Valid termination of a bareboat charter ends the charterer’s status before physical repossession, Supreme Court rules; vessel arrest vacated

The Appellant was the registered owner of M.V. Nereus Progress, which had been let to Nereides Marine Services (“Nereides”) under a BIMCO BARECON 2017 bareboat charterparty dated 03.10.2024. Following persistent non-payment of hire, the Appellant issued demand notices, an anti-technicality notice, and, after expiry of the contractual cure period, a Termination Notice dated 13.11.2025 under Clause 31(a)(i), followed by a repossession notice dated 19.11.2025 under Clause 32.

The Respondent, a creditor of Nereides under a separate charterparty concerning M.V. Bharadwaj, obtained an ex parte order on 04.12.2025 arresting Nereus Progress under Sections 5(1)(b) and 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, alleging that Nereides continued to be the vessel’s demise charterer. The High Court sustained the arrest, holding that the demise charterer’s status ordinarily continued until physical repossession. The registered owner appealed to the Supreme Court.

Whether the Appellant’s termination of the bareboat charterparty by the Termination Notice dated 13.11.2025 was proper and valid.

Whether, despite termination and absence of physical repossession, Nereides continued to be the demise charterer of M.V. Nereus Progress on 04.12.2025, so as to satisfy Sections 5(1)(b) and 5(2) of the Admiralty Act.

Section 5(1)(b) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 permits arrest where the demise charterer liable for the maritime claim was the demise charterer at the time the claim arose and remained either the demise charterer or owner when arrest was effected; Section 5(2) permits sister-ship arrest only subject to the requirements of Section 5(1).

Contractual terms governing termination and repossession must be given their commercial meaning and effect, consistent with the parties’ intention, as recognised in M/s Tomorrowland Ltd. v. HUDCO. Under Clauses 31 and 32 of the BARECON charterparty, valid termination upon default ends the demise charter, while pending physical repossession the charterer holds the vessel only as a gratuitous bailee; repossession is consequently a consequence of termination, not a condition precedent to it.

The Court found that Nereides’ continuing default was established by the unpaid hire, repeated demands, the anti-technicality notice, and the absence of payment within the contractual grace period. The Termination Notice therefore complied with Clause 31(a)(i), and Nereides’ acknowledgment of the notice and undertaking to arrange an orderly handover further supported its validity.

The Court then read Clauses 31 and 32 together. Clause 32 expressly provided that, after early termination and pending physical repossession, Nereides would hold the vessel only as a gratuitous bailee, a status legally inconsistent with that of a demise charterer, who possesses and commercially employs the vessel as owner pro tempore. The Appellant had also acted bona fide and promptly to secure repossession; the delay resulted from the vessel’s movements and Nereides’ conduct, rather than inaction by the Appellant.

The High Court’s judgment was set aside, the arrest of M.V. Nereus Progress was vacated, and the appeal was allowed.