Shipbuilding, yacht construction and major marine refit projects often involve large upfront payments, complex international supply chains, and prolonged lead times. These projects also carry significant financial risk for both the shipyard and the client. Delays, insolvencies, disputes or underperformance can lead to substantial losses.
To manage these risks, high-value marine contracts increasingly make use of shipyard escrow accounts - secure, neutral accounts through which funds are held and released only upon satisfaction of pre-agreed conditions, such as milestone completion or certification.
This article explores how shipyard escrow accounts function, what types of marine projects use them, and how they protect clients, yards, and financiers from risk.
A shipyard escrow account is a financial structure in which payments made under a shipbuilding, vessel refit, or marine equipment contract are deposited into a safeguarded account held by a neutral escrow agent. Funds are released to the shipyard (or other contractor) only when specified conditions are met - typically tied to construction milestones, surveyor certification, or delivery.
The purpose is to de-risk the transaction for both parties:
Marine construction and refit projects often span 12–36 months and involve significant capital exposure, long production cycles, and bespoke craftsmanship. Shipyards typically require staged payments, but clients are understandably cautious about releasing substantial sums in advance.
Escrow provides a mechanism to balance these interests. Payments are made in advance - but only released on completion of defined deliverables.
Each escrow arrangement is bespoke, but common release triggers include:
In refit projects, milestones may relate to dismantling, mechanical overhauls, interior outfitting, and surveyor sign-off.
Escrow is increasingly standard in high-value marine construction and yacht transactions, even though specific contractual details are usually confidential. However, publicly available references provide clear evidence of escrow's role in shipbuilding and vessel-related contracts.
A U.S. Securities and Exchange Commission (SEC)-filed ship construction contract explicitly provides for an escrow account to be used in the event of payment disputes between the client and the shipyard. In this case, milestone payments could be deposited into escrow pending resolution - highlighting how escrow mechanisms are embedded in real-world marine construction agreements.
A robust shipyard escrow arrangement typically includes:
Shipyard escrow accounts are a key tool for managing risk in large marine construction and refit projects. By securing funds in advance and linking payment to performance, escrow provides confidence and clarity to all parties involved. For clients, it removes the risk of advance payment without delivery. For shipyards, it ensures access to funds without relying on the client’s ongoing liquidity.
At dospay, we provide fully safeguarded escrow services for shipbuilding, refits and yacht purchases, with funds held at the Bank of England where required. Whether you are commissioning a new-build yacht, overseeing a complex refit, or advising a client on project structuring, escrow adds professionalism, control and trust to the process.
dospay is a trading name of DOS & Co. Ltd, a company registered in England and Wales with company number 08294966.
DOS & Co. Ltd. is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN: 833374) for the provision of payment services.
All of our GBP escrow and third-party managed accounts are segregated and safeguarded at the Bank of England.
.jpeg)
