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

The proper interpretation of clause 29

I agree with the Owners that the repossession provisions in clause 29 must be considered in the context of the legal and commercial nature of a bareboat charter, as given effect by the standard terms in Barecon 2001. It is indeed the case that, during the period of the Charter, the Vessel is “in the full possession and at the absolute disposal” of the Charterer and they are responsible for maintaining and repairing it (clause 10(a)). The Charterers are also, during that period, obliged to operate the Vessel at their own expense and its Master and crew are the Charterers’ servants (clause 10(b)). The Charterers are of course obliged to pay hire for the duration of the Charter (clause 11) and to insure the Vessel at their expense (clause 13), as well as to indemnify the Owners against loss, damage or expense caused by the operation of the Vessel (clause 17(a)). In contrast, the Owners’ obligations, after delivery of the Vessel, are limited to continuing to make the Vessel available for use by the Charterers, including, if the Vessel is arrested by reason of a claim against the Owners, securing its release within a reasonable time (clause 17(b)).

I do not, however, accept that that context justifies reading clause 29 in a manner favourable to the Owners. Clause 28 expressly and separately identifies termination due to the default of the Charterers and of the Owners, as well as insolvency events relating to either party, and also the loss of the Vessel (regardless of fault), yet provides one single repossession regime regardless of which party, if either, is at fault. In my judgment it is clear that that regime is not based on any assumption as to which party is “more likely” to be in default, and an attempt to assess that likelihood and to read in some bias accordingly, is thoroughly misconceived. The references in the BIMCO Explanatory Notes and Bareboat Charters to clause 29 strengthening the position of Owners is to the introduction of a contractual regime for repossession, and in particular the obligation of the Charterers to be gratuitous bailees of the Vessel pending repossession. Those references do not support the suggestion that the regime so introduced should be interpreted favourably to the Owners.

In my judgment the legal and commercial features of a bareboat charter are indeed highly relevant to understanding the meaning of the provisions of clause 29, but in a different way. In each of sub-clauses 28(a), (b) and (d) the termination is expressed to be “with immediate effect by written notice” (termination being deemed when the Vessel is an actual or constructive loss under clause 28(c)). The result of such termination, whichever of those sub-clauses is triggered, is that the Vessel ceases to be at the disposal of the Charterers and they cease to be under any obligation to pay hire to the Owners, or to operate, maintain or insure the Vessel. Neither are the Charterers liable to indemnify the Owners for loss, damage or expense in relation to the Vessel. In those circumstances it is a legal and commercial imperative that the Owners, whose Vessel is no longer on hire and is without the benefit of the Charterers’ obligations to operate, maintain, insure and indemnify, should have the right to repossess it at the first opportunity, namely, at its current port (or its next port of call, if at sea) and that the Charterers should have a minimum obligation to care for the Vessel as gratuitous bailee in the interim. The quid pro quo for that obligation of the Charterers must be that the Owners should repossess the Vessel as soon as reasonably practicable so as to relieve them of that unremunerated burden.

It can be seen that that imperative is duly given effect by the first three sentences of clause 29, subject only to the meaning and effect to be given to the additional words “or at a port or place convenient to them” in the first sentence. The question is whether those words entitle the Owners, even when the Vessel is currently at a safe and readily accessible port, to elect to repossess the Vessel at a far distant port “convenient” to them, with a corresponding implied obligation imposed on the Charterers to sail the Vessel to that port as gratuitous bailees at their own up-front cost. In my judgment there is no such broad entitlement for the following reasons.

First, clause 29 is not drafted, as it easily could have been, so as to give the Owners the express right to nominate a location for taking repossession, imposing a clear obligation on the Charterers to sail the Vessel there on termination. Instead the clause refers first and foremost to “her current or next port”, which would (as the Judge observed) be unnecessary if the Owners had a broad right to elect the location.

Second, the phrase “her current or next port” is not part of a menu of options for the Owners from which to choose a location for repossession, but reflects the fact that the Vessel may be in port at the time of termination (her current port) or may be at sea (heading for her next port). It would be a nonsense to suggest that, if the Vessel is already in port at the time of termination, the phrase entitles the Owners to require the Charterers to set sail to her next scheduled port, both in legal terms (because on termination of the Charterparty, there is no longer any “next port”) and also in commercial terms (because the Owners would have no interest or involvement in, and possibly no knowledge of where the next port was located). The phrase is therefore consistent with the repossession of the Vessel at the port she currently is located or will next be located, not a place chosen by the Owners.

Third, it is necessary and appropriate to read the sentences of clause 29 together to ascertain the overall scheme the parties intend to operate. I do not agree with the Owners that the first sentence deals with the location of repossession and the third sentence deals separately with timing of repossession at that location. Rather, the first sentence sets out the Owners’ right to repossess and the third sentence sets out its obligation in that regard, aspects that can and should be read as a coherent regime. Thus, the right to repossess the Vessel bestowed on the Owners in the first sentence should be read in the light of, and together with, the obligation imposed on them in the third sentence to place a representative on board as soon as reasonably practicable. In most cases that will be straightforward: the right to repossess at the Vessel’s current port will sensibly coincide with the obligation to repossess as soon as reasonably practicable. If, however, the Vessel is at sea, undertaking a long voyage to her next port of call, the obligation to repossess as soon as practicable might require that the Vessel be diverted to a different port convenient to the Owners to take repossession. In the same way, if the Vessel is in a port where it is not reasonably practicable to take repossession due to its location or circumstances, the Owners’ right and their obligation would coincide in directing the Vessel to sail to a port convenient for taking possession.

Fourth, reading the clause as above, in the light of the legal and commercial imperative on termination of the Charterparty, it can be seen that the additional words “or at a port or place convenient to them” have a clear purpose and meaning as a fall-back in the event that “her current or next port” is not convenient for taking possession, as the Owners are obliged to do, as soon as reasonably practicable.

Fifth, the clause imposes no express obligation on the Charterers to sail the Vessel to another port and the implication of any such duty must be strictly confined to what is necessary given the termination of their broad contractual obligations as Charterers and the replacement of them with the role of gratuitous bailee. I see no necessity for, and serious obstacles to, implying a broad obligation on the Charterers to set sail from a safe accessible “current port” to a distant port. The Charterers would be required to undertake that voyage at their own expense and risk, in circumstances (such as the present) where the Owners or their guarantors may not be good for any general law obligation to indemnify them. The limit of such implication must be an obligation to sail the Vessel for so long as is strictly necessary to permit the Owners to exercise their right to repossess the Vessel and to fulfil their duty to do so as soon as reasonably practicable.

It follows that I agree with the Judge that, if the Vessel is currently in port when the Charterparty is terminated under clause 29, the meaning and effect of the clause is that the Owners must repossess at that port unless it is impracticable or impossible for them to do so.