A v B ("The Tai Hunter")
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 31 March 2021 |
| Neutral Citation | [2021] EWHC 793 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2020-000218 |
[2021] EWHC 793 (Comm)
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2020-000218
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Michael Nolan QC (instructed by W Legal Limited) for the Claimant
Angharad M Parry (instructed by Studio Legale Associato Ridolfi Ghigi Longanesi) for the Defendant
Hearing date: 16 December 2020
Approved Judgment
| (A) INTRODUCTION | 2 |
| (B) BACKGROUND TO THE DISPUTE | 2 |
| (1) Contract and Vessel Nomination | 2 |
| (2) The Award | 6 |
| (3) The Appeal and the Challenge | 11 |
| (C) APPEAL QUESTION 1: WAS THE MAKING OF A “FALSE” NOMINATION A BREACH OF CONDITION? | 12 |
| (D) APPEAL QUESTION 2: OBLIGATION TO NOMINATE A VESSEL ALREADY CHARTERED | 29 |
| (E) APPEAL QUESTION 3/FIRST SECTION 68 ISSUE: OBLIGATION TO PROVIDE COPY CHARTERPARTY | 30 |
| (F) SECOND SECTION 68 ISSUE: CUMULATIVE EFFECT OF BREACHES | 33 |
| (G) APPEAL QUESTIONS 4 AND 5: INTEREST | 35 |
| (H) CONCLUSION | 36 |
(A) INTRODUCTION
The Claimant (“ Sellers”) sold a cargo of Ukrainian feed corn under a contract dated 13 December 2017 (the “ Contract”) to the Defendant (“ Buyers”). A dispute arose, which the parties referred to a GAFTA tribunal, who decided in favour of the Buyers. The Sellers appealed to a GAFTA Board of Appeal (the “ Board”). The Board issued an award dated 19 March 2020 (the “Award”) in favour of the Buyers. The Sellers now appeal, pursuant to permission granted by Teare J, on five questions of law under section 69 of the Arbitration Act 1996 (the “Act”). There is also a challenge to the Award under section 68(c) and (d) of the Act on the ground that the Board did not deal with two issues put to it.
For the reasons set out below, I have concluded that the Award should stand and that the challenge and the appeal under sections 68 and 69 of the Act should be dismissed.
(B) BACKGROUND TO THE DISPUTE
(1) Contract and Vessel Nomination
By the Contract, the Sellers agreed to sell to the Buyers 25,000 mt +/- 5% at Buyers' option Ukrainian Feed Corn in Bulk, crop 2017, FOB 1 safe berth/1 safe Ukrainian port, Yuzhny, Odessa or Chernomorsk. The Contract included the following provisions:
“PORT OF LOADING TO BE DECLARED NOT PRIOR 8 DAYS TO THE DELIVERY PERIOD AND LATEST UPON NOMINATION OF THE PERFORMING VESSEL. BUYERS PRESENT SINGLE DECK, SELF TRIMMING BULK CARRIER, SUITABLE FOR LOADING AT SELLER'S BERTH.”
“DELIVERY PERIOD:
1 st APRIL 2018 TO 15 TH APRIL 2018, BOTH DATES INCLUDED, NO EXTENSION”
“C/P:
IF REQUIRED, BUYERS SHALL SEND BY EMAIL/FAX/COURIER A WORKING COPY OF THE C/P OR BOOKING NOTE DULY SIGNED AND STAMPED TO SELLERS AT THEIR FIRST REQUEST”
“PRE-ADVICE:
BUYERS SHALL SERVE TO THE SELLERS NOT LESS THAN 8 DAYS' PRE-ADVICE WITH THE FOLLOWING INFORMATION
• ETA
• VESSEL'S NAME AND AGE
• FLAG
• DIMENSIONS OF THE VESSEL (LOA/BEAM/DM)
• OWNERS NAME
• DWT
• AIRDRAFT
• DEMURRAGE/DESPATCH RATE
• IMC
• COUNTRY OF DESTINATION
• ESTIMATED QUANTITY TO BE LOADED”
“GENERAL CONDITIONS:
ALL OTHER TERMS, CONDITIONS AND RULES, NOT IN CONTRADICTION WITH THE ABOVE CONTAINED IN FORM 49 OF GAFTA … APPLY TO THIS TRANSACTION AND THE DETAILS ABOVE GIVEN SHALL BE TAKEN AS HAVING BEEN WRITTEN INTO SUCH FORM IN THE APPROPRIATE PLACES”
GAFTA Form 49 clause 6 (“ Period of Delivery”) provides:
“ Delivery during …………………………………………. at Buyers' call.
Nomination of Vessel. Buyers shall serve not less than …………………. consecutive days' notice of the name and probable readiness date of the vessel and the estimated tonnage required. The Sellers shall have the goods ready to be delivered to the Buyers at any time within the contract period of delivery. The Buyer has the right to substitute any nominated vessel. Buyer's obligations regarding pre-advice shall only apply to the original vessel nominated. No new pre-advice is required to be given in respect of any substitute vessel, provided that the substitute vessel arrives no earlier than the estimated time of arrival of the original vessel nominated and always within the delivery period. 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 and carrying charges shall not apply. Notice of substitution to be given as soon as possible but in any event no later than one business day before the estimated time of arrival of the original vessel. ….”
The Buyers nominated the M/V “ Tai Hunter” (“the Vessel”) on 20 March 2018. The nomination gave an ETA of 1 April 2018 AGW WP (all going well, weather permitting) and the destination as Egypt. The nomination failed to provide the owners' name as required by the Pre-Advice clause in the Contract.
The Sellers were informed by a third party that day that the Vessel had berthed at the Olimpex Terminal in Odessa and was due to complete loading on 21 March 2018. The message indicated that the Vessel was then due to sail directly to Ireland without going via any Ukrainian ports: as indicated below, the Board found that information to be incorrect.
In view of this information, the Sellers, via the parties' respective brokers, asked the Buyers for a copy of the charterparty in respect of the prospective voyage. The Buyers stated that the message had been sent up the contractual chain to their sub-buyers, and they would revert once they had received the answer. The Buyers asked the Sellers to nominate the load port and agents.
The next day, the Sellers' agents sent another message to the Buyers indicating that they had doubts over the genuineness of the nomination. The agents added that they were confident that the Sellers' silence in not nominating the loading port would not cause any harm, since it appeared that the Vessel would not be in Ukrainian Black Sea waters on 1 April 2018.
Over the following days, the parties exchanged further messages, with the Sellers demanding sight of the charterparty for the Vessel and the Buyers demanding the nomination of load port and agents. On 26 March 2018, the Sellers purported to terminate the contract for repudiatory breach:
“Your continuous refusal and failure to provide the charterparty in respect of the m/v Tai Hunter, coupled with her current position and itinerary, supports our allegation that your nomination of the referred vessel was a fanciful nomination after all. I[n] turn, fanciful nomination constitutes a repudiatory breach which we hereby accept.”
On 28 March 2018, following continued dialogue between the parties, the Buyers purported to nominate a substitute vessel, the M/V “ Mariana”, with an ETA of 5 April 2018 AGW WP. The nomination gave the destination as Portugal and asked for details of the load port, load port agents and surveyors.
The Sellers did not accept the revised nomination of the Mariana:
“The reference is made to your email of this afternoon with the nomination of a substitute ‘Mariana’ (OBN or Sub) with ETA 05.04.18 and destination of Portugal. For the reasons set out in our previous correspondence of 26th and 27th March the relevance of this nomination is unclear. We would wish to remind you that after effects of the acceptance of the repudiatory breach was termination of the contract no.: CORN-196.131217 dated 13/12/17. Hence we fail to understand the rationale behind your new nomination.
Even if you are not in an agreement with us as to lawfulness of the steps taken towards the contract cancellation, you are reminded of your duty to mitigate damages and losses.”
Also on 28 March 2018, the Buyers sent a further message to the Sellers substituting MV “ Mariana” with MV “ Deribas” with an ETA of 8 April 2018 AGW WP. The nomination gave the destination as Portugal and asked for the load port, load port agents and surveyors. On 29 March 2018 the Sellers responded that in the light of their response to the substitute nomination of “ Mariana”, the relevance of Buyers' message relating to “ Deribas” was unclear.
By 3 April 2018, both parties accepted that the contract was at an end, and the Buyers wrote that:
“……
We take issue with your rejection of the MV Mariana, as well as with your refusal to declare the loadport in your email of 26 March. Your emails of 26 and 28 March [are] both constitutive of an anticipatory breach and/or renunciation to the contract. So, we take the contract as terminated.
We will purchase equivalent goods against you and will claim the price difference along with any additional expenses we may suffer.”
The parties provisionally settled their dispute the following day by an agreement (the “ Settlement Agreement”) under which the Buyers purchased the corn at an increased price of US$190 pmt but otherwise on the same terms. Clause 3 of the Settlement Agreement provided for a price variation in the event of a dispute under the original contract:
“3. In the event parties decide to contest or reconfirm, as the case may be, the lawfulness of the old contract termination by [the Sellers] through arbitration at Gafta, then depending on the outcomes of such arbitration the new Purchase Price of the new contract shall be adjusted in the following way:
a) in the event final and unappealable arbitration award finds that [the Sellers] unlawfully terminated the old contract then the new Purchase Price payable to [the Sellers] under the new contract shall be reduced up to USD177.59 per mt and [the Sellers] shall reimburse the overpaid amount to [the Buyers] at first request
b) in the...
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