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Havila Avoids Penalties as Sanctions Continue to Delay Operations

Havila avoids Norwegian fines
Havila Polaris's maiden voyage has been delayed five months due to Russian sanctions (Havila file photo)

Published Apr 14, 2023 1:57 PM by The Maritime Executive

A year after the financial sanctions were first imposed against Russian financial institutions, Norway’s Havila Voyages continues to work to resolve the complicated issues that are delaying the delivery of the company’s third and fourth coastal passenger ships. The company invoked “force majeure” to avoid potentially damaging Norwegian fines, but continues to delay the maiden voyage of the third cruise ship, Havila Polaris.

The company signed a contract in 2018 with the Norwegian Ministry of Transport to launch the coastal service between Bergen and Kirkenes. The historic agreement split operations on the route for the first time, awarding Havila the contract for four ships while Hurtigruten maintained a portion of the route with the right to operate seven ships. Havila was scheduled to commence its service in 2021.

“More than anything else, we want to be in full operation along the Norwegian coast with all four ships, as planned,” said Bent Martini, managing director of Havila Voyages. “Unfortunately, we have been hit by many unfortunate and unforeseen circumstances, most recently in that we cannot take delivery of a completed ship such as Havila Polaris, due to the sanction’s regulations.”

The Norwegian Ministry of Transport today, April 14, informed the company that it has agreed to withdraw a planned financial penalty for failing to launch service on the third cruise ship as scheduled at the beginning of 2023. In February 2023, the ministry informed the company of its intent to impose a penalty equal to the portion of the compensation provided to Havila for the third ship which was being delayed from starting service on the coastal route.

“We believe we should not be penalized for a delay that is completely beyond our control,” said Martini. The company invoked force majeure in its response to the government asking for the penalty to be reconsidered and withdrawn. Martini warned that if the ministry proceeded with the financial penalty it “would make us more vulnerable in terms of liquidity.”  He said the coastal route operates with a small margin.

Havila, however, has been forced for a fifth time to delay the maiden voyage of the Havila Polaris. The vessel was completed, and the company originally expected to take delivery during the second week of December 2022. Instead, the ship has remained at the Tersan Shipyard in Turkey with the December 29 sailing delayed first to February 11, then April 7, and finally April 29. Havila is now targeting May 21 for the maiden voyage from Bergen.

“We continue to work to resolve complicated legal processes to be able to take delivery of Havila Polaris and eventually Havila Pollux,” said Martini. The vessels were being financed by the Russian company GTLK and chartered to Havila, but the sanctions have prevented the company from buying the ships due to the limits on making payments to Russian financial institutions. Havila has won a court decision that should permit them to take possession of the ships and it has completed refinancing arrangements. It is waiting for permits from the courts to proceed with the solution which will see the funds put into frozen accounts and the company take delivery of the vessels.