This recent case1 is a nice example of the problems that arise when charterers fall behind with hire payments.
This area of law is a minefield for ship owners and operators. One wrong step or precipitant move can lead to a repudiatory breach by the ship owner. Henshaw J sets out the relevant parts of the Spar Shipping2 test in finding that there was a clear repudiatory and renunciatory breach. There was a vain attempt to argue that the owners’ suspension of performance as per their contractual rights was itself a repudiation. That was given short shrift and it was confirmed that owners were entitled to enter into an agreement with the voyage charterers pursuant to their lien.
In this case, the owners handled the situation well and successfully obtained summary judgment for the outstanding hire up to termination as well as damages for post-termination hire up to the date of discharge of the cargo when the vessel became free. The wider damages claim remains extant although it remains to be seen whether that claim will be pursued as the charterers appear to have gone to ground as happens in so many of these cases.
At BDM, we have handled many cases involving non-payment of hire. One of our most popular posts can be found here setting out the top ten things to consider when your time charterer is not paying hire.
- AI Gioris Oil Trading Limited v AG Shipping & Energy Pte. Limited (The “Marquessa”)  EWHC 2319 (Comm)
- Grand China Logistics Holding (Group) Co. Ltd. v Spar Shipping AS  EWCA Civ 982