Termination notice alone may not defeat an in rem claim where possession and control remain disputed
The Case
The Madras High Court’s decision in Owners and Parties Interested in M.V. Nereus Progress v Om Freight Forwarders Limited, O.S.A.(CAD) No.41 of 2026, pronounced on 30 April 2026, is an important development in Indian admiralty law. The Division Bench considered whether a bareboat or demise charterer ceases to be the demise charterer merely upon contractual termination of the charterparty, or whether physical re-delivery and repossession of the vessel are necessary before that status can be said to have come to an end.
The decision is significant for shipowners, bareboat charterers, P&I Clubs, cargo interests and maritime claimants because it addresses a recurring issue in vessel arrest proceedings: whether an owner can resist or vacate arrest by relying on a termination notice issued before the arrest, even where the charterer arguably continued to retain possession, control or employment of the vessel.
Background
The respondent, Om Freight Forwarders Limited, filed an admiralty suit before the Madras High Court seeking, among other reliefs, arrest and sale of the vessel M.V. Nereus Progress. The respondent asserted a maritime claim for unpaid charter hire under Section 4(1)(h), read with Sections 5(1)(b) and 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.
The claim arose out of alleged dues payable by Nereides Marine Services, UAE. Nereides was the demise charterer of the respondent’s vessel M.V. Bharadwaj. It was also the demise charterer of M.V. Nereus Progress, the vessel which was arrested.
The owners of M.V. Nereus Progress resisted the arrest. Their case was that they had terminated the bareboat charterparty with Nereides on 13 November 2025, before the arrest order was passed on 4 December 2025. On that basis, they argued that Nereides was no longer the demise charterer of the vessel at the date of arrest, and that the statutory foundation for arrest had therefore failed.
The respondent disputed this position. It contended that the alleged termination was not sufficient to end the demise charterer’s status because the vessel had not been physically re-delivered to, or repossessed by, the owners. The respondent also relied upon the conduct of the parties after the alleged termination, including communications suggesting that the charterer continued to assert firm control and employment of the vessel.
The central issue before the Court
The Division Bench identified the core question in clear terms:
“The crucial question to be decided in this appeal is whether a demise charterer of a vessel ceases to be a demise charterer upon termination of the charter party or, Whether physical possession of the vessel is required to be taken by the owner in order for the demise charterer to cease to be the demise charter of the vessel. If it so, what is the overt act required on the part of the owner to show that the owner has actively asserted their right to regain possession of the control of the vessel.” (Judgment, para. 32)
The Court also noted that there was no binding Indian precedent on the precise point:
“There is no binding precedent governing the issue of whether termination of a Bareboat Charterer necessitates physical re-delivery or re-possession, or whether it may be effected solely by issuance of a notice of termination.” (Judgment, para. 34)
This made the judgment particularly important in the Indian context, as vessel arrest applications are often urgent, and courts are required to decide questions of possession, control and security at an interlocutory stage.
Nature of a bareboat charter
The Court’s reasoning turned on the essential character of a bareboat or demise charter.
The Court observed:
“The ”quintessence” of a demise charterer is the complete transfer of possession and control, meaning the charterer steps into the shoes of the owner.” (Judgment, para. 38)
The consequence, according to the Court, is that the status of the demise charterer does not necessarily come to an end merely because a contractual termination notice has been issued. The Court stated:
“Physical re-delivery of the vessel and the taking of possession by the owner is usually required to terminate the demise charterer’s status.” (Judgment, para. 38)
The Court further held:
“Consequently, the charterer remains the demise charterer until that possession and control are returned to the owner, even if the Agreement has terminated contractually, via a notice.” (Judgment, para. 38)
This approach places substance over form. The Court was not prepared to treat a private termination notice as conclusive where the factual position regarding possession, control and employment remained disputed.
The Singapore authority: The Chem Orchid
A key aspect of the judgment is its reference to the Singapore High Court decision in The Chem Orchid [2015] SGHC 50. The respondent relied on The Chem Orchid for the proposition that physical re-delivery and repossession are essential to terminate a bareboat charter.
The Madras High Court adopted this reasoning in the Indian arrest context. It held:
“But common law, as affirmed in The Chem Orchid , the Singapore High Court, dictates that a bareboat charterer is terminated only upon the actual, physical re-delivery of the vessel back to the owner.” (Judgment, para. 40)
The third-party protection rationale was central to this conclusion. The Court observed:
“This requirement protects third parties who, after contractual termination but before re-delivery, might otherwise be left with no party to hold accountable for liabilities.” (Judgment, para. 40)
The Court further noted:
“Without physical re-delivery, a ”limbo” period occurs where the charterer no longer operates under the charterer but retains legal possession, making them still liable as the demise charterer.” (Judgment, para. 40)
The decision therefore reflects the commercial reality that third parties may continue dealing with the vessel on the basis of the charterer’s apparent possession and control. If a termination notice alone were sufficient to defeat arrest, third-party claimants could be left without effective security, notwithstanding that the charterer continued to operate or employ the vessel.
Constructive re-delivery and BARECON provisions
The owners relied on the termination and repossession provisions of the BARECON form and argued that, pending physical repossession, the charterer held the vessel only as a gratuitous bailee. They also relied on foreign authorities suggesting that a bareboat charter may be terminated without actual physical repossession.
The Madras High Court was not persuaded that these matters could conclusively defeat arrest at the interlocutory stage. The Court observed:
“Generally, the doctrine of ”constructive re-delivery”, where a vessel is considered re-delivered without physical handover is not strongly accepted in this context, as it could prejudice third parties.” (Judgment, para. 39)
Overt acts and reasonable efforts by the owner
The owners argued that they had actively asserted their right to repossess the vessel. They relied on correspondence from their English solicitors dated 19 November 2025, which stated:
“Our clients, the Owners of the vessel hereby exercised their right to repossess the vessel upon the vessel’s berthing at Colombo pursuant to Clause 32 of the Charter party and seek confirmation that the possession would be given at that time without hindrance or interference.” (Judgment, para. 35)
The respondent, however, relied on subsequent conduct and correspondence to contend that the charterer did not accept the termination and continued to assert firm control and employment of the vessel. The respondent’s submissions on continued possession, control and employment are recorded at paragraphs 20 to 29 and 36. The Court treated these matters as triable issues when applying the reasonably arguable best case test at paragraph 46.
The Court also observed that English maritime law requires an owner to take reasonable steps to repossess the vessel:
“English Maritime Law imposes a condition that the owner of the vessel must take all reasonable efforts to repossess the vessel.” (Judgment, para. 41)
The practical lesson is that owners seeking to rely on termination of a bareboat charterparty must do more than issue a termination notice. They should promptly document all steps taken to regain possession, including communications with the charterer, Master, managers, agents, port authorities and crew, as well as any arrangements for boarding the vessel or replacing the crew.
and dismissed the appeal.
Conclusion
The decision confirms that the termination of a bareboat charterparty is not merely a matter of contractual form when third-party maritime claims and in rem jurisdiction are involved.
The Court’s reliance on The Chem Orchid underscores the importance of physical re-delivery and repossession in determining whether a demise charterer’s status has come to an end. Where the charterer’s possession and control remain disputed, and where the claimant has a prima facie maritime claim, the Court is likely to preserve the arrest unless adequate security is provided or the arrest is clearly shown to be wrongful.
For shipowners, the message is clear: termination should be followed by prompt, practical and well-documented repossession steps. For maritime claimants, the decision provides useful support for sustaining arrest where the charterer’s factual possession and control continue notwithstanding an alleged contractual termination.
Source note: This article is based on the judgment of the Madras High Court in Owners and Parties Interested in M.V. Nereus Progress v Om Freight Forwarders Limited, O.S.A.(CAD) No.41 of 2026, pronounced on 30 April 2026. Paragraph references are to that judgment.
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