A much-anticipated judgment of the Court of Appeal has been
handed down this morning that addresses the important issue of
whether a charterer's failure to pay hire amounts to a breach
of a condition, thereby giving rise to a right to terminate the
contract and claim damages for the remaining period of the
In Grand China Logistics Holding (Group) Co Ltd v Spar
Shipping AS  EWCA Civ 982, the Court of Appeal has held
– contrary to the controversial 2013 decision of Flaux J in
The 'Astra' — that the failure to pay hire
(in this case under Clause 11 of NYPE 1993) does not amount to a
breach of condition.
The decision of the Court of Appeal returns English law to the
generally accepted position prior to The 'Astra',
namely that although the owner may often have a contractual right
to withdraw the vessel for non-payment of hire, it is also
necessary to establish a repudiatory breach on the part of the
charterer if the owner is to be able to recover additional damages
in respect of loss of profit over the remaining period of the
charter. In other words, the payment provisions are
not to be treated as a contractual condition but
merely as providing an owner with the right to stop further
performance in the event of unpaid hire and claim the debt.
The leading judgment was delivered by Gross LJ, who noted:
"The trade-off between the attractions of certainty and the
undesirability of trivial breaches carrying the consequences of a
breach of condition is most acceptably achieved by treating cl. 11
as a contractual termination option."
"It certainly does not appear to me that the market
requires the payment of hire to be a condition – and, in any
event, such a result could be simply achieved by appropriate
express wording if that was thought desirable."
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