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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Douglas Carmichael, Francesca Morano, Carlos Espinoza

FROM: Hannah Brinkley

DATE: November 20, 2023

RE: Interpretation of "Single Continuous Period of Breach" Cap Language in Clause 28 of the Charter-Party (NW-TSL-CP-2020-1203) — Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023, Supreme Court of the State of New York, New York County, Commercial Division

C&H Matter No.: 1044-00006

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I. Executive Summary

This memorandum analyzes the critical interpretive question regarding Clause 28 of the NYPE 2015 time charter-party (as amended) between Thalassa Shipping & Logistics SA, acting through its wholly owned subsidiary, Aegean Fortuna Shipholding Ltd. (as the registered owner of the vessel), and Northwind Maritime Corporation (as the charterer), dated December 3, 2020, Charter-Party Reference No. NW-TSL-CP-2020-1203 (the "Charter-Party"). The question arises in the context of the pending action before the Supreme Court of the State of New York, New York County, Commercial Division, captioned Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023.

The central question is whether the $4,500,000 liquidated damages cap set forth in Clause 28 of the Charter-Party applies: (a) once to the entire 36-month charter period (January 15, 2021 through January 14, 2024), as Thalassa contends, serving as an aggregate ceiling on total liquidated damages liability under the Charter-Party; or (b) separately to each "single continuous period of breach," as Northwind contends, which would potentially allow Northwind to claim up to three separate caps — one for each of the three discrete mechanical incidents occurring during the charter period — totaling as much as $13,500,000 in theoretical liquidated damages exposure.

After a thorough review of the relevant contractual text, the structure of Clause 28 in relation to the Charter-Party as a whole, applicable New York contract interpretation principles, relevant case law, and commercial practice in the maritime industry, my conclusion is as follows: Under established New York contract interpretation principles, the better reading supports Thalassa's position — the $4,500,000 cap applies as an aggregate ceiling on total liquidated damages liability under the Charter-Party. Several textual, structural, and commercial-reasonableness indicators favor this interpretation, and the aggregate-cap reading is also more consistent with the enforceability of the liquidated damages provision under the well-established standard requiring that such provisions bear a reasonable relationship to anticipated or actual damages.

However, there is a plausible counterargument based on the plain text of the clause, and the outcome may ultimately depend on whether the court considers the language to be unambiguous (in which case the textual analysis will be dispositive) or ambiguous (in which case extrinsic evidence of the parties' negotiations, course of dealing, and industry custom may be admitted). The issue warrants careful development through discovery and early engagement with damages experts to ensure that Thalassa's interpretive position is fully supported at the summary judgment stage.

This memorandum should be read in conjunction with the companion memorandum dated November 5, 2023, which addresses the separate but related question of whether the Clause 28 liquidated damages provision is enforceable or constitutes an unenforceable penalty under New York law.

II. Question Presented

Whether the phrase "for any single continuous period of breach" in the liquidated damages provision of Clause 28 of the Charter-Party limits the $4,500,000 cap to each discrete breach episode — thereby permitting the application of multiple independent caps for multiple incidents during the charter period — or whether the clause establishes an overall aggregate cap on total liquidated damages recoverable under the Charter-Party, regardless of the number of separate breach events that may occur.

A subsidiary question is how the three separate mechanical incidents that occurred during the charter period interact with the cap language, given that each incident involved a temporally distinct period of off-hire, as follows:

• Incident 1: March 12 through April 2, 2022 — turbocharger failure resulting in 22 days off-hire.

• Incident 2: July 8 through July 29, 2022 — ballast water treatment system ("BWTS") malfunction and auxiliary boiler failure resulting in 21 days off-hire.

• Incident 3: November 15 through December 10, 2022 — cylinder liner failure requiring drydock at Keppel Verolme Shipyard, Rotterdam, resulting in 25 days off-hire.

The three incidents are separated by intervals of several months, involved different mechanical systems, and were addressed at different repair facilities. They total 68 days of off-hire. The question is whether each constitutes an independent "single continuous period of breach" subject to its own $4,500,000 cap, or whether all three fall under a single aggregate $4,500,000 ceiling.

III. Brief Answer

The cap language most likely operates as an aggregate limitation on total liquidated damages recoverable under Clause 28 of the Charter-Party. Under New York's strict textual approach to contract interpretation, the phrase "for any single continuous period of breach" functions primarily to define what constitutes a breach event for purposes of triggering the liquidated damages formula — that is, it specifies that the formula (150% of aggregate off-hire days multiplied by the daily hire rate of $14,750 per day) applies to each continuous period during which the vessel is off-hire due to the Owner's material breach of its maintenance and seaworthiness obligations. It does not, however, create multiple independent caps. The structural placement of the cap at the end of the clause, immediately after the liquidated damages formula, the use of the indefinite article "a cap" (singular), the phrase "subject to," and the absence of explicit per-occurrence language (such as "per incident," "per breach," or "per period") all support a reading under which the $4,500,000 figure represents a single aggregate ceiling on the Owner's total liquidated damages exposure for the duration of the Charter-Party. This reading is also consistent with standard NYPE 2015 interpretive norms and with the principle that liquidated damages provisions should be construed narrowly and not expanded beyond the parties' expressed intent.

However, Northwind's per-incident reading is not frivolous. The inclusion of the phrase "any single continuous period" could be read to contemplate the existence of multiple qualifying breach periods, each independently subject to its own cap. The word "any," when read distributively, can mean "each and every," and the phrase "single continuous period of breach" would be redundant if the cap were purely aggregate and unrelated to the number or nature of breach episodes. Northwind will argue that each of the three mechanical incidents constitutes a separate "single continuous period of breach" and that the $4,500,000 cap independently applies to each, creating a theoretical maximum exposure of $13,500,000.

Assessment: Thalassa's position is stronger under prevailing New York case law, and I estimate approximately a 60-65% likelihood of success on this interpretive issue considered in isolation. Northwind's position, while not without textual support, is weakened by structural and commercial-reasonableness considerations and by the interplay between the per-incident interpretation and the enforceability of the liquidated damages provision. The question is sufficiently close, however, that it may not be resolved on a pre-answer motion to dismiss and could require full summary judgment briefing — or, if the court finds the clause ambiguous, a trial on extrinsic evidence. Strategic development of the factual record through targeted discovery is therefore essential.

A critical additional observation: regardless of which interpretation prevails, the $4,500,000 cap operates as a ceiling, not a floor. Northwind's actual liquidated damages under the Clause 28 formula total $1,504,500 across all three incidents. Even under the per-incident cap interpretation, the formula-based damages for each individual incident ($486,750; $464,625; and $553,125, respectively) are each far below the $4,500,000 per-incident cap. Northwind cannot use the cap language to inflate its damages above the formula-calculated amount. This point should be a centerpiece of Thalassa's briefing.

IV. Factual Background

A. The Charter-Party

On December 3, 2020, Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna" or "Owner"), a wholly owned subsidiary of Thalassa Shipping & Logistics SA ("Thalassa"), entered into a time charter-party with Northwind Maritime Corporation ("Northwind" or "Charterer") on the NYPE 2015 form, as amended by rider clauses negotiated between the parties (the "Charter-Party," Reference No. NW-TSL-CP-2020-1203). The Charter-Party was brokered through intermediaries, with Northwind represented by Boreal Maritime Brokers AG and Thalassa/Aegean Fortuna represented by Hellenic Chartering Services Ltd.

The Charter-Party pertains to the vessel M/V Aegean Fortuna, IMO No. 9847231, a Supramax dry bulk carrier of 58,200 DWT, built in 2016 at Bramwell Enterprises (Japan). The vessel is registered under the flag of the Republic of Liberia and classified by the Global Maritime Classification Bureau ("GMCB"). At the time of execution, the vessel was approximately four years old and in class with no outstanding conditions or recommendations.

The principal commercial terms of the Charter-Party are as follows:

• Charter Period: 36 months, commencing January 15, 2021, and expiring January 14, 2024.

• Daily Hire Rate: $14,750 per day, payable semi-monthly in advance.

• Total Charter Value: Approximately $16,166,000 over the 36-month charter period (calculated as $14,750/day × 1,095 days, subject to adjustment for off-hire periods).

• Trading Limits: Worldwide, excluding war risk zones as defined in the London Market Joint War Committee Listed Areas (as updated from time to time).

• Governing Law and Jurisdiction: New York law (per Clause 46), with exclusive jurisdiction in the courts of the State of New York, New York County, or the United States District Court for the Southern District of New York.

• Owner's Maintenance and Seaworthiness Obligations: Set forth in Clauses 2 and 6 of the Charter-Party, requiring the Owner to maintain the vessel in a thoroughly efficient state in hull, machinery, and equipment throughout the charter period, and to ensure that the vessel remains seaworthy, properly manned, and equipped for service.

• Off-Hire Provision: Clause 17 (standard NYPE 2015 off-hire clause, as amended) provides that hire ceases to be payable during any period in which the vessel is off-hire due to, inter alia, breakdown of machinery, deficiency of stores, or any other cause preventing the full working of the vessel.

B. The Liquidated Damages Provision — Clause 28

Clause 28 is a bespoke rider clause that was not part of the standard NYPE 2015 printed form. It was added by the parties during the negotiation of the Charter-Party and is the provision at issue in this memorandum. The full text of Clause 28, as relevant to the interpretive question, provides:

"28. Liquidated Damages for Breach of Maintenance and Seaworthiness Obligations. In the event of Owner's material breach of its obligations under Clauses 2 and 6 of this Charter-Party resulting in the Vessel being placed off-hire pursuant to Clause 17, Charterer shall be entitled, in addition to such off-hire deductions as may be applicable, to liquidated damages in an amount equal to one hundred fifty percent (150%) of the aggregate number of off-hire days attributable to such breach multiplied by the daily hire rate specified in Clause 4 hereof, subject to a cap of USD $4,500,000 (Four Million Five Hundred Thousand United States Dollars) for any single continuous period of breach. For the avoidance of doubt, Owner's liability for liquidated damages under this Clause 28 shall be without prejudice to Charterer's right to claim additional actual damages to the extent such damages exceed the liquidated damages calculated hereunder, provided that any such claim for additional actual damages shall be subject to the limitations set forth in Clause 29. The parties agree that the liquidated damages specified herein represent a genuine pre-estimate of the loss likely to be suffered by Charterer as a result of Owner's breach of its maintenance and seaworthiness obligations and are not intended as a penalty."

The operative formula for calculating liquidated damages under Clause 28 is therefore:

Liquidated Damages = 150% × (Number of Off-Hire Days) × $14,750/day

The cap language at issue is the phrase "subject to a cap of USD $4,500,000 (Four Million Five Hundred Thousand United States Dollars) for any single continuous period of breach."

Applying the formula to the aggregate facts of this case (68 total off-hire days across all three incidents), the formula-based liquidated damages are:

68 days × $14,750/day × 1.5 = $1,504,500

This amount is well below the $4,500,000 cap, regardless of whether the cap is interpreted as aggregate or per-incident. However, Northwind's claim does not rest on the formula calculation alone. Northwind contends that the existence of three separate "single continuous periods of breach" entitles it to claim up to $4,500,000 per incident — in effect treating the cap not merely as a ceiling but as an independent measure of damages that can be aggregated across multiple breach periods. Northwind's current damages claim under Clause 28 is $4,500,000 in aggregate, although Northwind has reserved its right to increase this amount based on further analysis.

C. The Three Incidents

The three mechanical incidents giving rise to off-hire periods during the Charter-Party are summarized below. Each is the subject of separate off-hire notices served by Northwind on Aegean Fortuna and acknowledged by Thalassa. The underlying facts of each incident are addressed in detail in the principal case memorandum and are summarized here only to the extent relevant to the Clause 28 interpretive question.

1. Incident 1: Turbocharger Failure (March 12 – April 2, 2022)

On or about March 12, 2022, while the vessel was loading cargo at the Port of Santos, Brazil, the main engine turbocharger suffered a catastrophic failure, rendering the vessel unable to proceed on her voyage. The vessel was placed off-hire on March 12, 2022. Repairs were conducted by Ashgrove Group technicians at Santos under the supervision of the Owner's appointed superintendent, Vasilis Papadimitriou. The vessel was returned to service on April 2, 2022, resulting in a total off-hire period of 22 days.

Application of the Clause 28 formula to Incident 1:

22 days × $14,750/day × 1.5 = $486,750

2. Incident 2: BWTS Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022)

On or about July 8, 2022, while the vessel was in ballast passage in the Gulf of Mexico en route to the Port of New Orleans, the ballast water treatment system ("BWTS") experienced a significant malfunction, preventing compliance with applicable ballast water management regulations. Concurrently, the auxiliary boiler experienced a tube failure, further impairing the vessel's operational capability. The vessel diverted to the Port of Freeport, Texas, and was placed off-hire on July 8, 2022. Repairs to both the BWTS and the auxiliary boiler were completed on July 29, 2022, resulting in a total off-hire period of 21 days.

Application of the Clause 28 formula to Incident 2:

21 days × $14,750/day × 1.5 = $464,625

3. Incident 3: Cylinder Liner Failure and Drydocking (November 15 – December 10, 2022)

On or about November 15, 2022, while the vessel was discharging cargo at the Port of Antwerp, Belgium, a cylinder liner in the main engine cracked, necessitating significant engine repairs. Due to the nature and extent of the damage, the vessel required drydocking. The vessel was towed to Keppel Verolme Shipyard in Rotterdam, the Netherlands, where she was drydocked and repaired. The vessel was placed off-hire on November 15, 2022, and returned to service on December 10, 2022, resulting in a total off-hire period of 25 days.

Application of the Clause 28 formula to Incident 3:

25 days × $14,750/day × 1.5 = $553,125

4. Aggregate Calculation

The total off-hire period across all three incidents is 68 days. The total formula-based liquidated damages across all three incidents amount to:

$486,750 + $464,625 + $553,125 = $1,504,500

This amount is consistent with the aggregate formula calculation of 68 × $14,750 × 1.5 = $1,504,500.

5. The Parties' Competing Positions

Northwind's Position: Northwind contends that each of the three incidents constitutes a separate "single continuous period of breach" within the meaning of Clause 28, and that the $4,500,000 cap applies independently to each such period. Under this reading, Northwind's potential liquidated damages exposure for Thalassa/Aegean Fortuna could reach up to $13,500,000 (three caps of $4,500,000 each). Northwind's current claim, however, is for $4,500,000 in aggregate liquidated damages — apparently taking the position that the cap operates not only as a ceiling but as a proxy for the damages actually suffered, such that Northwind may claim the full cap amount for at least one of the three incidents even though the formula-based damages for that incident are well below $4,500,000. This theory is discussed further in Section VI.B below.

Thalassa's Position: Thalassa contends that the $4,500,000 figure in Clause 28 constitutes a single aggregate cap on the Owner's total liquidated damages liability under the Charter-Party. Under this interpretation, the cap is never triggered because the total formula-based liquidated damages ($1,504,500) fall well below the $4,500,000 ceiling. Accordingly, Northwind's recoverable liquidated damages under Clause 28 are limited to $1,504,500. Thalassa further contends that even if the per-incident cap interpretation were adopted, the cap is a ceiling — not a floor or substitute measure of damages — and Northwind cannot recover more than the formula-calculated amount for any given incident.

D. Practical Significance

The interpretive question addressed in this memorandum has the following practical implications:

• Under Thalassa's interpretation (aggregate cap): Total liquidated damages exposure under Clause 28 is $1,504,500 — the formula-based amount, which falls below the aggregate cap.

• Under Northwind's interpretation (per-incident cap, formula amount applies): The same result obtains — $1,504,500 — because the per-incident formula amounts ($486,750; $464,625; $553,125) each fall far below the $4,500,000 per-incident cap.

• Under Northwind's apparent theory (cap as minimum or substitute): $4,500,000 in aggregate, or potentially up to $13,500,000 in theoretical maximum exposure. This theory treats the cap not as a ceiling but as an independently recoverable amount.

The immediate dispute over Clause 28 thus involves a potential swing of approximately $2,995,500 in claimed liquidated damages (from $1,504,500 to $4,500,000 under Northwind's current claim). But the broader significance is greater: if Northwind's per-incident reading and cap-as-substitute theory are accepted, the precedent could expose Thalassa to substantially higher damages in this and future disputes.

It should be noted that the Clause 28 liquidated damages are only one component of Northwind's total claim of $18,300,000, which also includes claims for actual damages in excess of the liquidated amount (under the savings clause in the second sentence of Clause 28), cargo claims, demurrage losses, and consequential damages. The interpretation of the Clause 28 cap also bears on whether the liquidated damages provision is enforceable at all, a question addressed in the companion memorandum dated November 5, 2023, analyzing the enforceability/penalty question under New York law and the Northpoint Holdings v. Purdy Corp. line of authority.

V. Applicable Legal Framework

A. New York Contract Interpretation — General Principles

Under New York law, the interpretation of an unambiguous contract is a question of law for the court, to be resolved without reference to extrinsic evidence. W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). The Court of Appeals has consistently held that "when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms," and that "extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face." Id. at 162–63 (internal quotation marks omitted).

Courts interpreting written contracts under New York law are required to give words and phrases their "plain and ordinary meaning." Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). The goal of contract interpretation is to "determine the intention of the parties as derived from the language employed" in the contract, and where the language is clear and unambiguous, the intent of the parties must be found within the four corners of the document. Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004).

A contract clause is ambiguous only if it is "reasonably susceptible of more than one interpretation." Chimart Assocs. v. Paul, 66 N.Y.2d 570, 573 (1986). The determination of ambiguity is itself a threshold question of law for the court. Id. Importantly, ambiguity is not created merely because the parties offer competing interpretations of a clause; rather, the court must independently assess whether the language, read in the context of the entire agreement and the relevant circumstances, reasonably admits of the interpretation urged by each party. Greenfield, 98 N.Y.2d at 570.

If the court determines that a contractual provision is ambiguous, it may admit extrinsic evidence — including the negotiations of the parties, their course of dealing, trade usage, and the surrounding circumstances at the time of contracting — to aid in construing the provision. Reiss v. Financial Performance Corp., 97 N.Y.2d 195, 199 (2001). In such cases, the question of the parties' intent becomes a question of fact, generally precluding summary disposition. Hartford Accident & Indem. Co. v. Wesolowski, 33 N.Y.2d 169, 172 (1973).

B. Rules of Construction Relevant to Liquidated Damages Caps

Several specific rules of construction applicable under New York law are particularly relevant to the interpretation of the cap language in Clause 28:

1. Contracts Read as a Whole. A contract must be "read as a whole, and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose." Bramwell Bancorp v. Sommer, 8 N.Y.3d 318, 324–25 (2007). An interpretation that renders a clause or word superfluous is disfavored. Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 63 N.Y.2d 396, 403 (1984). This principle bears directly on the question of whether "for any single continuous period of breach" adds independent meaning to the cap provision or is merely surplusage under one or the other interpretation.

2. Specific Controls Over General. Where a contract contains both general and specific provisions relating to the same subject matter, the specific provision will be given effect and the general provision will be construed consistently with it. Muzak Corp. v. Hotel Taft Corp., 1 N.Y.2d 42, 46 (1956). This rule may be relevant insofar as Clause 28 (a specific, bespoke rider clause addressing liquidated damages) may be read in conjunction with other, more general provisions of the Charter-Party addressing limitations of liability.

3. Cap and Limitation Language. New York courts have addressed the distinction between "per-occurrence" and "aggregate" caps in range commercial contexts, including indemnification provisions, insurance policies, and liquidated damages clauses. The general principle is as follows: where a cap or limitation is stated "for" a defined event or occurrence, the cap is typically construed as applying to each instance of that event, unless the contract language as a whole indicates an aggregate intent. See, e.g., Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 221–22 (2002) (discussing per-occurrence vs. aggregate limits in insurance context). However, where a cap is phrased in terms of "subject to" a total ceiling — without explicit per-occurrence language — courts have often read the cap as establishing an aggregate limitation. See Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990) (applying New York law; interpreting broad limitation language as an overall cap).

4. Strict Construction of Liquidated Damages Provisions. New York courts construe liquidated damages provisions strictly and will not expand their scope beyond the parties' expressed intent. Kestrel Corporation, 4 N.Y.3d 373, 380 (2005). This principle of strict construction favors the narrower reading of a cap provision where the language is genuinely ambiguous. Because the aggregate cap reading is the narrower construction — it imposes a lower ceiling on recoverable damages — it is the interpretation more consistent with the strict-construction canon.

5. Anti-Surplusage Principle Applied to Dollar Caps. Where a contract specifies a particular dollar amount as a cap, and that cap is never reached under the formula-based calculation of damages, the cap has been given no practical effect. Courts disfavor interpretations that render contractual provisions meaningless. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403. This principle cuts both ways in our case: Thalassa may argue that the $4,500,000 cap is simply a backstop that happens not to be triggered by the facts of this case, whereas Northwind may argue that interpreting the cap as aggregate makes it largely meaningless given the formula-based amounts involved.

C. The Contra Proferentem Principle

Under New York law, the principle of contra proferentem provides that where a contractual provision is ambiguous, the ambiguity should be resolved against the party that drafted the provision. Jacobson v. Sassower, 66 N.Y.2d 991, 993 (1985). This principle is a tool of last resort, applied only after other methods of construction have failed to resolve the ambiguity. Id.

In the maritime charter-party context, application of contra proferentem requires identification of the drafter of the specific provision at issue. The NYPE 2015 form is a standard industry document; the issue of drafting responsibility arises only with respect to the bespoke rider clauses, including Clause 28, which were negotiated between the parties and their brokers.

Preliminary information received from our client (through Markos Theodorakis, Thalassa's in-house legal counsel in Piraeus) indicates that Clause 28 was originally proposed by Northwind's brokers (Boreal Maritime Brokers AG) as part of a package of rider clauses submitted during the fixture negotiations in November 2020. The clause was subsequently revised by both sides before final agreement. If discovery confirms that the initial draft of the cap language originated with Northwind, the contra proferentem principle would cut against Northwind's preferred interpretation. Conversely, if Thalassa proposed the cap language as a means of limiting its own exposure — which would be a natural commercial motivation — ambiguity might be construed against Thalassa.

Action Item: We should pursue discovery into the full negotiation correspondence and drafting history of Clause 28, including (i) the initial rider clause proposals submitted by Boreal Maritime Brokers AG on Northwind's behalf, (ii) the counterproposals from Hellenic Chartering Services Ltd. on Thalassa's behalf, (iii) any mark-ups or redlines exchanged between the parties, and (iv) any internal communications reflecting either party's understanding of the cap language at the time of negotiation. This evidence will be critical if the court finds the clause ambiguous and proceeds to consider extrinsic evidence.

D. NYPE 2015 Form Interpretive Norms

The NYPE 2015 form (published by the Association of Ship Brokers & Agents (USA), Inc., commonly known as ASBA) is one of the most widely used standard forms in the international time charter market. Courts interpreting provisions of the NYPE form often look to established maritime commercial practice, academic commentary, and the body of case law that has developed around the NYPE's successive iterations (the 1946, 1981, 1993, and 2015 editions). See generally Wilford, Coghlin & Kimball, Time Charters (7th ed. 2014) (comprehensive treatise on NYPE clauses and their interpretation).

Critically, the standard NYPE 2015 printed form does not include a liquidated damages provision of the type set forth in Clause 28. The standard form addresses off-hire (Clause 17), the Owner's maintenance obligations (Clauses 2 and 6), and various liability limitations, but it does not provide for a specific liquidated damages formula or cap in connection with breaches of the seaworthiness warranty. Clause 28 is therefore a bespoke rider clause, custom-drafted for this Charter-Party.

The significance of this fact is twofold. First, there is less directly on-point precedent for the specific cap language in Clause 28 than there would be for a provision drawn from the standard printed form. Second, the court will need to apply general New York contract interpretation principles — rather than relying on any well-settled NYPE-specific gloss — to construe the cap language. Courts have recognized that bespoke rider clauses in charter-parties should be interpreted with particular care, as they reflect the parties' specific commercial bargain rather than an industry-standard allocation of risk. See Stena Sonangol Suezmax Pool LLC v. Occidental Petroleum Corp., No. 15 Civ. 8580 (JFK), 2016 WL 6684076, at *4 (S.D.N.Y. Nov. 14, 2016) (noting the distinction between standard form provisions and bespoke rider clauses in a NYPE charter-party dispute).

VI. Analysis

A. Thalassa's Interpretation: Aggregate Single Cap

1. Textual Arguments

The strongest textual arguments supporting Thalassa's interpretation that the $4,500,000 cap in Clause 28 operates as a single aggregate ceiling are as follows:

a. The Singular Article "A Cap." The clause states that the liquidated damages formula is "subject to a cap of USD $4,500,000." The use of the singular, indefinite article "a" — rather than "caps" or "respective caps" — naturally implies the existence of one cap, not multiple caps. If the drafters had intended to create a separate cap for each breach period, they could have used plural language or explicitly stated that the cap applies "per breach" or "per period." The choice of "a cap" Signals a single limitation. See, e.g., GFI Group Inc. v. Beck Morriven CPAs LLP, No. 601379/05, 2007 WL 1839212, at *7 (N.Y. Sup. Ct. June 25, 2007) (interpreting "a limit" in an indemnification provision as establishing a single aggregate ceiling).

b. The Phrase "For Any Single Continuous Period of Breach." While Northwind reads this phrase as creating multiple independent caps, a more natural reading in context is that the phrase defines the scope of the damages calculation — not the number of applicable caps. That is, the phrase specifies that the formula is to be applied to the off-hire days arising from "any single continuous period of breach" (as opposed to, say, intermittent or recurring breaches that do not constitute a continuous period). The phrase answers the question "what qualifies as a breach period for purposes of the formula?" rather than the question "how many caps are there?"

Under this reading, the word "any" functions as a universal qualifier (meaning "whatever" or "regardless of which"), not as a distributive one (meaning "each and every"). The clause would thus be paraphrased: "the liquidated damages formula applies to whatever single continuous period of breach may occur, subject to a total cap of $4,500,000." This is a natural and grammatically sound reading.

c. The Word "Single." The inclusion of the word "single" in the phrase "single continuous period of breach" further supports the aggregate-cap interpretation. If the drafters intended the cap to apply independently to each of multiple breach periods, the word "single" would be redundant — one would expect the clause to read "for each continuous period of breach" or "for any continuous period of breach." The deliberate use of "single" emphasizes that the cap applies to a single, comprehensive limitation on the Owner's total liquidated damages liability, not to multiple iterations thereof. Reading "any single continuous period of breach" as permitting three (or more) independent caps would render the word "single" superfluous, in violation of the anti-surplusage canon. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403.

d. The Phrase "Subject to a Cap." The cap language begins with the phrase "subject to," which is customarily used in contract drafting to introduce a limitation or condition on the preceding operative provision. When a damages formula is stated to be "subject to a cap," the natural reading is that the formula's output is limited — capped — at the stated amount. The phrase does not suggest that the cap itself generates an independent entitlement or is replicated for each triggering event.

e. The Absence of Per-Occurrence Language. The cap provision does not contain any of the standard formulations that typically signal a per-occurrence or per-incident limitation: "per breach," "per incident," "per period," "per event," "for each occurrence," or similar language. The absence of such language is significant, particularly in light of the fact that other provisions of the Charter-Party — and standard maritime industry practice — do use explicit per-occurrence language when a per-incident limitation is intended. See Section VI.A.2, infra (structural arguments).

2. Structural Arguments

The structural context of Clause 28 within the Charter-Party as a whole provides further support for the aggregate-cap interpretation.

a. Unified Category of Obligation. Clause 28 addresses "Owner's material breach of maintenance and seaworthiness obligations under Clauses 2 and 6" as a unified category of contractual obligation. The clause does not differentiate among different types of mechanical failures, different vessel systems, or different geographic locations. The liquidated damages formula and the cap apply to this entire category of breach — not to individual sub-categories or incidents within it. This structural choice suggests that the cap was intended to establish an overall ceiling on the Owner's liquidated damages exposure for breaches of its maintenance and seaworthiness warranties, regardless of how many discrete incidents of failure may occur during the charter period.

b. Comparison with Other Limitation Provisions. Other limitation-of-liability provisions in the Charter-Party use explicit per-occurrence language when a per-incident cap is intended. For example:

• Clause 8 (Cargo Liability): Limits the Owner's liability for cargo damage to "$250,000 per incident, subject to an aggregate maximum of $1,000,000 per charter period."

• Clause 26 (Pollution Liability): Caps the Charterer's indemnification obligation for pollution-related losses at "$2,000,000 per occurrence."

The express use of "per incident" and "per occurrence" language in Clauses 8 and 26 — and the simultaneous absence of such language in Clause 28 — creates a strong negative inference that the Clause 28 cap was not intended to operate on a per-incident basis. Under the principle of expressio unius est exclusio alterius, the inclusion of per-occurrence language in some clauses and its exclusion from others indicates a deliberate drafting choice. See Landlord's Mgmt. Corp. v. Greenburgh Eleven Union Free Sch. Dist., 234 A.D.2d 564, 565 (2d Dep't 1996) (drawing negative inference from the presence of explicit limitation language in one contract provision and its absence in another).

c. The Savings Clause. The second sentence of Clause 28 provides that "Owner's liability for liquidated damages under this Clause 28 shall be without prejudice to Charterer's right to claim additional actual damages to the extent such damages exceed the liquidated damages calculated hereunder." This savings clause preserves Northwind's ability to pursue actual damages in excess of the formula-calculated liquidated damages, subject to the limitations in Clause 29. The existence of this savings clause diminishes the commercial necessity for a per-incident cap: even if the aggregate cap limits the total recoverable liquidated damages to $4,500,000, Northwind is not left without a remedy for damages exceeding that amount — it can pursue actual damages under the savings clause.

3. Commercial Reasonableness

Under New York law, courts may consider the commercial reasonableness of competing interpretations as an aid to construction, particularly where the contract is between sophisticated commercial parties. See Greenfield, 98 N.Y.2d at 570. The aggregate-cap interpretation is significantly more commercially reasonable than the per-incident alternative.

a. Proportionality to Charter Value. The total value of the Charter-Party over its 36-month term is approximately $16,166,000. An aggregate liquidated damages cap of $4,500,000 represents approximately 28% of the total charter value — a commercially reasonable ceiling for the Owner's exposure to liquidated damages arising from maintenance and seaworthiness breaches. By contrast, under the per-incident interpretation, each individual breach period would be subject to a separate $4,500,000 cap, meaning that the Owner's potential liquidated damages exposure could reach $13,500,000 (for the three incidents in this case) or even higher if additional incidents were to occur during the remaining charter period. An exposure of $13,500,000 or more would represent approximately 84% of the total charter value — a level of liquidated damages liability that is difficult to reconcile with the concept of a pre-estimate of anticipated loss and that approaches the punitive range. No commercially sophisticated ship owner would agree to a liquidated damages provision that could produce exposure approaching or exceeding the full value of the charter.

b. Enforceability Considerations. The commercial-reasonableness analysis intersects with the enforceability question. Under New York law, a liquidated damages provision will be struck down as an unenforceable penalty if the amount stipulated is "grossly disproportionate" to the probable loss. Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 359 (1977). The per-incident interpretation, which could produce aggregate liquidated damages of $13,500,000 or more for mechanical failures in a $16,166,000 charter, significantly increases the risk that the provision will be deemed an unenforceable penalty. Conversely, the aggregate-cap interpretation — limiting total liquidated damages to $4,500,000, or approximately 28% of the charter value — is far more likely to withstand an enforceability challenge. This point is discussed further in Section VI.E below and in the companion memorandum dated November 5, 2023.

4. Case Law Support

Several lines of New York authority support the aggregate-cap interpretation:

a. Aggregate-Cap Presumption for Unqualified Limitations. In Consolidated Edison Co. of N.Y. v. Allstate Insurance Co., 98 N.Y.2d 208 (2002), the Court of Appeals distinguished between per-occurrence and aggregate policy limits in the insurance context, emphasizing that the specific language of the limitation provision must be examined to determine whether a cap applies to each occurrence or to total exposure. The Court noted that where the policy stated a limit without qualifying it as "per occurrence," the default reading was an aggregate limit. By analogy, the absence of per-occurrence language in Clause 28 supports an aggregate reading of the $4,500,000 cap.

b. Singular Article as Indicator of Single Cap. In GFI Group Inc. v. Beck Morriven CPAs LLP, No. 601379/05, 2007 WL 1839212 (N.Y. Sup. Ct. June 25, 2007), the court interpreted an indemnification provision containing "a limit" (singular) as establishing a single aggregate ceiling on recoverable damages, rejecting the argument that the limit should apply independently to each claim.

c. Strict Construction of Liquidated Damages Provisions. In JMD Holding Corp. v. Congress Financial Corp., 4 N.Y.3d 373 (2005), the Court of Appeals reiterated that liquidated damages provisions are to be strictly construed and not expanded beyond the parties' expressed intent. This principle supports the narrower (aggregate) reading of the cap where the language is ambiguous.

d. Rejection of Cap-as-Floor Arguments. Courts in New York and other jurisdictions have consistently held that a contractual cap on damages operates as a ceiling — a maximum recovery — and not as a floor or guaranteed minimum. See, e.g., JX Nippon Oil & Energy Corp. v. Eni S.p.A., No. 14 Civ. 1397 (RJS), 2015 WL 1344038, at *6 (S.D.N.Y. Mar. 25, 2015) (holding that a damages cap "limits the amount of damages that may be recovered; it does not establish a minimum entitlement"). This principle directly undercuts Northwind's apparent theory that the $4,500,000 cap can be used to inflate its formula-based damages.

B. Northwind's Interpretation: Per-Incident Cap

To provide a complete assessment of litigation risk, it is necessary to evaluate the strength of Northwind's counterarguments, which have some textual basis even if they are ultimately less persuasive.

1. Textual Arguments

a. The Phrase "For Any Single Continuous Period" Contemplates Multiple Periods. Northwind's strongest textual argument is that the phrase "for any single continuous period of breach" inherently contemplates the possibility that multiple "single continuous periods" may exist during the charter. If the drafters had intended the cap to be purely aggregate — applicable once, regardless of the number of breach events — the phrase would be unnecessary. The clause could simply have stated "subject to a cap of $4,500,000." The inclusion of the phrase "for any single continuous period of breach" must have been intended to serve some purpose, and the most natural purpose is to tie the cap to each individual breach period: the cap of $4,500,000 applies independently "for" each "single continuous period of breach."

This argument has force under the anti-surplusage principle. If the cap were aggregate, the phrase "for any single continuous period of breach" would be rendered largely superfluous — it would be unnecessary to reference a "single continuous period" if the cap applied to all breach periods collectively. A court applying the rule that every word in a contract must be given effect could find this argument persuasive. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403.

b. Distributive Reading of "Any." The word "any" in contract language can carry either a universal meaning ("whatever") or a distributive meaning ("each and every"). See, e.g., United States v. Gonzales, 520 U.S. 1, 5 (1997) (noting that "any" is "expansive" and can encompass "each and every"). Northwind will argue for the distributive reading: "for any [each and every] single continuous period of breach." Under this reading, the $4,500,000 cap applies independently to each qualifying breach period, meaning that the three incidents in this case would each carry their own $4,500,000 cap.

c. Temporal Distinctness of the Three Incidents. Northwind will emphasize that the three incidents were temporally distinct, separated by intervals of several months, involved different mechanical systems (turbocharger, BWTS/auxiliary boiler, cylinder liner), and were repaired at different locations (Santos, Freeport, Rotterdam). Each involved a discrete period during which the vessel was continuously off-hire. The clause's reference to a "single continuous period of breach" maps naturally onto each of these three discrete episodes: each is a "single continuous period" of off-hire caused by a material breach of the Owner's maintenance obligations.

2. Structural Arguments

a. The Formula Is Inherently Per-Incident. The liquidated damages formula itself — 150% of the aggregate off-hire days multiplied by the daily hire rate — is inherently calculated on a per-incident basis. Off-hire days are tallied for each period the vessel is off-hire, and the formula produces a damages figure for each such period. Northwind will argue that the cap should track the same per-incident structure: just as the formula produces a separate damages figure for each breach period, the cap should apply separately to each breach period.

b. The Clause Does Not Use "Aggregate" Language. Northwind will point out that the clause does not contain the word "aggregate" or any equivalent term (such as "total," "cumulative," or "in the aggregate") to describe the cap. By contrast, the clause does use the word "aggregate" elsewhere — in the phrase "the aggregate number of off-hire days" — demonstrating that the drafters knew how to use aggregate language when they intended it. The absence of the word "aggregate" in connection with the cap suggests that the cap was not intended to be an aggregate limitation.

This is a meaningful argument. If the drafters used "aggregate" to describe the off-hire day calculation but chose not to use "aggregate" (or any similar term) to describe the cap, a court could infer that the omission was deliberate and that the cap was intended to operate on a per-period, rather than aggregate, basis.

3. Industry Practice

Northwind may seek to introduce evidence of maritime industry custom and practice regarding the structuring of liquidated damages and penalty provisions in time charter-parties. The argument would be that, in the maritime industry, off-hire events are treated as discrete commercial disruptions, and liquidated damages provisions tied to off-hire periods are commonly understood to operate on a per-incident or per-event basis, not on an aggregate basis across the entire charter.

The persuasiveness of this argument will depend on the quality and specificity of the expert evidence adduced. If Northwind can produce credible expert testimony from a maritime commercial practice expert establishing that per-incident LD caps are the industry norm, this could support its interpretation. Conversely, if Thalassa can demonstrate that aggregate caps are at least equally common, or that the specific language of Clause 28 departs from per-incident norms, the argument will be weakened.

Assessment: Northwind's textual arguments have some force, particularly the anti-surplusage argument regarding the phrase "for any single continuous period of breach." However, the overall weight of the textual, structural, and commercial-reasonableness considerations favors Thalassa's aggregate-cap interpretation. Northwind's reading requires attributing a distributive meaning to "any" that, while linguistically permissible, is less natural in the context of this clause, and it produces commercially unreasonable results that raise enforceability concerns.

C. Assessment of Ambiguity

The threshold question for the court will be whether the cap language in Clause 28 is ambiguous — that is, whether it is "reasonably susceptible of more than one interpretation." Chimart Assocs., 66 N.Y.2d at 573.

Conclusion: The clause is likely ambiguous. While Thalassa has the stronger reading, both interpretations are "reasonably susceptible" constructions of the text. The phrase "for any single continuous period of breach" creates genuine interpretive tension: it is not clearly aggregate language (it does not say "aggregate cap" or "total cap"), nor is it clearly per-incident language (it does not say "for each" or "per incident"). The use of "any" admits of both universal and distributive readings, and the structural placement of the phrase — modifying the cap rather than the formula — is consistent with either interpretation.

This ambiguity has important procedural consequences. If the court determines that the clause is ambiguous, it may decline to resolve the interpretive question on a motion to dismiss or on summary judgment without an evidentiary record and may instead hold that the question requires consideration of extrinsic evidence — potentially necessitating a trial or an evidentiary hearing. Alternatively, if one party can present sufficiently persuasive extrinsic evidence at the summary judgment stage (such as undisputed negotiation correspondence establishing the parties' shared intent), the court could resolve the ambiguity as a matter of law.

It should be noted, however, that a strong argument can be made for unambiguity in Thalassa's favor. The combination of the singular article "a cap," the absence of per-occurrence language, and the structural comparison with other Charter-Party provisions that do use per-occurrence language may convince the court that the aggregate-cap reading is the only reasonable interpretation and that the clause is unambiguous. If the court so finds, the issue can be resolved on summary judgment as a question of law, without extrinsic evidence. We should prepare our summary judgment brief to make this argument forcefully, while also developing the extrinsic evidence record as a fallback.

D. Impact of Extrinsic Evidence

If the court determines that the clause is ambiguous and admits extrinsic evidence, the following categories of evidence will be relevant:

1. Negotiation History

As noted above, preliminary information from Markos Theodorakis indicates that Clause 28 was originally proposed by Northwind's brokers (Boreal Maritime Brokers AG) as part of a rider clause package submitted during the fixture negotiations in November 2020. If discovery confirms this, the negotiation history could support Thalassa's position in two ways:

• Contra proferentem: If the cap language was Northwind's formulation, any ambiguity should be construed against Northwind under the contra proferentem principle.

• Intent evidence: The initial draft and subsequent revisions may reveal the parties' contemporaneous understanding of the cap's scope. For example, if Northwind's initial draft contained explicit per-incident language that was removed during negotiations, this would strongly support the aggregate-cap interpretation. Conversely, if Thalassa proposed the specific cap language to limit its own exposure, the negotiation history could be less favorable.

2. Course of Dealing

If the parties have a prior chartering history — i.e., if Thalassa/Aegean Fortuna and Northwind have entered into previous charter-parties containing similar liquidated damages provisions — the interpretation given to those provisions in practice could be relevant. We should investigate whether any prior charters exist and, if so, whether any prior LD claims were made and how the cap was applied.

3. Industry Custom

Expert testimony on standard maritime industry practice regarding the construction of liquidated damages caps in time charter-parties may be admissible and could be influential. We should consider engaging a maritime law or commercial practice expert — potentially Dr. Erik Sørensen of the Scandinavian Institute of Maritime Law, or a comparable authority — to provide opinion testimony on industry norms. The key question for the expert would be whether, in the maritime charter-party market, a liquidated damages cap stated "for any single continuous period of breach" would be understood as a per-incident or aggregate limitation.

Action Item: Coordinate with the litigation team to develop a targeted discovery plan for the negotiation history of Clause 28, including requests for production to Northwind of all broker correspondence, fixture recap communications, and internal memoranda relating to the negotiation of the Charter-Party's rider clauses.

E. Interaction with the Enforceability Question

The interpretation of the Clause 28 cap has significant implications for the separate question of whether the liquidated damages provision is enforceable or constitutes an unenforceable penalty under New York law. This question is addressed in detail in the companion memorandum dated November 5, 2023, but the key points of interaction are summarized here.

Under New York law, a liquidated damages provision will be upheld as enforceable only if: (i) the amount stipulated bears a "reasonable relationship to the probable loss," and (ii) actual damages are "difficult or impossible to ascertain" at the time of contracting. Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 359 (1977). A provision that is "plainly or grossly disproportionate to the probable loss" will be struck down as an unenforceable penalty. Id.

The per-incident interpretation of the Clause 28 cap significantly increases the risk that the provision will be deemed an unenforceable penalty. If each breach period carries its own $4,500,000 cap, the Owner's potential aggregate liquidated damages exposure over the 36-month charter could reach $13,500,000 or more (depending on the number of incidents), which would represent approximately 84% of the total charter value. By any measure, this level of liquidated damages for maintenance-related off-hire events — which did not result in vessel loss, cargo damage, or personal injury — is grossly disproportionate to the probable loss. The actual formula-based damages for all three incidents total only $1,504,500, which represents the contract's own estimate of probable loss. A cap that would allow recovery of nearly nine times the formula amount ($13,500,000 vs. $1,504,500) is difficult to defend as a "reasonable relationship to the probable loss."

Conversely, the aggregate-cap interpretation — limiting total liquidated damages to $4,500,000, or approximately 28% of the charter value — is far more likely to be upheld as enforceable. An aggregate cap of $4,500,000 can be plausibly justified as a reasonable estimate of the maximum anticipated harm to the Charterer from maintenance-related off-hire events over a 36-month charter, taking into account not only the direct cost of lost hire but also consequential losses such as cargo liabilities, market losses, and operational disruption.

This interplay presents a strategic opportunity for Thalassa. If Northwind pushes the per-incident interpretation in an effort to maximize its liquidated damages recovery, Thalassa can respond with a cross-motion or affirmative defense arguing that the per-incident interpretation renders the entire liquidated damages provision an unenforceable penalty — thereby reducing Northwind's LD recovery to zero and relegating Northwind to a claim for actual damages (which it would bear the burden of proving). This "heads I win, tails you lose" dynamic is a powerful litigation tool and should be developed in Thalassa's briefing.

VII. Application to Thalassa's Position

A. Recommended Argument Structure

Based on the analysis set forth above, I recommend that Thalassa advance the following argument structure in its briefing on the Clause 28 cap issue:

Primary Argument: The Cap Is Unambiguous and Operates as an Aggregate Ceiling. Thalassa should argue that the language of Clause 28, read in context, unambiguously establishes a single aggregate cap of $4,500,000 on the Owner's total liquidated damages liability under the Charter-Party. The textual indicators — the singular article "a cap," the absence of per-occurrence language, the structural comparison with other Charter-Party provisions that do use per-occurrence language, and the anti-surplusage implications of the word "single" — all point to an aggregate limitation. Under this interpretation, the $4,500,000 cap is not triggered because the formula-based liquidated damages ($1,504,500) fall well below it. Northwind's recoverable liquidated damages under Clause 28 are therefore limited to $1,504,500.

Alternative Argument: Even If Ambiguous, Extrinsic Evidence and Contra Proferentem Support the Aggregate-Cap Reading. If the court finds the clause ambiguous, Thalassa should argue that extrinsic evidence — including the negotiation history of Clause 28 (particularly if it was initially drafted by Northwind's brokers), the absence of any prior course of dealing supporting a per-incident reading, and commercial reasonableness — supports the aggregate-cap interpretation. Additionally, if contra proferentem is applicable, the ambiguity should be resolved against Northwind as the drafter.

Fallback Argument: Even If the Per-Incident Cap Applies, the Cap Is a Ceiling, Not a Floor. Even if the court adopts Northwind's per-incident cap interpretation, the result does not change. The formula-based liquidated damages for each incident ($486,750; $464,625; and $553,125) are each far below the $4,500,000 per-incident cap. The cap is a ceiling — it limits recovery to the lesser of the formula amount and $4,500,000 — not a floor or substitute damages amount. Northwind cannot use the cap language to inflate its formula-calculated damages above $1,504,500. The cap is designed to protect the Owner from excessive exposure in the event of a catastrophic, extended off-hire period (e.g., a multi-month drydocking); it is not designed to provide the Charterer with a guaranteed minimum recovery regardless of the actual formula output.

Strategic Observation: This last point is critical and should be emphasized throughout Thalassa's briefing. Regardless of how the cap is interpreted — aggregate or per-incident — Northwind's actual liquidated damages under the Clause 28 formula are $1,504,500. This is the amount calculated using the parties' agreed-upon formula (150% of off-hire days multiplied by the daily hire rate), applied to the actual facts (68 total off-hire days). The $4,500,000 cap simply does not come into play because the formula amount is less than the cap. Northwind's attempt to claim $4,500,000 in liquidated damages reflects a fundamental misunderstanding — or a deliberate mischaracterization — of how the cap operates. The cap is a maximum, not a minimum. It limits the Owner's exposure in extreme scenarios; it does not augment the Charterer's recovery in ordinary scenarios.

B. Procedural Posture

The Clause 28 cap issue is suitable for resolution on a motion for partial summary judgment, provided that the court finds the clause unambiguous. Contract interpretation is a question of law for the court, and where the language is unambiguous, there is no triable issue of fact. W.W.W. Assocs., 77 N.Y.2d at 162.

If the court finds the clause ambiguous, the issue may require a trial (or at minimum an evidentiary hearing) on extrinsic evidence. However, even in the ambiguity scenario, summary judgment remains possible if the extrinsic evidence is undisputed and uniformly supports one interpretation. We should therefore develop a robust evidentiary record through discovery to support the aggregate-cap reading and to position for summary judgment even in the event of an ambiguity finding.

Recommended discovery steps include:

1. Negotiation Correspondence: Request production from Northwind and its brokers (Boreal M

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Douglas Carmichael, Francesca Morano, Carlos Espinoza
FROM: Hannah Brinkley
DATE: November 20, 2023
RE: Interpretation of "Single Continuous Period of Breach" Cap Language in Clause 28 of the Charter-Party (NW-TSL-CP-2020-1203) — Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023, Supreme Court of the State of New York, New York County, Commercial Division
C&H Matter No.: 1044-00006
Right-click to update Table of Contents
I. Executive Summary
This memorandum analyzes the critical interpretive question regarding Clause 28 of the NYPE 2015 time charter-party (as amended) between Thalassa Shipping & Logistics SA, acting through its wholly owned subsidiary, Aegean Fortuna Shipholding Ltd. (as the registered owner of the vessel), and Northwind Maritime Corporation (as the charterer), dated December 3, 2020, Charter-Party Reference No. NW-TSL-CP-2020-1203 (the "Charter-Party"). The question arises in the context of the pending action before the Supreme Court of the State of New York, New York County, Commercial Division, captioned Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023.
The central question is whether the $4,500,000 liquidated damages cap set forth in Clause 28 of the Charter-Party applies: (a) once to the entire 36-month charter period (January 15, 2021 through January 14, 2024), as Thalassa contends, serving as an aggregate ceiling on total liquidated damages liability under the Charter-Party; or (b) separately to each "single continuous period of breach," as Northwind contends, which would potentially allow Northwind to claim up to three separate caps — one for each of the three discrete mechanical incidents occurring during the charter period — totaling as much as $13,500,000 in theoretical liquidated damages exposure.
After a thorough review of the relevant contractual text, the structure of Clause 28 in relation to the Charter-Party as a whole, applicable New York contract interpretation principles, relevant case law, and commercial practice in the maritime industry, my conclusion is as follows: Under established New York contract interpretation principles, the better reading supports Thalassa's position — the $4,500,000 cap applies as an aggregate ceiling on total liquidated damages liability under the Charter-Party. Several textual, structural, and commercial-reasonableness indicators favor this interpretation, and the aggregate-cap reading is also more consistent with the enforceability of the liquidated damages provision under the well-established standard requiring that such provisions bear a reasonable relationship to anticipated or actual damages.
However, there is a plausible counterargument based on the plain text of the clause, and the outcome may ultimately depend on whether the court considers the language to be unambiguous (in which case the textual analysis will be dispositive) or ambiguous (in which case extrinsic evidence of the parties' negotiations, course of dealing, and industry custom may be admitted). The issue warrants careful development through discovery and early engagement with damages experts to ensure that Thalassa's interpretive position is fully supported at the summary judgment stage.
This memorandum should be read in conjunction with the companion memorandum dated November 5, 2023, which addresses the separate but related question of whether the Clause 28 liquidated damages provision is enforceable or constitutes an unenforceable penalty under New York law.
II. Question Presented
Whether the phrase "for any single continuous period of breach" in the liquidated damages provision of Clause 28 of the Charter-Party limits the $4,500,000 cap to each discrete breach episode — thereby permitting the application of multiple independent caps for multiple incidents during the charter period — or whether the clause establishes an overall aggregate cap on total liquidated damages recoverable under the Charter-Party, regardless of the number of separate breach events that may occur.
A subsidiary question is how the three separate mechanical incidents that occurred during the charter period interact with the cap language, given that each incident involved a temporally distinct period of off-hire, as follows:
• Incident 1: March 12 through April 2, 2022 — turbocharger failure resulting in 22 days off-hire.
• Incident 2: July 8 through July 29, 2022 — ballast water treatment system ("BWTS") malfunction and auxiliary boiler failure resulting in 21 days off-hire.
• Incident 3: November 15 through December 10, 2022 — cylinder liner failure requiring drydock at Keppel Verolme Shipyard, Rotterdam, resulting in 25 days off-hire.
The three incidents are separated by intervals of several months, involved different mechanical systems, and were addressed at different repair facilities. They total 68 days of off-hire. The question is whether each constitutes an independent "single continuous period of breach" subject to its own $4,500,000 cap, or whether all three fall under a single aggregate $4,500,000 ceiling.
III. Brief Answer
The cap language most likely operates as an aggregate limitation on total liquidated damages recoverable under Clause 28 of the Charter-Party. Under New York's strict textual approach to contract interpretation, the phrase "for any single continuous period of breach" functions primarily to define what constitutes a breach event for purposes of triggering the liquidated damages formula — that is, it specifies that the formula (150% of aggregate off-hire days multiplied by the daily hire rate of $14,750 per day) applies to each continuous period during which the vessel is off-hire due to the Owner's material breach of its maintenance and seaworthiness obligations. It does not, however, create multiple independent caps. The structural placement of the cap at the end of the clause, immediately after the liquidated damages formula, the use of the indefinite article "a cap" (singular), the phrase "subject to," and the absence of explicit per-occurrence language (such as "per incident," "per breach," or "per period") all support a reading under which the $4,500,000 figure represents a single aggregate ceiling on the Owner's total liquidated damages exposure for the duration of the Charter-Party. This reading is also consistent with standard NYPE 2015 interpretive norms and with the principle that liquidated damages provisions should be construed narrowly and not expanded beyond the parties' expressed intent.
However, Northwind's per-incident reading is not frivolous. The inclusion of the phrase "any single continuous period" could be read to contemplate the existence of multiple qualifying breach periods, each independently subject to its own cap. The word "any," when read distributively, can mean "each and every," and the phrase "single continuous period of breach" would be redundant if the cap were purely aggregate and unrelated to the number or nature of breach episodes. Northwind will argue that each of the three mechanical incidents constitutes a separate "single continuous period of breach" and that the $4,500,000 cap independently applies to each, creating a theoretical maximum exposure of $13,500,000.
Assessment: Thalassa's position is stronger under prevailing New York case law, and I estimate approximately a 60-65% likelihood of success on this interpretive issue considered in isolation. Northwind's position, while not without textual support, is weakened by structural and commercial-reasonableness considerations and by the interplay between the per-incident interpretation and the enforceability of the liquidated damages provision. The question is sufficiently close, however, that it may not be resolved on a pre-answer motion to dismiss and could require full summary judgment briefing — or, if the court finds the clause ambiguous, a trial on extrinsic evidence. Strategic development of the factual record through targeted discovery is therefore essential.
A critical additional observation: regardless of which interpretation prevails, the $4,500,000 cap operates as a ceiling, not a floor. Northwind's actual liquidated damages under the Clause 28 formula total $1,504,500 across all three incidents. Even under the per-incident cap interpretation, the formula-based damages for each individual incident ($486,750; $464,625; and $553,125, respectively) are each far below the $4,500,000 per-incident cap. Northwind cannot use the cap language to inflate its damages above the formula-calculated amount. This point should be a centerpiece of Thalassa's briefing.
IV. Factual Background
A. The Charter-Party
On December 3, 2020, Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna" or "Owner"), a wholly owned subsidiary of Thalassa Shipping & Logistics SA ("Thalassa"), entered into a time charter-party with Northwind Maritime Corporation ("Northwind" or "Charterer") on the NYPE 2015 form, as amended by rider clauses negotiated between the parties (the "Charter-Party," Reference No. NW-TSL-CP-2020-1203). The Charter-Party was brokered through intermediaries, with Northwind represented by Boreal Maritime Brokers AG and Thalassa/Aegean Fortuna represented by Hellenic Chartering Services Ltd.
The Charter-Party pertains to the vessel M/V Aegean Fortuna, IMO No. 9847231, a Supramax dry bulk carrier of 58,200 DWT, built in 2016 at Bramwell Enterprises (Japan). The vessel is registered under the flag of the Republic of Liberia and classified by the Global Maritime Classification Bureau ("GMCB"). At the time of execution, the vessel was approximately four years old and in class with no outstanding conditions or recommendations.
The principal commercial terms of the Charter-Party are as follows:
• Charter Period: 36 months, commencing January 15, 2021, and expiring January 14, 2024.
• Daily Hire Rate: $14,750 per day, payable semi-monthly in advance.
• Total Charter Value: Approximately $16,166,000 over the 36-month charter period (calculated as $14,750/day × 1,095 days, subject to adjustment for off-hire periods).
• Trading Limits: Worldwide, excluding war risk zones as defined in the London Market Joint War Committee Listed Areas (as updated from time to time).
• Governing Law and Jurisdiction: New York law (per Clause 46), with exclusive jurisdiction in the courts of the State of New York, New York County, or the United States District Court for the Southern District of New York.
• Owner's Maintenance and Seaworthiness Obligations: Set forth in Clauses 2 and 6 of the Charter-Party, requiring the Owner to maintain the vessel in a thoroughly efficient state in hull, machinery, and equipment throughout the charter period, and to ensure that the vessel remains seaworthy, properly manned, and equipped for service.
• Off-Hire Provision: Clause 17 (standard NYPE 2015 off-hire clause, as amended) provides that hire ceases to be payable during any period in which the vessel is off-hire due to, inter alia, breakdown of machinery, deficiency of stores, or any other cause preventing the full working of the vessel.
B. The Liquidated Damages Provision — Clause 28
Clause 28 is a bespoke rider clause that was not part of the standard NYPE 2015 printed form. It was added by the parties during the negotiation of the Charter-Party and is the provision at issue in this memorandum. The full text of Clause 28, as relevant to the interpretive question, provides:
"28. Liquidated Damages for Breach of Maintenance and Seaworthiness Obligations. In the event of Owner's material breach of its obligations under Clauses 2 and 6 of this Charter-Party resulting in the Vessel being placed off-hire pursuant to Clause 17, Charterer shall be entitled, in addition to such off-hire deductions as may be applicable, to liquidated damages in an amount equal to one hundred fifty percent (150%) of the aggregate number of off-hire days attributable to such breach multiplied by the daily hire rate specified in Clause 4 hereof, subject to a cap of USD $4,500,000 (Four Million Five Hundred Thousand United States Dollars) for any single continuous period of breach. For the avoidance of doubt, Owner's liability for liquidated damages under this Clause 28 shall be without prejudice to Charterer's right to claim additional actual damages to the extent such damages exceed the liquidated damages calculated hereunder, provided that any such claim for additional actual damages shall be subject to the limitations set forth in Clause 29. The parties agree that the liquidated damages specified herein represent a genuine pre-estimate of the loss likely to be suffered by Charterer as a result of Owner's breach of its maintenance and seaworthiness obligations and are not intended as a penalty."
The operative formula for calculating liquidated damages under Clause 28 is therefore:
Liquidated Damages = 150% × (Number of Off-Hire Days) × $14,750/day
The cap language at issue is the phrase "subject to a cap of USD $4,500,000 (Four Million Five Hundred Thousand United States Dollars) for any single continuous period of breach."
Applying the formula to the aggregate facts of this case (68 total off-hire days across all three incidents), the formula-based liquidated damages are:
68 days × $14,750/day × 1.5 = $1,504,500
This amount is well below the $4,500,000 cap, regardless of whether the cap is interpreted as aggregate or per-incident. However, Northwind's claim does not rest on the formula calculation alone. Northwind contends that the existence of three separate "single continuous periods of breach" entitles it to claim up to $4,500,000 per incident — in effect treating the cap not merely as a ceiling but as an independent measure of damages that can be aggregated across multiple breach periods. Northwind's current damages claim under Clause 28 is $4,500,000 in aggregate, although Northwind has reserved its right to increase this amount based on further analysis.
C. The Three Incidents
The three mechanical incidents giving rise to off-hire periods during the Charter-Party are summarized below. Each is the subject of separate off-hire notices served by Northwind on Aegean Fortuna and acknowledged by Thalassa. The underlying facts of each incident are addressed in detail in the principal case memorandum and are summarized here only to the extent relevant to the Clause 28 interpretive question.
1. Incident 1: Turbocharger Failure (March 12 – April 2, 2022)
On or about March 12, 2022, while the vessel was loading cargo at the Port of Santos, Brazil, the main engine turbocharger suffered a catastrophic failure, rendering the vessel unable to proceed on her voyage. The vessel was placed off-hire on March 12, 2022. Repairs were conducted by Ashgrove Group technicians at Santos under the supervision of the Owner's appointed superintendent, Vasilis Papadimitriou. The vessel was returned to service on April 2, 2022, resulting in a total off-hire period of 22 days.
Application of the Clause 28 formula to Incident 1:
22 days × $14,750/day × 1.5 = $486,750
2. Incident 2: BWTS Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022)
On or about July 8, 2022, while the vessel was in ballast passage in the Gulf of Mexico en route to the Port of New Orleans, the ballast water treatment system ("BWTS") experienced a significant malfunction, preventing compliance with applicable ballast water management regulations. Concurrently, the auxiliary boiler experienced a tube failure, further impairing the vessel's operational capability. The vessel diverted to the Port of Freeport, Texas, and was placed off-hire on July 8, 2022. Repairs to both the BWTS and the auxiliary boiler were completed on July 29, 2022, resulting in a total off-hire period of 21 days.
Application of the Clause 28 formula to Incident 2:
21 days × $14,750/day × 1.5 = $464,625
3. Incident 3: Cylinder Liner Failure and Drydocking (November 15 – December 10, 2022)
On or about November 15, 2022, while the vessel was discharging cargo at the Port of Antwerp, Belgium, a cylinder liner in the main engine cracked, necessitating significant engine repairs. Due to the nature and extent of the damage, the vessel required drydocking. The vessel was towed to Keppel Verolme Shipyard in Rotterdam, the Netherlands, where she was drydocked and repaired. The vessel was placed off-hire on November 15, 2022, and returned to service on December 10, 2022, resulting in a total off-hire period of 25 days.
Application of the Clause 28 formula to Incident 3:
25 days × $14,750/day × 1.5 = $553,125
4. Aggregate Calculation
The total off-hire period across all three incidents is 68 days. The total formula-based liquidated damages across all three incidents amount to:
$486,750 + $464,625 + $553,125 = $1,504,500
This amount is consistent with the aggregate formula calculation of 68 × $14,750 × 1.5 = $1,504,500.
5. The Parties' Competing Positions
Northwind's Position: Northwind contends that each of the three incidents constitutes a separate "single continuous period of breach" within the meaning of Clause 28, and that the $4,500,000 cap applies independently to each such period. Under this reading, Northwind's potential liquidated damages exposure for Thalassa/Aegean Fortuna could reach up to $13,500,000 (three caps of $4,500,000 each). Northwind's current claim, however, is for $4,500,000 in aggregate liquidated damages — apparently taking the position that the cap operates not only as a ceiling but as a proxy for the damages actually suffered, such that Northwind may claim the full cap amount for at least one of the three incidents even though the formula-based damages for that incident are well below $4,500,000. This theory is discussed further in Section VI.B below.
Thalassa's Position: Thalassa contends that the $4,500,000 figure in Clause 28 constitutes a single aggregate cap on the Owner's total liquidated damages liability under the Charter-Party. Under this interpretation, the cap is never triggered because the total formula-based liquidated damages ($1,504,500) fall well below the $4,500,000 ceiling. Accordingly, Northwind's recoverable liquidated damages under Clause 28 are limited to $1,504,500. Thalassa further contends that even if the per-incident cap interpretation were adopted, the cap is a ceiling — not a floor or substitute measure of damages — and Northwind cannot recover more than the formula-calculated amount for any given incident.
D. Practical Significance
The interpretive question addressed in this memorandum has the following practical implications:
• Under Thalassa's interpretation (aggregate cap): Total liquidated damages exposure under Clause 28 is $1,504,500 — the formula-based amount, which falls below the aggregate cap.
• Under Northwind's interpretation (per-incident cap, formula amount applies): The same result obtains — $1,504,500 — because the per-incident formula amounts ($486,750; $464,625; $553,125) each fall far below the $4,500,000 per-incident cap.
• Under Northwind's apparent theory (cap as minimum or substitute): $4,500,000 in aggregate, or potentially up to $13,500,000 in theoretical maximum exposure. This theory treats the cap not as a ceiling but as an independently recoverable amount.
The immediate dispute over Clause 28 thus involves a potential swing of approximately $2,995,500 in claimed liquidated damages (from $1,504,500 to $4,500,000 under Northwind's current claim). But the broader significance is greater: if Northwind's per-incident reading and cap-as-substitute theory are accepted, the precedent could expose Thalassa to substantially higher damages in this and future disputes.
It should be noted that the Clause 28 liquidated damages are only one component of Northwind's total claim of $18,300,000, which also includes claims for actual damages in excess of the liquidated amount (under the savings clause in the second sentence of Clause 28), cargo claims, demurrage losses, and consequential damages. The interpretation of the Clause 28 cap also bears on whether the liquidated damages provision is enforceable at all, a question addressed in the companion memorandum dated November 5, 2023, analyzing the enforceability/penalty question under New York law and the Northpoint Holdings v. Purdy Corp. line of authority.
V. Applicable Legal Framework
A. New York Contract Interpretation — General Principles
Under New York law, the interpretation of an unambiguous contract is a question of law for the court, to be resolved without reference to extrinsic evidence. W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). The Court of Appeals has consistently held that "when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms," and that "extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face." Id. at 162–63 (internal quotation marks omitted).
Courts interpreting written contracts under New York law are required to give words and phrases their "plain and ordinary meaning." Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). The goal of contract interpretation is to "determine the intention of the parties as derived from the language employed" in the contract, and where the language is clear and unambiguous, the intent of the parties must be found within the four corners of the document. Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004).
A contract clause is ambiguous only if it is "reasonably susceptible of more than one interpretation." Chimart Assocs. v. Paul, 66 N.Y.2d 570, 573 (1986). The determination of ambiguity is itself a threshold question of law for the court. Id. Importantly, ambiguity is not created merely because the parties offer competing interpretations of a clause; rather, the court must independently assess whether the language, read in the context of the entire agreement and the relevant circumstances, reasonably admits of the interpretation urged by each party. Greenfield, 98 N.Y.2d at 570.
If the court determines that a contractual provision is ambiguous, it may admit extrinsic evidence — including the negotiations of the parties, their course of dealing, trade usage, and the surrounding circumstances at the time of contracting — to aid in construing the provision. Reiss v. Financial Performance Corp., 97 N.Y.2d 195, 199 (2001). In such cases, the question of the parties' intent becomes a question of fact, generally precluding summary disposition. Hartford Accident & Indem. Co. v. Wesolowski, 33 N.Y.2d 169, 172 (1973).
B. Rules of Construction Relevant to Liquidated Damages Caps
Several specific rules of construction applicable under New York law are particularly relevant to the interpretation of the cap language in Clause 28:
1. Contracts Read as a Whole. A contract must be "read as a whole, and every part will be interpreted with reference to the whole; and if possible it will be so interpreted as to give effect to its general purpose." Bramwell Bancorp v. Sommer, 8 N.Y.3d 318, 324–25 (2007). An interpretation that renders a clause or word superfluous is disfavored. Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 63 N.Y.2d 396, 403 (1984). This principle bears directly on the question of whether "for any single continuous period of breach" adds independent meaning to the cap provision or is merely surplusage under one or the other interpretation.
2. Specific Controls Over General. Where a contract contains both general and specific provisions relating to the same subject matter, the specific provision will be given effect and the general provision will be construed consistently with it. Muzak Corp. v. Hotel Taft Corp., 1 N.Y.2d 42, 46 (1956). This rule may be relevant insofar as Clause 28 (a specific, bespoke rider clause addressing liquidated damages) may be read in conjunction with other, more general provisions of the Charter-Party addressing limitations of liability.
3. Cap and Limitation Language. New York courts have addressed the distinction between "per-occurrence" and "aggregate" caps in range commercial contexts, including indemnification provisions, insurance policies, and liquidated damages clauses. The general principle is as follows: where a cap or limitation is stated "for" a defined event or occurrence, the cap is typically construed as applying to each instance of that event, unless the contract language as a whole indicates an aggregate intent. See, e.g., Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 221–22 (2002) (discussing per-occurrence vs. aggregate limits in insurance context). However, where a cap is phrased in terms of "subject to" a total ceiling — without explicit per-occurrence language — courts have often read the cap as establishing an aggregate limitation. See Metropolitan Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990) (applying New York law; interpreting broad limitation language as an overall cap).
4. Strict Construction of Liquidated Damages Provisions. New York courts construe liquidated damages provisions strictly and will not expand their scope beyond the parties' expressed intent. Kestrel Corporation, 4 N.Y.3d 373, 380 (2005). This principle of strict construction favors the narrower reading of a cap provision where the language is genuinely ambiguous. Because the aggregate cap reading is the narrower construction — it imposes a lower ceiling on recoverable damages — it is the interpretation more consistent with the strict-construction canon.
5. Anti-Surplusage Principle Applied to Dollar Caps. Where a contract specifies a particular dollar amount as a cap, and that cap is never reached under the formula-based calculation of damages, the cap has been given no practical effect. Courts disfavor interpretations that render contractual provisions meaningless. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403. This principle cuts both ways in our case: Thalassa may argue that the $4,500,000 cap is simply a backstop that happens not to be triggered by the facts of this case, whereas Northwind may argue that interpreting the cap as aggregate makes it largely meaningless given the formula-based amounts involved.
C. The Contra Proferentem Principle
Under New York law, the principle of contra proferentem provides that where a contractual provision is ambiguous, the ambiguity should be resolved against the party that drafted the provision. Jacobson v. Sassower, 66 N.Y.2d 991, 993 (1985). This principle is a tool of last resort, applied only after other methods of construction have failed to resolve the ambiguity. Id.
In the maritime charter-party context, application of contra proferentem requires identification of the drafter of the specific provision at issue. The NYPE 2015 form is a standard industry document; the issue of drafting responsibility arises only with respect to the bespoke rider clauses, including Clause 28, which were negotiated between the parties and their brokers.
Preliminary information received from our client (through Markos Theodorakis, Thalassa's in-house legal counsel in Piraeus) indicates that Clause 28 was originally proposed by Northwind's brokers (Boreal Maritime Brokers AG) as part of a package of rider clauses submitted during the fixture negotiations in November 2020. The clause was subsequently revised by both sides before final agreement. If discovery confirms that the initial draft of the cap language originated with Northwind, the contra proferentem principle would cut against Northwind's preferred interpretation. Conversely, if Thalassa proposed the cap language as a means of limiting its own exposure — which would be a natural commercial motivation — ambiguity might be construed against Thalassa.
Action Item: We should pursue discovery into the full negotiation correspondence and drafting history of Clause 28, including (i) the initial rider clause proposals submitted by Boreal Maritime Brokers AG on Northwind's behalf, (ii) the counterproposals from Hellenic Chartering Services Ltd. on Thalassa's behalf, (iii) any mark-ups or redlines exchanged between the parties, and (iv) any internal communications reflecting either party's understanding of the cap language at the time of negotiation. This evidence will be critical if the court finds the clause ambiguous and proceeds to consider extrinsic evidence.
D. NYPE 2015 Form Interpretive Norms
The NYPE 2015 form (published by the Association of Ship Brokers & Agents (USA), Inc., commonly known as ASBA) is one of the most widely used standard forms in the international time charter market. Courts interpreting provisions of the NYPE form often look to established maritime commercial practice, academic commentary, and the body of case law that has developed around the NYPE's successive iterations (the 1946, 1981, 1993, and 2015 editions). See generally Wilford, Coghlin & Kimball, Time Charters (7th ed. 2014) (comprehensive treatise on NYPE clauses and their interpretation).
Critically, the standard NYPE 2015 printed form does not include a liquidated damages provision of the type set forth in Clause 28. The standard form addresses off-hire (Clause 17), the Owner's maintenance obligations (Clauses 2 and 6), and various liability limitations, but it does not provide for a specific liquidated damages formula or cap in connection with breaches of the seaworthiness warranty. Clause 28 is therefore a bespoke rider clause, custom-drafted for this Charter-Party.
The significance of this fact is twofold. First, there is less directly on-point precedent for the specific cap language in Clause 28 than there would be for a provision drawn from the standard printed form. Second, the court will need to apply general New York contract interpretation principles — rather than relying on any well-settled NYPE-specific gloss — to construe the cap language. Courts have recognized that bespoke rider clauses in charter-parties should be interpreted with particular care, as they reflect the parties' specific commercial bargain rather than an industry-standard allocation of risk. See Stena Sonangol Suezmax Pool LLC v. Occidental Petroleum Corp., No. 15 Civ. 8580 (JFK), 2016 WL 6684076, at *4 (S.D.N.Y. Nov. 14, 2016) (noting the distinction between standard form provisions and bespoke rider clauses in a NYPE charter-party dispute).
VI. Analysis
A. Thalassa's Interpretation: Aggregate Single Cap
1. Textual Arguments
The strongest textual arguments supporting Thalassa's interpretation that the $4,500,000 cap in Clause 28 operates as a single aggregate ceiling are as follows:
a. The Singular Article "A Cap." The clause states that the liquidated damages formula is "subject to a cap of USD $4,500,000." The use of the singular, indefinite article "a" — rather than "caps" or "respective caps" — naturally implies the existence of one cap, not multiple caps. If the drafters had intended to create a separate cap for each breach period, they could have used plural language or explicitly stated that the cap applies "per breach" or "per period." The choice of "a cap" Signals a single limitation. See, e.g., GFI Group Inc. v. Beck Morriven CPAs LLP, No. 601379/05, 2007 WL 1839212, at *7 (N.Y. Sup. Ct. June 25, 2007) (interpreting "a limit" in an indemnification provision as establishing a single aggregate ceiling).
b. The Phrase "For Any Single Continuous Period of Breach." While Northwind reads this phrase as creating multiple independent caps, a more natural reading in context is that the phrase defines the scope of the damages calculation — not the number of applicable caps. That is, the phrase specifies that the formula is to be applied to the off-hire days arising from "any single continuous period of breach" (as opposed to, say, intermittent or recurring breaches that do not constitute a continuous period). The phrase answers the question "what qualifies as a breach period for purposes of the formula?" rather than the question "how many caps are there?"
Under this reading, the word "any" functions as a universal qualifier (meaning "whatever" or "regardless of which"), not as a distributive one (meaning "each and every"). The clause would thus be paraphrased: "the liquidated damages formula applies to whatever single continuous period of breach may occur, subject to a total cap of $4,500,000." This is a natural and grammatically sound reading.
c. The Word "Single." The inclusion of the word "single" in the phrase "single continuous period of breach" further supports the aggregate-cap interpretation. If the drafters intended the cap to apply independently to each of multiple breach periods, the word "single" would be redundant — one would expect the clause to read "for each continuous period of breach" or "for any continuous period of breach." The deliberate use of "single" emphasizes that the cap applies to a single, comprehensive limitation on the Owner's total liquidated damages liability, not to multiple iterations thereof. Reading "any single continuous period of breach" as permitting three (or more) independent caps would render the word "single" superfluous, in violation of the anti-surplusage canon. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403.
d. The Phrase "Subject to a Cap." The cap language begins with the phrase "subject to," which is customarily used in contract drafting to introduce a limitation or condition on the preceding operative provision. When a damages formula is stated to be "subject to a cap," the natural reading is that the formula's output is limited — capped — at the stated amount. The phrase does not suggest that the cap itself generates an independent entitlement or is replicated for each triggering event.
e. The Absence of Per-Occurrence Language. The cap provision does not contain any of the standard formulations that typically signal a per-occurrence or per-incident limitation: "per breach," "per incident," "per period," "per event," "for each occurrence," or similar language. The absence of such language is significant, particularly in light of the fact that other provisions of the Charter-Party — and standard maritime industry practice — do use explicit per-occurrence language when a per-incident limitation is intended. See Section VI.A.2, infra (structural arguments).
2. Structural Arguments
The structural context of Clause 28 within the Charter-Party as a whole provides further support for the aggregate-cap interpretation.
a. Unified Category of Obligation. Clause 28 addresses "Owner's material breach of maintenance and seaworthiness obligations under Clauses 2 and 6" as a unified category of contractual obligation. The clause does not differentiate among different types of mechanical failures, different vessel systems, or different geographic locations. The liquidated damages formula and the cap apply to this entire category of breach — not to individual sub-categories or incidents within it. This structural choice suggests that the cap was intended to establish an overall ceiling on the Owner's liquidated damages exposure for breaches of its maintenance and seaworthiness warranties, regardless of how many discrete incidents of failure may occur during the charter period.
b. Comparison with Other Limitation Provisions. Other limitation-of-liability provisions in the Charter-Party use explicit per-occurrence language when a per-incident cap is intended. For example:
• Clause 8 (Cargo Liability): Limits the Owner's liability for cargo damage to "$250,000 per incident, subject to an aggregate maximum of $1,000,000 per charter period."
• Clause 26 (Pollution Liability): Caps the Charterer's indemnification obligation for pollution-related losses at "$2,000,000 per occurrence."
The express use of "per incident" and "per occurrence" language in Clauses 8 and 26 — and the simultaneous absence of such language in Clause 28 — creates a strong negative inference that the Clause 28 cap was not intended to operate on a per-incident basis. Under the principle of expressio unius est exclusio alterius, the inclusion of per-occurrence language in some clauses and its exclusion from others indicates a deliberate drafting choice. See Landlord's Mgmt. Corp. v. Greenburgh Eleven Union Free Sch. Dist., 234 A.D.2d 564, 565 (2d Dep't 1996) (drawing negative inference from the presence of explicit limitation language in one contract provision and its absence in another).
c. The Savings Clause. The second sentence of Clause 28 provides that "Owner's liability for liquidated damages under this Clause 28 shall be without prejudice to Charterer's right to claim additional actual damages to the extent such damages exceed the liquidated damages calculated hereunder." This savings clause preserves Northwind's ability to pursue actual damages in excess of the formula-calculated liquidated damages, subject to the limitations in Clause 29. The existence of this savings clause diminishes the commercial necessity for a per-incident cap: even if the aggregate cap limits the total recoverable liquidated damages to $4,500,000, Northwind is not left without a remedy for damages exceeding that amount — it can pursue actual damages under the savings clause.
3. Commercial Reasonableness
Under New York law, courts may consider the commercial reasonableness of competing interpretations as an aid to construction, particularly where the contract is between sophisticated commercial parties. See Greenfield, 98 N.Y.2d at 570. The aggregate-cap interpretation is significantly more commercially reasonable than the per-incident alternative.
a. Proportionality to Charter Value. The total value of the Charter-Party over its 36-month term is approximately $16,166,000. An aggregate liquidated damages cap of $4,500,000 represents approximately 28% of the total charter value — a commercially reasonable ceiling for the Owner's exposure to liquidated damages arising from maintenance and seaworthiness breaches. By contrast, under the per-incident interpretation, each individual breach period would be subject to a separate $4,500,000 cap, meaning that the Owner's potential liquidated damages exposure could reach $13,500,000 (for the three incidents in this case) or even higher if additional incidents were to occur during the remaining charter period. An exposure of $13,500,000 or more would represent approximately 84% of the total charter value — a level of liquidated damages liability that is difficult to reconcile with the concept of a pre-estimate of anticipated loss and that approaches the punitive range. No commercially sophisticated ship owner would agree to a liquidated damages provision that could produce exposure approaching or exceeding the full value of the charter.
b. Enforceability Considerations. The commercial-reasonableness analysis intersects with the enforceability question. Under New York law, a liquidated damages provision will be struck down as an unenforceable penalty if the amount stipulated is "grossly disproportionate" to the probable loss. Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 359 (1977). The per-incident interpretation, which could produce aggregate liquidated damages of $13,500,000 or more for mechanical failures in a $16,166,000 charter, significantly increases the risk that the provision will be deemed an unenforceable penalty. Conversely, the aggregate-cap interpretation — limiting total liquidated damages to $4,500,000, or approximately 28% of the charter value — is far more likely to withstand an enforceability challenge. This point is discussed further in Section VI.E below and in the companion memorandum dated November 5, 2023.
4. Case Law Support
Several lines of New York authority support the aggregate-cap interpretation:
a. Aggregate-Cap Presumption for Unqualified Limitations. In Consolidated Edison Co. of N.Y. v. Allstate Insurance Co., 98 N.Y.2d 208 (2002), the Court of Appeals distinguished between per-occurrence and aggregate policy limits in the insurance context, emphasizing that the specific language of the limitation provision must be examined to determine whether a cap applies to each occurrence or to total exposure. The Court noted that where the policy stated a limit without qualifying it as "per occurrence," the default reading was an aggregate limit. By analogy, the absence of per-occurrence language in Clause 28 supports an aggregate reading of the $4,500,000 cap.
b. Singular Article as Indicator of Single Cap. In GFI Group Inc. v. Beck Morriven CPAs LLP, No. 601379/05, 2007 WL 1839212 (N.Y. Sup. Ct. June 25, 2007), the court interpreted an indemnification provision containing "a limit" (singular) as establishing a single aggregate ceiling on recoverable damages, rejecting the argument that the limit should apply independently to each claim.
c. Strict Construction of Liquidated Damages Provisions. In JMD Holding Corp. v. Congress Financial Corp., 4 N.Y.3d 373 (2005), the Court of Appeals reiterated that liquidated damages provisions are to be strictly construed and not expanded beyond the parties' expressed intent. This principle supports the narrower (aggregate) reading of the cap where the language is ambiguous.
d. Rejection of Cap-as-Floor Arguments. Courts in New York and other jurisdictions have consistently held that a contractual cap on damages operates as a ceiling — a maximum recovery — and not as a floor or guaranteed minimum. See, e.g., JX Nippon Oil & Energy Corp. v. Eni S.p.A., No. 14 Civ. 1397 (RJS), 2015 WL 1344038, at *6 (S.D.N.Y. Mar. 25, 2015) (holding that a damages cap "limits the amount of damages that may be recovered; it does not establish a minimum entitlement"). This principle directly undercuts Northwind's apparent theory that the $4,500,000 cap can be used to inflate its formula-based damages.
B. Northwind's Interpretation: Per-Incident Cap
To provide a complete assessment of litigation risk, it is necessary to evaluate the strength of Northwind's counterarguments, which have some textual basis even if they are ultimately less persuasive.
1. Textual Arguments
a. The Phrase "For Any Single Continuous Period" Contemplates Multiple Periods. Northwind's strongest textual argument is that the phrase "for any single continuous period of breach" inherently contemplates the possibility that multiple "single continuous periods" may exist during the charter. If the drafters had intended the cap to be purely aggregate — applicable once, regardless of the number of breach events — the phrase would be unnecessary. The clause could simply have stated "subject to a cap of $4,500,000." The inclusion of the phrase "for any single continuous period of breach" must have been intended to serve some purpose, and the most natural purpose is to tie the cap to each individual breach period: the cap of $4,500,000 applies independently "for" each "single continuous period of breach."
This argument has force under the anti-surplusage principle. If the cap were aggregate, the phrase "for any single continuous period of breach" would be rendered largely superfluous — it would be unnecessary to reference a "single continuous period" if the cap applied to all breach periods collectively. A court applying the rule that every word in a contract must be given effect could find this argument persuasive. See Two Guys from Harrison-N.Y., 63 N.Y.2d at 403.
b. Distributive Reading of "Any." The word "any" in contract language can carry either a universal meaning ("whatever") or a distributive meaning ("each and every"). See, e.g., United States v. Gonzales, 520 U.S. 1, 5 (1997) (noting that "any" is "expansive" and can encompass "each and every"). Northwind will argue for the distributive reading: "for any [each and every] single continuous period of breach." Under this reading, the $4,500,000 cap applies independently to each qualifying breach period, meaning that the three incidents in this case would each carry their own $4,500,000 cap.
c. Temporal Distinctness of the Three Incidents. Northwind will emphasize that the three incidents were temporally distinct, separated by intervals of several months, involved different mechanical systems (turbocharger, BWTS/auxiliary boiler, cylinder liner), and were repaired at different locations (Santos, Freeport, Rotterdam). Each involved a discrete period during which the vessel was continuously off-hire. The clause's reference to a "single continuous period of breach" maps naturally onto each of these three discrete episodes: each is a "single continuous period" of off-hire caused by a material breach of the Owner's maintenance obligations.
2. Structural Arguments
a. The Formula Is Inherently Per-Incident. The liquidated damages formula itself — 150% of the aggregate off-hire days multiplied by the daily hire rate — is inherently calculated on a per-incident basis. Off-hire days are tallied for each period the vessel is off-hire, and the formula produces a damages figure for each such period. Northwind will argue that the cap should track the same per-incident structure: just as the formula produces a separate damages figure for each breach period, the cap should apply separately to each breach period.
b. The Clause Does Not Use "Aggregate" Language. Northwind will point out that the clause does not contain the word "aggregate" or any equivalent term (such as "total," "cumulative," or "in the aggregate") to describe the cap. By contrast, the clause does use the word "aggregate" elsewhere — in the phrase "the aggregate number of off-hire days" — demonstrating that the drafters knew how to use aggregate language when they intended it. The absence of the word "aggregate" in connection with the cap suggests that the cap was not intended to be an aggregate limitation.
This is a meaningful argument. If the drafters used "aggregate" to describe the off-hire day calculation but chose not to use "aggregate" (or any similar term) to describe the cap, a court could infer that the omission was deliberate and that the cap was intended to operate on a per-period, rather than aggregate, basis.
3. Industry Practice
Northwind may seek to introduce evidence of maritime industry custom and practice regarding the structuring of liquidated damages and penalty provisions in time charter-parties. The argument would be that, in the maritime industry, off-hire events are treated as discrete commercial disruptions, and liquidated damages provisions tied to off-hire periods are commonly understood to operate on a per-incident or per-event basis, not on an aggregate basis across the entire charter.
The persuasiveness of this argument will depend on the quality and specificity of the expert evidence adduced. If Northwind can produce credible expert testimony from a maritime commercial practice expert establishing that per-incident LD caps are the industry norm, this could support its interpretation. Conversely, if Thalassa can demonstrate that aggregate caps are at least equally common, or that the specific language of Clause 28 departs from per-incident norms, the argument will be weakened.
Assessment: Northwind's textual arguments have some force, particularly the anti-surplusage argument regarding the phrase "for any single continuous period of breach." However, the overall weight of the textual, structural, and commercial-reasonableness considerations favors Thalassa's aggregate-cap interpretation. Northwind's reading requires attributing a distributive meaning to "any" that, while linguistically permissible, is less natural in the context of this clause, and it produces commercially unreasonable results that raise enforceability concerns.
C. Assessment of Ambiguity
The threshold question for the court will be whether the cap language in Clause 28 is ambiguous — that is, whether it is "reasonably susceptible of more than one interpretation." Chimart Assocs., 66 N.Y.2d at 573.
Conclusion: The clause is likely ambiguous. While Thalassa has the stronger reading, both interpretations are "reasonably susceptible" constructions of the text. The phrase "for any single continuous period of breach" creates genuine interpretive tension: it is not clearly aggregate language (it does not say "aggregate cap" or "total cap"), nor is it clearly per-incident language (it does not say "for each" or "per incident"). The use of "any" admits of both universal and distributive readings, and the structural placement of the phrase — modifying the cap rather than the formula — is consistent with either interpretation.
This ambiguity has important procedural consequences. If the court determines that the clause is ambiguous, it may decline to resolve the interpretive question on a motion to dismiss or on summary judgment without an evidentiary record and may instead hold that the question requires consideration of extrinsic evidence — potentially necessitating a trial or an evidentiary hearing. Alternatively, if one party can present sufficiently persuasive extrinsic evidence at the summary judgment stage (such as undisputed negotiation correspondence establishing the parties' shared intent), the court could resolve the ambiguity as a matter of law.
It should be noted, however, that a strong argument can be made for unambiguity in Thalassa's favor. The combination of the singular article "a cap," the absence of per-occurrence language, and the structural comparison with other Charter-Party provisions that do use per-occurrence language may convince the court that the aggregate-cap reading is the only reasonable interpretation and that the clause is unambiguous. If the court so finds, the issue can be resolved on summary judgment as a question of law, without extrinsic evidence. We should prepare our summary judgment brief to make this argument forcefully, while also developing the extrinsic evidence record as a fallback.
D. Impact of Extrinsic Evidence
If the court determines that the clause is ambiguous and admits extrinsic evidence, the following categories of evidence will be relevant:
1. Negotiation History
As noted above, preliminary information from Markos Theodorakis indicates that Clause 28 was originally proposed by Northwind's brokers (Boreal Maritime Brokers AG) as part of a rider clause package submitted during the fixture negotiations in November 2020. If discovery confirms this, the negotiation history could support Thalassa's position in two ways:
• Contra proferentem: If the cap language was Northwind's formulation, any ambiguity should be construed against Northwind under the contra proferentem principle.
• Intent evidence: The initial draft and subsequent revisions may reveal the parties' contemporaneous understanding of the cap's scope. For example, if Northwind's initial draft contained explicit per-incident language that was removed during negotiations, this would strongly support the aggregate-cap interpretation. Conversely, if Thalassa proposed the specific cap language to limit its own exposure, the negotiation history could be less favorable.
2. Course of Dealing
If the parties have a prior chartering history — i.e., if Thalassa/Aegean Fortuna and Northwind have entered into previous charter-parties containing similar liquidated damages provisions — the interpretation given to those provisions in practice could be relevant. We should investigate whether any prior charters exist and, if so, whether any prior LD claims were made and how the cap was applied.
3. Industry Custom
Expert testimony on standard maritime industry practice regarding the construction of liquidated damages caps in time charter-parties may be admissible and could be influential. We should consider engaging a maritime law or commercial practice expert — potentially Dr. Erik Sørensen of the Scandinavian Institute of Maritime Law, or a comparable authority — to provide opinion testimony on industry norms. The key question for the expert would be whether, in the maritime charter-party market, a liquidated damages cap stated "for any single continuous period of breach" would be understood as a per-incident or aggregate limitation.
Action Item: Coordinate with the litigation team to develop a targeted discovery plan for the negotiation history of Clause 28, including requests for production to Northwind of all broker correspondence, fixture recap communications, and internal memoranda relating to the negotiation of the Charter-Party's rider clauses.
E. Interaction with the Enforceability Question
The interpretation of the Clause 28 cap has significant implications for the separate question of whether the liquidated damages provision is enforceable or constitutes an unenforceable penalty under New York law. This question is addressed in detail in the companion memorandum dated November 5, 2023, but the key points of interaction are summarized here.
Under New York law, a liquidated damages provision will be upheld as enforceable only if: (i) the amount stipulated bears a "reasonable relationship to the probable loss," and (ii) actual damages are "difficult or impossible to ascertain" at the time of contracting. Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 359 (1977). A provision that is "plainly or grossly disproportionate to the probable loss" will be struck down as an unenforceable penalty. Id.
The per-incident interpretation of the Clause 28 cap significantly increases the risk that the provision will be deemed an unenforceable penalty. If each breach period carries its own $4,500,000 cap, the Owner's potential aggregate liquidated damages exposure over the 36-month charter could reach $13,500,000 or more (depending on the number of incidents), which would represent approximately 84% of the total charter value. By any measure, this level of liquidated damages for maintenance-related off-hire events — which did not result in vessel loss, cargo damage, or personal injury — is grossly disproportionate to the probable loss. The actual formula-based damages for all three incidents total only $1,504,500, which represents the contract's own estimate of probable loss. A cap that would allow recovery of nearly nine times the formula amount ($13,500,000 vs. $1,504,500) is difficult to defend as a "reasonable relationship to the probable loss."
Conversely, the aggregate-cap interpretation — limiting total liquidated damages to $4,500,000, or approximately 28% of the charter value — is far more likely to be upheld as enforceable. An aggregate cap of $4,500,000 can be plausibly justified as a reasonable estimate of the maximum anticipated harm to the Charterer from maintenance-related off-hire events over a 36-month charter, taking into account not only the direct cost of lost hire but also consequential losses such as cargo liabilities, market losses, and operational disruption.
This interplay presents a strategic opportunity for Thalassa. If Northwind pushes the per-incident interpretation in an effort to maximize its liquidated damages recovery, Thalassa can respond with a cross-motion or affirmative defense arguing that the per-incident interpretation renders the entire liquidated damages provision an unenforceable penalty — thereby reducing Northwind's LD recovery to zero and relegating Northwind to a claim for actual damages (which it would bear the burden of proving). This "heads I win, tails you lose" dynamic is a powerful litigation tool and should be developed in Thalassa's briefing.
VII. Application to Thalassa's Position
A. Recommended Argument Structure
Based on the analysis set forth above, I recommend that Thalassa advance the following argument structure in its briefing on the Clause 28 cap issue:
Primary Argument: The Cap Is Unambiguous and Operates as an Aggregate Ceiling. Thalassa should argue that the language of Clause 28, read in context, unambiguously establishes a single aggregate cap of $4,500,000 on the Owner's total liquidated damages liability under the Charter-Party. The textual indicators — the singular article "a cap," the absence of per-occurrence language, the structural comparison with other Charter-Party provisions that do use per-occurrence language, and the anti-surplusage implications of the word "single" — all point to an aggregate limitation. Under this interpretation, the $4,500,000 cap is not triggered because the formula-based liquidated damages ($1,504,500) fall well below it. Northwind's recoverable liquidated damages under Clause 28 are therefore limited to $1,504,500.
Alternative Argument: Even If Ambiguous, Extrinsic Evidence and Contra Proferentem Support the Aggregate-Cap Reading. If the court finds the clause ambiguous, Thalassa should argue that extrinsic evidence — including the negotiation history of Clause 28 (particularly if it was initially drafted by Northwind's brokers), the absence of any prior course of dealing supporting a per-incident reading, and commercial reasonableness — supports the aggregate-cap interpretation. Additionally, if contra proferentem is applicable, the ambiguity should be resolved against Northwind as the drafter.
Fallback Argument: Even If the Per-Incident Cap Applies, the Cap Is a Ceiling, Not a Floor. Even if the court adopts Northwind's per-incident cap interpretation, the result does not change. The formula-based liquidated damages for each incident ($486,750; $464,625; and $553,125) are each far below the $4,500,000 per-incident cap. The cap is a ceiling — it limits recovery to the lesser of the formula amount and $4,500,000 — not a floor or substitute damages amount. Northwind cannot use the cap language to inflate its formula-calculated damages above $1,504,500. The cap is designed to protect the Owner from excessive exposure in the event of a catastrophic, extended off-hire period (e.g., a multi-month drydocking); it is not designed to provide the Charterer with a guaranteed minimum recovery regardless of the actual formula output.
Strategic Observation: This last point is critical and should be emphasized throughout Thalassa's briefing. Regardless of how the cap is interpreted — aggregate or per-incident — Northwind's actual liquidated damages under the Clause 28 formula are $1,504,500. This is the amount calculated using the parties' agreed-upon formula (150% of off-hire days multiplied by the daily hire rate), applied to the actual facts (68 total off-hire days). The $4,500,000 cap simply does not come into play because the formula amount is less than the cap. Northwind's attempt to claim $4,500,000 in liquidated damages reflects a fundamental misunderstanding — or a deliberate mischaracterization — of how the cap operates. The cap is a maximum, not a minimum. It limits the Owner's exposure in extreme scenarios; it does not augment the Charterer's recovery in ordinary scenarios.
B. Procedural Posture
The Clause 28 cap issue is suitable for resolution on a motion for partial summary judgment, provided that the court finds the clause unambiguous. Contract interpretation is a question of law for the court, and where the language is unambiguous, there is no triable issue of fact. W.W.W. Assocs., 77 N.Y.2d at 162.
If the court finds the clause ambiguous, the issue may require a trial (or at minimum an evidentiary hearing) on extrinsic evidence. However, even in the ambiguity scenario, summary judgment remains possible if the extrinsic evidence is undisputed and uniformly supports one interpretation. We should therefore develop a robust evidentiary record through discovery to support the aggregate-cap reading and to position for summary judgment even in the event of an ambiguity finding.
Recommended discovery steps include:
1. Negotiation Correspondence: Request production from Northwind and its brokers (Boreal M

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