Supreme Court sets aside arrest of vessel M.V. Nereus Progress, holds bareboat charter ended on valid termination notice, Physical repossession not a prerequisite for ending demise charter; charterer became a gratuitous bailee after termination under BIMCO BARECON 2017, says Court
The Supreme Court on 25 September 2026 allowed an appeal by the registered owners of the vessel M.V. Nereus Progress and set aside the arrest ordered by the Madras High Court, holding that a valid termination notice under a bareboat charterparty was enough to bring the demise charter to an end.
A Bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana ruled that physical repossession of the vessel was not a condition precedent for termination of the bareboat charter. Once the owners issued a valid notice under Clause 31(a) of the BIMCO BARECON 2017 form, the charterer’s status as a demise charterer stood extinguished. Thereafter, pending actual repossession, the charterer held the vessel only as a gratuitous bailee under Clause 32.
The dispute arose after Om Freight Forwarders Ltd., which had a maritime claim against Nereides Marine Services under a separate charterparty involving another vessel, sought arrest of M.V. Nereus Progress under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. The respondent argued that Nereides continued to be the demise charterer of the vessel and that sister-ship arrest was therefore permissible under Section 5(1)(b) read with Section 5(2) of the Act.
The owners contended that the bareboat charter had already been validly terminated on 13 November 2025 after repeated defaults in payment of hire and issuance of an anti-technicality notice. They said the High Court erred in treating physical repossession as essential to termination.
Accepting the owners’ case, the Supreme Court held that the termination notice was preceded by due compliance with the contractual procedure and was based on admitted default. The Court noted that Nereides itself had acknowledged the termination and had sought time for an orderly handover. It also found that Clause 32 of the charterparty expressly stated that after termination, and until physical repossession, the charterers would hold the vessel only as gratuitous bailees.
The Court distinguished foreign decisions relied upon by the High Court, observing that those cases did not involve the same contractual language. It said the High Court failed to consider the effect of Clause 32, which clearly separated termination from physical repossession.
On the admiralty issue, the Court held that for arrest under Section 5(1)(b) and Section 5(2), the respondent had to show that the demise charterer was still the demise charterer or owner when the arrest was effected. Since Nereides had ceased to be demise charterer before the arrest on 4 December 2025, the statutory requirement was not satisfied.
Setting aside the High Court’s judgment, the Supreme Court vacated the arrest and allowed the appeal.
Bottom Line:
Termination of Bareboat Charterparty under BIMCO BARECON 2017 Form - Physical repossession of vessel not a pre-condition for termination - Demise charterer's status extinguished upon valid notice of termination - Vessel held as gratuitous bailee thereafter.
Statutory provision(s): Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, Section 5(1)(b), Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, Section 5(2)
