Ship Withdrawal

Ship Withdrawal

The shipowner is not normally entitled to withdraw the ship from the service of the charterer under any circumstances, unless the charterer has breached the charter party contract to such an extent that it amounts to a repudiation of the contract.

Therefore, the charterer’s inability to pay hire on time will not amount to a breach of repudiatory character, but it could become just that if the charterer shows unwillingness and inability to pay even at a later date any overdue hire payment.

It is important that the owners indicate quite clearly and in no uncertain terms that an ultimatum is presented, after the expiry of which they will withdraw the vessel from the charterer’s service.

In The Brimnes (1974) both the high court and the court of appeal held that late payment of hire was not of itself repudiatory, entitling the owners, in the absence of a withdrawal provision, to terminate the charter.

In order to justify a decision that the charterers’ conduct was repudiatory, it would be necessary to find that they evinced clearly by that conduct an intention not to be bound by the terms of the contract. The owners for evident operational reasons are prepared to insist on timely and punctual payment of hire and usually do so by inserting express provisions into time charters that give them a right to withdraw the vessel bypassing the common law rule. These provisions are called Withdrawal Clauses. Withdrawal provisions are incorporated in standard forms of time charter parties such as NYPE 93, BPTIME3, and SHELLTIME4.