Australian livestock carrier operator Wellard has said that it has resolved its arbitration proceedings in London, UK, against the Croatian Bank for Reconstruction and Development (Hrvatska banka za obnovu i razvitak, or HBOR), and that Wellard will be entitled within 14 days to receive payments plus interest amounting to US$12.0m within 14 days.
HBOR had issued Wellard’s subsidiary, Wellard Ships Pte Ltd refund guarantees supporting Wellard’s terminated 2015 contract for the building of the planned livestock vessel to have been known as the M/V Ocean Kelpie with the Uljanik d.d shipyard (Uljanik).
When HBOR disputed payment under the refund guarantees, Wellard commenced arbitration to recover the funds.
Wellard Executive Chairman John Klepec said that Wellard was “pleased to have been able to recover these monies after two long and complex arbitrations conducted over several years. This is a fair and appropriate outcome in the circumstances, demonstrating the importance of effective risk mitigation that refund guarantees provide in the ship building industry”.
Following termination of a shipbuilding contract in 2018, Wellard had taken successful arbitral proceedings in 2020 against the original Croatian shipbuilders, Uljanik, for a refund of all monies paid by Wellard in respect of the shipbuilding contract, plus costs and interest.
However Uljanik d.d. shipyard had been placed into interim receivership in 2019, which in due course proceeded to full insolvency, meaning that the shipyard was unable to repay Wellard, an unsecured creditor.
Arbitral proceedings were subsequently commenced against HBOR seeking to enforce the two Refund Guarantees which secured the advance payments made by Wellard to Uljanik.
The Refund Guarantees were for advance payments of US$8.0m and €1.6m made by Wellard, plus interest accruing.
The precise amount received will be reported by Wellard in its statutory financial reports. Costs in the matter have been reserved, and Wellard will be assessing and claiming its reasonable costs. The dispute with HBOR was subject to London arbitration, with English law applying.