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Withdrawal Clause and Notice of Withdrawal


Law and Sea.
Time Charterparty.Withdrawal

In case of non-performance under such contract the common law generally gives to the innocent party only remedies in damages for breach of contract, unless said breach is of repudiatory character. Accordingly, the common law does not treat the late payment of hire by the charterers as a breach of sufficient gravity to give the owners a right to rescind the contract…
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Time Charter, Suspension and Withdrawal
Last updated: 12-Jun-2015

Per Mrs Justice Gloster in Greatship (India) Ltd v Oceanografia SA de CV [2012] EWHC 3468 (Comm) at paras 35-36:

35. … there is a fundamental difference between permanent withdrawal of a vessel, and temporary suspension of service, during the period of which the vessel remains on hire. The right to suspend performance is a "lesser" or "intermediate" right. It is wholly unsurprising that the manner in which such rights are to be exercised are different. I see no reason why it should be regarded as uncommercial to give the owner the right to suspend performance immediately when the charterer fails to pay, on the due date, hire, bunkers or other obligations, in clear breach of the charterparty. It is for the charterer to ensure that the owners receive payment by the due date. I see no commercial reason why owners should be potentially obliged to provide the services of the vessel without payment for a period of seven to eight days (i.e. because of intervening weekends) before any notice of suspension became effective for the purpose of Part [4], in circumstances where the Charterers have failed to honour their payment obligations. On the Arbitrators' approach, if payment is not made, Owners would be powerless to prevent the loading of cargo during the five day notice period and then be effectively unable to withdraw the vessel because of the presence of cargo.

36. There is every commercial reason for a difference between the triggers permitting the exercise of the right to withdraw, and the exercise of the right to suspend services. Since permanent withdrawal cannot be contractually remedied by charterers after the vessel has been withdrawn, there is every commercial justification for the requirement that owners must give five banking days notice before their right to withdraw can be exercised. By contrast, the suspension of performance is temporary, can easily be remedied by the payment of hire (which charterers are bound to pay) and, therefore, there is no need to give five banking days notice prior to suspension. The consequences of the exercise of the respective rights are, therefore, of a different order and this is reflected by the different pre-conditions for the exercise of owners' respective rights.


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