Agrimex Ltd v Tradigrain SA & Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE ANDREW SMITH |
| Judgment Date | 08 December 2003 |
| Neutral Citation | [2003] EWHC 3451 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 December 2003 |
| Docket Number | 2002 Folio |
[2003] EWHC 3451 (Comm)
IN THE HIGH COURT OF JUSTICE COMMERCIAL COURT
(IN PRIVATE)
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Andrew Smith
2002 Folio
MR L AKKA (instructed by HF & Willan) appeared on behalf of the CLAIMANT
MR G CHARKHAM (instructed by Richards Butler) appeared on behalf of the DEFENDANT
1.This is an appeal under section 69 of the Arbitration Act 1996, leave having been given to the appellant sellers, Agrimex Limited ("Agrimex"), to appeal on one of the points that they raised in their application of 28th November 2003. They formulate the question as follows:
"Whether on the true constructions of sales contracts a Notice of Readiness could validly be tendered in circumstances where the vessel was not in fact ready to receive cargo."
This formulation, specifically the reference to the notice being validly tendered, was criticised by Mr Graham Charkham who appears for the respondents, Tradigrain SA ("Tradigrain"), but it suffices to set the scene.
There are two relevant sale contracts, one numbered 982852 concluded on 9th July 1998, and one numbered 982928 concluded on 16th July 1998. Both contracts were confirmed in written documents signed by or on behalf of the parties. Under them Agrimex agreed to sell to Tradigrain quantities of Ukrainian or Russian feed wheat, FOB 1/2 berths Illychevsh. They provided for GAFTA arbitration. The award against which Agrimex appeal is one of the GAFTA Board of Appeal, dated 31st October 2003.
The contract of 9th July 1998 contained the following provisions:
"Loading rate: 8,000 NT per WWD [weather working day] of 24 consecutive hours SSHEX [Saturdays, Sundays, and holidays excepted] even if used. Laytime shall commence at 2.00 pm if NOR [notice of readiness] is validly tendered at or before noon and 8.00 am on the next working day if NOR is validly tendered afternoon WIPON/WIBON/WIFPON/WECCOM [whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not] lay time shall not commence from 17.00 hours on day preceding legal or local holiday and from noon on Saturday until 8 hours on Monday or on the following working day, even if used. All other conditions as per relevant C/P [charterparty].
"Demurrage/despatch: As per Charter Party, but maximum 7,000/3,500 to be settled directly between buyer and seller. Calculation to be done as per notice of readiness [NOR] and statement of facts [SOF], both signed by Master and timesheet copied sent by fax shipping agents to seller and buyer." [quotation unchecked]
The contract of 16th July 1998 contained the following provisions:
"Loadrate: 7,000 mt per WWD of 24 consecutive hours SSHEX, even if used. Laytime shall commence at 1400 hours if valid notice of readiness is tendered at or before noon and at 0800 hours, the next working day if valid NOR is tendered after noon WIPON/WIBON/WIFPON/WECCON. Laytime shall not count from 1700 hours on Fridays or on days preceding a legal or local holiday until 0800 hours on Monday, or the next official working day, even if used.
"Demurrage/despatch: As per Charter Party, but maximum $7,000/3,500 to be settled directly between seller and buyer. Calculation to be accorded to the statement of facts and valid NOR signed by the Master and time sheet copies sent by fax from the shipping agents to buyer and seller."
As Mr Charkham observed, the side headings do not indicate the full content of the clauses.
At the time of the contract no relevant charterparty had been agreed. In due course on 26th February 1999 Tradigrain chartered from Tradigrain Shipping SA the MV Mastra Giorgis and the vessel was nominated under the sale contract on 2nd March 1999. The charterparty, which was on Synacomex 90 form, provided at clause 8 against the side heading "Laytime" as follows:
"Vessels written or by cable notice of readiness to load … shall be tendered at the office of Shipper/Charterers … or their agents between 0800 and 1700 hours on all days except Saturdays, Sundays and Holidays, and between 0800 hours and 1200 hours on Saturdays unless a Holiday. Such notice of readiness shall be delivered when vessel is in the loading or discharging berth and in all respects ready to load/discharge.
"At loading port Shipper/Charterers or their Agents have the privilege to inspect vessel's holds and reject the notice when holds are not clean, dry, odourless and in all respects ready to receive the cargo.
"In case of dispute an independent surveyor shall decide about vessel's readiness to load, Owners bearing the cost. If rejection of notice of readiness is undisputed or confirmed by surveyor the laytime will only start to count after the vessel has validly tendered again when ready. Only when the loading … berth is unavailable Master may warrant that the vessel in all respects ready and may tender notice of readiness by cable or VHF to load … from any usual waiting place or anchorage, whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.
"Laytime shall commence at 1400 hours if notice of readiness to load … is validly tendered at or before 1200 hours or at 0800 hours on the next working day if notice of readiness is validly tendered after 1200 hours. Time used before commencement of laytime shall not count. Laytime shall not count between … 1700 hours on Fridays or 17.00 hours on days proceedings a holiday or 0800 hours on Mondays or 0800 hours on the following working day… even if used … Any delays caused by ice, floods, quarantine or by cases of 'force majeure' shall not count as laytime unless the vessel is already on demurrage.
"When Master has tendered notice of readiness to load … from a waiting place or anchorage and the vessel is subsequently found unready an application of the above provisions laytime or time on demurrage shall not count from the time the vessel is rejected until the time she is accepted. Additionally, any actual time lost on account of vessel's obtaining free pratique or customs clearance shall not count as laytime or time on demurrage … At all ports any time lost shifting from waiting place to berth shall not count as laytime or as time on demurrage."
The charterparty also provided at clause 9:
"Demurrage/dispatch: Demurrage is payable by Charterers at the rate of US 8,000 … per day of 24 hours consecutive hours or pro rata. Owners shall pay Charterers despatch money for working time …. save in loading/discharging at the rate of US 4,000 … per day of 24 consecutive hours or pro rata."
The vessel anchored at Illychevsh on 11th March 1999 at 02.30 hours and tendered notice of readiness stating that the vessel was "in all respects ready to load her cargo … in accordance with the terms and conditions of the charterparty." However, on 10th March 1999 the port had been reported to be congested, and on 12th March 1999 the buyer's agent advised that the loading berth was occupied. On 26th March 1999 the vessel left anchorage at 11.20 hours and berthed at the grain loading terminal at 12.55 hours. Later that day, after an inspection, the holds were rejected for loading grain due to rust on the hatch covers. Rust was removed and on 27th March 2003 her holds were passed fit to load wheat and loading began the same day.
The Tribunal found that, when the vessel tendered notice of readiness on 11th March 1999, her holds were not in a fit condition to load the cargo, and that she required cleaning of her cargo spaces and hatch covers before she was in a fit state to load the contractual cargo; and that she was fit to load the cargo once the remedial cleaning works had been carried out, that is to say from 1000 hours on 27th March 1999.
Tradigrain made a demurrage claim in an invoice of 15th June 1999 in the sum of US $312.445.73. Agrimex disputed the calculation of demurrage. One issue was whether the notice of readiness of 11th March 1999 was valid and effective under the contracts of sale, and the Tribunal upheld Tradigrain's contention that it was. The appeal challenges that finding.
There can be no dispute that prima facie a valid notice of readiness can only be tendered by a vessel if she is physically ready in all respects to load her cargo: The Tres Flores, [1973] 2 Lloyd's Law Reports 247. The question is whether the wording of the sales contracts displaces that prima facie rule, and so is one of interpretation of the sale contracts and specifically what terms from the charterparty were imported into them.
Here again the ambit of the difference between the parties is limited. I shall identify the common ground. First, the references to a charterparty in the sale contract are to be taken to be references to the charterparty of 26th February 1999. Secondly, the charterparty provided that the vessel might tender notice of readiness if she was in berth and in all respects ready to load, in which case, if on subsequent inspection the holds were rejected, the holds had to be cleaned and a fresh notice of readiness tendered before laytime started to run; or if, because a berth was not available, the vessel was not in berth but at a usual waiting place or anchorage and the Master warranted that she was in all respects she was ready. In the latter case laytime started, and if on subsequent inspection the holds were rejected, laytime was interrupted while the holds were cleaned, but no fresh notice of readiness was then required. Thirdly, on 11th March 1999 the loading berth was not available. Fourthly, on 11th March 1999 the Master warranted that the vessel was in all respects ready and...
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