선박 건조계약상 선수금환급보증서에 관한 연구

Abstract

It takes considerable amount of time for a Shipbuilder to build a ship and deliver it to a Buyer, the cost of which can range from hundreds to tens of millions of dollars. Shipbuilding are carried out by making payments by a Buyer in installments, which can lead to virtual insolvency and subsequently bankruptcy or corporate rehabilitation procedure if the Shipbuilder's financial structure would deteriorate during shipbuilding process, not to mention potential danger of the Shipbuilder's debtors (other than the Buyer) motioning for forcible execution against the Shipbuilder's properties including the not-yet-complete ship itself. In such cases the Buyer, who paid huge sum of construction price in installments, bears a risk of losing the possibility of exercising his/her rights. If a Buyer signed a shipbuilding contract with a small-to-middle sized Shipbuilders, the Buyer needs to figure out a suitable way to remove such a risk, although it wouldn't be the case if the other party is a super-sized Shipbuilder with ample resources for payment. Therefore, if the Shipbuilders does not comply with the conditions set forth in the ship building contract or the ship cannot be complete due to other causes, the Buyer will demand refund of the advances. And the Buyer will demand 'Refund Guarantee' issued by a financial institute, as a security for advance refund.

However, due to global economic crisis in 2008, financial health of small-to-middle sized Shipbuilders deteriorated along with collapse of BDI, HR indexes and shrinking market for newly-built ships, which led to elevated concern for cancellation of shipbuilding orders placed by those Shipbuilders. This factor worked in tandem with profit deterioration caused by high steel plate price and resulted in more rigid review standard implemented by increasing number of financial institutes when issuing Refund Guarantees. Issuing Refund Guarantees has become more difficult especially due to elevated concern for over-investment in equipment followed by excessive supply, as most small-to-middle sized Shipbuilders entered into the market after 2006. This led to drastic decrease in the number of contracts signed and orders placed, and the concern for excessive supply caused by concentration of small-to middle Shipbuilders equipment investment was another reason for avoiding issuance of Refund Guarantees for advances.

Possible risks generated by a financial institute issuing Refund Guarantee to a Shipbuilder (especially those risks which might lead to subrogation of the advances already paid) are construction defect on the part of the Shipbuilder, deferred delivery caused by deferred completion and bankruptcy of the Shipbuilder. For Shipbuilders with unhealthy cash flow caused by decreased number of orders and impractical equipment investment, risks such as deferred delivery and bankruptcy are working as the reasons for their failure to acquire Refund Guarantees, which again leads to even more deteriorated cash flow, completing a vicious circle. As long as the current financial instability and drastic decrease of new orders continue, that vicious circle can drive some builders - with insufficient construction/financial resources - into restructuring, which in turn leads to increased risks borne by financial institutes.

In legal sense, Refund Guarantee is an independent bank guarantee identical to Performance Guarantee used by abroad construction companies or plants exportation. When a beneficiary demands payment, the guaranty bank must pay the amount regardless of the ship building contract. As charter parties were terminated and ship prices plummeted due to recession of maritime business, there occurred many cases where a Buyer abuse such independence of Refund Guarantee by cancelling the contract and requesting the payment. Many a small-to-middle Shipbuilders are going into bankruptcy because of decreased order following shipbuilding recession, and their difficulty is increased by disputes regarding past Shipbuilding Contracts.

The financial institutes' refusal to issue guarantees drove small-to-middle Shipbuilders into grave emergency, which led to restructuring efforts made by those Shipbuilders. However, guarantee insurance for advance refund became a big issue as it dragged down such efforts, which led to contrasting consequences for the banks and insurance companies.

As a provision for the possibility of abusing the irrevocable of Refund Guarantee by making wrongful payment request, one needs to have Refund Guarantee Insurance. Especially, characteristics of Refund Guarantee itself necessitate further investigation, as they lead to possible disputes and problems generated by fraudulent request, which actually occur more often than not. Therefore, I argues that there is a great need of research on theories and cases from outside of Korea.

Also, while a range of causes can be listed regarding disputes in financial institutes as to who is responsible for advance Refund Guarantee problems, I thinks that the most important cause is the failure to include in the creditors group those insurers and reinsurance companies of advance Refund Guarantees.

The existing research on payment of advances refund and methods to retain ensuing indemnity rights is far from being sufficient. Actually, there has been no detailed counter-plan against incidents of insolvency caused by such factors as Shipbuilders' bankruptcy.

In this paper, I would like to review several issues surrounding Refund Guarantees which provides vital and significant function for ship building contracts and hinder it at the same time and make suggestions for ways to cope with those issues. I hope this paper will contribute to facilitating successful completion of ship building business and elevating competitiveness of Shipbuilders.