The next morning.
Zhongtian Law Firm.
"In recent years, due to weakening global economic recovery montum, trade frictions between East and West have intensified.
Combined with the global economic crisis, the OPEC production cut agreent, and the mariti sulfur cap order, the growth of international mariti trade has been sluggish, and the volu of crude oil trade bleak.
This has resulted in the oil shipping market operating at a low level, with freight rates consistently depressed and new ship prices continuing to fall.
In this environnt, the performance of global shipping companies has been affected, resulting in a significant number of shipbuilding order cancellations.
This includes the Norway Ship King—John Frederiksen.
His international crude oil transportation company ’Searill’ is the plaintiff that has filed a lawsuit against our client ’Bin City Shipyard’."
Director Zheng, standing in front of the projector with a solemn face, introduced the case to the lawyers in the conference room, including Lin Haitang.
"Bin City Shipyard was established in 2006 and is a controlled subsidiary under the ownership of Bin City Shipbuilding Heavy Industry Group.
Bin City Heavy Industry owns 51% of shares, and Samoa’s Shengmao Investnt holds 49%, making it a joint venture.
In 2013, Bin City Shipyard signed a contract with Searill Company for the construction of 8 VLCCs (Very Large Crude Carriers) with a displacent exceeding 300,000 tonnes, totaling a contract value of 60 billion RMB.
In order to deliver this substantial order on ti, Bin City Shipyard practically used up all its shipbuilding berths to complete the construction tasks.
By the end of 2017, the shipyard had already advanced about 40 billion RMB in shipbuilding funds, with 6 of the oil tankers nearly completed and close to delivery.
It was at this ti that Searill Company, due to poor performance and declining new ship prices, began to cancel shipbuilding orders worldwide."
Director Zheng opened the next slide.
"The problem lies in their thod of cancelling orders.
Searill Company abruptly announced, without any prior notice, the unconditional cancellation of the 6 nearly completed VLCC orders, dealing a heavy blow to Bin City Shipyard.
But bound by the contract, Bin City Shipyard could only grit its teeth and continue to fulfill the remaining two orders.
Earlier this year, Searill Company proposed the cancellation of the seventh VLCC order.
Bin City Shipyard finally abandoned all illusion, decided to halt cooperation with the other party, and curtail its losses and proactively requested the cancellation of the eighth VLCC as well.
It was thought that this negotiation could be settled, but unexpectedly, the other party firmly disagreed with the cancellation.
With no choice left, Bin City Shipyard had to continue building at a loss.
Just recently, Searill Company, which had previously made a solemn promise never to cancel the order for the eighth ship, reneged once again.
Even more unexpectedly, Searill not only canceled all orders but also sued Bin City Shipyard for failing to deliver on ti, demanding the return of 10% of the deposit along with related interests..."
"This is utterly shaless!" blurted out one male lawyer who could no longer hold back.
As people of Country Hua, hearing how their own company was repeatedly manipulated by a foreign company, every lawyer present felt outraged.
A solid shipbuilding order, hard worked on for 5 years, now not only was the final paynt unattainable, but even the deposit was likely to be reclaid, a total loss!
What was infuriating was that the other party was obviously intentionally causing repeated cancellations to destabilize Bin City Shipyard, aiming to force them into a breach of contract to reclaim that 10% of the order.
Faced with this extre tug-of-war, Bin City Shipyard was undoubtedly caught between a rock and a hard place.
Continue building, but who to sell to? It would likely further increase losses.
If they stopped building, that would exactly fulfill the other party’s desires, and even the deposit would be reclaid...
"Such untrustworthy behavior and malicious creation of comrcial traps is indeed shaless, but the problem is, subjective judgnts cannot determine objective facts.
The key to the issue is... all business actions must be based on the contract.
The other party’s tactics, albeit unethical, must be admitted, have cunningly utilized the clauses of the contract signed by both parties."
Director Zheng said helplessly.
At that mont, a middle-aged man wearing square-frad glasses began to speak, his face etched with bitterness.
"Alas, yes, if we are to bla anyone, it can only be for our eagerness to finalize the contract back then, without carefully evaluating the potential risks of this cooperation... It’s all our fault..."
The man speaking was in his fifties, but his hair was already half-grey, making him look worn and much older than his years.
He was Feng Liang, the deputy director of Bin City Shipyard, who had specially co to assist the law firm with the case.
"Mr. Feng, you shouldn’t bla yourself too much, after all, you weren’t the one who signed the contract." Director Zheng consoled.
"Even though I didn’t sign it, the entire managent team is responsible for the situation we’re in now!
When I think about how our company’s thousands of employees can’t even get their salaries, we feel so ashad!"
Lin Haitang looked at the deputy director, whose face was full of self-reproach, and asked in a puzzled manner.
"Mr. Feng, I’ve reviewed the records and, as far as I know, the general paynt process at the shipyard is divided into five stages—contract activation, comncent of work, vessel on slipway, launch, and delivery.
Normally, the buyer would make a 20% prepaynt at each stage.
Why was it that when the contract was signed, the shipyard only received a 10% deposit and even the remaining 90% of the paynt was done all at once upon delivery? That doesn’t seem to follow the usual practice."
Everyone present nodded, as it seed that no matter how you looked at it, such a contract was clearly tyrannical on the part of the buyer.
A VLCC, with a construction period of at least two or three years, in such a long ti, no one could predict sudden contingencies, undoubtedly putting the shipyard at great risk.
So even began to suspect conspiracy, wondering if so decision-makers might have been dishonest.
Feng Liang gave a bitter smile upon hearing this.
"It’s normal for you not to understand the intricacies. In fact, such contracts were not uncommon in the industry at that ti."
He sighed.
"After the 2008 economic crisis, the ill effects of overproduction began to show, and the shipbuilding industry was one of the hardest hit!
Furthermore, the economic crisis led to a sluggish global shipping market, resulting in a general scarcity of orders for our country’s shipbuilding industry.
But without orders, how could we support so many employees?
So after the industry slumped, buyers assud a completely dominant position in ship deals.
The paynt terms you just ntioned were unattainable for us at that ti.
In order to compete for international orders, we would pay an initial 10% prepaynt, then finance the production through bank loans, and only receive the remaining 90% of the paynt upon delivery.
This was a common practice in the industry at that ti.
Facing harsh external conditions, so dostic shipbuilding companies even dealt with businesses where the prepaynt was only 1%.
Our profits were so low they were nearly at cost price.
Even if it ant incurring losses, we had to grit our teeth and accept orders, as surviving was our top priority.
In such tis, if a company offered you a huge order of six billion and even allowed you to earn a profit of about 10%, could you resist the temptation?
Even if it had been back then, I probably would have gritted my teeth and signed the contract..."
So that was the case...
"Ladies and gentlen, I’m not going to lie, because we advanced a massive amount of the project funds, our working capital has already dried up, and we are also in debt of over two billion.
If we lose this lawsuit, it would be adding insult to injury, and bankruptcy might be our only option.
Director Zheng, ladies and gentlen, for the sake of thousands of employees in the factory, as well as their children and parents...
Please... I implore you all!"
Seeing Mr. Feng, his eyes filled with hot tears, his spine bent by reality, everyone present was deeply moved.
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