Songa Product and Chemical Tankers III AS v Kairos Shipping II LLC

This appeal concerns the proper interpretation of clause 29 of the Baltic and International Maritime Council (“BIMCO”) Barecon 2001 standard form of bareboat charter. Clause 29 provides for the respective rights and obligations of the owners and the charterers of the relevant vessel in the event that it is repossessed by the owners following early termination of the charter pursuant to clause 28.

The issue, raised as a point of law under section 69 of the Arbitration Act 1996, is whether (i) clause 29 gives the owners the right, following termination, to require the charterers to sail the vessel to any port or place the owners consider to be convenient to them to take possession (provided the choice is not irrational or arbitrary) or (ii) the clause requires the owners to repossess the vessel as soon as reasonably practicable at its current port or call (or next scheduled port, if at sea) or at another port or place if those are not convenient for the prompt taking of repossession by the owners.

On 13 December 2024 His Honour Judge Pelling KC (“the Judge”) decided that the second of those interpretations was correct, allowing the appeal of the respondent charterers (“the Charterers”) from a partial final award of an LMAA arbitral tribunal to the opposite effect. The Judge granted the appellant owners (“the Owners”) permission to appeal to this Court.

The issue arises in the context of a bareboat charter dated 11 February 2013, on an amended BIMCO Barecon 2001 form, whereby a Croatian shipbuilder named Brodotrogir DOO (“BDOO”), with its main shipyard in Trogir, agreed to charter a 49,708 DWT chemical & oil product tanker it was building to Songa Shipping Pte Ltd (“the Charterparty”). The Charterparty was for the period of 5 years, plus or minus two months at charterers’ option. The tanker was in due course named SONGA PRIDE (“the Vessel”). On 17 December 2013 the Charterparty was novated by the original parties to the Owners (a Marshall Islands special purpose vehicle in the same beneficial ownership as BDOO) and the Charterers (another member of the Norwegian Songa Group of companies) respectively. On the same date BDOO guaranteed the Owners’ obligations under the Charterparty.

The Vessel was delivered to the Charterers on 23 December 2016.

Part 1 of the Barecon 2001 form provides boxes for the parties to insert specific details in relation to the standard terms in Part II. In addition to the matters set out above, box 16 of the Charterparty provided that the place of redelivery at the expiry of the charter period pursuant to clause 15 of the standard terms would be “One safe port, berth or anchorage WorldWide in Charterers option…”. Box 35 provided for English governing law and arbitration of any disputes in London in accordance with LMAA terms as set out in clause 30(a).

Clause 28 provides for early termination of the Charterparty. Clause 28(a) deals with default by the Charterers, such as unrectified failure to pay hire in accordance with clause 11, providing that in those circumstances the Owners shall be entitled to withdraw the Vessel from the service of the Charterers with immediate effect by written notice. Clause 28(b) deals with default by the Owners such that the Charterers are deprived of the use of the Vessel and such breach continues for 14 days, providing that in those circumstances the Charterers shall be entitled to terminate the Charter with immediate effect by written notice to the Owners. Clause 28(c) provides that the Charter shall be deemed to be terminated in the event the Vessel becomes or is declared a total loss. The relevant sub-clause for present purposes is clause 28(d), which provides for insolvency issues, amended in the case of the Charterparty to provide for insolvency issues affecting BDOO as well as those affecting the Owners and the Charterers, as follows:

“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.”

Clause 28(e) provides that termination of the Charter in accordance with the provisions of clause 28 shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party may have.

Clause 29 provides for repossession of the Vessel in the event of termination in accordance with one of the provisions of clause 28 as follows:

“…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.”

On 16 October 2020 the Commercial Court in Split confirmed a Restructuring Plan and Pre-Bankruptcy Agreement in relation to BDOO. The Charterers claimed that was an event that entitled them to terminate the Charterparty with immediate effect under clause 28(d) and purported to effect such termination on 14 May 2021, shortly after the Vessel had completed discharging its cargo at the port of Stockton in California, notifying the Owners that it was ready for them to take repossession.

The Owners refused to repossess the Vessel at Stockton, but insisted that it be brought by the Charterers to Trogir. On 16 August 2021, after a standoff during which the Vessel had been taken to Mexico to reduce costs, the Charterers commenced the voyage to Trogir under protest. On 20 September 2021, after sailing for 37 days, the Charterers arrested the Vessel at Gibraltar. On 7 January 2022 the Owners provided security as ordered by the Supreme Court of Gibraltar and took possession of the Vessel.

On 13 January 2022 the Charterers commenced LMAA arbitration proceedings against the Owners, claiming damages of US$2,190,277.81 for the Owners’ breach of clause 29 by failing to take possession of the Vessel at Stockton as soon as reasonably practicable. These comprised the costs the Charterers incurred in crewing and running the Vessel from 14 May 2001 to the date the Owners repossessed it at Gibraltar. In the alternative, the Charterers claimed those sums in bailment, on the ground that they were gratuitous bailees of the Vessel for the same period.

The Owners denied the claim, maintaining that the Charterers had not been entitled to terminate under clause 28(d) or at all, and counterclaimed damages for lost hire which would have been payable under the Charterparty (and for the costs of various repairs to the Vessel, not relevant to the issue on this appeal). The Owners’ alternative position was initially that, even if the Charterparty had been terminated, the Charterers were not entitled to recover any of their costs after such termination. During the arbitration hearing, however, the Owners accepted that, if the Charterparty was terminated under clause 28(d), the Charterers were entitled to expenses properly incurred in sailing the Vessel to Gibraltar (on route to Trogir) as gratuitous bailees, but not for expenses for the period the Vessel was anchored in Mexico, which the owners asserted were the result of the Charterers’ breach of clause 29. As I understand it, it is those latter expenses which are the primary sum at stake in these proceedings.

An oral hearing took place in London between 12 and 16 February 2024 before an LMAA tribunal comprising Ms Clare Ambrose, Mr Steven Berry KC and Mr Robert Thomas KC (“the Tribunal”). The Tribunal published a Partial Final Award on 26 March 2024, subsequently corrected in respects not material to the present appeal by a Memorandum dated 19 April 2024 (“the Award”).

The Tribunal concluded that the Charterparty was validly terminated by the Charterers on 14 May 2021 pursuant to clause 28(d), entailing that the Vessel was to be repossessed by the Owners pursuant to the terms of clause 29.

As for the proper interpretation of clause 29, the Tribunal’s reasoning was as follows:

“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).”

The Tribunal did not consider that the express reference to the Charterers holding the Vessel as “gratuitous bailees only” pending repossession undermined the above reasoning, stating:

“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 Tribunal further rejected the suggestion that the phrase “at current or next port of a place convenient to them” should be read as a single genus, entailing repossession should be close to where the Charter was terminated, stating:

“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).”

Having interpreted clause 29 as bestowing a right on the Owners to choose a place convenient to them to repossess the Vessel, provided only that it was not an arbitrary or irrational choice, the Tribunal set out its conclusions on the facts relevant to the application of that test as follows:

“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.”

The Tribunal therefore concluded as follows:

“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 on 14 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.”

As a result of that conclusion the Charterers were awarded only US$721,045.08 of the damages it claimed (together with interest) as the reasonable costs and expenses of caring for the Vessel between 14 and 21 May 2021 and during the voyage to Gibraltar, as a matter of gratuitous bailment and/or under clause 29.

The Owner’s counterclaim for lost hire necessarily failed given the finding that the Charterparty had been terminated on 14 May 2021, but a separate counterclaim for the failure of the Charterers to effect certain repairs was upheld by a majority of the Tribunal and damages of US$1,129,600.90 were awarded, together with interest.

By arbitration claim form issued on 22 April 2024 the Charterers sought leave to appeal the Award on the following question of law:

“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?”

On 2 August 2024 Cockerill J granted leave to appeal to the High Court. Following the hearing of the appeal on 29 November 2004, the Judge delivered his reserved judgment on 13 December 2024, allowing the appeal.

At [17] the Judge helpfully set out in some detail the well-established framework principles for interpreting a contract governed by English law. As neither party took issue with it, it is convenient to set out here, and adopt for the purposes of this judgment, the Judge’s account of those principles:

“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.”

At [18] the Judge further recorded, as was and remains common ground, that there is no obligation on a gratuitous bailee to take steps to return the bailed items as a matter of general law and that such a bailee can only be required to do so by contract – see Capital Finance Company Ltd v Bray [1964] 1 WLR 323 per Lord Denning MR at 329. The general law obligation is limited to making the bailed item available for collection.

Turning to the application of the principles he had identified, the Judge did not agree with the Tribunal that clause 29 was unambiguous, stating at [20] that, in his judgment, the language used was opaque and failed to specify with either clarity or precision what was intended by the critical clause. Thus, he held, it was necessary to pay particular attention to the commercial context when read as a whole.

At [21] the Judge stated that clauses 28 and 29 were to be read together as a self-contained code for early termination, clause 29 therefore applying whether the Charterers or the Owners were in default, or the Vessel was lost or where either party is affected by an insolvency event. At [22] the Judge stated:

“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.”

At [23] the Judge stated that the phrase “convenient to them” should be construed narrowly, so as to work fairly in each of the situations within clause 28. That, he stated, was supported by the subsequent text in clause 29, namely, the obligation on the Owners to arrange for its authorised representative to board the Vessel as soon as reasonably practicable and the requirement that the Charterers care for the Vessel as gratuitous bailee pending repossession. The Judge explained his view of the significance of the latter provision as follows:

“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.”

At [24] the Judge disagreed with the Tribunal’s finding that the wording requiring the Owners to place a representative on board as soon as reasonably practicable did not impose an obligation requiring the Owners to repossess as soon as practicable regardless of whether a place was convenient to them. The Judge expressed his reasoning to the contrary in [25] as follows:

“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.”

The Judge regarded that point as decisive, concluding at [26] as follows:

“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.”

The Judge further expressed his conclusion at [28]-[29] as follows:

“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.”

At [31] the Judge explained that the Owners’ proposed interpretation of clause 29, giving primacy to the Owners’ generalised needs and purposes, failed to engage with the task described by Lord Hodge in Wood v Capita Insurance Services Ltd [2017] UKSC 24 at [10] to [12] of checking each interpretation against the contract and its commercial consequences, stating that:

“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.”

Having allowed the Charterers’ appeal, the Judge remitted the Partial Final Award to the Tribunal to reconsider its decision in the light of his conclusion on the question of law appealed.

The Owners’ overall contention on this appeal was that the Judge’s interpretation of clause 29 was wrong and that the Tribunal’s decision should be reinstated. To the extent that it was necessary to identify specific errors in the Judge’s approach, the Owners advanced three grounds.

First, the Owners contended that the Judge had purported to construe clause 29 in the context of the facts of the present case, whereas he should have construed it, as a standard provision in a widely used form, in a manner which was universally applicable irrespective of the factual scenario. I see no merit in that criticism. The Judge did express the view that the exercise of interpretation should be confined to that which arose on the facts of the case, but that was not an indication that he was limiting his consideration of the issue which did so arise to the particular facts. Indeed, a central plank of the Judge’s analysis was that clause 29 could apply in each of the termination scenarios provided for in clause 28.

Second, the Owners asserted that, because he viewed the bargain arising from the natural meaning of clause 29 as unfair to the Charterers, the Judge “sought to create” ambiguity in its language without identifying that ambiguity and where there was none. Again, I see no merit in that criticism of the Judge. He was plainly right to say that the meaning of the clause is neither clear nor precise (the Tribunal noting that its views had “fluctuated”). His reference to the “highly prejudicial” consequence for the Charterers of the Tribunal’s interpretation was an entirely appropriate consideration of the commercial effect of such an interpretation in the iterative process of determining which of competing interpretations was correct.

Third, the Owners contended that the Judge wrongly made factual findings, inconsistent with those properly made by the Tribunal. The specific criticism relates to the Judge’s comment at [29] that it was reasonably practicable for the Owners to have boarded the Vessel in Stockton and “more quickly than by requiring it to be sailed to Trogir”. The Owners complained that the Tribunal had not made a finding as to how long it would have taken the owners to board the Vessel at Stockton (other than that it would not have been on or shortly after 14 May 2021) and that the Judge himself found, improperly, the additional fact that it would have been quicker than sailing to Trogir. Again, I reject that criticism. The Tribunal found that it would have been reasonably practical for the Owners (using a management company) to have placed a crew onboard at Stockton in May 2021, notwithstanding Covid 19, albeit not on 14 May or shortly thereafter. In fact the obligation was not to place a crew on board, but only a single authorised representative. Whilst the Tribunal did not state how long that (or indeed, boarding an entire crew) would have taken, it is implicit in the finding of reasonable practicability that it would not have been as long as two months, the potential duration of the full voyage from California to Croatia. The concept of reasonable practicability only arises in the context of repossessing the Vessel as soon as reasonably practicable. If it could have taken as long as two months to arrange for an authorised representative to board the Vessel in port in California, that could hardly have been regarded as a reasonably practicable course of action and the Tribunal would not have so found.

In the event the above grounds did not feature significantly in the oral arguments on appeal. The Owners, rightly in my judgment, focused its arguments on the issue of law before us, namely, how clause 29 should be interpreted, rather than a critique of the Judge’s approach below.

In that regard Mr Akoni, for the Owners, made the following submissions:

I agree with the Owners that the repossession provisions in clause 29 must be considered in the context of the legal and commercial nature of a bareboat charter, as given effect by the standard terms in Barecon 2001. It is indeed the case that, during the period of the Charter, the Vessel is “in the full possession and at the absolute disposal” of the Charterer and they are responsible for maintaining and repairing it (clause 10(a)). The Charterers are also, during that period, obliged to operate the Vessel at their own expense and its Master and crew are the Charterers’ servants (clause 10(b)). The Charterers are of course obliged to pay hire for the duration of the Charter (clause 11) and to insure the Vessel at their expense (clause 13), as well as to indemnify the Owners against loss, damage or expense caused by the operation of the Vessel (clause 17(a)). In contrast, the Owners’ obligations, after delivery of the Vessel, are limited to continuing to make the Vessel available for use by the Charterers, including, if the Vessel is arrested by reason of a claim against the Owners, securing its release within a reasonable time (clause 17(b)).

I do not, however, accept that that context justifies reading clause 29 in a manner favourable to the Owners. Clause 28 expressly and separately identifies termination due to the default of the Charterers and of the Owners, as well as insolvency events relating to either party, and also the loss of the Vessel (regardless of fault), yet provides one single repossession regime regardless of which party, if either, is at fault. In my judgment it is clear that that regime is not based on any assumption as to which party is “more likely” to be in default, and an attempt to assess that likelihood and to read in some bias accordingly, is thoroughly misconceived. The references in the BIMCO Explanatory Notes and Bareboat Charters to clause 29 strengthening the position of Owners is to the introduction of a contractual regime for repossession, and in particular the obligation of the Charterers to be gratuitous bailees of the Vessel pending repossession. Those references do not support the suggestion that the regime so introduced should be interpreted favourably to the Owners.

In my judgment the legal and commercial features of a bareboat charter are indeed highly relevant to understanding the meaning of the provisions of clause 29, but in a different way. In each of sub-clauses 28(a), (b) and (d) the termination is expressed to be “with immediate effect by written notice” (termination being deemed when the Vessel is an actual or constructive loss under clause 28(c)). The result of such termination, whichever of those sub-clauses is triggered, is that the Vessel ceases to be at the disposal of the Charterers and they cease to be under any obligation to pay hire to the Owners, or to operate, maintain or insure the Vessel. Neither are the Charterers liable to indemnify the Owners for loss, damage or expense in relation to the Vessel. In those circumstances it is a legal and commercial imperative that the Owners, whose Vessel is no longer on hire and is without the benefit of the Charterers’ obligations to operate, maintain, insure and indemnify, should have the right to repossess it at the first opportunity, namely, at its current port (or its next port of call, if at sea) and that the Charterers should have a minimum obligation to care for the Vessel as gratuitous bailee in the interim. The quid pro quo for that obligation of the Charterers must be that the Owners should repossess the Vessel as soon as reasonably practicable so as to relieve them of that unremunerated burden.

It can be seen that that imperative is duly given effect by the first three sentences of clause 29, subject only to the meaning and effect to be given to the additional words “or at a port or place convenient to them” in the first sentence. The question is whether those words entitle the Owners, even when the Vessel is currently at a safe and readily accessible port, to elect to repossess the Vessel at a far distant port “convenient” to them, with a corresponding implied obligation imposed on the Charterers to sail the Vessel to that port as gratuitous bailees at their own up-front cost. In my judgment there is no such broad entitlement for the following reasons.

First, clause 29 is not drafted, as it easily could have been, so as to give the Owners the express right to nominate a location for taking repossession, imposing a clear obligation on the Charterers to sail the Vessel there on termination. Instead the clause refers first and foremost to “her current or next port”, which would (as the Judge observed) be unnecessary if the Owners had a broad right to elect the location.

Second, the phrase “her current or next port” is not part of a menu of options for the Owners from which to choose a location for repossession, but reflects the fact that the Vessel may be in port at the time of termination (her current port) or may be at sea (heading for her next port). It would be a nonsense to suggest that, if the Vessel is already in port at the time of termination, the phrase entitles the Owners to require the Charterers to set sail to her next scheduled port, both in legal terms (because on termination of the Charterparty, there is no longer any “next port”) and also in commercial terms (because the Owners would have no interest or involvement in, and possibly no knowledge of where the next port was located). The phrase is therefore consistent with the repossession of the Vessel at the port she currently is located or will next be located, not a place chosen by the Owners.

Third, it is necessary and appropriate to read the sentences of clause 29 together to ascertain the overall scheme the parties intend to operate. I do not agree with the Owners that the first sentence deals with the location of repossession and the third sentence deals separately with timing of repossession at that location. Rather, the first sentence sets out the Owners’ right to repossess and the third sentence sets out its obligation in that regard, aspects that can and should be read as a coherent regime. Thus, the right to repossess the Vessel bestowed on the Owners in the first sentence should be read in the light of, and together with, the obligation imposed on them in the third sentence to place a representative on board as soon as reasonably practicable. In most cases that will be straightforward: the right to repossess at the Vessel’s current port will sensibly coincide with the obligation to repossess as soon as reasonably practicable. If, however, the Vessel is at sea, undertaking a long voyage to her next port of call, the obligation to repossess as soon as practicable might require that the Vessel be diverted to a different port convenient to the Owners to take repossession. In the same way, if the Vessel is in a port where it is not reasonably practicable to take repossession due to its location or circumstances, the Owners’ right and their obligation would coincide in directing the Vessel to sail to a port convenient for taking possession.

Fourth, reading the clause as above, in the light of the legal and commercial imperative on termination of the Charterparty, it can be seen that the additional words “or at a port or place convenient to them” have a clear purpose and meaning as a fall-back in the event that “her current or next port” is not convenient for taking possession, as the Owners are obliged to do, as soon as reasonably practicable.

Fifth, the clause imposes no express obligation on the Charterers to sail the Vessel to another port and the implication of any such duty must be strictly confined to what is necessary given the termination of their broad contractual obligations as Charterers and the replacement of them with the role of gratuitous bailee. I see no necessity for, and serious obstacles to, implying a broad obligation on the Charterers to set sail from a safe accessible “current port” to a distant port. The Charterers would be required to undertake that voyage at their own expense and risk, in circumstances (such as the present) where the Owners or their guarantors may not be good for any general law obligation to indemnify them. The limit of such implication must be an obligation to sail the Vessel for so long as is strictly necessary to permit the Owners to exercise their right to repossess the Vessel and to fulfil their duty to do so as soon as reasonably practicable.

It follows that I agree with the Judge that, if the Vessel is currently in port when the Charterparty is terminated under clause 29, the meaning and effect of the clause is that the Owners must repossess at that port unless it is impracticable or impossible for them to do so.

I would dismiss the appeal, largely for the reasons given by the Judge.