Charterparty 'Keep Vessel In Class' Obligations' Are NOT Conditions

• Published date: 07 August 2020
• Subject Matter: Transport, Marine/ Shipping
• Law Firm: Quadrant Chambers
• Author: Mr Simon Rainey QC and Natalie Moore

Ark Shipping Company LLC v Silverburn Shipping (IOM) Ltd, "ARCTIC" [2019] EWCA Civ 1161

The question of law on this appeal was whether the term in a bareboat charterparty 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.

In their partial final award, two experienced LMAA arbitrators held that the term was not a condition.

On appeal, Carr J held that the term was a condition, any breach of which entitled the Owners to terminate the charterparty.

The Court of Appeal disagreed. The term was innominate. To terminate for breach of the term therefore required the owner to show a breach going to the root of the contract and depriving it of substantially the whole benefit of the charter (something the owner did not even allege). Given the similarity of wording of time charter terms where the corresponding obligation is on the owner, the decision is of importance in this context also.

The Court reasoned as follows:

1. Wording. The term was not expressed to be a condition This was significant, especially given that the BARECON 89 Form is an industry standard form.
2. Not a time clause. The term was not a time clause of the nature under consideration in Bunge v Tradax [1981] 1 WLR 711.
3. No inter-dependence. There was no interdependence of obligations. There were no sequencing issues in relation to the performance of the contract.
4. Type of breach. Although the term goes to the classification status of the vessel and only one kind of breach is possible, this was outweighed by a plethora of other factors.
5. Clause 9A as a whole. The term was found in the middle of clause 9A dealing with Charterers' maintenance obligations If the classification obligation was intended to be a condition this was a surprising place to find it. The classification and maintenance obligations are closely connected and Charterers' obligation as to the physical maintenance of the vessel was plainly not a condition.
6. "Other required certificates". The term also required Charterers to keep "other required certificates in force at all time". This wording could not be limited to certificates required by class because it would add nothing to Charterers' obligation to maintain class. Therefore the Owners were driven to say either that only part of the term is a condition (not including...