17/04/2013

Kuwait Rocks Co v AMN Bulkcarriers Inc ("The Astra") [2013] EWHC 865 (Comm) [2013] 2 Lloyd's Rep. 69

In a landmark decision, Flaux J has ruled that the obligation upon a charterer to make punctual payment of hire in clause 5 of the NYPE 1946 form is a condition whether or not there is an anti-technicality clause in the charterparty. Although the point did not need to be decided to resolve the s.69 arbitration appeal, Flaux J's judgment on the point is detailed and appears to be intended to provide an alternative ratio.

In overturning the position previously accepted by most texts on this standard form, Flaux J has handed great power to owners who may now withdraw their vessels from charterers' service on a falling market without suffering financial loss. The potential damages claims against charterers will be very significant; in this case, for example, the sum at stake was some US$12 million.

In the same decision, Flaux J also addressed the proper legal test for repudiation of a contract. Although briefly, Flaux J also addressed the question of whether an agreement to pay loss of bargain damages in the event of a withdrawal of a vessel for the non-payment of hire was a penalty. Having considered Lombard North Central Plc v Butterworth [1987] 1 QB 527, Flaux J concluded that adding such a regime would convert the payment obligation into a condition.

Josephine Davies and Rupert Hamilton acted for the appellant (instructed by Watling & Co)