ENGLISH ADMIRALTY AND MERCHANT SHIPPING LAW
Ark Shipping Co LLC v Silverburn Shipping (IoM) Ltd (The Arctic)
Charterparties (bareboat)—obligation to keep vessel in class—whether obligation condition or innominate term
Appellant Charterers bareboat chartered respondent Owners’ tug on an amended BARECON 89 form. Clause 9A obliged Charterers (among other things) to “keep the Vessel with unexpired classification of the class indicated in Box 10 and with other required certificates in force at all times”. The tug’s certificates expired on 6 November 2017, while the vessel was in port for repairs but before she entered dry dock. Owners purported to terminate the charter on 7 December 2017 on the ground that Charterers were therefore in breach of cl.9A. Charterers refused to return the tug.
Owners commenced urgent arbitration proceedings for a declaration that the charterparty had been lawfully terminated and for delivery up of the vessel. This claim was dismissed on the ground that maintenance of class was not an absolute obligation and was not a condition. Owners appealed to the High Court. Carr J allowed the appeal and held that the obligation was absolute. Further, she held it was a condition. It had to be maintained at all times; it was essentially binary; and it could have adverse consequences, including for third-party relationships such as insurance. Charterers appealed the question whether the term was a condition or an innominate term.
Decision: Appeal allowed.
: (1) Classification of a term is a question of construction.2
Authorities in which there was interdependence between the obligation in issue and other contractual obligations were very different from the present case. Certainty, while important, is not entitled to undue weight in determining whether a term is a condition. The right balance must be struck between certainty and preventing trivial breaches from having disproportionate consequences.
(2) The term is not expressed to be a condition. That is not determinative but is significant for a clause drafted as industry standard by an industry committee.