“Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. The Charterers shall have the same rights in case of a similar event in respect of the Guarantor.”
“…the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with Clause 29, the Charterers shall hold the vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners’ representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the charterers’ Master, officers and crew shall be the sole responsibility of the Charterers.”
“124. Clause 29 did not give Owners a right to make an unlimited choice of location. They had the right to repossess at the Vessel’s current port, her next port or a place convenient to them. The words “convenient to them” should be given their natural and ordinary meaning which meant that Owners were able to choose a location for repossession that suited them. 125. Objectivity is the basis of all contractual interpretation and an irrational or arbitrary choice of location unconnected to the purpose of prompt repossession would not be treated as “convenient” merely because the Owner has chosen it. An objectively convenient place must be convenient for the purpose of repossession under the Charter rather than for some wholly extraneous reason. 126. The wording referring to a “convenient place” had to be read together with that requiring Owners to place a representative on board as soon as reasonably practicable, and that the Vessel would be deemed to be repossessed at that stage. This wording did not impose an obligation requiring Owners to repossess as soon as practicable regardless of whether a place was convenient to them. 127… The convenience of a place is to be assessed objectively against the parties’ express intention that the Vessel be repossessed as soon as reasonably practicable. The time by which Owners could reasonably arrange to take actual possession of the Vessel would be a relevant consideration in determining whether a place is convenient. 128. Charterers’ construction failed to give effect to the ordinary meaning of “convenient” and it was not required to give effect to the parties’ intention that the Vessel be repossessed as soon as reasonably practicable. 129. Charterers argued with some force that it would be surprising if Owners were given the choice of the place of repossession in circumstances where a termination under clause 28 could arise because Owners were in breach or insolvent. However, arguments as to what is the (perceived) commercially reasonable result may not reflect the bargain that the parties actually agreed on (for better or worse), and will generally not prevail over the ordinary meaning of unambiguous wording. The parties had chosen a standard form wording under which one side’s convenience was expressly given priority in determining the place of repossession. The ordinary meaning of the Barecon 2001 wording is clear and effective to achieve the purpose of a safe, unhindered repossession as soon as reasonably practicable. Furthermore, Charterers’ construction gave rise to greater room for uncertainty and debate (as illustrated by this case).”
“131….The wording made clear that Charterers were not entitled to use the Vessel for their own profit but were expressly required to take the Vessel to the place designated. It could not be read as following the common law rule that the owner must collect the chattel. On the contrary, the intention was plainly to depart from that common law position.”
“The parties had agreed that Owners had a right to repossess the Vessel at her next port of call and this could entail a trans-ocean voyage. A convenient place similarly did not have to be close. The obligation to repossess as soon as reasonably practicable was not to be read as requiring repossession at a close place (or a place as close as reasonably practicable).”
“134. It was not disputed that the trans-Atlantic voyage to Trogir would have taken well over 37 days (the time for passage from Mexico to Gibraltar) and cost at least USD 500,000. It was also accepted that neither Owners nor [BDOO] operated ships. The Vessel would, of course, have required a minimum crew and Charterers acknowledged that Owners would have had to appoint a professional ship management company to engage such a crew. 135. In principle, it would have been reasonably practicable for Owners to have repossessed the Vessel in Stockton and COVID 19 would not have prevented them installing a crew (although it may have affected the timing). Charterers made assertions as to the ease with which a ship management company may be appointed but neither side put forward evidence as to how long it would reasonably have taken Owners to install a crew to take actual possession of the Vessel in Stockton in May 2021. It was accepted that Owners were a special purpose vehicle owned by [BDOO], whose yard was at Trogir and who were subject to insolvency procedures due to financial difficulties. 136. Trogir was not selected by Owners for an extraneous, irrational or arbitrary reason, or to exert illegitimate pressure. It was the place where [BDOO] had a yard and personnel to receive the Vessel. The mere fact that it might have taken up to two months to reach as suggested by Charterers did not render it inconvenient for the purpose of clause 29. The evidence suggested that the voyage should have taken no more than 45 days based on [evidence] that the voyage to Gibraltar would take 37 days. The termination arose in circumstances where Owners would have had to appoint a ship management company to mobilise a crew. This could reasonably have taken a substantial period given that neither Owners nor [BDOO] operated ships, and [BDOO] was subject to insolvency proceedings.”
“137. In all the circumstances, we are not satisfied that it would have been reasonably practicable for Owners to have taken repossession of the Vessel on14 May 2021 or shortly thereafter. Trogir was a place that was objectively convenient to Owners for the purpose of taking repossession of the Vessel as soon as reasonably practicable. Accordingly, clause 29 gave Owners the right to insist on repossessing the Vessel in Trogir rather than a port or place where (or near where) she was at the time of the termination.”
“What is the correct construction of Clause 29 in the Charter (which is as per the BIMCO Barecon 2001 standard form)? In particular, does it mean and have the effect that: (A) The Owners are required to repossess the Vessel as soon as practicable basically where the Vessel is upon termination or where the Charterers position her as they wind down their use and possession of the Vessel and take reasonable steps to keep the Vessel safe pending repossession, provided that the Owners are entitled to have the Vessel made available at a port or place that is convenient for repossession in the (objective) sense that it allows an authorised representative and crew to be put on board in a usual way; or (B) The Charterers are obliged to sail the Vessel to any place nominated by the Owners which the Owners (in good faith) consider to be the place that would be the most convenient to themselves for repossessing the Vessel?”
“a. The Court construes the relevant words of a contract in its documentary, factual and commercial context assessed in the light of, (i) the natural and ordinary meaning of the provision being construed; (ii) any other relevant provisions of the contract being construed; (iii) the overall purpose of the provision being construed and the contract in which it is contained; (iv) the facts and circumstances known or assumed by the parties at the time the document was executed and (v) commercial common sense but (vi) disregarding subjective evidence of any party’s intentions - see Arnold v Britton[2015] UKSC 36 [2015] AC 169 per Lord Neuberger PSC at [15]… and most recently Sara & Hossein Holdings Ltd v Blacks Outdoor Retail Ltd[2023] UKSC 2 [2023] 1 WLR 575 per Lord Hamblen at [29(1)]; b. In carrying out this exercise it is necessary to consider the contract as a whole since it may be apparent from such a reading that the parties intended either a narrower or conceivably a wider meaning than the literal meaning of the words used might suggest when read in isolation - see Barclays Bank plc v Unicredit Bank AG[2014] EWCA Civ 302 [2014] 2 All ER (Comm) 115 per Longmore LJ at paragraph 14. In addition, Apache North Sea Limited v INEOS FPS Limited[2020] EWHC 2081 (Comm) per Foxton J at paragraph 21; c. A Court can only consider facts and circumstances known or reasonably available to both parties that existed at the time that the contract was made. See Arnold v Britton per Lord Neuberger PSC at paragraph 21. That which is known to one party alone is immaterial and what is reasonably available generally means what is readily available to all parties - see Investors Compensation Scheme Limited v West Bromwich Building Society[1998] 1 WLR 896 per Lord Hoffmann at 912 to 913…; d. In arriving at the true meaning and effect of a contract, the departure point in most cases will be the language used by the parties because (a) the parties have control over the language they use in the contract and (b) the parties must have been specifically focused on the issue covered by the disputed Clause or Clauses when agreeing the wording of that provision - see Arnold v Britton per Lord Neuberger PSC at paragraph 17; e. Where the parties have used unambiguous language, the Court must apply it - see Rainy Sky SA v Kookmin Bank[2011] UKSC 50 [2011] 1 WLR 2900 per Lord Clarke JSC at paragraph 23; f. Where the language used by the parties is unclear, the Court can properly depart from its natural meaning where the context suggests that an alternative meaning more accurately reflects what a reasonable person with the parties’ actual and presumed knowledge would conclude the parties had meant by the language they used. However, that does not justify the Court searching for, drafting infelicities in order to facilitate a departure from the natural meaning of the language used - see Arnold v Britton, ibid per Lord Neuberger PSC at paragraph 18; g. If there are two possible constructions, the Court is entitled to prefer the construction which is consistent with business common sense and to reject the others. See Rainy Sky SA v Kookmin Bank ibid per Lord Clarke JSC at paragraph 21. However, commercial common sense is relevant only to the extent of how matters would have been perceived by reasonable people in the position of the parties at the date when the contract was made - see Arnold v Britton ibid per Lord Neuberger PSC at paragraph 19. h. In striking a balance between the indications given by the language and those arising contextually, the Court should consider the quality of the drafting of the Clause and the agreement in which it appears - see Wood v Capita Insurance Services Ltd[2017] UKSC 24 per Lord Hodge JSC at paragraph 11. Sophisticated, complex agreements drafted by skilled professionals are likely to be interpreted principally by textual analysis unless a provision lacks clarity or is apparently illogical or incoherent - see Wood v Capita Insurance Services Ltd ibid per Lord Hodge JSC at paragraph 13 and National Bank of Kazakhstan v Bank of New York Mellon[2018] EWCA Civ 1390 per Hamblen LJ at paragraphs 39 to 40; and i. A Court should not reject the natural meaning of a provision as incorrect simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of the wisdom of hindsight, because it is not the function of a Court when interpreting an agreement to relieve a party from a bad bargain. See Arnold v Britton ibid per Lord Neuberger PSC at paragraph 20 and Wood v Capita Insurance Services Ltd ibid per Lord Hodge JSC at paragraph 11. Applying these principles should enable a Court to answer what is ultimately the question that arises where there is an interpretation dispute - that is what a reasonable person with all the background knowledge which would have reasonably been available to the parties when they entered the contract, would have understood the language used by the parties to mean - see FCA v Arch Insurance (UK) Ltd[2021] UKSC 1 [2021] 2 WLR 123 per Lords Hamblen and Leggatt JJSC at paragraph 47.”
“As is obvious, if the [Owners’] construction of Clause 29 is correct, then the clause is capable of operating in a highly prejudicial manner so far as the charterer is concerned, since on that analysis it would require a charterer which had terminated the charter following the winding up or dissolution, liquidation or bankruptcy of the owner to nevertheless deliver the vessel as required by the owner or as liquidator or receiver anywhere in the world with no prospect of recovering its outlay or at any rate in full, from the insolvent owner. Textually, if correct, the [Owners’] construction renders the reference to that vessel’s current or next port of call entirely unnecessary. Both these factors in my judgment point to the [Owners’] construction being wrong.”
“The longer that situation continues the greater will be those costs and those costs will be enhanced very substantially, if the owner had an unqualified entitlement to choose where to repossess the vessel. If costs are incurred in carrying out the duty to take reasonable care of the vessel, the bailee, has a correlative right to charge the bailor with the expense of doing so - see China Pacific SA v Food Corporation of India[1982] AC 939 per Lord Simon at 964. That is significant because the costs will, or may, not be recoverable or recoverable in full from an insolvent owner. Taken together in my judgment these factors - that is the textual impact of the conclusion of the reference to the vessel’s current or next port of call, the owner’s express obligation to repossess as soon as reasonably practicable after termination and that pending re-possession the former charterer possesses the vessel concerned as a gratuitous bailee suggest very strongly that it cannot have been the parties’ intention that the owner would [have] an unqualified entitlement to choose where to repossess the vessel in the event of a clause 28 termination.”
“If the owners’ representative was able to board the vessel at her “… current … port of call …”, then it would not follow that the owner was entitled nonetheless to insist that the vessel be taken by the ex-charterer at its own initial expense to a place or port where the combination of the voyage time to that port or place and the making of the owners’ representative available at that port or place, would take materially longer than if the owners’ representative had boarded the vessel at its original port where it was located when a termination under clause 28 took effect. Concluding that an owner was entitled to act in this manner would mean ignoring the owner’s obligation to repossess the vessel by arranging for the owners’ representative to board the vessel as soon as reasonably practicable.”
“In my judgment, once that point is understood, that really resolves this case. On its true construction, the defendant was required to re-possess the Vessel at Stockton being her “… current … port of call…” unless it was either impossible or impractical for a representative of the defendant to board the Vessel in that port. As the Tribunal found at paragraph 135 of the award, it was reasonably practical for the owners to have repossessed the vessel at Stockton. That is a finding of fact against which there is not and could not be an appeal. Instead, the defendant purported to require the claimant to embark on a voyage of between 37 and 45 days in duration at a cost to be born [sic] by it initially at least of not less than US$500,000 . It did not do so because it was impractical or impossible for it to place a representative on board the Vessel in Stockton but because it wished to take possession in Trogir where it had a yard and personnel and probably also because it was in financial difficulty. In my judgment that is not what the parties intended by clause 29.”
“28. As I have said, it was reasonably practical for the owners’ representative to board the vessel there in Stockton in far less time than would have elapsed between the vessel being made available in Stockton and the date when the voyage to Trogir could have been completed. Had the [Owners] wished to prove otherwise, [they] could and should have adduced evidence on this point, but it chose not to do so. 29. In the result therefore, I conclude that on its proper construction, Clause 29 requires the [Owners] to repossess the vessel by causing [their] representative to board the vessel as soon as reasonably practicable after termination. It was reasonably practicable for the [Owners] to have undertaken that task in Stockton and more quickly than by requiring it to be sailed to Trogir. By insisting the vessel was sailed there, the [Owners] acted in breach of [their] obligation to take possession by boarding as soon as reasonably practicable.”
“The construction for which the [Owners contend], divorces the language being used in the first sentence of Clause 29 from the rest of the Clause, from Clause 28 and from the purpose for which the provision was being agreed, which was to facilitate and require repossession of the vessel as soon as reasonably practical after termination.”
“This new clause tackles the potentially thorny issue of repossession of the vessel following termination of the Charter in accordance with Clause 28. A situation might arise where the charterers terminate early and do not pay outstanding crew wages and/or repatriation costs when abandoning ship. The Repossession Clause attempts to strengthen the owners’ position when the bareboat charter is terminated and the owners cannot take immediate physical repossession of the vessel. This issue is dealt with by requiring the charterers to act as “gratuitous bailees only” to the owners, whereby the charterers must care for the vessel without compensation until the owners can physically repossess her. Clause 29 also requires the owners’ representative to board the vessel and take physical repossession “as soon as reasonably practicable following the termination of the Charter”.”
“This is a new provision in Barecon 2001 which is designed to clarify and strengthen the position of the owners if/when the charter is terminated under Clause 28, and to address some of the practical difficulties that may occur in such circumstances. Because under a bareboat charter the owners give up possession of the vessel to the charterers, the owners are placed in a potentially vulnerable situation where they terminate the bareboat charter and are unable to retake possession of the vessel, if for example the vessel is on the high seas. Clause 29 seeks to address when and how the owners are to retake possession of the vessel following termination of the charter, and to set out the responsibilities of the charterers following termination but pending repossession….” v) In that context, it is understandable that the language of the first sentence of clause 29 gives the Owners an express right to elect the location for repossession, including at a place “convenient to them”