Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Shipping volume discussing topics including sources of finance, compliance initiatives and foreign court decisions within key jurisdictions worldwide.

1 What is the current state of the shipping industry in your country?

In line with last year’s growth projections, things are still picking up in the Greek shipping market across the board. Partially owing to a burgeoning – if not entirely stable – newbuilding sector, owners and foreign investors remain optimistic despite persistently high taxation and a slow and at times unpredictable public administration mechanism. In fact, Greece has recently topped VesselsValue’s list of top 10 shipowning nations in 2019, with the total asset value of the Greek fleet exceeding US$100 billion and an impressive total value increase by over US$5 billion in one year.

2 What are the prevailing shipping market trends affecting your country?

Greek owners have always had a strong presence in the second-hand market and that remains the case with many opportunities for the experienced and commercially astute. The general feeling in the local dry bulk market is one of apprehension, reflecting a continuing global trend tied to US tariffs and a noticeable stall in Chinese growth rates in the midst of political turmoil feeding into the trade dispute between the two countries. Oil tankers are so far faring better in 2019 than they did in 2018, with an expected decrease in demolitions and a lot riding on the upcoming distribution of IMO 2020-compliant fuels.

3 Are there any recent domestic or international political or legislative developments that may have an impact on your country’s shipping market?

Traditionally, the Greek shipping market has had a stronger impact on the commercial and operational status quo rather than shaping change on the regulatory and legislative front – that is, compared to its northern counterparts. Most of the political and legislative pressure, therefore, comes externally from EU’s regulatory commitments and current worldwide political trends. The Greek market is reactive and adaptable. Key points of concern include Brexit, the US–China trade dispute and the situation in the Persian Gulf. On a more local note, the market has reacted positively to partial relaxation of Greek capital controls in October 2018, which may soon be further extended, allowing Greek banks to let go of the harmful ‘lockdown’ approach to investment, and to extend competitive and flexible finance solutions to provide incentives to a shipping market as large and important as the Greek one.

4 What are the key regulatory and compliance issues for your country’s shipping market? What’s coming up in the near future?

In 2020, under the new global cap, ships will have to use fuel with a sulphur content of no more than 0.5 per cent against the current limit of 3.5 per cent in an effort to reduce greenhouse gases. Owners will have to decide if they want to continue using high-sulphur fuel oil, in conjunction with scrubbers; or switch to low-sulphur fuel oil (LSFO) options. Time charterers are worried – LSFO is some 60 per cent more expensive than existing heavy fuel oil. The container liner industry is particularly worried, given that carriers charter in a high percentage of their fleet.

5 What are the shipping industry’s current sources of finance? How do you predict they will develop, and what are the advantages and challenges to financing a vessel in your country?

Developing local banks are gradually gaining a bigger stake in the market, while foreign banks seem to prefer financing major players. Private equity funds and leasing companies continue to increase their Greek portfolios. In a nutshell, one could say that as long as freight rates go up, there will be more and better funding options available to shipowners.

6 Have there been any recent significant domestic or foreign court decisions or arbitration awards that impact on your country’s shipping market?

We have recently acted in a significant case dealing with the fallout of OW Bunkers Group’s bankruptcy. Specifically, we defended claims brought against the owners by physical suppliers, who were not paid for the bunkers stemmed by the OW Bunkers Group. The Court of Appeal reaffirmed the position in Greek law that the only party liable for payment of the purchase price is the contracting party.

Another interesting development (albeit not a decision or an award) is the establishment of the IOPC Fund for the first time in Piraeus, following a major oil spill caused by the total loss of a tanker on the Piraeus route.

7 What is the outlook for your country’s shipping market? Which sectors are likely to grow, and which not?

The outlook for the Greek market is generally optimistic. The shipbuilding and ship repairing market is due for a renaissance, with Onex reportedly committing up to €400 million to rescue the historical Elefsis shipyards through an integrated agreement to be ratified judicially. Cosco’s large-scale investment at the port of Piraeus, following its 40-year concession contract in 2016, is expected to have a positive effect on the cruise ship market if the planned reconstruction and modernisation of port amenities near the cruise ship terminal and in the port city’s centre goes through. The Greek shipping market seems to have overcome the biggest hurdles of the financial crisis and adapted to the rest. Far from settled, it continues to grow and offer unparalleled investment opportunities, while its long history and vital role in the Greek economy ensures a strong and knowledgeable support network.

The Inside Track

What are the particular skills that clients are looking for in an effective shipping lawyer?

As a result of globalised investment and leaps in technological development, shipping law is increasingly interconnected with other disciplines and areas of law. We find this is reflected in clients’ evolving wants and needs. Now is not the time for one-trick ponies. An effective shipping lawyer can offer a broad range of services, a flexible problem-solving approach and clear, no-nonsense communication.

What are the key considerations for clients and their lawyers when arranging finance for a shipping transaction?

The main considerations for shipowners are usually specifically transaction focused – ie, how much can they borrow, what is the interest rate or fees and when do they need to repay. Owners look at what kind of security the bank asks for – personal guarantees and shares pledges would be less attractive. Owners might also expect their financing banks to provide up to date and efficient banking facilities to facilitate operation of vessels. Lenders with a good track record and commitment to shipping are to be preferred. Those with experienced account officers and a reputation for supporting owners in tough times are valued. The shipping industry is one of personal relationships, and bank officers and owners would need to get along on a personal level.

What are the most interesting and challenging cases you have dealt with in the past year?

A ro-ro ferry casualty (grounding) off a tourist island: Thanks to our expertise in similar matters, we were instructed by the vessel’s P&I Club to deal with pollution issues and the casualty-related claims.

We also acted for claimants who suffered losses owing to a major oil spill in the Saronic Gulf (including notification of claims to the IOPC Fund), as well as a classification society and a large manufacturer in their respective disputes with customers.

We are representing a major shipowner in a complex corporate or family dispute regarding control of the vessel-owning company.