CA-2025-000005 - [2025] EWCA Civ 1227

The Award

The Tribunal concluded that the Charterparty was validly terminated by the Charterers on 14 May 2021 pursuant to clause 28(d), entailing that the Vessel was to be repossessed by the Owners pursuant to the terms of clause 29.

As for the proper interpretation of clause 29, the Tribunal’s reasoning was as follows:

Clause 29 did not give Owners a right to make an unlimited choice of location. They had the right to repossess at the Vessel’s current port, her next port or a place convenient to them. The words “convenient to them” should be given their natural and ordinary meaning which meant that Owners were able to choose a location for repossession that suited them.

Objectivity is the basis of all contractual interpretation and an irrational or arbitrary choice of location unconnected to the purpose of prompt repossession would not be treated as “convenient” merely because the Owner has chosen it. An objectively convenient place must be convenient for the purpose of repossession under the Charter rather than for some wholly extraneous reason.

The wording referring to a “convenient place” had to be read together with that requiring Owners to place a representative on board as soon as reasonably practicable, and that the Vessel would be deemed to be repossessed at that stage. This wording did not impose an obligation requiring Owners to repossess as soon as practicable regardless of whether a place was convenient to them.

127… The convenience of a place is to be assessed objectively against the parties’ express intention that the Vessel be repossessed as soon as reasonably practicable. The time by which Owners could reasonably arrange to take actual possession of the Vessel would be a relevant consideration in determining whether a place is convenient.

Charterers’ construction failed to give effect to the ordinary meaning of “convenient” and it was not required to give effect to the parties’ intention that the Vessel be repossessed as soon as reasonably practicable.

Charterers argued with some force that it would be surprising if Owners were given the choice of the place of repossession in circumstances where a termination under clause 28 could arise because Owners were in breach or insolvent. However, arguments as to what is the (perceived) commercially reasonable result may not reflect the bargain that the parties actually agreed on (for better or worse), and will generally not prevail over the ordinary meaning of unambiguous wording. The parties had chosen a standard form wording under which one side’s convenience was expressly given priority in determining the place of repossession. The ordinary meaning of the Barecon 2001 wording is clear and effective to achieve the purpose of a safe, unhindered repossession as soon as reasonably practicable. Furthermore, Charterers’ construction gave rise to greater room for uncertainty and debate (as illustrated by this case).”

The Tribunal did not consider that the express reference to the Charterers holding the Vessel as “gratuitous bailees only” pending repossession undermined the above reasoning, stating:

“131….The wording made clear that Charterers were not entitled to use the Vessel for their own profit but were expressly required to take the Vessel to the place designated. It could not be read as following the common law rule that the owner must collect the chattel. On the contrary, the intention was plainly to depart from that common law position.”

The Tribunal further rejected the suggestion that the phrase “at current or next port of a place convenient to them” should be read as a single genus, entailing repossession should be close to where the Charter was terminated, stating:

“The parties had agreed that Owners had a right to repossess the Vessel at her next port of call and this could entail a trans-ocean voyage. A convenient place similarly did not have to be close. The obligation to repossess as soon as reasonably practicable was not to be read as requiring repossession at a close place (or a place as close as reasonably practicable).”

Having interpreted clause 29 as bestowing a right on the Owners to choose a place convenient to them to repossess the Vessel, provided only that it was not an arbitrary or irrational choice, the Tribunal set out its conclusions on the facts relevant to the application of that test as follows:

It was not disputed that the trans-Atlantic voyage to Trogir would have taken well over 37 days (the time for passage from Mexico to Gibraltar) and cost at least USD 500,000. It was also accepted that neither Owners nor [BDOO] operated ships. The Vessel would, of course, have required a minimum crew and Charterers acknowledged that Owners would have had to appoint a professional ship management company to engage such a crew.

In principle, it would have been reasonably practicable for Owners to have repossessed the Vessel in Stockton and COVID 19 would not have prevented them installing a crew (although it may have affected the timing). Charterers made assertions as to the ease with which a ship management company may be appointed but neither side put forward evidence as to how long it would reasonably have taken Owners to install a crew to take actual possession of the Vessel in Stockton in May 2021. It was accepted that Owners were a special purpose vehicle owned by [BDOO], whose yard was at Trogir and who were subject to insolvency procedures due to financial difficulties.

Trogir was not selected by Owners for an extraneous, irrational or arbitrary reason, or to exert illegitimate pressure. It was the place where [BDOO] had a yard and personnel to receive the Vessel. The mere fact that it might have taken up to two months to reach as suggested by Charterers did not render it inconvenient for the purpose of clause 29. The evidence suggested that the voyage should have taken no more than 45 days based on [evidence] that the voyage to Gibraltar would take 37 days. The termination arose in circumstances where Owners would have had to appoint a ship management company to mobilise a crew. This could reasonably have taken a substantial period given that neither Owners nor [BDOO] operated ships, and [BDOO] was subject to insolvency proceedings.”

The Tribunal therefore concluded as follows:

In all the circumstances, we are not satisfied that it would have been reasonably practicable for Owners to have taken repossession of the Vessel on 14 May 2021 or shortly thereafter. Trogir was a place that was objectively convenient to Owners for the purpose of taking repossession of the Vessel as soon as reasonably practicable. Accordingly, clause 29 gave Owners the right to insist on repossessing the Vessel in Trogir rather than a port or place where (or near where) she was at the time of the termination.”

As a result of that conclusion the Charterers were awarded only US$721,045.08 of the damages it claimed (together with interest) as the reasonable costs and expenses of caring for the Vessel between 14 and 21 May 2021 and during the voyage to Gibraltar, as a matter of gratuitous bailment and/or under clause 29.

The Owner’s counterclaim for lost hire necessarily failed given the finding that the Charterparty had been terminated on 14 May 2021, but a separate counterclaim for the failure of the Charterers to effect certain repairs was upheld by a majority of the Tribunal and damages of US$1,129,600.90 were awarded, together with interest.