As Skuld Club informs, issues regarding the service of anti-technicality notices and the withdrawal of ships are almost exclusively approached from a shipowners’ perspective. However, these issues are also related to charterers both in terms of contractual rights and the protections afforded charterers when experiencing unreasonable attempts to withdraw.
Skuld notes that the traditional remedy in a charterparty for a time charterer in default of his obligation to pay hire is to withdraw the ship from charterers’ service.
There is no automatic right to withdraw a vessel for late or non-payment of hire, so a charterparty will almost always contain an express clause giving a shipowner the right to withdraw in the event of default
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Nevertheless, due to the serious results of such withdrawal, to protect charterers from unreasonable and/or unjust withdrawal by owners for minimal or inconsequential matters, the contractual right of withdrawal is usually expressed within the constraints of an anti-technicality clause. This clause requires owners to send charterers a prescribed notice which enables charterers a specific additional period to remedy the default and prevent a withdrawal of the vessel. This is crucial as it applies a grace period for payment that aims to protect charterers from forfeiture in cases where they have a reasonable opportunity to rectify inadvertent or unintentional breaches.
What is more, the Club says that charterers should also take into consideration that, due to the strict nature and consequences of a withdrawal of a vessel from service, the English Courts and Tribunals are willing to construe the operation of anti-technicality notices, when ambiguous or uncertain, in a charterers’ favour. Thus, when experiencing the service of an anti-technicality notice, a charterer should consider the following:
Owners are required to serve the anti-technicality notice promptly after the hire is overdue
An anti-technicality notice cannot generally be served by a shipowner until after midnight on the due date for payment. As a result, the owner must serve the notice without delay. If charterers are served with a notice several days after a default, then the notice may be invalid. The acceptable duration of any delay is based on the specific facts, but lack exceptional circumstances, an important delay can be considered a waiver of owners’ right to withdraw, and in fact constitute an affirmation of the charterparty.
Owners are obliged to strictly adhere to the terms of the anti-technicality notice
Charterers should make sure that any anti-technicality notice received, has been served in the correct form. Namely, during a London arbitral decision, an anti-technicality notice supplied for immediate payment of hire to be made in three clear banking days from the date that notice was given. Owners’ however did not calculate correctly the date for withdrawal in the notice. When owners withdrew the ship, the Tribunal decided that owners had not provided the correct contractual notice period, and the notice was invalid. What is more, charterers were entitled to damages from owners for wrongful repudiation of charterparty.
Furthermore, the notice must state clearly that the ship will be withdrawn if the overdue hire is not paid.
A notice received by charterers which simply mentions that owners will exercise their rights under the charterparty without specifically referring to withdrawal, will not be deemed sufficiently clear notice, and will likely be held to be invalid
Skuld explains.
Owners’ previous acceptance of late hire payments may prevent them from withdrawing on the basis of subsequent late payments
If owners have accepted late payments of hire, without protesting or having reservation, then owners may have waived or lost their right to withdraw. Nonetheless, charterers must be careful not to depend on this as an excuse for intentional late payment(s). Courts will take a look at the totality of charterers’ conduct in determining the right to withdraw and are not likely to allow a charterer to use last late payments as justification for a deliberate intention to default on their present hire obligations.
Charterers are entitled to make bona fide deductions from hire
Charterers should also note that an owner does not have the right to withdraw a ship for non-payment of hire if a charterer can prove that the deduction from hire is bona fide and reasonable, despite the fact that the amount which the charterer deducts turns out to have been too much.
Owners’ subsequent conduct may affirm the charterparty
Owners can affirm the charter contract notwithstanding their previously having served a valid anti-technicality notice. Any effort to terminate the charter may be viewed as a repudiation of contract by owners and give the right to charterers to claim damages.
The service of anti-technicality notices and exercising the right to withdraw a vessel can be complicated, and it is incumbent on charterers (not just owners) to be aware of the rights and risks involved. There are many factors that need to be taken into account
Skuld Club concludes.
