Termination — Kuwait Rocks Co v AMN Bulkcarriers Inc; The Astra

By Clare Kempkens

Those who attended any of our recent Smart Contracting seminars will be familiar with Flaux J’s decision in Kuwait Rocks Co v AMN Bulkcarriers Inc; The Astra [2013] EWHC 865 (Comm), in which a failure to pay hire was accorded the status of a breach of condition, entitling an owner to terminate the charter and claim damages for loss of future earnings.

As discussed below, the decision ran counter to the market’s previous understanding, but it was not appealed. It remains to be seen whether Flaux J’s approach will be approved by the higher courts in some future case, and indeed how arbitrators and courts of first instance will respond to it.

The actual terms of the particular contract will of course be pivotal. The Astra decision was on a NYPE 1946 form time charter, and the charterer’s obligation for ‘punctual and regular payment of hire’ was an essential component of the decision. Other standard forms, such as Supplytime 2005, which provide for payment of interest if hire is paid late and provide a mechanism allowing the contract to be terminated for non-payment of hire, may reduce the impact of The Astra. However, both charterers and owners would be well advised to review any amendments to payment terms with The Astra in mind…

Click on the link below to read the rest of the Ince & Co briefing.

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