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ARTICLE · 22 AUGUST 2019

Ship Leasing: Does Loss Of Class Entitle Owners To Terminate?

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Reported cases involving bareboat charters are rare. The recent English Court of Appeal decision in Ark Shipping Company LLC v. Silverburn Shipping (IOM) Ltd [2019] EWCA Civ 1161 (The "Arctic" )

Hong KongTransport
Bill Amos
Bill Amos
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Introduction

Reported cases involving bareboat charters are rare. The recent English Court of Appeal decision in Ark Shipping Company LLC v. Silverburn Shipping (IOM) Ltd [2019] EWCA Civ 1161 (The "Arctic" ) should therefore be of interest to everyone involved in ship leasing. 

The Respondent Owners bareboat chartered their vessel on the amended BARECON 89 Form to the Appellant. The sole question of law on appeal was whether Clause 9A ("the Clause"), obliging Charterers to:

"keep the Vessel with unexpired classification of the class indicated in Box 10 and with other required certificates in force at all times."

was a condition or an innominate term. 

Owners have a clear and automatic right of termination for breach of condition. Breach of an innominate term, however, requires an examination of the consequences of the breach to determine if Owners were deprived of "substantially the whole benefit of the contract", a 'wait and see' approach which is

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