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MARITIME LAW – CLAUSES 28 AND 29 BARECON 2001 – OWNERS CAN’T PICK ANY PORT: COURT LIMITS ‘CONVENIENCE’ IN VESSEL REPOSSESSION CLAUSE

1. Summary and Facts:

Songa Product and Chemical Tankers III AS v Kairos Shipping II LLC [2026] 1 Lloyd’s Rep 100 concerns a dispute over the proper construction and interpretation of the Clause 29 BARECON 2001. Whereas, the claimant charterers had entered into a bareboat charterparty for the vessel of Songa Pride, which was governed by English law and subject to London Arbitration. Following a restructuring event affecting the guarantor, the charterers treated this as an event of default under Clause 28 and terminated the charterparty with immediate effect. At the time of termination, the vessel was in Stockton, California. In which, the owners refused to repossess the vessel there and instead required the charterers to sail it to Trogir, Croatia, asserting that Clause 29 entitled them to take possession at a location “Convenient to them”. The charterers complied under protest but later sought damages, arguing that the owners had breached their obligation to repossess the vessel promptly and appealed on the question of law as to the correct construction of Clause 29.

2. Legal Issues:

  • Whether Clause 29 granted the owners an entitlement to require redelivery at any location they deemed convenient; and
  • Whether Clause 29 imposed a more limited obligation requiring repossession at or near the vessel’s current location unless impracticable.

3. Court’s Findings:

The Court of Appeal dismissed the appeal and affirmed with the High Court Judge’s reasoning. In which: –

  • The court rejected the argument that Clause 29 conferred an unfettered right on owners to choose any convenient location, noting that such a significant obligation on charterers would require clear and express wording.
  • It was held that the reference to a “port or place convenient to them” operates as a fallback mechanism.
  • Accordingly, the correct construction is that owners must repossess the vessel at its current location unless prevented by practical constraints.

4. Practical Implications:

This judgment are signifcant as it limits the scope of owners’ rights upon early termination and reinforces the principle which:

  • Introduce a good approach that reflects a reluctance to imply onerous obligations upon one party especially in contracts without clear contractual terms;
  • Promotes commercial fairness and reduces the risk of opportunistic behaviour by owners; and
  • Highlights the importance of precise drafting in standard form contracts which requires it to be articulated in clear and unequivocal terms in certain circumstances.

This case serves as a leading authority on the interpretation of repossession clauses in bareboat charters in which it will likely influence the judicial reasoning in future disputes.

If you need more information on our legal updates, our Knowledge and Law News Division at lawnews@yhalaw.com.my would be pleased to assist.

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