Anti-Technicality Clause

What it does

An anti-technicality clause qualifies the owner's right to withdraw the vessel for non-payment of hire by requiring it first to give the charterer notice of the default and a short grace period, often a stated number of banking hours or days, in which to put the payment right. Only if the charterer fails to pay within that period may the owner proceed to withdraw.

The clause exists because the right to withdraw for late or short payment can otherwise be exercised on a strict, technical basis, even where the failure was an innocent administrative or banking error and the charterer is ready and willing to pay. The anti-technicality mechanism turns withdrawal into a remedy of last resort for genuine default rather than a trap that can be sprung on a momentary slip.

Commercial effect

The clause reallocates the risk of an honest payment failure away from the catastrophic outcome of losing the ship. Withdrawal in a rising market can be hugely valuable to an owner and devastating to a charterer, so without protection the charterer bears the risk that a banking delay hands the owner a windfall. The anti-technicality clause inserts a cure period that prevents that result for a curable slip.

It does not, however, excuse real default. A charterer that cannot or will not pay gains only the short grace period, after which the owner's remedy revives. The clause therefore strikes a balance: it protects the paying charterer against technical withdrawal while preserving the owner's ultimate sanction against one that genuinely fails to perform, and its precise wording decides how much protection the charterer actually gets.

Owner's perspective

The owner accepts an anti-technicality clause as market practice but wants the notice and cure period kept short and the procedure clear, so that a charterer in genuine default cannot use it to string out non-payment. It wants certainty about how and when notice is given and when the cure period expires, so that its right to withdraw remains effective for real defaults.

The owner is conscious that the clause removes the ability to withdraw on a pure technicality, which in a strong market can be commercially significant. It therefore focuses on ensuring the mechanism is tightly defined, with a brief, well-specified grace period, so that it gives up only the windfall from an innocent slip and not its substantive protection against a charterer that stops paying.

Charterer's perspective

The charterer regards the anti-technicality clause as essential protection, since the consequences of withdrawal are so severe and payment failures can arise from causes outside its control, such as bank processing delays. It wants a clear right to a notice and a realistic period to cure, so that an innocent or administrative slip cannot cost it the ship and its underlying employment.

The charterer presses for the cure period to be long enough to be useful in practice, allowing for time zones and banking cut-offs, and for the trigger and procedure to be unambiguous. It accepts that the clause does not protect against genuine inability to pay, but it wants firm assurance that, where it is ready and willing to pay, a technical default will not be turned into a withdrawal.

Negotiation points

• The length of the cure period and whether it is expressed in banking hours or days.
• The form and method of the owner's notice of default and how it is given.
• Whether the clause covers short payment and disputed deductions as well as non-payment.
• How the cure period interacts with time zones and banking cut-off times.

Common variations

• A clause giving a stated number of banking days to cure before withdrawal.
• A clause expressed in banking hours for a faster cure window.
• A notice clause covering both non-payment and underpayment of hire.
• An anti-technicality provision built into the withdrawal clause itself.