Interlegal lawyers settled the dispute upon unpaid hire under the Time Charter

Quickly, professionally and with respect for all the Client’s interests – this is how the dispute upon unpaid hire for the last validity period of the Time Charter in the amount exceeding 500,000 USD was settled.

A dispute arose between the Shipowner and the Charterer regarding the Charterer’s rejection to pay hire for the last period of the vessel Time Charter. Due to the Master’s inaccurate information about berthing time, the vessel had no time to call the sea port within the stipulated term, while due to dense queue for vessel call, mooring and unloading were delayed for almost half a month. Therefore, the Time Charter validity term was automatically extended. However, the Charterer, referring to the Master’s negligence, took the position that the Time Charter term from the moment of cancelling the vessel’s arrival at the sea port until complete termination of the vessel’s chartering shall be treated as off-hire period and shall not be payable by the Charterer.

Due to the Charterer’s reluctance to pay hire, the Shipowner held the cargo in lien, but the Parties still could not reach a compromise.

At the first stage, defending the Client’s position (who acted as the Shipowner), Interlegal law team conducted the Claims Handling procedure. In order to avoid unforeseen damages and costs for additional berthing of the Vessel with cargo on board, the Parties entered into an Escrow Agreement, whereunder the Charterers paid hire for the disputed period in total amount of 550,000 USD.

Although the cargo was discharged, the Parties still disputed upon the amount payable to the Shipowner from the escrow account. Due to the Charterer’s reluctance to comply with such a term, the Shipowner had to initiate arbitration proceedings in London.

At the second stage, Interlegal lawyers appointed LMAA arbitrators and drafted the corresponding lawsuit, thoroughly justifying the Shipowner’s position. Therefore, Interlegal experts nevertheless managed to convince the Charterer in weakness of their arguments and in absence of any grounds for non-payment of hire.

As per the Charter Party, as well as in accordance with general principles of the English law regarding Time Charters, the Charterer shall be solely liable for giving orders and instructions regarding the vessel hiring, her operation and agency services, while non-payment of hire shall be treated as a serious breach of the Charter Party, which allows the Shipowner to use all available means of legal defense of their interests.

Having understood high risks of losing the arbitration proceedings and incurring even greater costs due to LMAA proceedings, the Charterer agreed with the Shipowner on amicable settlement of the dispute.

At the third and final stage, Interlegal lawyers drafted a Settlement Agreement aimed to reach a compromise and to settle the dispute, preserving good business relations between the Parties, followed by closing the arbitration proceedings.

Therefore, a well-thought-out strategy, confidence in negotiations and professionalism in direct work performance enabled our Client to settle the dispute amicably, to receive a significant amount of hire, to avoid unnecessary expenses, while the lawyers fully adhered to principality of its position.

Interlegal English law team – associate attorney Mykola Kozachenko, lawyer Ganna Domuschi and junior lawyer Diana Mykhailova – led the project Alexey Remeslo