Time Charterparty
Withdrawal as equivalent to cancellation
There cannot be a partial withdrawal of the owners’ vessel and neither any temporarily suspension of the timecharter can take place. Withdrawal is irrevocable and therefore operates only in one way: in way of cancellation of charterparty.
Although when Lord Tenterden first wrote his famous text-book on Shipping it was not the practice to provide for hire to be paid in advance and for time charterers to grant an express right of withdrawal on non-payment of such advance payments. these provisions have been common form in time charters in this country and the United States for generations. I think there is much weight in Mr. Pollock’s argument that if the word "withdrawal" bore the construction sought to be placed upon it by Mr. Hallgarten so as to include temporary withdrawal or suspension, this would inevitably have come up for decision in the Courts before now. The Courts seem to have treated the word "withdrawal" as equivalent to "cancellation", an interpretation which, if I may say so with respect, seems to me the natural one.
Per Mocatta J in The Agios Giorgis [1976] 2 Lloyd’s Rep 192.
Commercial cases examining operation of withdrawal option in timecharter contracts represent vivid examples of owners’ persistent efforts to get rid of economically disadvantageous charterparty on raising market. Pure mercantile background of these disputes was underlined by Lord Hailsham of St.Maylebone, L.C. in Afovos Shipping Co SA v R Pagnan & Fratelli (The Afovos) [1983] 1 Lloyd’s Rep. 335 at p.340 as below:
I have only to add that [withdrawal] option … is not one which the owner is bound to exercise. On the contrary, if the market charge for hire had moved the other way, it seems to me extremely unlikely that he would have wished to do so.
Since the lawful cancellation itself was usually a matter legally pursued by the owners, there was seldom any claim for damages. The question of damages flows directly from the matter of classification of the breach and it is yet to be decided. But what is clear beyond much doubt is that the owners can certainly recover all outstanding hire accrued by the moment of withdrawal. It is remains to be seen what legal issues can eventually come up if or when withdrawal provision will be triggered by the repudiatory breach.
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