Deutsche Bank Trust Company Americas v Owners of the M/v ‘Sertao’
| Jurisdiction | England & Wales |
| Judge | Teare J. |
| Judgment Date | 04 May 2018 |
| Neutral Citation | [2018] EWHC 1013 (Admlty) |
| Court | Queen's Bench Division (Admiralty) |
| Date | 04 May 2018 |
[2018] EWHC 1013 (Admlty)
Queen's Bench Division (Admiralty Court).
Teare J.
Christopher Smith QC (instructed by Watson Farley & Williams LLP) for the claimant.
The defendants were not represented.
Joanne Box (instructed by Holman Fenwick Willan LLP) for a cautioner against release, STX Service Americas LLC.
The Admiralty Marshal represented himself.
The following cases were referred to in the judgment:
Bank of Scotland plc v Owners of M/V Union Gold [2013] EWHC 1696 (Admlty); [2013] 2 CLC 36.
Myrto, The [1977] 2 Ll Rep 243.
Shipping — Admiralty Marshal — Mortgagee seeking order for sale of vessel pendente lite — Sixth generation ultra deepwater drillship — Appraised value well below outstanding debt — Vessel diminishing asset because of costs of maintenance — Good reason for sale pendente lite — Mortgagee's undertaking to pay Admiralty Marshal's costs if vessel not sold — Joint appointment of Admiralty Marshal's broker and specialist broker to sell vessel with commission split between them.
This was an application by the claimant mortgagee for an order for sale pendente lite of the MV SERTAO, a sixth generation ultra deepwater drillship.
A large number of such drillships were in lay up following a significant fall in oil prices that occurred in mid-2014. The sum said to be due and payable, including interest, and secured by the mortgage of the vessel was over US$808m. Numerous events of default were said to have occurred. The value of the vessel, which was laid up but being maintained to assist the prospects of a sale, had been appraised by a specialist broker in a sum well below the outstanding debt.
The mortgagee applied for a sale pendente lite on the basis that the vessel was a diminishing asset because of the costs of maintenance. The mortgagee wished the vessel to be sold by the specialist broker rather than the Admiralty Marshal and did not want the vessel to be sold at less than the appraised value.
Held, ruling accordingly:
1. The court was satisfied that the vessel was a diminishing asset, which was a good reason for ordering a sale pendente lite. (The Myrto[1977] 2 Ll Rep 243applied.)
2. If the vessel was not to be sold at less than the appraised value, the mortgagee would have the benefit of testing the market, but the Admiralty Marshal would not recover a fee for attempting to sell the vessel. That concern was met by an undertaking by the mortgagee to pay a reasonable fee in those circumstances.
3. The specialist broker and the Admiralty Marshal's broker would be appointed jointly to sell the vessel, with the 1% broker's fee split between them.
Teare J:
1. This is an application by the claimant mortgagee for an order for sale pendente lite of the MV SERTAO. If the court orders such a sale the claimant mortgagee seeks an order that the Admiralty Marshal appoint as his broker, not the broker he and his predecessors have used for over 150 years, CW Kellock & Co, but a broker appointed and paid for by the claimant mortgagee. The Marshal has provided a helpful statement expressing concerns about the appointment of such a broker.
2. MV SERTAO is a sixth generation ultra deepwater drillship, 227.81m in length and of 61.619 dwt. She is registered in the Marshall Islands. She was built in South Korea by Samsung in 2011. A drillship is a self-propelled vessel in a traditional hull form, but equipped for drilling operations in midwater to ultra deepwater areas. Such drillships are held in position using dynamic positioning systems and are generally preferred for exploration drilling as they are self-propelled. There are thought to be some 137 sixth generation drillships worldwide of which 78 are operating and 59 are in lay up. The large number in lay up is the result of the significant fall in oil prices that occurred in mid-2014.
3. The owner of the vessel is Dleif Drilling LLC, a Delaware company, which was an affiliate of Grupo Schahin, a Brazilian engineering conglomerate. The owner time chartered the vessel to Petroleo Brasileiro SA, the Brazilian national oil company.
4. The claimant mortgagee is a US financial institution and a wholly owned subsidiary of Deutsche Bank AG which lent some US$750m to Grupo Schahin. The debt was secured by, inter alia, a mortgage on the vessel dated 28 March 2012. Some of that debt was repaid but payments ceased on 17 April 2015 following the fall in oil prices. In late 2015 the vessel was sailed from offshore Brazil to England in order to lay her up in a place where she might later conveniently be sold. In November 2015 the claim in rem in this action was issued and the vessel was served and arrested in Teesport. There has been no acknowledgment of service, which is not surprising because the vessel's managers have been...
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Seadrill Ghana Operations Ltd v Tullow Ghana Ltd
...in the demand for 6 th generation ultra deep water drillships; see Deutsche Bank Trust Company Americas v The Owners of the SERTAO [2018] EWHC 1013 (Admlty)). 13 Thus, in essence, the question which the court must resolve is whether Tullow's reliance on “force majeure” is justified. Seadri......