Oslo-listed Ocean Yield has won an arbitration case related to the purchase options of four very large crude carriers (VLCCs) exercised by Greek shipping company Okeanis ECO Tankers.
Namely, in October 2019, Okeanis served a notice to exercise options to repurchase four VLCCs that had been bought by Ocean Yield and chartered back to Okeanis on long-term charters.
The parties disagreed if the conditions for exercising the options had been fulfilled, and the matter was referred to arbitration.
The arbitration tribunal has decided that Okeanis did not have the right to exercise such options to repurchase the vessels under the lease agreements.
“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,” Okeanis said.
The tribunal dealt only with issues of liability and is yet to decide on the issues relating to legal costs.
The financial impact of the arbitration is expected to 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,” Okeanis added.
In the meantime, the effect of the awards is that the vessels remain on their existing long-term bareboat charters from Ocean Yield.
The four VLCCs built by Korean Hyundai Heavy industries were delivered in 2019. Upon delivery, the VLCCs commenced a 15-year bareboat charter to Okeanis Eco Tankers Corp with a 5-year sub-charter to Koch Shipping Pte. Ltd.
Okeanis Eco Tankers, established in 2018 by the Alafouzos family, has a fleet of 17 crude oil and product tankers.