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Contract formation – contract of affreightment forming the basis of individual charter parties – held to be established by conduct. 


The facts

Bananas were shipped from Ecuador to St Petersburg, Russia for about three years pursuant to consecutive contracts of affrightment.  Four different contractual regimes applied over this period:

1.Initially there were two written contracts of affreightment. 


2.  On expiry the second contract of affreightment  parties agreed to contract on existing terms in anticipation of entering into a new formal contract of affreightment.        


3.  The parties continued trading after an e-mail proposal had been sent by the owners setting out the terms of a contract of affreightment.


4.  A final period of spot trading. 


The written contracts of affreightment were on standard GENCON forms containing a description of the ship brokers.  The owners were described as “Managers for performing vessels”.  The performing vessels were stated to be ‘[owners] tonnage to be nominated”.  A further clause read that owners irrevocably confirmed that all nominated vessels would be suitable to call during winter at St Petersburg. 


The e-mail proposal in the third period read as follows:


“Have to agree terms for winter season.

Suggest to make it, as follows:

Owners tonnage to be nominated for

–       Account importers

–       Cargo of about 100 boxes up to 150 boxes in owner’s option, fresh green bananas every week.

–       Owners’ option to load part of charterer’s volumes into reefer containers as well as split this volume into two vessels a week.

Start – week 43, finish week 22, both weeks inclusive.

No loading on week 39 and 50 – unless otherwise agreed.

Freight to be mutually agreed on weekly basis latest by Friday prior loading.

Owners’ option to cancel one shipment during the COA with two weeks advanced notice.

Further terms/ details based on GENCON 94”


Importers did not respond to this e-mail but accepted owners nomination of a number of vessels pursuant to the terms of the e-mail. 


The parties were two clusters of companies: importers were two related companies, registered in Russia and Cyprus.  Their operations were conducted through a chartering broker. 


Owners were a Scottish Limited liability Partnership which became a British Virgin Islands Company.  Owners were the disponent owners of 3 reefer vessels and the managers another 9 vessels owned by a single-ship companies. 


Cargo damage claims were made in respect of voyages which took place during the period following upon the e-mail referred to above.   


Multiple references to arbitration were made by importers which led to a challenge of the arbitrators’ jurisdiction under section 67 of the Arbitration Act. 



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Charter Party Casebook