NYPE 2015. New rights for owners against defaulting charterers.

On 15 October 2015 BIMCO released their 2015 revision to the NYPE form. It contains the following provisions which will improve owners’ position against defaulting charterers.

Clause 11 dealing with withdrawal has been amended as follows.

  • The grace period no longer refers to ‘oversight, negligence, errors or omissions on the part of the charterers or their bankers’ and now refers simply to a failure to make punctual payment of hire due.
  • Owners are now given a right to damages, if they withdraw the Vessel, for the loss of the remainder of the Charter Party. There are currently two conflicting first instance decisions as to whether owners can claim damages for the loss of the remainder of the charter following the exercise of their right to withdraw. In 2013 in The Astra [2013] EWHC 865 (Comm); [2013] 2 Lloyd’s Rep. 69, Flaux J held that there was such a right as the obligation to make punctual payment of hire was a condition, but in 2015 in Spar Shipping v Grand China Logistics v Spar Shipping [2015] EWHC 718 (Comm), [2015] 2 Lloyd’s Rep. 407 Popplewell J held that there was no such right, as hire was not a condition. The new clause makes it clear that owners do have such a right.
  • The right of owners to suspend performance of their obligations under the charter has been extended. This was first introduced in NYPE 1993 and was not a right which owners would otherwise have, as seen in The Agios Georgis [1976] 2 Lloyd’s Rep. 192. Under NYPE 1993 the right of suspension operated after the expiry of the grace period for as long as hire was outstanding. Hire would continue to run during this period and charterers were to indemnify owners for any consequences resulting from the owners’ suspension of performance, and to pay for any extra expenses resulting from the suspension. NYPE 2015 now provides that the owners’ right of suspension now exists ‘at any time while hire is outstanding’ and deletes the reference to the expiry of the grace period.

Clause 23 dealing with liens has been amended so as to create a lien on sub-hires and sub-freights due to any sub-charterers. This is in accordance with the interpretation of the effect of a lien on sub-freights in cases such as The Cebu [1983] 1 Lloyd’s Rep 302, QB, and The Western Moscow [2012] EWHC 1224 (Comm); [2012] 2 Lloyd’s Rep. The lien on sub-freights and or sub-hires is also extended to deadfreight and demurrage.

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