Article 172 of the Saudi Commercial Maritime Law
المادة 172 من النظام البحري التجاري · الفصل الثالث: إيجار السفينة المجهزة
The charterer may terminate a ship charter at any time before loading begins, and must compensate the lessor for its loss up to the agreed freight.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز للمستأجر إنهاء عقد إيجار السفينة في أي وقت قبل البدء في شحن البضائع, ويعوِّض المؤجر عما يلحقه بسبب ذلك من ضرر, على ألاّ يتجاوز التعويض قيمة الأجرة المتفق عليها.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 172 explained in plain English
This article gives the charterer the right to terminate the ship charter by its own will, but on conditions:
- Timing: at any time before the loading of the goods begins. Once loading has begun, this right is no longer available under this article.
- Compensation: the charterer compensates the lessor for the loss it suffers as a result.
- Cap on compensation: the compensation may not exceed the agreed freight.
The charterer can withdraw from the deal if its circumstances change, but it bears the actual loss suffered by the lessor, with the freight as the maximum. The lessor is not automatically entitled to compensation equal to the freight, but only to the extent of its actual loss, which may not exceed it.
This differs from Article 171, which provides that the contract is dissolved without compensation if force majeure makes the voyage impossible or trade is prohibited with the country of one of the two ports; there the charterer has no hand in the dissolution, whereas here the termination is by its own will.
It is followed by Article 173, which allows the charterer, during the voyage, to request the discharge of the goods before the agreed port provided it pays the full freight and the costs of discharge. Anyone considering terminating a ship charter is advised to consult a lawyer specialized in maritime and commercial law.
Practical example
A company chartered a ship for freight of SAR 800,000, and then cancelled the deal before loading began. It is entitled to terminate, but it compensates the lessor for its actual loss up to a maximum of SAR 800,000.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 172 of the Saudi Commercial Maritime Law
May a ship charter be cancelled?
The charterer may terminate it at any time before the loading of the goods begins.
How much compensation does the charterer pay on termination?
It compensates the lessor for the loss it suffered, provided the compensation does not exceed the agreed freight.
More articles on Ship Charter
- Article 20
The article permits registering a chartered foreign bareboat ship at the Kingdom's registration offices if the charterer meets the registration conditions, and creates a special temporary register for such ships.
1- تسجل السفينة الأجنبية غير المجهزة -لسفرة أو لرحلة واحدة أو لعدد من الرحلات والسفرات أو لمدة محددة- التي يستأجرها من تتوافر لديه شروط التسجيل بأي مكتب من مكات
- Article 21
The article subjects a chartered foreign bareboat ship registered in the Kingdom to the Kingdom's laws, with the charterer taking the owner's place in the law's obligations and penalties for the whole charter period.
تطبق على السفينة الأجنبية المستأجرة غير المجهزة المسجلة في المملكة، الأنظمة المعمول بها في المملكة، ويحل المستأجر طوال مدة الإيجار محل المالك فيما يتعلق بالالتز
- Article 22
The article requires the charterer of a ship that is not fitted out to apply to cancel its register and return the temporary registration certificate within fifteen days of the end of the charter contract.
يلتزم المستأجر بتقديم طلب شطب سجل السفينة المستأجرة غير المجهزة، وإعادة شهادة التسجيل المؤقتة الخاصة بها خلال خمسة عشر يوماً من تاريخ انتهاء عقد الإيجار.
- Article 23
The article requires the owner of a Saudi ship not fitted out, chartered to a foreigner, to notify the registration office fifteen days before the contract takes effect; registration is suspended or cancelled temporarily and the Kingdom's flag may not be flown during the charter.
في حالة تأجير سفينة سعودية غير مجهزة لأجنبي، فعلى مالكها إبلاغ مكتب التسجيل المسجلة فيه السفينة قبل سريان عقد الإيجار بخمسة عشر يوماً على الأقل، وعلى مكتب التسج
- Article 77
If the charterer manages the ship's navigation and alone is liable for the maritime debt, the ship or the charterer's other ships may be attached, but not the other ships of the lessor-owner.
1- إذا كان مستأجر السفينة يتولى إدارتها الملاحية، وكان وحده مسؤولاً عن أي دين بحري متعلق بها، جاز للدائن توقيع الحجز على هذه السفينة أو على أي سفينة أخرى مملوكة
- Article 142
A ship charter contract can be proven only in writing and must state the ship, the parties, loading and unloading, the rent and compensation and the type of charter, and a sale of the ship does not end the charter.
1- لا يثبت عقد إيجار السفينة إلا بالكتابة, ويجب أن يكون متضمناً اسم السفينة, ومقدار حمولتها, ودرجتها, والدولة التابعة لها، واسم المؤجر والمستأجر، والمكان والزما
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.