Case Nos: CL-2023-000206 and CL-2023-000207 - [2025] EWHC 1591 (Comm)

It is convenient first to set out the broader financial background to the Charterparties.

Initially one of the Vessels was owned by Charterers and the other by the Guarantors. In 2014 Charterers entered into a sale and lease back arrangement with Owners under which the Vessels were purchased by Owners in order to be demise chartered back to Charterers. Mr Garware’s evidence was that this was ‘pushed for’ by DVB Group companies.

There are two features of this sale and lease back arrangement which require mention. First, under a Sellers’ Credit Agreement dated 31 December 2014 (the ‘Credit Agreement’), Charterers did not receive US$ 4.5 million of the purchase price of the Ben Nevis. This sum was a ‘Seller’s Credit’, which it was intended should be deducted from the sum payable at the end of the Charterparties in order for Charterers to repurchase the Ben Nevis.

Second, facility agreements were entered into at around the same time as the Charterparties, between the respective Owners as borrowers, DVB Group Merchant Bank (Asia) Ltd (‘DVB’) as arranger, agent and security trustee, and a variety of financial institutions as lenders. I refer to these as the ‘Facility Agreements’. Owners granted various forms of security for the Facility Agreements to DVB including mortgages and the ‘General Assignments’ of, inter alia, the Charterparties and the Guarantees which I will turn to later.

The Kailash Charterparty was a bareboat charterparty on the BARECON 2001 form with amendments and additions. It was in effect a hire-purchase agreement.

The Ben Nevis Charterparty (which was amended and restated pursuant to an agreement dated 10 April 2015) was on materially similar terms, except in respect of the dates and sums payable, and some differences in clause numbers. The following summarises key terms of the Ben Nevis Charterparty for convenience.

Under Clause 41 of the Ben Nevis Charterparty Charterers were due to pay three types of hire (‘Fixed Charter-hire’, ‘Variable Charter-hire’, and ‘Additional hire’). These terms were defined in Clause 32. I summarise them as follows:

Under Clause 36.1, the term of the Ben Nevis Charterparty was to be 72 months (the ‘Charter Period’) commencing on the Delivery Date. The Ben Nevis was delivered to Charterers on 11 February 2015. The Kailash was delivered on 30 May 2014.

Under Clause 36.2, where OCSL terminated the Ben Nevis Charterparty in accordance with its terms, or where the Ben Nevis Charterparty expired at the end of its Charter Period then, subject to the Credit Agreement, ‘the Charterer shall make full payment to the satisfaction of the Owner of the Termination Sum (including the Repurchase Price) and all other sum payable by the Charterer to the Owner on the date of termination or date of expiry of this Charter’.

Under Clause 55.1, Owners had the right to terminate the Charterparty upon the occurrence of a Termination Event. The Termination Events were listed in Clause 54.1, and included at subclause (b):

Any Charter-hire or any other sum payable… to the Owner… is not paid when due unless, in the case of payment of any Charter-hire only, the failure of payment of such Charter-hire is caused by administrative or technical error and payment is made within three (3) Business Days after the due date…

Under Clause 33.1(b), the effectiveness of the Ben Nevis Charterparty was subject to Owners’ receipt of the ‘Security Documents’. In Clause 32, Security Documents are defined to include (inter alia) the Guarantee, and the General Assignment.