Charterers of a ship sought relief from forfeiture of the charterparty on equitable grounds.
Held: No jurisdiction existed to grant such a relief. In a commercial agreement between commercial parties, the court had no jurisdiction to relieve a party of the consequences of failure to pay or duly to perform some other contractual obligation.
Robert Goff LJ said that ‘It is of the utmost importance in commercial transactions that, if any particular event occurs which may affect the parties’ respective rights under a commercial contract, they should know where they stand. The court should so far as possible desist from placing obstacles in the way of either party ascertaining his legal position, if necessary with the aid of advice from a qualified lawyer, because it may be commercially desirable for action to be taken without delay, action which may be irrevocable and which may have far reaching consequences. It is for this reason, of course, that the English courts have time and again asserted the need for certainty in commercial transactions – for the simple reason that parties to such transactions are entitled to know where they stand, and to act accordingly. In particular, when a ship owner becomes entitled under the terms of his contract, to withdraw a ship from the service of a time charterer, he may well wish to act swiftly and irrevocably. True, his problem may, in a particular case, prove to be capable of solution by entering into a without prejudice agreement with the original time charterer, under which the rate of hire will be made to depend upon a decision, by arbitrators or by a court, whether he was in law entitled to determine the charter. But this is not always possible. He may wish to refix his ship elsewhere as soon as possible, to take advantage of a favourable market. It is no answer to this difficulty that the ship may have cargo aboard at the time, so that her services cannot immediately be made available to another charterer’
Robert Goff LJ continued: ‘For one thing, the ship may not have cargo on board, and for another she can be refixed immediately under a charter to commence at the end of her laden voyage. Nor is it an answer that the parties can immediately apply to arbitrators, or to a court, for a decision, and that both maritime arbitrators and the Commercial Court in this country are prepared to act very quickly at very short notice. For, quite apart from the fact that some delay is inherent in any legal process, if the question to be decided is whether the tribunal is to grant equitable relief, investigation of the relevant circumstances, and the collection of evidence for that purpose, cannot ordinarily be carried out in a very short period of time.’ and ‘The policy which favours certainty in commercial transactions is so antipathetic to the form of equitable intervention invoked by the charterers in the present case that we do not think it would be right to extend the jurisdiction to relieve charterers from the consequences of withdrawal. We consider that the mere existence of such a jurisdiction would constitute an undesirable fetter upon the exercise by parties of their contractual rights under a commercial transaction of this kind. It is not enough to say it will only be exercised in rare cases. For the mere possibility that it may be exercised can produce uncertainty, disputes and litigation, and so prevent parties from knowing where they stand, particularly as the jurisdiction, if available, would be discretionary and there may be doubt whether it could be successfully invoked in any particular case.
For these reasons we hold that we have no equitable jurisdiction to grant equitable relief of the kind asked for by the charterers.’
Judges:
Robert Goff LJ
Citations:
[1983] QB 529
Jurisdiction:
England and Wales
Cited by:
Affirmed – Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) HL 1983
The House considered giving relief from forfeiture where an owner had justifiably withdrawn his vessel in accordance with the terms of the charter.
Held: A withdrawal clause under a time charter, exercised on the ground of the charterer’s . .
Cited – Golden Strait Corporation v Nippon Yusen Kubishka Kaisha (‘The Golden Victory’) HL 28-Mar-2007
The claimant sought damages for repudiation of a charterparty. The charterpary had been intended to continue until 2005. The charterer repudiated the contract and that repudiation was accepted, but before the arbitrator could set his award, the Iraq . .
Lists of cited by and citing cases may be incomplete.
Damages, Contract
Updated: 08 April 2022; Ref: scu.252492