SEA Europe (European Shipyards and Equipment Manufacturers)
SEA Europe, representing the European Shipyards and Maritime Equipment Manufacturers, is of the opinion that such a proposal would have a very adverse effect on bank financings (and ultimately on the construction) of movable assets such as ships, therefore negatively impacting the European shipbuilding industry and the extensive maritime supply chain relaying on it, which we represent.
First of all, SEA Europe holds the view that the implementation of such a proposal would significantly increase the pricing, and hence the cost, for the financing of ships without mitigating to the same extent the credit risk. European shipbuilding customers are extremely price sensitive. A price increase due to the need to obtain legal opinions for all jurisdictions where the ships could move during the lifetime of the loan will lead such companies to look for more attractive and flexible alternatives elsewhere, especially in non-EU countries (such as China) where no such requirements would exist.
Secondly, it must be kept in mind that it is in the nature of movable assets such as ships to be operated freely in a great number of jurisdictions around the world. This is particularly the case for European shipbuilding customers such as the cruise lines and operators who constantly adapt their schedules and itineraries in order to adapt to evolving demand patterns or for operational reasons or in certain cases due to geopolitical developments or security risks in the affected destination. The ability to move their ships wherever necessary, including on short notice, is fundamental to those operators. Any restriction regarding the operational area in which the ship would be deployed would not be acceptable, therefore, for the owners and operators of such movable assets. Moreover, since typical financing arrangements are long-term and have maturities of up to twelve years or more, no owner/operator of such assets are likely to accept operational limitations for such a long period of time. Any such limitation would not only significantly reduce the flexibility and competitiveness of the owner/operators of the asset. It would be detrimental to the asset's value and be, hence, against the interest of the financing bank. This could indeed ultimately lead shipowners or ship-operators to opt for more flexible and favourable financing – and building - alternatives in non-European jurisdictions, thus favouring non-European shipyards.
In summary, it is our opinion that the proposal to provide each relevant lender with Legal Opinions for all potential jurisdictions a vessel might be visiting would not be not only unfeasible. It would also fail to achieve the stated goals while adversely impacting the ship financing landscape in Europe and ultimately the European shipbuilding sector relying upon it. We therefore strongly suggest that EBA revises this part of the proposed regulation.