Lloyd's Maritime and Commercial Law Quarterly
Bareboat charterers and third parties
AM Tettenborn*
This article deals with two awkward problems of bareboat charters: (1) if a head charter is cancelled or falls away, does this necessarily affect any sub-charter of the same vessel? and (2) if the owner of a vessel under bareboat charter sells her over the head of the charterer, can the latter enforce its rights against the buyer? It is argued that, on a fairly straightforward common law analysis, the answer to (1) is No and to (2) is Yes. The possible further relevance of equitable doctrines is then discussed, before concluding that they have some, but only fairly peripheral, importance.
I. INTRODUCTION
In the 2024 case of SY Roro 1 Pte Ltd v Onorato Armatori Srl
1 Sir William Blair faced, but did not in the end have to answer, a question of principle whose solution remains surprisingly obscure. How far can the bareboat charterer of a vessel assert its rights against third parties other than the person from whom it took the charter? This is an issue that matters a lot, even if not extensively covered in the books.2 Depending on the state of the market, a bareboat charter can be a very valuable asset; furthermore, the sudden cancellation of such a charter, coupled with a demand for immediate return of the vessel, if lawful, can cause havoc with contracts of carriage and other arrangements already made.3
This article is an attempt to answer this question. It will be divided into two main parts, reflecting the fact that that the issue can arise in two ways. The first is where a sub-charterer seeks to oppose its rights to those of the ultimate owner: for example, where the latter claims either that the sub-charter was unauthorised or that the head charter has been terminated. The second is where the rights of a transferee are involved: for instance, where a vessel is sold by the owner over the head of the charterer, and the latter then wishes to assert its rights against the new owner.
* Professor of Commercial Law, Swansea University.
1. [2024] EWHC 611 (Comm); [2024] 2 Lloyd’s Rep 446. For further proceedings, see [2024] EWHC 1283 (Comm).
2. M Davis, Bareboat Charters, 2nd edn (London, 2005) is the leading work. The issues in this article are not dealt with in any detail, though the effect of a sale by the owner on the charterer’s rights is touched on briefly in one paragraph ([22.19]).
3. Especially since, if the demand for return is indeed lawful, the claimant need not generally be concerned with its possibly catastrophic effect on charterers, cargo owners and others in contractual relations with the owner. Cf the mortgage case Den Norske Bank ASA v Acemex Management Co Ltd (The Tropical Reefer) [2003] EWCA Civ 1559; [2004] 1 Lloyd’s Rep 1.
Bareboat charterers and third parties
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