Charter is void until its state registration

The charter contract (lease) of a ship is void if it is transferred to the charterer (tenant) before the state’s mandatory registration by the shipowner (landlord), and if the lack of registration resulted in the inability of the vessel to operate by the charterer (tenant).

On September 11, 2007, the Federal Antimonopoly Service of the Far Eastern District issued a Resolution in which the lease agreement for a vessel without crew (time charter) was declared void due to the absence at the time of transfer of the vessel to the charter of its state registration, without which operation of the vessel was illegal and impossible.

The plaintiff, an individual who leased a small-sized vessel from a shipowner company, filed a lawsuit to declare the transaction null and void, returning all rental payments paid by him. As established by the court, at the time of the conclusion of this transaction, the leased small boat did not have state registration in accordance with the Decree of the Government of the Russian Federation of December 23, 2004 N 835 "On Approval of the Regulations on the State Inspectorate for Small Courts of the Ministry of the Russian Federation for Civil Defense, Emergencies and Liquidation consequences of natural disasters".

Applying Articles 131, 168, 209, 219, 608 of the Civil Code of the Russian Federation and Articles 13, 33 of the KTM of the Russian Federation, the courts concluded that the lease agreement for a vessel concluded on behalf of the lessor by a person who does not have ownership of the leased property is invalid. The fact that the parties actually executed this transaction does not affect such qualification of the contract.

(с) Law office of St. Petersburg «Inmarine».