QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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Thai Maparn Trading Co Ltd |
Claimant |
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- and - |
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Louis Drefyus Commodities Asia Pte Ltd |
Defendant |
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Philip Edey QC (instructed by Hill Dickinson) for the Defendant
Hearing date: 14 September 2011
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Crown Copyright ©
Mr Justice Beatson :
"(a) Where an FOB contract expressly requires a buyer to give a vessel nomination notice a specified period of time before the vessel's estimated time of arrival (or readiness to load), is the seller entitled to reject (or not accept) a notice as given by that buyer which contains an uncontractual shorter period of notice?
(b) Is the seller in repudiation or renunciation of contract where, in receipt of an uncontractually short period of notice, he rejects that notice and says that he does not have cargo to meet the vessel as thus nominated to load on an uncontractual date?"
(c1) In the case of award No 4188 the question is: Where a seller wrongly rejects such a nomination notice but the buyer neither accepts that rejection as terminating the contract before the end of the shipment period nor secures the lifting vessel's presentation to load within that period, is the seller in repudiation of the contract so as to generate a liability in damages (calculated by reference to the time of the wrongful rejection)?
(c2) In the case of award No 4196 it is: Where a seller wrongly rejects such a notice but the buyer does not accept that rejection as a repudiation or present a vessel for loading at or about the time specified in the notice, or thereafter give any notice advising a fresh time of readiness to load of a vessel either at all or by 7 working days prior to the end of the contractual shipment period, is the seller liable for the repudiation or renunciation of the contract so as to generate a liability in substantial damages (calculated by reference to the time of the rejection of the notice as given)?
The contracts
"Quantity: Exact quantity to be declared on Buyers nomination of vessel. Partial shipment/cargo/part cargo allowed at buyers' option
Loading terms: Buyer to give minimum 7 (seven) working days written pre-advise [sic] of vessel's ETA.
Notice of Readiness (NOR) tenderable in writing between the normal business hours…
…
Governing contract(s) All other terms and conditions as per GAFTA 120 where not in conflict with terms contained herein …"
"PERIOD OF DELIVERY
...
6…Nomination of vessel – Buyers shall serve not less than…..consecutive day's (sic) notice of the name and probable readiness date of the vessel and the estimated tonnage required…Provided the vessel is presented at the loading port in readiness to load within the delivery period, Sellers shall if necessary complete loading after the delivery period
…
10. LOADING
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Notification of the vessel's readiness to load at the port of loading shall be served on sellers at their office at the port between [specified hours].
…
Any time lost at Port of Loading through riots, strikes or any cause whatsoever beyond Seller's control, not to count as laytime. …
21 NOTICES
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For the purposes of serving notices in a string, any notice received after 16:00 hours on a business day shall be deemed to have been received on the business day following.
…
23. DEFAULT – In default of fulfillment of contract by either party, the following provisions shall apply:-
(a) The party other than the defaulter shall, at their discretion, have the right, after serving notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price.
(b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration.
(c) The damages payable shall be based on, but not limited to, the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods, on the date of default, established under (b) above.
…"
The findings of the Boards of Appeal:
(1) Award 4188
(a) On Friday 7 March 2008 the buyers nominated MV Med Salvador or substitute to the Sellers to load 17,500 mts in complete fulfillment of the contract and gave an estimated time of arrival at Kohsichang of 11 March, saying that they expected the sellers to bring the cargo alongside latest 17 March: paragraph 4.1.
(b) "Counting the seven days pre-advice requirement under the Contract [i.e. "7 working days"], effectively meant the vessel could not be contractually nominated to load until 19 March. Buyers had therefore failed to give the requisite seven working days notice of the vessel": paragraph 8.14.
(c) The buyers' breach "was not considered enough for the nomination to be rejected"; "both parties agreed this was an issue of warranty rather than of condition". "Sellers did not have to abide by the short notice of vessel as they were entitled to the seven working days before their obligation to load commenced", they were thus "protected by the contract", and "in other words Buyers' breach of serving the required notice period was remediable at no cost to Sellers as they only had to accept the vessel as per contract from 19 March": paragraph 8.15.
(d) The buyers "had fulfilled their obligation in declaring the exact weight of the goods to be loaded …. in complete fulfillment of contract in their nomination of MV Med Salvador … [and] … duly met their contractual obligation in terms of tonnage to be loaded": paragraph 8.16.
(e) "The Buyer's nomination of vessel [contained] all the information it was required to under the Contract" and the notice sent on 7 March was "valid and contractual": paragraph 8.17.
(f) "On 13 March Sellers sent the following message to Buyers:
'[Thanks] for [your] fax dated March 07, 2008 … wish to advise you that as we are not ready with cargo and printed bags, and hence, we cannot accept your above nomination'": paragraph 4.2.(g) The Sellers' words were clear: they said they could not accept the nomination "as they were not ready with cargo and printed bags": paragraph 8.19. There was no mention of the nomination being invalid due to the short notice or that the Sellers suspected the nomination to be a sham: paragraph 8.19.
(h) Since "the words used were both comprehensive and unambiguous in that the cargo and printed bags were unavailable to meet the vessel" and "the nomination notice was valid", the Sellers "were obliged to accept it, albeit only as from 19 March", and as they did not because they were not ready with cargo and printed bags "they were in anticipatory breach of contract entitling Buyers to accept this repudiation as bringing the Contract to an end": paragraph 8.20.
(i) Since the nomination gave an ETA at Kohsichang on 11 March although the cargo was not called for until 17 March the Sellers were "aware that the vessel would probably start loading on arrival by other suppliers before Sellers were due to present their cargo" and "there was still time to supply the missing information and NOR": paragraph 8.25.
(j) On 18 March the buyers responded to the Sellers' message of 13 March, stating:
"… Our nomination was made on 7 March and we provided you with the contractually required pre-advice period.We clearly advised you in our nomination that cargo had to be alongside latest March 17.If you do not provide cargo as contracted we will have to seriously consider our contractual position.Please urgently provide us with your expected loading program …": paragraph 4.3.(k) There is no finding in the award that anything (such as that the nominated vessel either tendered Notice of Readiness or presented for loading) happened between 18 and 31 March, the end of the shipment period.
(l) On 8 April, the buyers accepted the Sellers' message of 13 March as being in repudiation of the Contract: paragraph 4.4.
(m) The date of the Sellers' breach was 13 March, the date the Sellers' repudiation message was sent, and the default date was 14 March, the following business day: paragraph 8.26. Damages were accordingly calculated by reference to that default date: paragraph 8.28.
(2) Award 4196
(a) On Wednesday 19 March 2008 the buyers nominated MV Goa or substitute to the Sellers to load 4,000 mts against the contract. They advised the vessel was already at Kohsichang and that she would be ready to load on 27 March: paragraph 4.1.
(b) As the buyers' nomination was timed at 5:57pm, by clause 21 of GAFTA 120, it was deemed to have been received by the Sellers on the next business day. Counting the "7 working days" pre-advice requirement under the contract, "effectively meant that the vessel could not be contractually nominated to load until 31 March" and the "Buyers therefore failed to give the requisite seven working days notice of the vessel": paragraph 8.11.
(c) The buyers' breach "was not considered enough for the nomination to be rejected"; "both parties agreed this was an issue of warranty rather than a condition precedent". "Sellers did not have to abide by the short notice of vessel as they were entitled to the seven working days before their obligation to load commenced", they were thus "protected by the contract", and "in other words Buyers' breach of serving the full notice period was remedied [(sic)] at no cost to Sellers as they only had to accept the vessel as per contract from 31 March": paragraph 8.12.
(d) The buyers "had fulfilled their obligation in declaring the exact weight of the goods to be loaded" in their nomination of MV Goa "and therefore … duly met their contractual obligation in terms of tonnage to be loaded: paragraph 8.13.
(e) The buyers' "nomination of vessel [contained] all the information it was required to under the Contract" and the notice sent on 19 March was "valid and contractual": paragraph 8.15.
(f) Since the nomination stated the vessel was already at Kohsichang and gave its dead weight, sellers were aware of the vessel's arrival at the load port and that it was probably loading other cargo: paragraph 8.22.
(g) "On 20 March Sellers sent the following message to Buyers:
[Thanks] for [your] below mail n nomination of MV 'Goa' to load 4000 M/Tons … [Thai rice] … but we regret, with due respect, due to unavailability of goods and printed bags, we cannot accept [your nomination] of [vessel]""We thank [you] in anticipation for [your] good understandings": paragraph 4.2.(h) The Sellers' words were clear: "they said they could not accept the nomination … due to unavailability of goods and printed bags": paragraph 8.17. There was no mention of the nomination being invalid due to the short notice or that the Sellers suspected the nomination to be a sham or advice as to when the cargo was to be available: paragraph 8.18.
(i) Since "the words used were both comprehensive and unambiguous in that the cargo and printed bags were unavailable to meet the MV Goa" and "the nomination notice was valid", the Sellers "were obliged to accept it, albeit as from 31 March" and, as they did not because the cargo and printed bags were unavailable, "they were in anticipatory breach of contract entitling Buyers to accept this repudiation as bringing the Contract to an end": paragraph 8.18.
(j) There was no evidence of any further communication thereafter between the parties before 30 April, the last day of the contract shipment period: paragraph 8.20. There is no finding that a further notice was sent 7 working days before 30th April or that the nominated vessel either tendered Notice of Readiness or presented for loading on or by 30 April.
(k) On 30 April the buyers responded to the Sellers' email of 20 March stating:
"… We hereby advise you that we accept that message [the email of 20 March] as your intention to default against the contract…": paragraph 4.3.(l) Since the Sellers' email of 20 March was sent at 9:14pm, the date of Sellers' breach was 21 March, and the default date was 24 March, the following business day: paragraph 8.23. Damages were accordingly calculated by reference to that default date: paragraph 8. 25
Discussion
Conclusion