91. Agip S.P.A. v Avigazione Alta Italia S.P.A. (The “Nai Genova” and “Nai Superba”) [1983] 2 Lloyd’s Rep 333; [1984] 1 Lloyd’s Rep 353

Consecutive voyage charterparties – rectification – decision on the facts

The facts

Written, ten year, consecutive voyage charterparties were entered into in respect of the two vessels.

The charterer assigned its rights to AGIP and both sued for rectification of the written contracts in respect of each of the two vessels.

The owner’s remuneration was subject to an escalation clause with a base figure expressed in United States Dollars. The escalation clause was designed to provide for rising costs of maintenance and repairs over the ten year period and was linked to the increase in the costs of workmanship and materials. The objective element was provided by tables issued by an association of shipbuilders in Genoa and the Milan Chamber of Commerce.

Over the ten year period of the contracts, the Italian Lire lost value against the United States Dollar. The expenditure occurred in Italy using Lire as currency. If the base figure had been expressed in the equivalent of Italian Lire at the time when the contracts were entered into, this would have resulted in a considerable saving for the charterer.

AGIP led evidence that, on the charterer’s side, the intention was to express the base figure in Lire in not in United States Dollars. It was alleged, again from the charterers’ perspective, that the expression of the base figure in United States Dollars in the written contract was not intended by it. The owner, on the other hand, led evidence that it fully intended the base figure to be expressed in Dollars.

Considerable evidence relating to the negotiations leading up to the signing of the contracts was given.

Findings

The judgments of both the Commercial Court and the Court of Appeal contain useful summaries of the law of rectification.

Both courts concluded that AGIP had failed to prove on the ordinary civil standard that the owner shared the charterer’s intention that the base figure be expressed in Lire.

The Commercial Court found that the owner was unaware of the charterer’s misapprehension; neither did it conduct itself in such a manner that it would be inequitable for it to take advantage of the charterer’s unilateral mistake. These findings were upheld on appeal.