Introduction
This article has been prepared in response to the question, “What are the legal rights of a ship owner if a vessel, brought to the shipyard for maintenance/repair or construction, is not delivered on the date specified in the contract?“, through an analysis of various court decisions. The article comprehensively addresses the legal remedies a ship owner can pursue, the types of compensation that can be claimed, the procedural requirements to be observed during the litigation process, and possible defenses that may be encountered in case of late delivery of the ship. The examined decisions indicate that such disputes are primarily evaluated within the framework of “contract for work” or mixed-type contracts, and that the resolution largely depends on the contractual provisions, the fault status of the parties, and their burdens of proof.
1. Contractual Rights and Compensation Claims
The contract outlines the basic framework of your rights. Especially if there is a penalty clause (delay penalty) stipulated in the contract to be applied in case of delay, this is your most direct right to claim. This situation has been clearly stated in the decision of the Istanbul Regional Court of Justice: “The plaintiff may claim compensation from the defendant pursuant to Article 6 of the contract, and compensation in the amount of 5% of the contract price, which is 39,738.50 euros, may be demanded” (bam-Istanbul Regional Court of Justice 12th Civil Chamber-2018/516).
In addition to the penalty clause, actual damages resulting from delay may also be claimed. However, the most significant and hardest-to-prove item of claim is usually loss of profit. Although the Supreme Court and local courts accept such claims, they require the damage to be proven with concrete evidence. In a decision by the Istanbul 17th Civil Court of Commerce, while the plaintiff’s claim for loss of profit was accepted, it was observed that this damage was calculated by an expert witness: “The loss of profit for the 2018-2019 period was calculated as 747,912.02 TL,” and it was decided to accept this claim.“ (firstInstance-Istanbul 17th Civil Court of Commerce-2019/367). However, the Supreme Court has stated that for positive damages such as loss of profit to be claimed in the event of termination of the contract, there must be an explicit provision to that effect in the contract (Supreme Court-15th Civil Chamber-2016/4019).
2. Defective Performance and Optional Rights
In addition to the delay, if there is a defect or deficiency (fault) in the work performed, the shipowner acquires optional rights according to Article 475 of the TCO (Turkish Code of Obligations). The Izmir Regional Court of Justice has listed these rights as follows: “(1)-Termination of the contract if the work is so defective that the employer cannot use it or cannot be forced to accept it by fairness, or if it contradicts the contract provisions to the same extent, (2)-Keeping the work and demanding a proportional reduction in price, (3)-If it does not require excessive expense, demanding free repair of the work, with all expenses borne by the contractor (the employer’s right to claim compensation according to general provisions is reserved).” (bam-Izmir Regional Court of Justice 4th Civil Chamber-2019/1316). In addition to these optional rights, compensation for other damages caused by the defect (e.g., repair costs incurred at another shipyard) may also be claimed.
3. Critical Points to Consider During the Litigation Process
Mediation: In commercial lawsuits, applying to a mediator before filing a lawsuit is a condition for litigation. If this condition is not met, the lawsuit is dismissed on procedural grounds. (bam-Istanbul Regional Court of Justice 12th Civil Chamber-2022/1269).
Reservation of Rights: When taking delivery of a delayed vessel, it is critically important to make a reservation of rights stating that you reserve your right to claim a penalty clause or delay compensation. Otherwise, you may lose this right. In one of its decisions, the Court of Cassation ruled that the right to claim a penalty clause was lost because no reservation of rights was made upon delivery (Court of Cassation-15th Civil Chamber-2017/1296).
Competent and Authorized Court: Since disputes are generally in the nature of a “contract for work”, the competent court is the Commercial Court of First Instance (First Instance – Istanbul 17th Commercial Court of First Instance – 2021/314). However, in some cases, if the claim is of the nature of a “maritime claim”, the Maritime Specialized Court may be competent (Supreme Court – 20th Civil Chamber – 2016/5316). The authorized court is generally the court specified in the contract. If there is no provision in the contract, the court of the defendant’s domicile is authorized (Regional Court of Appeals – Istanbul Regional Court of Justice 15th Civil Chamber – 2020/1477).
Burden of Proof and Shipyard’s Defenses: As the plaintiff, you are obliged to prove your damage and that it resulted from the shipyard’s fault. The shipyard, on the other hand, may try to avoid liability by claiming that the delay was due to the shipowner’s requests (additional works) or an unforeseen event (force majeure). In one decision, the court dismissed the case, concluding that the delay was caused by the plaintiff’s requests for additional work: > “as the delay was caused by the plaintiff’s request for additional work” (First Instance – Istanbul 18th Commercial Court of First Instance – 2022/96).
Conclusion and Recommendations
The untimely delivery of a ship taken to the shipyard is a serious breach of contract that grants the shipowner various rights within the framework of contract and legal provisions. In this case, the steps to be taken are summarized as follows:
Review the Contract: First, carefully review the articles of the contract you signed with the shipyard, such as the delivery date, delay penalties, limitations of liability, and competent court.
Collect Evidence: Document the delay, the damages you suffered due to this delay (missed voyages, rent losses, additional expenses, etc.), and all your correspondence with the shipyard.
Send a Formal Notice: Sending a formal notice through a notary public, stating that you claim your rights due to the delay and demand immediate delivery of the vessel, is crucial for putting the other party in default.
Apply for Mediation: It is a legal requirement for you to initiate the mediation process before filing a lawsuit.
File a Lawsuit: If an agreement cannot be reached in mediation, in light of the collected evidence and contract provisions, at the competent Civil Court of Commerce;
If stipulated in the contract, collection of the penal clause,
Compensation for the direct damages and loss of profit arising from the delay,
If the work performed is defective, rectification of the defect or price reduction,
If necessary, you can file a lawsuit with claims for refund of the amount paid and termination of the contract.
Considering the complexity of these processes, the heavy burden of proof, and the technical details of the dispute, it is strongly recommended to obtain professional support from a lawyer specialized in maritime trade and works contracts to prevent any loss of rights. A writing suggestion.
Why is Tuzla Lawyer Support Necessary?
Legal relations between businesses operating in Tuzla, which is a shipyard region, and shipowners cover a highly technical and specialized area in terms of both maritime commercial law and the provisions of contracts for work. Disputes such as delay in delivery, defective performance, penalty clause applications, and loss of profit are shaped not only by the letter of the contract but also by commercial practices in application, technical expert reports, and rules of evidence.
Especially for ship maintenance companies operating in shipyard regions in and around Istanbul, such as Tuzla, Pendik, Kartal, Maltepe, Gebze, Çayırova, Tepeören, and Orhanlı, the timely and complete collection of receivables is of vital importance for the sustainability of the business. Therefore, for a shipowner to effectively protect their rights, it is crucial to work with a Tuzla lawyer who manages the process correctly, establishes a solid evidence strategy, and has experience with both the Civil Court of Commerce and the Specialized Maritime Court. An expert lawyer in the field will not only prevent loss of rights but also speed up the process and contribute to achieving more effective results.
