Songa Product and Chemical Tankers III AS v Kairos Shipping II LLC

Clause 29 of the BIMCO Barecon 2001 form does not give owners an unrestricted right to nominate a distant place that suits them for repossession. Read with clause 28 and as a whole, it requires owners to repossess at the vessel’s current port, or next port if at sea, as soon as reasonably practicable. A port or place convenient to the owners is a fallback where the current or next port is impracticable or impossible for prompt repossession. Any obligation on former charterers, who hold the vessel as gratuitous bailees pending repossession, to sail elsewhere must be strictly confined to what is necessary to enable prompt repossession. The regime must not be construed on an assumption that charterer default is more likely or that the standard form should be interpreted in the owners’ favour.

The appeal arose from a point-of-law appeal under section 69 of the Arbitration Act 1996 concerning a partial final award by an LMAA tribunal. Following an insolvency-related termination of a bareboat charter, the charterers offered the vessel for repossession at Stockton, California. The owners required it to sail to Trogir, Croatia, where they had a yard and personnel.

The tribunal held that Trogir was objectively convenient to the owners and awarded the charterers only limited care and voyage costs. The High Court, in [2024] EWHC 3452 (Comm), allowed the charterers’ appeal, held that clause 29 required prompt repossession at Stockton where practicable, and remitted the award. The owners appealed. The central issue was whether clause 29 gave the owners a broad choice of a convenient place or made the current or next port the default location subject to practical exceptions.

Lord Justice Phillips gave the leading judgment. Lord Justice Nugee and Lady Justice King agreed. The appeal was dismissed, leaving in place the High Court’s construction of clause 29 and its remittal of the award.

1. Single repossession regime. Clauses 28 and 29 operate together as one regime. It applies whether termination follows default by the charterers, default by the owners, insolvency, or loss of the vessel. The court rejected construction by reference to an assumption that charterer default was more likely or that clause 29 was intended generally to favour owners.
2. Prompt repossession. On termination, the vessel is no longer at the charterers’ disposal and the charterers’ operating, maintaining, insuring and indemnifying obligations cease. The owners therefore have a legal and commercial imperative to repossess at the first opportunity. The charterers’ interim role as gratuitous bailees, with a minimum duty to care for the vessel, is the quid pro quo for the owners’ obligation to board as soon as reasonably practicable.
3. Meaning of convenient place. The reference to the vessel’s current or next port is not a menu of locations from which the owners may freely choose. It reflects the vessel’s location on termination, or its next port if it is at sea. The words convenient to them operate as a fallback where the current or next port is impracticable or impossible for prompt repossession. The first and third sentences of clause 29 must be read together as a coherent scheme.
4. Implied sailing obligation. Clause 29 does not impose a broad obligation on charterers to sail from a safe and accessible current port to a distant port nominated by the owners. Any implied duty to sail must be strictly limited to what is necessary to enable the owners to exercise their right and fulfil their duty to repossess as soon as reasonably practicable. The Court applied the objective, whole-contract approach to contractual interpretation, including the iterative assessment of competing constructions described in [2017] UKSC 24.
5. Application. Stockton was the vessel’s current port. The tribunal had found that it was reasonably practicable for an owners’ representative to board there. Requiring a voyage of up to two months to Trogir therefore breached clause 29. The High Court’s order remitting the award stood.

• Court of Appeal (Civil Division): In [2025] EWCA Civ 1227, dismissed the owners’ appeal and upheld the High Court’s construction of clause 29.
• High Court, Commercial Court: In [2024] EWHC 3452 (Comm), allowed the charterers’ appeal under section 69 of the Arbitration Act 1996 and remitted the partial final award to the tribunal.
• LMAA arbitral tribunal: By a Partial Final Award dated 26 March 2024, corrected on 19 April 2024, held that the charterers validly terminated the charter but that Trogir was a place objectively convenient to the owners for repossession.