Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The “Trident Beauty”) - House of Lords (Lord Keith, Lord Goff, Lord Lowry, Lord Slynn and Lord Woolf) - 27 January 1994

Advance hire payments paid by charterer direct to shipowners’ assignee - Hire not subsequently earned - Whether assignee obliged to make repayment to charterer

Trident Shipping Co were the disponent owners of a fleet of fourteen vessels. One of these vessels was the Trident Beauty , of which the owners were the United Arab Shipping Company, and which Trident operated under the terms of a bare boat charter. In order to maintain the fleet and to finance the shipping operations Trident made use of credit facilities through Creditcorp Ltd. Trident was entitled to drawdown on these facilities, up to a maximum amount, once Trident had entered into a specific charterparty. The amount advanced would be secured by an assignment of the freight or charter hire anticipated to be received under that charterparty. The funds drawn down were applied by Trident to the payment of suppliers of other vessels in the Trident fleet and not to the specific charter in respect of which the drawdown was allowed.