mainly from the United Kingdom and Northern Europe. This allows us to rely at all times on up-to-date professionals in their respective jurisdictions to resolve any issued that may arise in the negotiation of the contracts concerned.’

When asked about their latest performances in Madrid, the firm’s partner, Verónica Meana, points our that: ‘We have recently seen in the office a notable increase in the number of cases that are resolved in institutional arbitration in these matters, either under CIAM or ICC rules, compared to the percentage of cases that go to court, which is still higher. This increase, although independent, runs parallel to the firm’s involvement in the Maritime Law working group within the Spanish Maritime Law Association in collaborating with CIAM, in an effort to promote maritime arbitration in Spain as an efficient and quality alternative means of dispute resolution.’

AIYON’s involvement in the teaching and preparation of the new generations is part of its hallmark, a fact that Verónica wants to highlight: ‘On the other hand, form Madrid, as from the rest of our offices, we continue to contribute to the teaching of maritime law. In my case, participating as a lecturer in the Master’s degree of both the IME (Spanish Maritime Institute) and the ISDE (Higher Institute of Law and Economics) in the subjects of maritime law and land transport.’

‘In Aiyon we know what it means to be at the side of both maritime and land carriers on a daily basis’, says Enrique Ortiz, partner of the Cadiz office. ‘And we know what it is like to be there for them both in normal circumstances and in urgent situations that require quick action (such as refusals of delivery by receivers, accidents, blocking of the means of transport by the authorities, etc.). What’s more, in exceptional circumstances, such as during the Covid confinement period or during the road transport stoppages and strikes that took place throughout the country between March and April 2022, our customers have always been able to counts on us.’

In fact, the situation in times of strikes and stoppages in the transport sector was not easy for the companies dedicated to land transport, and many of them, due to the convulsions of the time, even suffered damage to their vehicles caused by a group of people who, in favour of the strike during those dates, ‘took it’, in an absolutely vehement manner, against the vehicles in question. In relation to these events, which occurred to a significant number of road haulage companies and vehicles, Enrique can confirm that AIYON has recently managed to obtain, for one of its clients, a favourable ruling in the first instance, subject to appeal, against the Insurance Compensation Consortium, ensuring that concepts such as ‘riot’ and ‘extraordinary risk’ are not emptied of content, thereby rendering ineffective the coverage of claims that correspond to the Insurance Compensation Consortium. Let us not forget that the Consortium collects part of the premiums that insured hauliers pay to their insurance companies.

Asked about the great activity of the Port of Algeciras, our partner in the location, José Domínguez, tells us: ‘The port of Algeciras occupies a pre-eminent position within the Spanish port system. From our office in Algeciras, we provide ‘dockside’ assistance to shipping companies that provide passenger and goods transport services, both containers and roll-on/roll-off cargo in the Strait of Gibraltar, constantly advising not only in the day-to-day handling of all types of cargo and passengers claims, but also in the planning and management phases of the shipping companies to face challenges such as those of the so-called Operation Crossing the Strait (OPE). To this end, we regularly advise on charterparties, slot charters, shipbuilding and ship repair contracts, ancillary contracts and agreements such as stevedoring, confinement, etc. This is a part of the business that I particularly enjoy, as my background as a merchant seafarer is of great help to our clients, as I speak the same language as they do.’

Another of the most important traffics of Algeciras is the supply of fuel to ships, the so-called bunkering. Domínguez indicates in this respect that: ‘Algeciras is one of the most important bunkering ports in the Mediterranean. The maritime traffic through the Strait of Gibraltar, together with the magnificent anchorage of the port, make our port especially attractive for this type of operations. The figures that are handled are very relevant, close to 350,000 tons of oil products to ships, at a rate of approximately 200 ships supplied per month by a fleet of more than 15 barges of different sizes.’

For her part, Zuberoa Elorriaga, AIYON partner in Bilbao, points out that, in their almost 10 years as active partners, the common effort and trajectory has brought them together, allowing them to learn from each other: ‘Together with the rest of the firm’s staff, we form a close-knit team that encourages cooperation between offices and lawyers. It is not an easy sector as we face different challenges every day, with often complex cases and different actors involved, so the best way to work is to support each other and share experiences, which will always result in a better service for our clients.’

Finally, Zuberoa makes special mention of the continuous learning that the firm’s team is committed to pursuing, proof of which is the Postgraduate Course in Aeronautics and Space Law at the Faculty of Law (ICADE) of the Universidad Pontificia de Comillas, which she completed in 2021, opening up new areas of activity for the firm.

Listening to its partners, it is clear that in Aiyon Abogados they face this first decade of work and common effort as the beginning of a long and productive professional career looking to the future with optimism.

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Mechanisms to Protect Against the Risk of Non-Payment by Shipyards and Shiprepairers

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I. Introduction

In any commercial or industrial activity involving the exchange of goods or services, there is a risk for the supplier that he will not be paid for his goods or services. To avoid these risks, market operators can take appropriate contractual measures or assert the rights that the legal system, the law, grants them.

The risks of non-payment are not particularly higher in the shipbuilding or ship repair sector than in any other sector under consideration. However, due to the type of asset on which the entire maritime shipbuilding or ship repair business is based, the ship, sometimes under foreign flag and ownership, protection against such risks of non-payment deserves special attention.

Many shipowners are organised under single-ship corporate structures, which means that with the vessel gone, the shipping company is undercapitalised and collection of claims against it becomes impossible.  The mobility of ships, which can easily change jurisdiction, can also add complexity to the recovery of claims in cases where there are no other known assets of the shipping company in the jurisdiction where the shipbuilder or ship repairer operates.

In order to protect their interests, both shipbuilders and ship repairers can implement contractual mechanisms that best protect their claims. There are also legal mechanisms that the legislation provides to these operators with the same protective purpose. In this article we will try to explain some of these mechanisms.

II. Contractual Mechanisms:

When we talk about contractual mechanisms, we refer to preventive measures that can be agreed in shipbuilding or ship repair contracts. There is no legal limitation to adopt this type of contractual covenants, so the will of the parties and the creativity of their legal advisors are the limit. The most common mechanisms that shipbuilders or ship repairers usually adopt are:

(a) Advance payments:

The provision of funds by the shipowner prior to the execution of the work is a common preventive solution to ensure that the shipbuilder or repairer has the necessary resources during the shipbuilding or repair process.

Most commonly, milestone payments are agreed. Through this mechanism, the shipowner makes advance payments based on the achievement of milestones during the construction or repair process, ensuring that the operator receives funds as the work progresses.

This system usually involves the issuing of refund guarantees by the builder/repairer in favour of the shipowner in case the work for which the latter has made the advance payment is not executed as agreed.  The mechanism therefore has a banking/financial cost for the shipbuilder/repairer.

(b) Requiring Sureties or Enforceable Guarantees:

Payment guarantees are another effective form of protection for shipbuilders and ship repairers.  Through this mechanism, the shipowner provides the shipbuilder/repairer with a separate payment guarantee, so that in the event of non-payment by the shipowner, the guarantor, under the guarantee contract, is obliged to make payment on first demand. The most common guarantees are:

  • Bank Guarantee: In this case the guarantor is a bank that will issue a guarantee on first demand in the event of non-payment and up to the agreed monetary limit.

If certain requirements are met, this type of bank document is directly enforceable before the Spanish courts.  The cost of this banking instrument is generally borne by the shipowner.

  • Personal Executive Payment Guarantee: With due formalities, this instrument functions in a similar way to a bank guarantee. In this case the guarantor is a natural or legal person whose solvency is known to the constructor/repairer. By means of this guarantee this person guarantees with his present and future assets the non-fulfilment of the payment obligation by the shipowner.

(c) Retention of Ownership of the Ship.

Finally, we would like to comment on this mechanism of retention of ownership of the ship until the shipowner pays the price. Due to its nature and operation, this contractual solution is reserved for shipbuilders, as it will be difficult or impossible for ship repairers to implement.

It involves retaining ownership of the vessel built until full payment by the shipowner. So that in the event of non-payment the shipbuilder can sell the ship to the highest bidder in order to collect the amount owed. If the market value of the ship is less than the price owed by the shipowner, the contractual arrangement should provide that the shipbuilder will continue to have a claim against the shipowner for the remainder.

In order to guarantee its effectiveness and proper operation, it is advisable to register the construction project in the name of the builder. In this way, if the shipowner’s non-payments are widespread, the registration of the ownership of the project in favour of the builder will prevent third party creditors of the shipowner from enforcing their claims against the vessel.

III. Legal Measures.

Spanish legislation provides shipbuilders and ship repairers with additional mechanisms that they can articulate without having to expressly agree on them. These mechanisms are mainly the following:

(a) Retention of possession of the vessel.

Article 7 of the International Convention on Ship Mortgages and Privileged Maritime Claims 1993 together with section 139 of the Shipping Act 2014 enables the builder and repairer of a ship to retain possession of the ship until they are paid what is due to them in respect of its construction or repair.

Certain requirements must be met:

  • In order to be retained, the ship must be in the possession of the shipbuilder or repairer. That is, the detention must operate prior to delivery and as long as the ship is on the premises or in the possessory custody of the shipbuilder’s or repairer’s personnel.
  • Retention is to be exercised for claims arising from the shipbuilding or ship repair contract, not for other claims.
  • The vessel that has generated these unpaid claims should be retained, not against another vessel.

It is important that all these requirements are scrupulously respected, otherwise there is a risk of improperly exercising the retention, which could lead to civil and even criminal liability.

Certain rules of the Civil Code apply to this lien which result in a lien on the ship. Some authors therefore argue that the shipbuilder or repairer of the ship can ask for the ship to be sold at public auction once the shipowner’s obligation to pay has expired. Thus the measure is sufficiently effective to persuade a shipowner to pay.

The Maritime Navigation Act 2014 only states that, if the compulsory sale occurs while the ship is retained by the shipbuilder or repairer, ‘the latter shall deliver possession of the ship to the buyer, but may obtain payment of his claim with the proceeds of the sale after satisfying those of the holders of maritime privileges… and before mortgage claims and other registered or noted encumbrances’. Thus, the shipbuilder or ship repairer will have preference of collection over ship mortgages and ordinary creditors, but not over privileged maritime claims (accruals in favour of the crew, compensation for death or personal injury caused by the ship, prizes for maritime salvage, port and pilotage fees and material damage caused by the ship due to non-contractual fault).

Since possession of the ship is a prerequisite for the lien, once the ship is delivered the lien and its collection preferences are extinguished.

(b) The Preventive Vessel Attachment:

The freezing of ships is a legal tool that enables the shipbuilder or repairer to secure the immobilisation of a ship wherever it is located in order to guarantee the collection of his claim.

This precautionary, preventive and urgent judicial measure can also be qualified as a burdensome measure due to the economic damage it can cause to the operator of the vessel, such as delays in its navigation, unforeseen costs due to its stay in a port, etc. It can also be a costly measure for the person requesting the seizure if it is wrongly or improperly proposed.

This measure is regulated by the International Convention on Arrest of Ships (Geneva 1999), the LNM and the Spanish Civil Procedure Act.

The immobilisation of the ship may be replaced by the provision of security by the shipowner/shipowner to the seizing court, since the ultimate objective of the attachment is to ensure the effectiveness of a subsequent judgment on the merits of the claim (‘maritime claim’) and thus to guarantee the creditor/shipper the possibility of enforcement.

In the event that the lien is unjustifiably or improperly applied for, the shipowner/shipowner of the vessel is entitled to claim any damages resulting from the lien.

The requirements are as follows:

  • Allegation of a ‘maritime claim’: The list of so-called ‘maritime claims’ is contained in Article 1(1) of the 1999 Geneva Convention, which includes, in paragraph (m), shipbuilders‘ or ship repairers’ claims;
  • attachment of the ‘offending ship’: attachment of the ship causing the claim is permitted provided that the person who was the owner/bareboat lessor of the ship at the time when the claim arose is still the owner/bareboat lessor at the time the attachment is requested. Under certain conditions it also provides for the possibility to seize other vessels owned by the person liable to pay (‘sister ships’).
  • the obligation for the attaching creditor to deposit a security: its purpose is to guarantee that in the event that the attachment is improperly requested, the damage caused to the shipowner/shipowner can be economically alleviated. At present, the minimum amount for this security is 15% of the alleged claim.
  • Where the application for attachment is made as an interim measure prior to the filing of the claim on the merits, it will lapse if the builder/repairer fails to commence proceedings on the merits before the competent court within the time limit set by the attaching court.

In short, this is a very effective precautionary measure that allows the builder or repairer to obtain sufficient security for his claims.

IV. Conclusions

It is a fact that shipbuilders and ship repairers face risks of non-payment by shipowners in their day-to-day business.

To protect against this risk there are a variety of solutions, both contractual and legal, which it is always and in any case advisable to bear in mind in order to minimise the risks to which builders and repairers are subject, all the more so when we are talking about foreign vessels and shipowners without a presence in our territory with complex corporate structures.

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