P v. A
DMC Category Rating: Confirmed
The COA did not contain any provision as to when the carriage of the six cargoes was to take place. Clause 23 provided:
On 6 September 2007 the charterers gave a laycan of 5/14October for voyage 5, which was to be from Baltimore to Constanza. On 13 September the charterers asked the owners if the laycan could be moved to 21/30 Oct. The owners refused.
On 17 September the charterers again asked the owners to move the laycan for voyage 5, explaining that "the stem for 5/14 has been moved to 21/30 by the shippers because of cargo availability in this port". Owners replied, declining to change the dates, but offering to cancel voyage 5 and to perform voyage 6 on the new dates proposed by the charterers. (Market rates had risen substantially above the freight rate specified in the COA.)
On 20 September the charterers proposed, instead of the voyage Baltimore/Constanza envisaged for voyage 5, that the ship load coal from Newport to Nikolaev. By a message of 24 September, owners maintained their position that a substitute voyage was not acceptable. Owners insisted that the notice given by charterers on 6 September was a binding nomination which could not be withdrawn, and repeated their proposal to cancel voyage 5 and to perform voyage 6 on the new 21/30 October laycan.
On 24 September the charterers insisted that, in circumstances where owners had not yet nominated the loading vessel, they were entitled to move the laycan "in the event of unforeseen events" and, on the same day, the owners said that they were treating the charterers as being in repudiatory breach.
The dispute was referred to arbitration. The tribunal (by a majority) held that, once the laycan notice for the fifth voyage was given on 6 September 2007, it was written into the COA and could not be changed save by agreement, and that the charterers' insistence that they had the right to move the laycan dates amounted to a proposal for a substitute voyage and demonstrated a clear intention not to be bound by the original nomination. Accordingly, the charterers' conduct amounted to a repudiatory breach of the fifth voyage, thereby releasing the owners from any further performance of that particular voyage.
The charterers appealed to the High Court. They submitted that the nomination of the laycan spread was not irrevocable. Only if the owners had nominated a vessel and the same had been duly confirmed by the charterers would the laycan dates be irrevocable, since the charterers would then be estopped from changing the spread. They further submitted that the arbitrators had erred in law in holding that charterers, in purporting to revise the laycan dates, were in repudiatory breach.
As for the owners, they submitted that the nomination of the vessel was as irrevocable as the nomination of the loading port; the requirement for confirmation did not constitute a right of rejection but merely an opportunity for assessing compliance with the express specifications. These nominations were both inextricably entwined with the laycan period; the charterers’ laycan notice set the timing of the voyage together with the load port and cargo; it was then an obligation of the owners to nominate a vessel "latest" 10 days prior to the specified laycan period. Such nominations accordingly became "written" into the contract for the fifth voyage.
(1) He held that the charterers had no right to move the laycan. The structure of the COA was to define the timing of the six voyages solely by reference to the obligation on the charterers under clause 23 to give 30 days' notice of a 10 day laycan spread. The nomination of the laycan was essential to complete the definition of the parties' obligations in regard to the timing of the fifth voyage, including the date when the relevant vessel had to engage on its approach voyage and the earliest date for tendering NOR. Notice would by definition also identify both the loading port and the cargo particulars into the charterparty. Without these matters being written into the COA, it would be unworkable.
In his judgment, as soon as the notice was given the owners could rely on it. "The idea", he said, "that over the period of 20 days before the nomination of the vessel has to be made the charterers can change the laycan dates as frequently and as substantially as they see fit, or even thereafter up to the stage that an estoppel be clearly established, is commercially unreal and uncertain."
The judge noted that the owners' position was supported by the leading textbook. He quoted from Cooke on Voyage Charters, 3rd Edition, para 4.19, as follows:
(2) Accordingly, he held that the tribunal was fully entitled to treat the charterers' insistence on their "entitlement" to move the laycan period as constituting a clear intention not to be bound by their original nomination. From the messages sent by the charterers on 17 and 20 September, the charterers "were evincing an intention not to be bound by an essential term in regards to the fifth voyage".
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