SHIP 25: Time for a wider audience?

Understanding the evolution from SHIP 2000 and the development of some interesting innovations

The Norwegian Standard Form Shipbuilding Contract has undergone a comprehensive transformation. Launched in October 2025, SHIP 25 represents a significant revision of SHIP 2000. It is intended to address several commercial, regulatory and technological developments that have emerged since SHIP 2000's introduction 25 years ago, whilst at the same time presenting some potential solutions to various long-standing issues. The wider industry should take note.

Key differences between SHIP 25 and SHIP 2000

While SHIP 25 builds on the same fundamentals as SHIP 2000, the revisions are far from superficial.

Enhanced project management requirements

One of SHIP 25's most notable improvements addresses the collaborative nature of shipbuilding contracts. The builder must now provide the buyer with electronic access to drawings and documentation, followed by preliminary schedules within 30 days, and detailed schedules within six months. Additionally, monthly progress reports must include comparisons of actual progress against building schedules, completion percentages of major components, any agreed variations, and the status of major subcontractors' deliveries. Furthermore, a failure by the buyer’s representatives to promptly notify the builder of non-conformities identified during construction may trigger the buyer’s liability for any resulting wasted time and costs.

This heightened transparency serves multiple purposes: it enables early identification of potential issues, facilitates closer buyer supervision, and creates a more robust documentary record should disputes arise. For buyers, this represents enhanced control, oversight and visibility. For builders, it means increased administrative obligations and potential exposure if documentation reveals non-conformities.

Modified subcontractor liability regime

Another rebalancing of risk between builder and buyer involves subcontractors nominated by buyers. While builders remain generally responsible for delays and defects caused by subcontractors, SHIP 25 establishes a more balanced liability regime than SHIP 2000 for supplies where the buyer nominates the subcontractor and the builder cannot make alternative selections. Where such "Buyer's Elected Supplies” are delayed, the builder can claim permissible delay and compensation. This change acknowledges the unfairness of holding builders fully responsible for suppliers over whom they have no control.

Extended delay grace periods

SHIP 25 extends the default grace period for late delivery before triggering liquidated damages from 30 days to 60 days, with liquidated damages payable from the 61st to the 180th day.

There has also been an extension to the time of termination for cumulative delay. Under SHIP 2000 it was 270 days. Under SHIP 25, if the total accumulated delay, including force majeure delay but excluding other permissible delays, amounts to 360 days or more, the buyer may terminate the contract.

These extensions provide builders with additional breathing room but may disadvantage buyers facing tight operational schedules.

Enhanced refund guarantee provisions

SHIP 2000 was not prescriptive about refund guarantees, but SHIP 25 explicitly requires parties to include refund guarantee terms in an appendix, failing which default terms apply. Critically, the builder must ensure the guarantee stays valid until actual delivery, and if the builder fails to renew a guarantee within 45 days of expiry, the buyer can terminate and draw down. This provision significantly strengthens buyers' financial protection and creates a potential termination trigger that builders must carefully manage.

Dispute resolution changes

SHIP 25 moves away from ad hoc arbitration proceedings of SHIP 2000, adopting the Nordic Offshore and Maritime Arbitration Association (NOMA) Arbitration Rules by default. Although this dispute resolution framework might appeal to Nordic clients, it may be less attractive to international parties who usually seek resolution via the larger and more established bodies such as the LMAA, LCIA, SCMA, SIAC or HKIAC.

Price adjustment mechanisms

SHIP 25 introduces an updated price format with index regulation referencing the Norwegian producer price index or similar, and provisions for additional payments in respect of certain scopes of work on a cost-plus basis. These provisions provide builders with inflationary and budget protection mechanisms, but international parties may not be willing to accept the Norwegian index or its equivalents, and the requirement of extra payments outside the agreed milestones may create cash flow or funding issues, dependent on timing.

Progressive title transfer

The default position under SHIP 25 is that title will pass upon delivery and acceptance, consistent with industry practice. However, there is also an opt-in arrangement whereby the buyer can take title to the vessel as construction progresses. If this option is taken, the builder need not provide a refund guarantee, and in the event of termination the builder is not obliged to refund the prepaid instalments. Rather, the builder is obliged to complete the minimum works required to allow the vessel to leave the yard and be completed by the buyer elsewhere. This will not be an attractive mechanism in most jurisdictions where progressive title cannot be registered.

Design responsibility

Perhaps SHIP 25's most significant innovation addresses one of shipbuilding's most controversial legal issues: design responsibility.

SHIP 25 includes Appendix I, which applies if parties specifically opt in. It operates to limit the builder's liability – for delay, defects, and deficiencies resulting from errors or omissions in design documents – to the liability of the designer under the design agreement. In addition, the builder is entitled to rely entirely on the design documents when creating detailed production drawings and constructing the vessel.

If this opt-in is chosen, and unless the parties agree to modifications or variations, the buyer must take delivery of the vessel without rectification of defects resulting from design errors. This optional mechanism addresses a common concern of shipyards: builders assuming full design liability even where the design and designer were specified and selected by the buyer without the builder's involvement, and where the builder has a limited right of recourse against the designer.

Advantages of the design opt-in:

First, the opt-in explicitly allocates design risk rather than leaving courts to interpret potentially conflicting contractual provisions.

Second, it aligns liability with control. Where buyers select designers and builders have no input, the opt-in ensures builders are not held to standards beyond the designer's contractual obligations.

Third, it may reduce contract prices, encourage use of specialist designers, and allow a wider range of shipyards to tender, including those without in-house design capability.

Fourth, the opt-in would probably exclude any implied fitness for purpose obligations in relation to the design, subject to the wording of the underlying design agreement. This is because it likely requires the builder to exercise the same standard of care as that of the designer – namely, reasonable skill and care – so that there is no room for an implied fitness for purpose obligation in respect of the design.

Limitations and caveats:

First, it requires buyer agreement - sophisticated buyers may not agree, particularly for complex vessels where design risks are pronounced.

Second, the opt-in only limits liability to the designer's contractual cap, which would normally be much lower than the builder's limit of liability in the shipbuilding contract. If the designer's liability is limited to a small amount, buyers face substantial exposure.

Third, buyers accepting this opt-in must take delivery of vessels with design defects unless variations are agreed. This may create seaworthiness, operational and safety concerns, particularly for specialised vessels.

Fourth, the opt-in does not address situations where builders accept express fitness for purpose obligations, or similar warranty language. If such language exists elsewhere in the contract, courts might still impose those higher standards.

Concluding remarks and SHIP 25's prospects for broader international usage

SHIP 2000 has been widely used in Norway since its launch in 2000. Norway has a long tradition of using "agreed documents"—standard forms where both parties' organizations contribute to create balanced contracts, supported by independent representatives. This collaborative development process has given SHIP 2000 credibility as a fair, balanced framework.

However, the international shipbuilding landscape features multiple competing standard forms. The SAJ Form, published by the Shipbuilders' Association of Japan, is commonly used by Asian yards. BIMCO's NEWBUILDCON is the industry's only international standard shipbuilding contract designed for use in any jurisdiction and for any type of ship, but it is far from ubiquitous, and when it is used it is often in a heavily amended form. The AWES Form, introduced by the Association of Western European Shipbuilders, did not receive widespread recognition, particularly with Asian yards.

SHIP 2000 is not commonly used outside Norway. To the extent that it is adopted internationally, however, parties generally find it to be fair and balanced. SHIP 25 appears well-positioned to carry forward this legacy, albeit that some of its more Nordic-centric provisions would probably have to be amended for wider use.

Whether it will become more widespread in the industry will depend on the continued perception that it fairly balances risk, and whether non-Nordic builders and buyers will find some of its more modern and innovative provisions acceptable when compared to their traditional alternatives. For example, the design responsibility opt-in may prove particularly attractive to builders worldwide.