Clifford Chance

Grand China – contractual termination rights and remedies at law for breach

31 May 2017

In the landmark decision of Grand China vs. Spar Shipping, the Court of Appeal confirmed that, in the absence of an express term, a charterer's failure to pay hire punctually is not a breach of a condition (which would entitle the shipowner at law to terminate the charterparty, withdraw the vessel and claim loss of bargain damages).  Further, a contractual termination right exercisable upon such non-payment will not alter this conclusion, without more.  The decision raises important considerations for shipowners and for other parties involved in asset lease financings.

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