In March 2025, the Arbitrazh Court of Primorsky Krai (Russia) considered the case on the claim of OOO Rassvet (Owner) against OOO Belrybflot (Charterer) on the recovery of a fine in the amount of 10 million Roubles for breach of representations of circumstances and on a counterclaim in the amount of 14 million Roubles - a debt for freight under a bareboat charter agreement.
Facts of the case:
In September 2021, a bareboat charter agreement was entered into between the parties for the fishing vessel Akteon (Vessel).
The Vessel was transferred to the Charterer, and the Charterer was to pay freight for the use of the Vessel from the date the Vessel went to sea.
The Charterer was offered to ensure the Vessel was surveyed and seaworthy, i.e. the Vessel was not seaworthy on the date of the contract.
The freight rate was set at 300,000 Roubles per month. In 2022, the freight rate increased to 500,000 Roubles per month.
The parties further agreed that the freight rate would be reduced to the original amount if the Owner paid 50% of the costs of the annual survey of the Vessel. In this case, the Owner would receive 50% of the Charterer's profit from fishing.
The parties also agreed:
- that the Vessel is free from the rights of third parties, and in case of non-compliance with this clause, the Owner shall pay the Charterer a fine in the amount of 10 million Roubles,
- that the Charterer provides representations on the circumstances that there are no current legal disputes in relation to the vessel in the amount of more than 150 thousand Roubles; in case of non-compliance with this clause, the Owner shall reimburse the Charterer for the investment in the Vessel.
In the course carrying out of the contract, it became clear that there were legal proceedings against the Vessel, and the Charterer claimed that the Owner pay damages and a fine in the amount of 10 million Roubles.
In turn, the Owner calculated the freight based on a rate of 500,000 Roubles and claimed debt for 28 months in the amount of 14 million Roubles.
The Court's decision and reasons:
The Court rejected the claim and counterclaim.
The court rejected the original claim and explained that the representations of circumstances shall be valid on the date of their issue. The legal claims against the Vessel arose after the conclusion of the bareboat charter agreement and the issuance of the representations.
The Court rejected the counterclaim and explained that the Vessel was not operated for the entire period of the contract. The calculation of freight was related to the Vessel's departure to sea, and paying freight for an unseaworthy Vessel does not make economic sense. The Court invalidated the clauses on calculating freight for an unseaworthy Vessel and considered the actions of the Owner to be unfair.
The principle of estoppel was also applied in the case, establishing the obligation of participants in civil transactions to act consistently, in good faith and to avoid actions that contradict previous behavior relied on by other persons. In particular, the Owner did not claim freight payments until the litigation arose, therefore, the Owner believed that freight would be calculated after the Vessel went to sea.
Source: case No. A51-7594/2024
Facts of the case:
In September 2021, a bareboat charter agreement was entered into between the parties for the fishing vessel Akteon (Vessel).
The Vessel was transferred to the Charterer, and the Charterer was to pay freight for the use of the Vessel from the date the Vessel went to sea.
The Charterer was offered to ensure the Vessel was surveyed and seaworthy, i.e. the Vessel was not seaworthy on the date of the contract.
The freight rate was set at 300,000 Roubles per month. In 2022, the freight rate increased to 500,000 Roubles per month.
The parties further agreed that the freight rate would be reduced to the original amount if the Owner paid 50% of the costs of the annual survey of the Vessel. In this case, the Owner would receive 50% of the Charterer's profit from fishing.
The parties also agreed:
- that the Vessel is free from the rights of third parties, and in case of non-compliance with this clause, the Owner shall pay the Charterer a fine in the amount of 10 million Roubles,
- that the Charterer provides representations on the circumstances that there are no current legal disputes in relation to the vessel in the amount of more than 150 thousand Roubles; in case of non-compliance with this clause, the Owner shall reimburse the Charterer for the investment in the Vessel.
In the course carrying out of the contract, it became clear that there were legal proceedings against the Vessel, and the Charterer claimed that the Owner pay damages and a fine in the amount of 10 million Roubles.
In turn, the Owner calculated the freight based on a rate of 500,000 Roubles and claimed debt for 28 months in the amount of 14 million Roubles.
The Court's decision and reasons:
The Court rejected the claim and counterclaim.
The court rejected the original claim and explained that the representations of circumstances shall be valid on the date of their issue. The legal claims against the Vessel arose after the conclusion of the bareboat charter agreement and the issuance of the representations.
The Court rejected the counterclaim and explained that the Vessel was not operated for the entire period of the contract. The calculation of freight was related to the Vessel's departure to sea, and paying freight for an unseaworthy Vessel does not make economic sense. The Court invalidated the clauses on calculating freight for an unseaworthy Vessel and considered the actions of the Owner to be unfair.
The principle of estoppel was also applied in the case, establishing the obligation of participants in civil transactions to act consistently, in good faith and to avoid actions that contradict previous behavior relied on by other persons. In particular, the Owner did not claim freight payments until the litigation arose, therefore, the Owner believed that freight would be calculated after the Vessel went to sea.
Source: case No. A51-7594/2024