Motor Oil (Hellas) Corinth Refineries SA v Shipping Corporation of India
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE GLIDEWELL,LORD JUSTICE FOX |
| Judgment Date | 23 November 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J1123-12 |
| Docket Number | 88/0997 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 November 1988 |
[1988] EWCA Civ J1123-12
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
(MR JUSTICE HOBHOUSE)
Royal Courts of Justice,
Lord Justice Fox
Lord Justice Lloyd
Lord Justice Glidewell
88/0997
AC/197/87
MR MICHAEL COLLINS, Q.C. and MR D. MILDON (instructed by Messrs. Ince & Co.) appeared on behalf of the Appellants.
MR ANTHONY CLARKE, Q.C. and MR C. HADDON-CAVE (instructed by Messrs. Horrocks & Co.) appeared on behalf of the Respondents.
Under a charterparty dated 8th August 1978 the owners, Shipping Corporation of India, let their vessel "Kanchenjunga" to the charterers, Motor Oil (Hellas) Corinth Refineries S.A. for four consecutive voyages with an option (which was exercised) to extend the charterparty for a further four consecutive voyages. On the same day the charterers entered into a sub-charter with an associated company, Varnima Chartering Compania Naviera S.A. on identical terms. On 19th November 1980 Varnima sub sub-chartered the vessel to Refineria de Petroleos Del Norte S.A. It is convenient, for the purposes of this judgment, to treat the sub sub-charter as if it were the sub-charter; in other words to ignore the intermediate charter between Motor Oil (Hellas) and Varnima. This does not affect in any way the legal issues involved.
The Gulf war broke out on 22nd September 1980. The head charter, which was entered into before the outbreak of war, defined the loading ports as "1/2 safe ports Arabian Gulf excluding Fao and Abadan". The sub-charter, which was entered into after the outbreak of war, defined the loading ports as "1/2 safe ports Arabian Gulf excluding Iran and Iraq but including Kharg Island On 20th November 1980, the day after the charterers entered into the sub-charter, they ordered the vessel to load at Kharg Island. The vessel proceeded the next day and arrived off Kharg Island on 23rd November, where she gave notice of readiness. There was then a short delay, due to the presence of other vessels. A berth became available on 30th November. But the vessel could not berth on that day due to fog. The following day there was an air-raid on Kharg Island, and the Master, no doubt prudently, sailed away. On 2nd December the owners called on the charterers to nominate another port. But the charterers declined. On 4th December the Master refused to return to Kharg Island. Thereafter, as so often happens, each side accused the other of having repudiated the charter; the owners in refusing to load at Kharg Island, the charterers in refusing to nominate another safe loading port.
The disputes between the parties were referred to arbitration. The arbitrators found as a fact that at all material times Kharg Island was unsafe. There is no appeal against that finding of fact. However the charterers submitted before the arbitrators that by accepting the nomination of Kharg Island, and by their conduct between 21st November and 2nd December, the owners were estopped from asserting that Kharg Island was unsafe. Alternatively they relied on the doctrine of election, or waiver.
The arbitrators, having found, as I have said, that Kharg Island was unsafe, and therefore a bad nomination under the charter, rejected the charterer's argument on estoppel/election/waiver. They held that the charterers were in breach of the charterparty in failing to make a fresh nomination; that the owners were entitled to accept the charterer's breach as a repudiation and to recover damages.
There was a parallel arbitration between charterers and sub-charterers. But there was a crucial difference. In the sub-charter, Kharg Island is expressly included as a contractual loading port. Accordingly the charterers were unable to assert, with any hope of success against the sub-charterers, the same arguments which had succeeded against them. Instead they sought to rely on the War Risks Clause incorporated in the sub-charter. But that argument too was rejected by the arbitrators. Accordingly the charterers—the parties in the middle—lost in both directions. That is not perhaps altogether surprising, in view of the differing terms of the two charterparties.
On 20th February 1987 the charterers obtained leave to appeal on a point of law under Section 1(2) of the Arbitration Act 1979. The case came on before Hobhouse J. in June 1987. He took a different view from the arbitrators. He held that the charterers.' argument on waiver succeeded. Accordingly the charterers were not liable to the owners in damages. He then went on to consider whether, as charterers argued, it was the owners who were in repudiation of the charterparty. The Judge held not. Although the owners had waived their right to treat the nomination of Kharg Island as non-contractual, they had not waived their separate and distinct right to rely on the War Risks Clause by way of defence. Thus the result, in the Judge's view, was that neither party was entitled to damages against the other.
Both parties now appeal to this Court by leave of the Judge, who has certified a point of law of general public importance. There was no appeal to the Judge by the charterers against the sub-charterers so the arbitrators' award in favour of the sub-charterers stands.
In opening the appeal on behalf of the owners, Mr Collins referred us to the valuable analysis of the various senses in which the word "waiver" is used in the judgment of Neill J. (as he then was) in " The Athos" (1981) 2 Lloyd's Law Reports 74. Mr Collins argued that there are three senses in which the word is used, each requiring different ingredients, namely, election, variation and promissory estoppel. Mr Clarke argued that there are not three but four different kinds of "waiver", namely, election, strictly so-called, waiver, variation and estoppel. Estoppel may be sub-divided into promissory estoppel and affirmation.
I do not find it necessary to attempt my own elucidation of these various terms. I suspect that this is an area in which the law is still in course of development, and that it will be some years before each of the terms has a distinct and generally accepted significance. In the meantime it is wise to bear in mind that though we all use the same terms, we may not all use them in precisely the same sense or with the same legal consequences.
In the present case we need not go into these refinements, because it became common ground that the outcome of the appeal must depend on two questions and two questions only: first, whether the owners' conduct in complying with the charterers' order to proceed to Kharg Island was sufficiently unequivocal to deprive them of their right to treat the nomination as non-contractual. Unequivocal conduct is an essential ingredient of the charterers' argument, whichever way they put their case—whether as one of election, waiver or estoppel. The second question depends on the owners' state of knowledge. I take first the owners' conduct. The charterers rely on two factors, namely, the terms in which the owners accepted the charterers' nomination, and secondly their conduct subsequently, and in particular their giving of notice of readiness to load.
The telexes in which the owners accepted the nomination are set out in full in the Case, and are summarised in the judgment below. I will not repeat them. The important point to notice is that nowhere in the owners' telex of 20th November, or in their two telexes of 21st November, did they reserve the right to treat the nomination as non-contractual. On the contrary, what they were concerned about was, first, whether the nomination would be effective, in other words, whether there was a cargo ready to load; and, seoondly, whether by accepting the charterers' nomination they would be prejudicing their right to claim damages in respect of the charterers' failure to give prompt orders. The express reservation by the owners of their right to claim damages for the delay which had already occurred, and the absence of reservation of any right to treat the nomination as noncontractual, is strong support for the Judge's conclusion on waiver. It was only on 25th November, after the Master had reported anti-aircraft fire in the vicinity, that the owners said that they would hold the charterers responsible for sending the vessel to Kharg Island.
The second factor relied on by the charterers was the giving of notice of readiness. Mr Collins submitted that this was nothing more than a continuation of the course of conduct on which the owners had already embarked. But it is important for this reason. Mr Collins argued that there was never any unqualified acceptance of the charterers' nomination. The owners were throughout insisting that if the vessel proceeded north of latitude 24 degrees, at the entrance to the Gulf of Oman, the charterers must pay the additional War Risk premium for which the vessel would become liable. This was always emphatically denied by the charterers, for the simple reason that there was no provision to that effect in the charterparty; the charterparty had been fixed long before the Gulf ever became a war zone. The fact that the owners gave notice of readiness after proceeding north of latitude 24 degrees, without having obtained the charterers' agreement to pay the additional War Risk premium, shows (says Mr Clarke) that the owners' acceptance of the charterers' nomination was not qualified as the owners' assert.
The two factors which I have mentioned are sufficient to justify the Judge's view that the owners 'conduct was...
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