Lloyd's Maritime and Commercial Law Quarterly
Terminating a demise charter: is possession nine-tenths of the law?
The Hon Steven Rares*
The BARECON 2001 and 2017 forms expressly provide for the owner to terminate a bareboat or demise charterparty without taking actual physical possession of the ship. However, in The Chem Orchid, a judge of the Supreme Court of Singapore said that public policy requires the owner to retake physical possession before termination is effective. That reasoning conflicts with appellate decisions in Australia and England. This article explores the principles of maritime law, common law actions to vindicate rights to possession and in bailment as they bear on how an owner can terminate a demise charterparty.
Introduction
This paper concerns whether, as a matter of law, a shipowner must retake possession of his ship after exercising a contractual right to terminate a demise charter, to make the termination effective. As I seek to show, that is not the law. But, if it is, it would take the manner of termination of a demise charter of a ship out of step with the established common law as to how a ship can be sold or abandoned to an insurer while at sea and whether an owner or bailor is entitled to terminate the lawful possession of a person under a contract or bailment.
A ship is a chattel,1 albeit not like an ordinary chattel.2 That is because a working ship is a commercial enterprise, that can be a peripatetic home and workplace for her crew. The sale of, and transfer of title to, ships are subject to a mix of customary and statute law. In Australia, the United Kingdom and other common law jurisdictions, ships are goods within the meaning of statutes3 and entries evidencing (but not determinative of) title to a ship can be recorded under statutes.4
* KC; formerly a Judge of the Federal Court of Australia from 2006 to 2023 and currently an arbitrator, mediator and Adjunct Professor at the University of New South Wales Faculty of Law and Justice. The author thanks Scarlett de Vine, his research assistant, for her assistance in the preparation of this paper. Any errors are the author’s alone. This is a revised version of the 2024 Richard Cooper Memorial Lecture presented in Brisbane on 17 October 2024, hosted by the University of Queensland and the Federal Court of Australia.
1. Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) [2005] FCAFC 68; 143 FCR 43, 76 [129] (Ryan and Allsop JJ).
2. Hooper v Gumm (1867) LR 2 Ch App 282, 290 (Turner LJ); ASP Ship Management Pty Ltd v Administrative Appeals Tribunal [2006] FCAFC 23; 149 FCR 261, 285-286 [98] (Black CJ, Emmett and Allsop JJ).
3. Such as the Sale of Goods Act 1923 (NSW).
4. Such as the Shipping Registration Act 1981 (Cth) and its analogues; Mentink v Registrar of the Australian Register of Ships (2015) 234 FCR 458, 471–472 [52–55] (Rares, Logan and McKerracher JJ); Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) [2005] FCAFC 68; 143 FCR 43, 81 [152].
268