In Kuwait Rocks Co v AMB Bulkcarriers Inc (The Astra) (as reported in a previous post), the court determined that the obligation to make punctual payment of hire under the amended NYPE time charter in that case was a condition of the contract, so that failure to pay a single hire payment entitled the vessel owners both to withdraw the vessel and to claim damages for loss of profit for the remainder of the charter period.
On 18 March 2015, judgment was handed down in Spar Shipping AS v Grand China Logistics Holding (Group) Co., Ltd. The court disagreed with the analysis in The Astra, finding that payment of hire was not a condition of the contract.
Owners had withdrawn three vessels from Charterers' service due to non-payment of hire. They claimed from the party which had guaranteed Charterers' performance, inter alia, the unpaid hire which had fallen due and damages for loss of bargain for the unexpired charter periods. In light of the court's finding that payment of hire was not a condition, Owners were only entitled to damages for loss of bargain if they could show that Charterers' conduct was repudiatory and/or constituted a renunciation of the charters.
The judgment in this case effectively reverses the somewhat controversial position set out, albeit obiter, in The Astra, a position which had potentially strengthened owners' position where charterers failed to make full and punctual hire payments. Reed Smith will be publishing a client alert which will consider this case, and the comparison with The Astra in more detail, a link to which will be posted in due course.
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