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'''SPAR SHIPPING AS v GRAND CHINA LOGISTICS HOLDING (GROUP) CO LTD (THE “SPAR CAPELLA”, “SPAR VEGA” AND “SPAR DRACO”)'''

Michael Coburn QC and Josephine Davies, instructed by Holman Fenwick Willan LLP, for the appellant/defendant/charterers

Gross LJ affirmed Popplewell J’s decision that the Charterers’ failure to pay hire amounted to a renunciation. First, Gross LJ noted that the contractual benefit to which the Owners were entitled was the regular, periodical advance payment of hire as stipulated in the Charterparties. Second, Gross LJ agreed that a reasonable owner, in the position of the Owners, could have no realistic expectation that the Charterers would in the future pay hire punctually in advance. Third, he held that this would go to the root of the Charterparties, because payment in advance is of paramount importance in time charterparties.

The Court of Appeal’s decision should be welcomed in that it settled the two conflicting first instance decisions, that of Flaux J in The Astra and that of Popplewell J in the instant case. The detailed analysis on the Condition Issue is particularly helpful, since the appeal could have been decided on the Renunciation Issue alone. The duty to pay hire in a time charterparty is now authoritatively classified as an innominate term. For shipowners who intend to make charterers’ duty to pay hire a condition, they should adopt Clause 11 of NPYE 2015 form and expressly state the consequence of late payment as conferring on shipowners the right both to terminate the charterparty and to claim damages for loss of bargain.