Shipbuilding Contracts: Lessons Learned from M/V Dali

The owners and managers of the M/V Dali, the ship that destroyed Baltimore’s Francis Scott Key Bridge, have brought a claim in the Pennsylvania Court against the vessel’s shipbuilder, Hyundai Heavy Industries Co. Ltd. The M/V Dali was completed and delivered by HHI in 2015, so is 10 years old.
The owners/managers allege strict products liability for defective design and manufacturing, breach of implied warranties, negligent misrepresentation, negligence and an indemnity and/or a contribution. The owners/managers are claiming the cost of damage to the vessel, a contribution/indemnity for any damages sustained by the owners/managers in claims by third parties in respect of personal injury/death or damage to property (referred to as the Limitation Action) and other damages. These claims have not been quantified, but are likely to be very substantial. Perhaps not surprisingly in view of the issues discussed in this article, the owners/managers’ claims say almost nothing about the underlying shipbuilding contract concluded with the builder.

If successful, these claims would break open shipbuilders’ normal limited liability for defects in the vessel after delivery, as provided for in most international shipbuilding contracts (at least those subject to English law) and which form an integral part of the shipbuilding bargain.