FOB Sale – Sellers’ right to nominate substitute vessel limited by notice requirements in respect of original vessel.
By a contract dated 3 July 2012 sellers sold maize on following terms:
between 15th March 2013 and 31st March 2013, both dates included no extension;
buyers to present self – trimming bulk carrier;
loading berth(s) / pier(s) to be declared by sellers upon nomination of a vessel…
Pre – Advice:
Buyers shall serve to the sellers (or the agent at loading) not less than 10 days pre – advice with the following information: ETA; Vessel’s name; Flag; Dimensions of the vessel; DWT; Airdraft; Demurrage / dispatch rate.
The buyers or their forwarding agent shall send to the sellers and agents at loading the 8, 7, 6, 5, 3, 2 days and the 24 hours’ precise Master’s notices of the vessel’s arrival at the loading port. “
On 20 March 2013, buyers nominated the M / V “Puffin” with an ETA at Nikolayev of 26 / 27 March 2013.
The notice was given fewer than 10 days before the ETA of the Puffin.
On 26 March 2013, the buyers sent another message nominating the M / V “Sea Way” in place of the Puffin giving an ETA of 28 March 2013.
Later that day sellers rejected the nominations of both vessels which they categorized as repudiatory breaches and cancelled the contract.
Buyers bought in a substituted cargo.
In GAFTA arbitration proceedings they claimed the difference in price of over USD 800 000.
The first tier tribunal accepted the sellers’ argument that the buyers had repudiated by failing to make a valid nomination.
The Board of Appeal allowed the buyers’ appeal.
Andrew Smith J restored the first tier tribunal’s award.
Andrew Smith J disallowed an argument by the sellers which was not raised in the arbitration that the invalid nomination was an innominate breach which did not allow the sellers to cancel.
Andrew Smith J accepted this as potentially valid but refused permission to argue this point because it contained an element of fact which had not been fully canvassed in the arbitration.
To have argued the point would have served no purpose because the wording of the contract (as with Cobetas and Finnbeaver) required strict compliance with the nomination clause.
In Finnbeaver, both Evans J at first instance, and the CA, Parker, Bingham and Taylor LJJ, rejected an argument that the nomination clause had no practical effect and could therefore not ground a cancellation. The clear words of the contract gave a right of cancellation and that was enough.
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