OCM MARITIME NILE LLC AND ANOTHER V COURAGE SHIPPING CO AND OTHERS

[2022] EWHC 452 (Comm), Queen’s Bench Division, Commercial Court, Sir Andrew Smith sitting as a Deputy Judge of the High Court, 4 March 2022

Charterparty (demise) – Effect of sanctions – Registered owner seeking possession of vessels – Construction of charterparty terms – Entitlement to buy vessel at end of charterparty period – Penalty clauses – Primary and secondary obligations – Relief from forfeiture – Conduct – Barecon 2001

The claimants were the registered owners of the vessels Courage and Amethyst, bareboat chartered to the defendants, and asserted that various events of default had occurred entitling them to terminate the charterparties. Their parent company had on 12 July 2019 entered into an agreement with the third defendant pursuant to which the claimants would own and the defendants would bareboat charter vessels, as a result of which the claimants would be providing finance for the defendants’ purchase transaction. The charters would be bareboat charters of a “hell or high water” character and on Barecon 2001 terms. The hire was composed of a fixed and a floating element and there was an option for the charterer to purchase, and an obligation to purchase on the final day of the charter. The purpose of the first two defendants was to enter into these charters. The third defendant was the controlling company and the manager of the vessels. On 10 June 2021, Mr M who controlled the defendants was designated a “Specially Designated Global Terrorist” by the United States and added to a blocked persons list, as a result of which the defendant companies were also blocked. Soon thereafter, the claimants served notice of events of default and now sought declarations that the charterparties had been lawfully terminated and that they were entitled to possession of the vessels. The defendants did not dispute that events of default had occurred, but denied that on a proper construction of the charterparties the claimants were entitled to possession. They also submitted that the claim for possession relied on provisions in the charterparty that were void and unenforceable, and finally also brought a counterclaim for relief from forfeiture.