10/09/2025
Bareboat charters, indemnities and sanctions: Commercial Court hands down judgment in Ceto v Savory
In a judgment handed down on 31 July 2025 by Cockerill J ([2025] EWHC 2033 (Comm)), the Commercial Court held that the defendant, Savory, was under no obligation to transfer to Ceto title in the vessel under charter (or the proceeds of its sale in Singapore) at or after the expiry of a long-term bareboat charterparty.
The judgment contains analysis covering the construction of clause 10 of the Barecon form, the scope of the contractual indemnities, contractual termination clauses, and the factual circumstances in which a Master can refuse to perform a voyage order on the basis of a belief that complying with an order might expose the vessel to sanctions.
Oliver Caplin KC and Eliza Bond acted for the successful defendant, Savory, at the six-day trial in May earlier this year, and in various interlocutory applications over the last 2 years.
Background
The case concerns the bareboat charter of the m/v Victor 1. Under the terms of the charter, title was intended to transfer automatically from Savory to Ceto at the expiry of the charter if and only if Ceto had paid: (1) all hire due under the charter (which was to stand as the purchase price for the vessel), (2) any other sums due under the charter, and (3) all management fees and any other sums due under a management agreement with a company called Delfi SA.
Savory argued that neither condition 2 nor 3 had been fulfilled. As a result, it said it was entitled to keep the vessel (or the proceeds of its sale), despite Ceto having satisfied condition 1. Mrs Justice Cockerill accepted both of Savory’s arguments and the consequence, that it retained title to the vessel / the proceeds of its sale.
The decision
Regarding condition 2, the court held that there were sums due under the charter pursuant to a bespoke contractual indemnity, and that the indemnity was wide enough to cover in rem claims asserted against the vessel.
For condition 3, the court held that there were sums due under the management agreement with Delfi SA, because:
- Ceto was not entitled to terminate on account of the Master’s refusal to perform a particular fixture known as the ‘Imperium Charter’, which would have required the vessel to carry Iranian origin gasoline to Venezuela (contrary to the OFAC sanctions regime applicable to both countries at the time); and
- Ceto’s purported termination of the management agreement on account of issues relating to the vessel’s insurance was ineffective.
Neither of the conditions being satisfied, the obligation to transfer never arose, and could not be resurrected now by a belated payment from Ceto at this point (years after the charter had expired).
Oliver Caplin KC and Eliza Bond appeared for Savory, instructed by John Hicks and Sofia Xylouri of Waterson Hicks.
