Havila files legal actions to free cruise ship from sanctions against Russia

Norway-based Havila Kystruten has resorted to the courts as it attempts to get round the sanctions problem that have effectively prevented cruise ship Havila Capella (IMO 9865570) from returning to service.

The vessel has remained docked for two months in Bergen.

Havila wants to free the cruise ship from sanctions lockdown and also to protect its interests in two additional cruise ships under construction in Norway.

Havila has a contract with the Norwegian government to supply coastal voyages, but said it had decided to push the situation along legally as it has been unable to find a temporary solution to resume operations of the Havila Capella, which last week had to cancel another scheduled cruise.

The legal actions are taking place in Norway and in the UK. Havila Kystruten requested a temporary arrest and right of use for the Havila Capella from a district court in Norway, seeking forced use of the vessel. The company also filed a case in the English High Court seeking to force the change of ownership of its cruise ship.

The often complex ownership situations of vessels has in the case of Havila led to a previously unforeseen consequence. In April the EU added Russian lender GTLK to the list of sanctioned companies.

However, as part of a long-term financing agreement reached in 2019, Havila is building four cruise ships to operate the Norwegian coastal voyages using what are normally fairly standard “sale and lease back” terms. While Havila would have full control of the ships, it would technically be leasing them from the “owner”, GTLK Asia. Havila would have the option to purchase the ships after two years of operation, and would be required so to do after 10 years.

The Norwegian authorities ultimately agreed with the company that the ships were de facto Norwegian rather than Russian; they operate under Norwegian regulations and pay taxes to Norway. The authorities therefore granted the company a six-month dispensation to operate the Havila Capella while it refinanced the ships.

Unfortunately the insurers withdrew its liability coverage, noting that, in the event of a claim, the proceeds would go to Russian sanctioned company GTLK and putting the insurers in breach of sanctions rules. This meant that the company was forced to lay up the Havila Capella from April 12th.

Havila Kystruten CEO Bent Martini said that “we have not met very much willingness from our financing partner to find an amicable solution. Therefore, we now choose to take legal action to demand a change of ownership.”

Havila Kystruten’s case with The High Court of Justice, Business and Property Courts of England and Wales, Commercial Court (QBD) in London seeks to force a change of ownership of the Havila Capella and to protect its interest in the two cruise ships currently under construction in Turkey. The shipyard provided a bridge loan to Havila in May so that the company could take delivery and start operations of its second cruise ship, the Havila Castor (IMO 9865582).

“We have tried to find a solution with GTLK Asia, but the only solution they have put forward is to pay the amount due. It would be illegal for us to pay the amount due to a sanctioned company. We want to settle by paying the amount we owe GLTK Asia to a blocked account. The amount will be paid to GTLK Asia when the sanctions are lifted,” said Martini.

If Havila can force the change of ownership without being in breach of sanctions, it will be able to make the vessels insured and resume sailing the Havila Capella.

The Commercial Court in London issued a first ruling protecting the company’s interest in the two ships under construction by preventing any transaction on the ships without Havila’s approval.

2021-built, Norway-flagged, 15,519 gt Havila Capella is owned by GTLK Asia M11 Ltd care of manager Havia Kystruten Operations AS of Fosnavaag, Norway (Equasis information). As of June 22nd it was moored at Bergen, Norway.

2022-built, Norway-flagged, 15,519 gt Havila Castor is owned by HK Ship V AS care of manager Havila Kystruten Operations AS ,of Fosnavaag, Norway. It is entered with Gard on behalf of HK Ship V AS. As of June 22nd it was moored at Trondheim, Norway, scheduled to leave for Bergen, ETA June 23rd.