In a major development, Okeanis Eco Tankers Corp. has announced the outcome of the arbitration proceedings related to 4 VLCCs on Long-Term Bareboat Charter, says a press release published on its website.
What is it?
On 9 October 2019, four single-purpose companies (the “Charter Guarantors”) wholly owned by Okeanis Eco Tankers Corp. (“OET” or the “Company”) that each operate one VLCC on long-term bareboat charter from Ocean Yield ASA (“Ocean Yield”) gave notice to Ocean Yield requiring the sale of those four VLCCs (the “Vessels”) back to the Charter Guarantors for 103% of the Vessels’ cumulative outstanding lease amount, plus certain breakage fees.
Ocean Yield disputed the Charter Guarantors’ right to require such sales under the bareboat charters. The matter was subsequently referred to four arbitrations that were heard on a concurrent and expedited basis.
The Company today announces that the arbitration Tribunal (the “Tribunal”) has decided against OET and its right to require Ocean Yield to sell the Vessels to the Charter Guarantors.
The arbitration awards are subject to very limited grounds of appeal under English law and OET is considering its options in this regard with its legal advisors. An update will be provided in due course should OET decide to take steps to appeal the awards.
How did the tribunal decide?
The Tribunal dealt only with issues of liability (i.e. questions relevant to determining the Charter Guarantors’ right to require such sales and the terms) and did not decide issues relating to legal costs. Those issues are to be decided in a later quantum stage (for which a timetable has not yet been agreed/determined). In the meantime, the effect of the awards is that the Vessels remain on their existing long-term bareboat charters from Ocean Yield.
Financial Impact of this
The financial impact of the arbitrations will be limited to the legal costs incurred by OET (the majority of which were settled in Q4 2019) and to any legal costs that it must pay to Ocean Yield arising from the adverse arbitration decisions. Ocean Yield has not yet indicated what their legal costs of the arbitration are but we expect them to do so shortly. The Company expects the portion of legal costs it must reimburse Ocean Yield not to be material in terms of financial reporting. We will provide an update on legal costs as and when appropriate at that time.
OET will release its fourth quarter 2019 results before market open and host a webcast at 15:00 CET on 28 February 2020.
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Source: Okeanis Eco Tankers
