Right of affirmation in a charterparty context under English law : The Aquafaith

The shipping market is characterized by high fluctuation range and obvious periodicity, which affects not only the fleet planning of shipowners but also the charterers ability to meet their obligations. When the market falls substantially, the charterer might not be able to meet hire payments out of earnings on the employment of the vessel. Often the charterer will write to the owner, seeking reduction in agreed rates. The shipowner may in turn persist on the fulfillment of the original contract. The charterer may respond by attempting to negotiate a lower rate in exchange for a longer duration, etc. If the worst comes to the worst, the charterer may redeliver the vessel early, in breach of contract. Another scenario is a ”plain” premature redelivery of the vessel, without connection to a market downturn, i.e. one month prior to the expiry of the charterparty. In both situations, the shipowner and the charterer will be interested in grasping their legal position – what are the legal consequences of such repudiation and what rights and obligations does such breach confer on them. The question of primary concern is whether the shipowner has the right to reject the charterer´s repudiation and affirm the contract. If the answer is negative, the shipowner is obliged to take the possession of the ship and his only remedy will be a claim for damages with the corresponding duty to mitigate. In practice, a considerable level of uncertainty, in respect of the shipowner´s right to affirm the contract, has led to a prevalent policy of accepting repudiation with a consequent claim for damages, even in situations where the charterer was not insolvent. That way, owners avoid potential significant losses which could arise should the shipowner wrongly interpreted his legal position, affirmed and performed the contract, and subsequently learned from arbitrator´s/court´s decision that he was only entitled to a claim in damages. Early delivery can be considered as a nearly eternal problem in the context of the charter-party relationship. It has a reappearing tendency on the agenda of maritime lawyers, defence clubs and defence departments of P&I clubs. Also, shipowners and charterers are very much interested in the accurate assessment of their negotiating and settlement position. Even though, the right of affirmation within a charterparty relationship was in England and internationally subject to a considerable interest during the years, there was to my knowledge no publication specifically devoted to a systematic research of the topic. The thesis should be therefore considered as an attempt to fill this gap.