Can a tug or supply vessel suddenly be withdrawn by owners from
active operations without warning where charterers are late on hire
payments? The commonly used BIMCO Supplytime 1989 form of
charter, and in particular rights regarding payment of hire and
suspension, have recently been discussed by the Commercial Court in
the United Kingdom in Greatship (India) Limited v Oceanografia
SA de CV.1
Importantly, the Court affirmed that
based on the wording of an unamended Supplytime 1989 charter,
owners are not required to give five banking days notice in order
to exercise their right to suspend provision of the vessel's
Clause 10(e) of the BIMCO Supplytime
1989 form states in relevant part as follows:
Payments of Hire, bunker invoices
and disbursements for the Charterers' account shall be received
within the number of days stated in Box 23 from the date of receipt
of the Invoice...
In default of payment herein
specified, the Owners may require the Charterers to make payment of
the amount due within 5 banking days of receipt of notification
from the Owners; failing which the Owners shall have the right to
withdraw the Vessel ...
While payment remains due the
Owners shall be entitled to suspend the performance of any and all
of their obligations ...
In Greatship, following
instances of Charterers failing to pay hire in accordance with the
terms of the Charterparty, Owners purported to suspend provision of
the vessel's services without providing five banking days
notice, relying on Clause 10(e).
The Charterers objected to this
suspension and argued that the 5 day grace period that Owners would
have been obliged to give in the case of withdrawal of the vessel
altogether should also apply before Owners were entitled to suspend
provision of the vessel's services.
However, the Court rejected this
argument. Following the principle that clear and unambiguous
language in a contract should be given effect, the Court found that
the express language of the clause did not require any notice or
grace period to be given. Looking at the charterparty as a whole,
there were numerous clauses where notice or grace periods were
provided. If the parties had intended there to be a notice or grace
period before Owners could exercise their right to suspend for
non-payment of hire, the parties could have made express provision
Charterers argued that the consequences
of suspension could be commercially severe. The Supplytime
form is often used for work involving extreme time pressure, and
losses where a crucial vessel suddenly ceases to assist could be
high. The Court confirmed that commercial arguments will not
necessarily be sufficient to overrule the express wording of a
clause where that clause is unambiguous and Charterers'
commercial argument was not successful in this case.
The express wording of Clause 10(e) of
the BIMCO Supplytime 1989 form – if unamended –
provides owners with a powerful right to suspend their vessel's
services for non-payment of hire without notice to the charterer.
Where the Supplytime 1989 charter is used, charterers would be well
advised to amend clause 10(e) to provide a period of grace before
owners are entitled to suspend the vessel's services for
non-payment of hire.
1.  EWHC 3468 (Comm).
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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