“28. Termination (See also Clauses 46 and 47)… (b) Owners’ Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the vessel and such breach continues for a period of fourteen (14) days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect, by written notice to the Owners. In case of cancellation by the Charterers as set out in Clause 28(b), the vessel shall be deemed to be off-hire from the time notice in accordance with line 821 is received by Owners. ” 38 CHARTER HIRE 38.1 The Charterers shall throughout the Charter Period pay charter hire (the “Charter Hire”) to the Owners, calculated from the first day of the Charter Period, at a rate of USD 38,5000 net per day. 38.2 Subject to the terms of this Agreement, hire shall be paid continuously throughout the Charter Period; 38.3 The Charterers shall pay hire due to the Owners in accordance with the terms of this Charter punctually, in respect of which time shall be of essence. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date in respect of a period up to the end of that calendar month and with subsequent instalments on the 1st day of every calendar month (each, a “Payment Date”), however, where there is a failure to make punctual payment of hire due to oversights, negligence or omissions on the part of the Charterers or the Charterers’ bankers, the Charterers shall be allowed the number of Banking Days indicated in Box 34 in which to rectify the failure, and when so rectified within that number of Banking Days, the payment shall stand as regular and punctual. 38.4 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.4.1 On the relevant Payment Date; and… ” 46. EVENTS OF DEFAULT 46.1 Each of the following events and the events referred to in Clause 28(a) shall be a “Event of Default” for the purposes of this Charter:- 46.1.1 If any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date, or in the case only of sums expressed to be payable by the Charterers on demand, within five (5) Banking Days following the date of demand therefore, and such failure to pay is not remedied within three (3) Baking Days’ of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.2 The occurrence of an Event of Default shall entitle the Owners by notice to the Charterers with immediate effect to terminate the chartering of the Vessel under this Charter by withdrawing the Vessel from the service of the Charterers, and to recover any and all amounts due and payable hereunder and/or resulting from such termination.” 47. OWNERS’ RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing under this Charter, the Owners may, by notice of the Charterers immediately, on such date as the Owners shall specify, terminate the Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the vessel to the owners in accordance with Clause 15. … 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the “Termination Date”) or such later date as the Owners shall specify:- 47.3.1 all hire due and payable, but unpaid, under this Charter up to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.7 hereof from the due date for payment hereof from the date for payment thereof of the Termination Date; 47.3.2 any sums, other than hire, due and payable, but unpaid under this Charter together with interest accrued thereon pursuant to Clause 38.7 to the Termination Date; and 47.3.3 all costs, expenses, damages and losses incurred by the Owners as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of Charter Hire and expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15,29 and 52 hereof), provided always that the Owners shall take reasonable steps to mitigate their losses so incurred.” 47.4 When making payment to the Owners in accordance with Clauses 47.3.1 through 47.3.3 above, no deduction shall be made by the Charterers in respect of the Sellers’ Credit which, pursuant to its terms, is immediately forgiven by the Sellers upon the termination of the Charter, by the Owners following the occurrence of a Termination Event hereunder, it being understood by both parties that amount is a reasonable pre-estimate of minimum damages and is not a penalty and an amount equivalent to the Sellers’ Credit shall be deducted from the amount of any claim the Owners have against the Charterers in respect of the terminated Charter. For the avoidance of doubt, if the Sellers’ Credit does not cover the Owners’ loss, the Owners shall be able to claim further compensation for such loss. 47.5 For the avoidance of doubt, in the event of termination of this Charter by the Owners or the Charterers, each of the Owners and the Charterers shall be entitled to all contractual, legal, statutory or equitable remedies, regardless of whether the reasons for such termination would give rise to an independent right of termination as a matter of law. 47.7 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15,29 and 52. 47.8 In the event of termination of this Charter, the Owners and the Mortgagee shall be entitled to assume and take over Charterers’ position as party to any charterparties exceeding 13 months’ (including optional periods) subsequently entered into between the Charterer and sub-charterers so that the Owners will substitute the Charterer under such charterparties. The Charterers undertake to assist the Owners and/or the Mortgagee, as the case may be, to accomplish the aforesaid substitution.”
“14. The evidence from Parbulk was that prior to March 2009 there had been no major problems with the payment of hire. Clearly Heritage were not immune to the effects of the collapse in freight rates that started in the autumn of 2008. On20 January 2009 Parbulk agreed to Heritage’s request that for the period from February to July 2009 hire should be paid on the first and fifteenth of each month rather than monthly in advance as provided for in the charterparty. However, despite this concession, no hire was paid from16 April 2009 until the termination of the charterparty by Parbulk on22 June 2009 . Parbulk set out their summary of the instalments of hire that were not paid in a table as follows:- Date Period Outstanding hire (USD) 16.4.2009 16- 30.4.2009 577,500 1.5.2009 1-15.5.2009 577,500 15.5.2009 15-31.5.2009 616,000 1.6.2009 1-15.6.2009 577,500 15.6.2009 16-22.6.2009 7/15 x 577,500 = 269,500 Total outstanding hire up to22 June 2009 2,618,000 15.….. In so far as it should be necessary, we find as a fact that Parbulk’s summary of the instalments that were not paid by Heritage is accurate. 16. When the instalment that was due on16 April 2009 was not paid, Parbulk sent the following “Notice of outstanding bareboat hire” to Heritage:- On behalf of Parbulk II AS we hereby tender notice pursuant to clause 46.1.1 of the Bareboat Charter, and ask you to settle the Charter Hire due on16th April 2009 , promptly. We remind you that if your failure to pay is not remedied within 3 Banking Days of your receipt of this notice, the non-payment will constitute an Event of Default under the Bareboat Charter, ref clause 46. Please settle the outstanding Charter Hire due on16th April 2009 + one month’s Libor 0,448 + 2% = 2,45% per annum calculated on basis of the number of days from16th April 2009 until payment is made, ref. clause 38.7 pf the Bareboat Charter. We hereby reserve all our rights under the Bareboat Charter 17. Virtually identical notices, with only the dates and sums amended as appropriate, were sent in respect of each unpaid instalment up to and including the instalment that was due on15 June 2009 . …..”
“23. Parbulk found out that under the time charter that Heritage were performing, the vessel had not called at Singapore as previously advised but had instead put into Port Klang for bunkers on her voyage to China. Parbulk arrested the “MAHAKAM” there on12 June 2009 . They did so in support of an admiralty action in rem against vessel “Mahakam” which named as defendants the demise charterers of the vessel. The endorsement of claim pursuant to which the warrant of arrest issued by the High Court of Malaya was as follows:- Indorsement of claim The Plaintiff’s claim against the Defendants, who are and were at all material times the demise charterers of the Vessel is for USD 2,348,500, being the charter hire sum due under a demise charter dated11 December 2007 for the period between April to June, 2009, and, for damages for breach of contract and/or duty and/or negligence and/or a declaration that the Defendants are liable to the Plaintiffs in respect of any and all losses and/or damage and/or costs and/or expenses and/or claims and/or liabilities whatsoever incurred and/or to be incurred arising out of and/or in connection with the Defendant’s breach of the demise charter and/or duty and/or negligence but not limited to all hire and other earnings due and payable by Defendants under the demise charter including interest and costs. ”
“24. On17 June 2009 Heritage filed an application to the Malaysian court for an order that all further proceedings be stayed pending reference to arbitration in London in accordance with clause 30(a) of the bareboat charterparty, that the arrest be set aside and an enquiry be made into Heritage’s losses due to the wrongful arrest of the vessel. The main grounds for the application were that all disputes between the parties were to be referred to arbitration. It was also alleged that the warrant of arrest was not executed validly because the vessel was outside port limits at the time. 25. While matters were pending before the Malaysian court, there were apparently no meaningful discussions between the parties either as to the settlement of Parbulk’s claims or the provision of security. 26. On22 June 2009 the chairman of Parbulk, Mr Christian Due, faxed the following letter to Heritage:- “To: Heritage Maritime Ltd S.A. C/o Humpuss Sea Transport TbK C/o Granadi Building 7th -8th Floor Jln.HR Rasuna Sald Kav. X-1 No 8-9 Jakarta 12950, Indonesia Attention: Tatok Hardiono22nd June 2009 Telefax no+62-21-252-4477 We refer to our notices for outstanding bareboat charter hire dated16 April 2009 ,4 May 2009 ,18 May 2009 and2 June 2009 under the Bareboat Charterparty for the vessel “MAHAKAM” (“Vessel”) dated11 December 2007 between Charterers and Owners (“Charterparty”). In breach of your obligations under Charterparty, you have failed to pay charterhire and your guarantors, PT Humpuss Transportasi TbK (“Guarantors”) has failed to make payment despite our notices of21 April 2009 ,8 May 2009 and27 May 2009 to them. You have further failed to remedy your default to date. Your actions and/or those of the Guarantors clearly constitutes Events of Default under Clauses 46.1.1, 46.1.3 and 46.1.7. Accordingly, we hereby withdraw the Vessel from your service and terminate the Charterparty with immediate effect. Charterers are to redeliver the Vessel to Owners at Port Klang, Malaysia, immediately and make payment of all outstanding charterhire pursuant to clause 47.3. Please confirm immediately to Owners and the vessel’s agents at Port Klang: Veerasamy Muniratnam, Assistant Operation Manager-West Malaysia Wilhelmsen Ships Service Malaysia Sdn Bhd Port Klang Tel: +603 3101 2331 (Ext 168) Fax: +603 31012313/Mobile: +60123987212 Email: muniratnam.veerasamy@wilhelmsen.com that Charterers crew will now facilitate a proper handover of the vessel to owners crew who are now standing by in Port Klang including providing a full familiarisation of the vessel, as required by the ISM code. Take notice that Owners will be conducting an off-hire survey later today, you are invited to send a surveyor participate on a joint survey basis. However, the owners survey will go ahead irrespective of whether you send a surveyor to participate and owners will not permit the survey to be delayed pending the arrival of Charterers appointed surveyor. Please advise owners agent immediately if a surveyor will attend on behalf of charterers. All our rights remain fully reserved. Kind regards Parbulk II AS Christian Due Chairman. 27. The “MAHAKAM” was redelivered to Parbulk on23 June 2009 and was released from arrest on24 June 2009 .”
“59. It is therefore clear that there is no settled and established principle of landlord and tenant law that a demand for rent will constitute a waiver of the landlord’s right to terminate the tenancy for a failure to pay rent. Judgments involving charterparty disputes such as the “LIBYAVILLE”, the “MIHALIOS XILAS” and the “LACONIA” indicated that that guidance could be obtained from the principles of landlord and tenant law since time charters are analogous to leases. However, in all the shipping cases cited to us the courts considered all the factual circumstances of the cases to determine whether waiver had been established. 60. That is scarcely surprising. In this context, waiver means the unequivocal affirmation of the continuation of a contract with knowledge of a breach justifying termination of the contract. In cases of the acceptance of rent, it has become a binding principle in landlord and tenant law that the requirements of waiver are thereby made good. However, it would require clear evidence of the existence of such a principle and its application being so automatic that a court or arbitration tribunal could not investigate the surrounding facts to satisfy itself that the requirements for waiver had been established. We were not persuaded by Heritage’s arguments that there was a principle that was so well established that it precluded investigation of surrounding circumstances in landlord and tenant cases involving demands for, as opposed to, receipts of rent, never mind its automatic and obligatory extension to charterparty disputes. 61. We are not, for a moment, suggesting that principles relating to the waiver of contractual rights cannot be a general application and have to be compartmentalised by reference to the subject matter of the contract. Of course we accept, as indeed did the judgments in the charterparty disputes referred to above, that potentially the right to withdraw a vessel could be waived by an owner. We have simply concluded that, contrary to the position argued for by Heritage, there is no well established principle of landlord and tenant law that a mere demand for rent (as opposed to the acceptance of rent) will lead to waiver of the right to terminate a lease for breaches of it; nor is there any authority that concludes that such a principle (to the extent that it does exist) is automatically applicable in charterparty disputes without full consideration of all surrounding circumstances. In this case we had to consider the actions of the parties and their effect and the response to the other party to those actions.”
“65. We agreed with Heritage’s case that Parbulk’s arguments as to the effect of the notices prior to that of2 June 2009 identified in the termination letter of22 June 2009 overlooked the evidence of Mr Magelssen to the effect that initially Parbulk understandably were anxious to keep the bareboat charter alive. The hire rate in the charterparty was above the then prevailing market rate and a substitute charterparty, if one could be concluded at all, would not have been close to the bareboat charterparty rate payable by Heritage. Parbulk hoped that Heritage, or more probably their guarantors, would be able to pay the outstanding and future instalments of hire. Finally, Parbulk had been created as a single purpose company for the purposes of performing the sale and leaseback and the bareboat charterparty; it was not structured to trade the vessel, in the spot or period bulk market. 66. It was clear from Mr Magelssen’s evidence that despite the notices of outstanding charter hire served on 16 April, 4 May, 18 May and2 June 2009 at the times when those notices were issued, Parbulk were still prepared to keep the charterparty contract alive. However, both from the exchanges between the parties and from Mr Magelssen’s evidence, it was clear that Parbulk’s attitude changed significantly after the meeting of5 June 2009 to which Heritage sent no decision makers. The message sent by Mr Grieveson on5 June 2009 , in Mr Magelssen’s own words, made it clear to Heritage that:- “…you need to pay up immediately and you need to come up with a viable commercial solution for how we take this forward unless we are free to…terminate the bareboat charter [whenever] we want”. 67. In the event, nothing was paid and Heritage did not come forward with “a viable commercial solution” as envisaged by Mr Magelssen. Furthermore, the vessel was arrested on12 June 2009 . Again Heritage did not approach Parbulk about the provision of security but instead on17 June 2009 Heritage filed their application to set aside the arrest, stay the Malaysian proceedings and claim damages for wrongful arrest. 68. If there had been no communications between the parties other than the invoices for 15 day instalments of hire and the notices of outstanding bareboat hire there would have been some force in Heritage’s argument that Parbulk had waived the right to terminate the charterparty for the non-payments of hire. However, the meeting of5 June 2009 and the email sent that evening on behalf of Parbulk by Mr Grieveson broke that pattern and the significance that could properly be attached not only to the invoice of8 June 2009 and the notice of outstanding bareboat hire of16 June 2009 but also to the earlier notice of outstanding hire of2 June 2009 . The notice of2 June 2009 required payment to be made within three banking days (in other words by5 June 2009 ) failing which the failure to make payment constituted an “Event of Default” under the charterparty. The expiry of the three day deadline coincided with the email sent by Mr Grieveson on behalf of Parbulk. The instruction of solicitors which was explained in that email as well as the text of the email made it quite clear that Heritage could no longer assume that Parbulk would tolerate the non-payment of instalments of hire and unless Heritage or their guarantors made an immediate commercial proposal as to how the unpaid instalments of hire were to be paid Parbulk would terminate the charterparty and repossess the vessel. 69. Far from Parbulk, making an election to keep the contract alive and communicating the election to Heritage, they were expressly telling Heritage that unless arrangements that were satisfactory to Parbulk were made to pay the outstanding hire promptly, they would elect to exercise their right to terminate the charterparty. It is often said that a party cannot “approbate and reprobate”
“72….. In case our conclusion that the invoice of8 June 2009 and the notice of 16 June did not amount to waiver of Parbulk’s contractual rights is overturned on appeal, we had to consider Parbulk’s second and alternative case based on Heritage’s failure to pay in response to the invoice of8 June 2009 or the notice of16 June 2009 . They argued that they could terminate pursuant to clause 46.1.1 and no issue as to waiver could arise because it was the last instalment of hire whose payment had been demanded. The only issue that arose in considering this alternative ground of termination was that it was not identified in the termination letter of22 June 2009 . 73. Parbulk referred us to passages from Chitty, the decision in Dalkia Utilities v Celtech and Stocznia Gdynia v Gearbulk Holdings. They argued that the requirement for clear notices (as laid down in the “AFOVOS” and Heisler v Anglo-Dal Limited ) did not apply on the facts of this case. Indeed, since the consequences were the same, they argued that they could simply rely on the notice of16 June 2009 and did not need to rely on the letter of22 June 2009 . 74. We were not persuaded by Parbulk’s arguments on this point. Some of the authorities upon which they relied (such as Dalkia Utilities v Celtech) were more concerned with the separate question of whether a notice had to distinguish between contractual and common law rights of termination. It seemed to us that where a party relied on a letter of termination after the instruction of lawyers who one assumes would have had a hand in the drafting of the letter and which identified specific grounds on which it relied, it was not open to it to argue, after the event, that it could rely on a separate contractual ground which it could have but had not identified at the time. We appreciate that this conclusion may seem rather artificial in the absence of any attempt by Heritage to cure any of their breaches, whether at this time identified or not. However, clause 46.2 did require a notice of termination after an Event of Default and it was to be inferred that the notice had to be comprehensive.”
“80. We considered that, consistently with our findings as to the effect of Mr Magelssen’s evidence (recorded in paragraph 66 above), Parbulk had elected not to terminate the charterparty for breaches of the obligation to pay hire prior to5 June 2009 . Thereafter, as already recited, Parbulk’s position had changed radically. The failure to pay the instalment for the period 1-15 June 2009 was still a continuing breach of condition as at8 June 2009 expired - it had not been waived. As of5 June 2009 when the three banking day period of grace following service of the notice of2 June 2009 and thereafter there was no waiver of the existing or subsequent breaches of condition. Furthermore, although the right to terminate for the earlier breaches might have been waived, it was legitimate to take into account all the unpaid instalments as evidence of Heritage’s inability to pay. 81. For the above reasons we concluded that Heritage were in repudiatory breach of the charterparty. Independently of their contractual rights under the terms of the charterparty, Parbulk were entitled to accept the totality of Heritage’s conduct in not paying the instalments of hire due for the periods 1-15 June and 16-30 June 2009 and in having evidenced an inability to pay as evincing an intention no longer to be bound by the charterparty contract which they could and did accept as terminating it.”
“In breach of your obligations under Charterparty, you have failed to pay hire…we hereby withdraw the Vessel from your service and terminate the Charterparty with immediate effect”
“However, clause 46.2 did require a notice of termination after an Event of Default and it was to be inferred that the notice had to be comprehensive.”
“ The notice of termination must identify the precise default relied upon. The Owners are not entitled to supplement its notice of termination by reference to defaults not identified in the notice of termination. Clauses 46.2 and 47.1 require a notice of termination and the Charterers are entitled to restrict the Owners to the defaults identified. Clauses 46 and 47 contain a clear regime for contractual termination with specific contractual consequence. It is a regime which potentially gives rise to multiple grounds of withdrawal and termination and potentially very serious financial compensation under clause 47.3 a. One of the very few protections that the Charterers have is that the Owners must identify the precise grounds on which it seeks to terminate before doing so. This is spelt out in clauses 46.2 and 47.1. The Owners give no grounds at all for disapplying the contract wording. It would also contradict the basic guidance in relation to notice of termination given by Lord Wilberforce in The Laconia[1977] 1 Lloyd’s Rep 315 at 321- the charterer needs to be in a position to know what is being said against it and to give instructions in regard to the vessel. Moreover the consequences of termination are potentially severe including not only loss of all contractual rights but also forfeiture of the Sellers’ Credit of US$6,250,000 . There is no parallel in the Dalkia v Celtech case relied upon by the Owners.”
“The Owners were entitled to terminate the charterparty at the very least on the basis of the non-payment of hire for the period 1-15 June 2009 expressed in the demand made on2 June 2009 . The demand made on8 June 2009 in respect of hire for the period 16-30 June 2009 did not amount to a waiver of such right”
“Yes” and Question 3: “Yes”