Deposit (Clause 1)

The Buyers shall pay a deposit of 10 per cent of the Purchase Price specified in Box 8 (i) as security for the fulfillment of this Agreement to the bank nominated by the Sellers in Box 8 (i) (a), with a value date no later than that specified upon in Box 8 (i) (b) of this Agreement. Notwithstanding that the amount received may be lesser due to bank remittance charges imposed during the normal course of transfer, such amount shall stand as due fulfillment of the Buyers obligation to pay the deposit and be held in a joint escrow account of both the Sellers and the Buyers, which shall be released to the Sellers as part of the Purchase Price in accordance with joint written instructions of the Sellers and the Buyers. The Sellers are to arrange the opening of the joint escrow account latest by 2 banking days prior to the Value Date. The Buyers, latest together with their remittance of the Deposit, are to arrange bank-to-bank confirmation from the remitting bank to the bank specified in Box 8 (i) (a) that the Buyers, and the remitting party if different, are a known customer of the bank and should it be required by the bank in Box 8 (i) (a), the Buyers will also arrange for the bank-to-bank confirmation to include the confirmation by the remitting bank that they know the source of funds. Both Sellers and Buyers shall comply with the anti-money laundering laws and regulations of the country in which the bank(s) specified in Box 8 are located.

Any interest earned on the deposit shall accrue to the Buyers whereas any closing fee/fees charged for holding the deposit shall be borne equally by the Sellers and the Buyers.

Rationale & Usefulness

• Avoids the uncertainty in relation to the Purchase Price and use of the Deposit as well as the timing of the deposit payment by expressly stipulating that the Deposit shall be held in a joint escrow account of both parties and shall be released to the Sellers as part payment of the Purchase Price
• Clarifies the obligations of both parties regarding the deposit payment so as to adhere to anti-money laundering laws and Know Your Client (KYC) requirements
• Sellers - Obliged to arrange for the opening of the joint escrow account in the nominated bank and within a specified time (latest by two banking days prior to the Value Date specified for the payment of the deposit)
• Buyers - Obliged to arrange bank-to-bank confirmation from the remitting bank to the Sellers’ nominated bank that the Buyers (and any different remitting party) are known customers of the bank

Notices and Notice of Actual Readiness (Clause 5)

• Prior to the arrival of the Vessel at the Delivery Place specified in Box 10, the Sellers shall provide the Buyers with 30, 15, 7, and 3 days advance written notices to keep the Buyers advised of the estimated date and port of delivery and of the Vessel’s itinerary. Following the tender of any notice, Sellers are to take reasonable steps not to hinder delivery by the date set out in the notice.
• Upon the arrival of the Vessel at the Delivery Place and when the Vessel is physically ready in accordance with Clause 4 for delivery and Sellers have ready all of the Sellers’ documents required by Clause 8 (save for the Certificate of Ownership or equivalent, Class Maintained Certificate, Invoice for Bunkers and Lubricants and the Protocol of Delivery and Acceptance), the Sellers shall tender a written Notice of Actual Readiness of the Vessel to the Buyers. Subject only to Clause 2 (b), the Buyers shall take delivery of the Vessel within 3 full banking days after the Sellers tender such notice.
• However, if the Vessel becomes an actual, constructive or compromised total loss before delivery, the Sellers incur no liability under this Agreement, the Buyers are entitled to the immediate return of the deposit and any interest earned thereon and thereafter this Agreement shall be null and void.

Rationale & Usefulness

• Sellers may tender NOAR only if both "physical readiness" and "legal readiness" is achieved thereby ensuring that both the vessel and the agreed delivery documents are ready enabling certainty on both sides and planning of schedules accordingly.
• The clause further provides that the Buyers are to be given 30, 15, 7 and 3 days advance notice of the Vessel’s itinerary and estimated date and port of delivery
• The obligation imposed on the Sellers to take reasonable steps not to hinder delivery enables better certainty in planning the delivery schedule and the Vessel’s future trading.

Documentation (Clause 8)

• As soon as practically possible after the Deposit in Box 8 (i) has been paid in accordance with Clause 1: the Sellers shall forward the Buyers scanned or photocopies of all requested Plans, Registry, Class, Safety/Trading Certificates and other documents reasonably required for preparation of Buyers registration and management documentation.

• At the Place of Closing specified in Box 8 (iii) at the time of delivery the Sellers and the Buyers shall sign and deliver to each other a signed Protocol of Delivery and Acceptance stating the date, time and place of delivery of the Vessel from the Sellers to the Buyers.

  The Sellers shall furnish the Buyers with the following documents (unless otherwise specified all to be originals in English or with official English translations) in exchange for payment of the full Purchase Price of the Vessel:

  • Two (2) Bills of Sale to be notarially attested and then legalized by the appropriate authorities as required by the Buyers’ incoming flag specifying that the Vessel is free from all encumbrances as set out in Clause 9(a) of this Agreement. The notarial certificate is to confirm the identity of the signatory, his/her ability to bind the Sellers and the authenticity of the signature.
  • Resolutions of the Sellers’ Board of Directors and Shareholders meetings authorizing the sale and transfer of the Vessel pursuant to this Agreement and appointing persons to represent the Sellers in connection with the sale of the Vessel and the execution of Bills of Sale and any other documents in connection with the sale of the Vessel including the issuance of a Power of Attorney. Such Resolutions are to be notarially attested and then legalized by the appropriate authorities as required by the Buyers’ incoming flag. The notarial certificate is to confirm the identity of the signatory, his/her ability to bind the Sellers and the authenticity of the signature.
  • Power of Attorney issued by the Sellers authorizing their named representative(s) to effect the sale and transfer of the Vessel to the Buyers, pursuant to this Agreement and carry out any delivery/closing formalities including receiving the Deposit and the Balance Purchase Price or any other amounts pursuant to this Agreement. Such Power of Attorney is to be notarially attested and then legalized by the appropriate authorities as required by the Buyers’ incoming flag. The notarial certificate is to confirm the identity of the signatory, his/her ability to bind the Sellers and the authenticity of the signature.
  • One (1) Certificate of Ownership or equivalent, dated on the date of Vessel’s delivery or such other date as the parties may agree, issued by the competent authorities showing that the Vessel is registered in the ownership of the Sellers and is free from registered mortgages and encumbrances.
  • A certified true copy of the Sellers’ constitutive documents.
  • A current Certificate of Good Standing or Equivalent.
  • Three (3) Commercial Invoices setting out the main particulars of the Vessel and the Purchase Price of the Vessel.
  • One (1) Commercial Invoice setting out the particulars and cost of bunkers and lubricants remaining on board together with copies of the respective vouchers.
  • Certificate of Deletion or in lieu thereof, a Letter of Undertaking to provide the Certificate of Deletion and closed CSR from the present Ship Registry within 30 days from the date of delivery.
  • Letter from the Sellers confirming at the time of delivery that the Vessel is free from all encumbrances, charters, mortgages, maritime liens, writs (save where security has been furnished), port state and other administrative detentions, stowaways, trading commitments and any other debts whatsoever, and undertaking to indemnify fully Buyers against all consequences of any claims against the Buyers that may arise due to claims against the Vessel originating prior to the time of the Vessel’s delivery to the Buyers.
  • Three (3) Protocols of Delivery and Acceptance. (One each to be retained by the Buyers, the Sellers and the closing Bank)
  • Class Maintained Certificate dated not more than 3 working days prior to the date of delivery. However, if the Class Maintained Certificate is issued prior to the underwater inspection, then a copy of the Class report following the divers’ inspection also to be included.
  • The Sellers’ letter of confirmation that to the best of their knowledge the Vessel:
    • has not sustained grounding or any other damage to underwater parts since underwater inspection (or most recent dry-docking in case there is no divers’ inspection).
    • is not black listed by any government, state, country, political sub division and union.
  • A copy of Sellers or Sellers manager’s letter(s) to the respective authoritiesconfirming cancellation of all Inmarsat and other communication contracts for the Vessel effective at the time of delivery.
• At the time of delivery of the Vessel the Buyers shall furnish the Sellers with the following documents (unless otherwise specified all to be originals in English or with official English translations):
  • A certified true copy of the Buyers’ constitutive documents.
  • A current Certificate of Good Standing or equivalent.
  • Resolution of the Board of Directors of the Buyers approving the purchase of the Vessel from the Sellers and granting a power of attorney to authorized representatives of the Buyers. Such Resolution to be notarially attested and then legalized by the appropriate authorities as required by the Sellers. The notarial certificate is to confirm the identity of the signatory, his/her ability to bind the Buyers and the authenticity of the signature.
  • Power of Attorney of the Buyers authorizing the Buyers’ representatives or their nominees to do all such acts and things which the attorney may consider necessary or desirable on behalf of the Buyers with respect to the purchase and delivery of the Vessel but including specifically, acceptance of the Bill of Sale, signing of the Protocol of Delivery and Acceptance, release/payment of Deposit and Balance Purchase Price or any other amounts pursuant to the Agreement. Such Power of Attorney to be notarially attested and then legalized by the appropriate authorities as required by the Sellers. The notarial certificate is to confirm the identity of the signatory, his/her ability to bind the Buyers and the authenticity of the signature.

• As soon as possible but not later than 14 days prior to the Vessel’s expected readiness for delivery, the Sellers and the Buyers shall exchange by fax or email (copies to the extent possible) or drafts of the documents listed in sub clauses (b) & (c) above for the other Party’s review and comments. Copies of executed versions which are to be in strict conformity with the drafts are also to be circulated latest 3 days prior to delivery.

  At the time of delivery onboard the Vessel, the Sellers shall hand over to the Buyers all Classification Certificates, Plans, Drawings, Record Books, Instruction Manuals (excluding ISM or other documents specific only to the Sellers/their Managers). All other certificates and documents onboard and pertinent to the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case photocopies are to be left onboard. All other documents which may be in the Sellers’/Sellers manager’s possession shall be promptly forwarded to the Buyers after delivery. Forwarding charges, if any, to be for the Buyers’ account. The Sellers may keep the Vessel’s log books but the Buyers to be so advised and have the right and opportunity to take copies of same.

Rationale & Usefulness

• The SSF details the documents to be delivered both by the Sellers and the Buyers
• This clause ensures that all major documents needed for the effective completion of the sale & purchase are specified in the extended list of documents required from both parties
• The clause provides a comprehensive list of all documents that are likely to be required by most jurisdictions in which the Buyers may wish to flag the Vessel that is being acquired
• In line with current needs (and KYC compliance requirements of most banks), the Buyers are also required to produce and deliver a list of documents to the Sellers at the time of delivery
• The SSF also acts as a useful and relevant documentary check list for those parties who may wish still to specify their required documentation in a separate addendum

Encumbrances (Clause 9)

• It is a condition of this Agreement, any breach of which will entitle the Buyers to reject the Vessel, that the Vessel, at the time of delivery, is free from all encumbrances, charters, mortgages, maritime liens, writs (save where security has been furnished), port state and other administrative detentions, stowaways, trading commitments and any other debts whatsoever
• The Sellers hereby undertake to indemnify fully the Buyers against all consequences of any claims against the Buyers that may arise due to claims against the Vessel originating prior to the time of delivery of the Vessel to the Buyers

Rationale & Usefulness

• The SSF removes the uncertainty of the intermediate term “warranty” by explicitly making the encumbrance’s clause a condition of the Agreement
• The SSF Clause 9 also widens the scope of the guarantee so that it covers not only the commercial claims but also issues such as writs, port state detentions, stowaways, trading commitments and other debts which might interfere with the Buyers’ free use of the Vessel after delivery, making the SSF more relevant and consistent with the prevailing stringent shipping regulations

Arbitration and governing law (Clause 15)

• * This Agreement and any guarantee contained herein shall be governed by and construed in accordance with Singapore/English* Law and any and all disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore Chamber of Maritime Arbitration for the time being in force at the commencement of the arbitration.
• * This Agreement and any guarantee contained herein shall be governed by and construed in accordance with ………………………….. Law and any and all disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in …………………in accordance with the …………………………………Rules for the time being in force at the commencement of the arbitration.

* 15(i) and (ii) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 15 (i) and Singapore law shall apply to the exclusion of any other law. In the absence of selection by the parties as to the applicable law, seat of arbitration and arbitration rules under alternative 15 (ii); Singapore law shall apply to the exclusion of any other law, Singapore shall be the seat of arbitration and the arbitration rules of the Singapore Chamber of Maritime Arbitration shall apply.

Rationale & Usefulness

• Offers a cost-efficient and geographically proximate Asian venue to the Asian community for settling any disputes by providing Singapore as the default venue of arbitration
• The institutional similarity of the SCMA Rules and the London Maritime Arbitration Association (LMAA) Rules, both providing for the adhoc arbitration or the party autonomy model preferred by the maritime community, also makes Singapore the preferable choice of arbitration venue.
• As Singapore is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, any awards secured in Singapore can also be enforced internationally.