Breach of contract is not a reason to reimburse the excess: Interlegal law team defended the grain trader’s interests against the shipowner’s excessive claims
16 September, 2025
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A Client – grain trader who chartered a vessel to transporting minimum 3,000 MT of cargo from Turkey to Ukraine – recently applied to Interlegal. In the process of contract performance, the Client faced a problem, namely: the Shipper refused to accept the vessel, since it found out that previously such vessel called at the Syrian port. As a result, the Charterer had to cancel the Charter Party. In response, the Shipowner applied to arbitration on loss recovery on aggregate amount exceeding 120,000 USD.
According to terms and conditions of the Charter Party itself, Charterers have the right to cancel C/P without any claims if vessel called to port of Syria, Russian Federation or Crimea to load or discharge any cargo. However, our Client was sure that it could cancel the Charter Party based on such provision without any legal effects.
Unfortunately, the fact of vessel’s call at the Syrian port was not proved. In defense, the Shipowner stated that the vessel just passed by, while MarineTraffic allegedly fixed that fact. Due to absence of proper evidence of vessel call to port for loading or discharging, the Charterer was unable to refer to the relevant clause as grounds for legitimate cancelling the Charter Party.
Interlegal’s task was to mitigate the Client’s losses and to settle the dispute in the fairest and most profitable way for both parties.
Having analyzed the situation in detail, Interlegal lawyers found out that, although cancellation of the Charter Party after the vessel’s arrival within the agreed laycan is in fact treated as unlawful under the English law incorporated in the Charter Party, the Shipowner’s claimed amount was mostly groundless, since claimed losses included not only freight difference, but also PDA, expenses for vessel passage from the previous to the nominated port, detention, etc.
Based on results of claims handling held by our law team, the parties entered into amicable agreement, whereunder our Client reimbursed only one third of the initially claimed losses, while the Shipowner, in turn, withdrew the initiated arbitration proceedings, which was time- and cost-saving for both parties.
Based on this case, we may provide several recommendations for the parties involved in maritime carriages:
1. Attentive study of the Charter Party terms.
Special charter clauses incorporated in the contract should be maximum clear, detailed and adapted to a certain situation, current risks and specifications of relationship between the parties. Generalized and vague formulations will probably cause their contestation at the arbitration court, jointly with the need to properly confirm the facts, which is not always possible.
2. Due diligence of the vessel and counterparties.
The most reliable way to avoid undesirable situations is to check in advance history of the vessel, status and reputation of counterparties, even before signing the Charter Party. In particular, such verification is part of the standard procedures of due diligence carried out before signing the agreement. Speaking about the vessel, it includes analysis of previous port calls, ownership and management structures, sanctions lists and blacklists concerning the vessel herself and related companies/persons. Based on the results of due diligence, expert’s opinion shall be formed, indicating the current risks and recommendations for safe operations and helping to make well-founded commercial decisions.
3. Legal instruments to be used for mitigation of losses.
Even if you have in fact violated the agreement, the claim against you is not always feasible. When applying to arbitration courts, claimants often unjustifiably overstate the amount of desired reimbursement – sometimes deliberately and within the procedural strategy, sometimes due to their failure to know or to understand principles of international commercial law. In most cases (though not always) experienced lawyers can reduce amounts claimed by your opponent and mitigate your losses.
Interlegal law team always works to prevent risks, in order to facilitate our Clients’ maximum protection against potential obstacles, starting from the stage of entry into the Charter Party. If you face obstacles and arbitration proceedings are initiated, we will help you settle the dispute with minimum expenses.
Interlegal lawyer Diana Mykhailova and managing associate Taras Dragan, managed by partner Karyna Gorova, led the case.
