Idan Ofer will get to retain a $4.26m deposit from a cash buyer after a VLOC scrap sale went wrong in India due to Covid-19 restrictions.
The tycoon’s Eastern Pacific Shipping (EPS) had agreed to offload the 306,900-dwt Shagang Giant (built 1993) for demolition to NKD Maritime at $366 per ldt, or $14m.
But the cash buyer terminated the deal after it alleged the ship was unable to dock in Alang in March and April 2020 after the Indian government imposed a Covid-19 lockdown.
NKD went to the High Court in London to recover its deposit.
Justice Christopher Butcher said he examined whether the actions of the Indian authorities constituted or gave rise to a force majeure event.
NKD had sold the ship on to ship breaker Shree Ram Group for €12.5m (now $13.3m).
Delivery was set for a period between 17 March and the cancellation date of 30 April, which was later changed to 15 April.
On 20 March, the bulker was not allowed to enter the vessel traffic service area at Khambat, but anchored outside.
EPS gave notice of arrival, but Shree Ram told NKD the ship could not be regarded as having arrived at the place of delivery.
The shipowner contended that the vessel was anchored in the customary waiting area in view of the Covid situation and that all other ships going for recycling at Alang were waiting in the same area.
Bulker re-sold
On 14 April, NKD sent a notice of termination of its contract with EPS, which proceeded to re-market the vessel.
On 27 April, NKD made an offer to purchase the Shangang Giant at the lower price of $320 per ldt, but EPS went with Best Oasis at $277 per ldt.
Butcher accepted EPS’ argument that “inability” to deliver a vessel is significantly different from a contract provision that refers to hindrance or delay.
“I also accept that inability is not to be judged simply by reference to whether there was inability to perform by the contractual cancellation date,” he ruled.
If “inability” were to be judged simply by whether there could be performance by the cancelling date, this would mean that potentially very short-lived and transient hindrances could trigger cancellations of contract, he explained.
EPS claimed that it had suffered losses amounting to $4.94m from the failed sale, but the judge ruled it was not entitled to recover this.
The demolition was reported by TradeWinds at the time as EPS’ first green scrapping deal.
