Agrimex Ltd v Tradigrain SA & Ors

A notice of readiness is prima facie valid only where the vessel is physically ready in all respects to load. That rule may be modified by contractual incorporation of charterparty terms. Where a sale contract provides for demurrage and despatch as per charterparty, the incorporated terms may include provisions governing when a notice of readiness is effective, not merely the rates. The question is one of construction of the particular sale contract. Commercial coherence, including correspondence between the buyer’s liability under the sale contract and the charterer’s liability under the charterparty, may support incorporation unless the contract clearly indicates otherwise.

Agrimex appealed under section 69 of the Arbitration Act 1996 against an award of the GAFTA Board of Appeal dated 31 October 2003. The dispute concerned two FOB wheat sale contracts which provided for demurrage and despatch as per charterparty.

The nominated vessel tendered notice of readiness while waiting at anchorage because the loading berth was unavailable. The charterparty permitted such a notice where the master warranted that the vessel was ready in all respects. The vessel’s holds were subsequently rejected because of rust and became fit to load only after cleaning. The tribunal held that the notice was valid under the sale contracts. The central issue was whether the charterparty provisions governing notices of readiness had been incorporated into those contracts.

1. Appeal dismissed. The tribunal was correct to hold that the notice of readiness tendered on 11 March 1999 was valid and effective under the sale contracts.
2. A valid notice of readiness can prima facie be tendered only when the vessel is physically ready in all respects to load: The Tres Flores [1973] 2 Lloyd's Law Reports 247. Whether that rule is displaced depends on the proper construction of the sale contract and on which charterparty terms it incorporates.
3. The parties accepted that the relevant charterparty allowed a notice of readiness to be tendered from a usual waiting place when the berth was unavailable, provided that the master warranted that the vessel was ready in all respects. If the vessel was later found unready, laytime was interrupted while the defect was remedied, without requiring a fresh notice of readiness.
4. The words as per charterparty in the 16 July 1998 contract were not limited to demurrage and despatch rates. They incorporated the charterparty provisions governing the effectiveness of a notice of readiness tendered while the berth was unavailable, and the consequences if the vessel was later found unready. This construction was supported by the commercial expectation that the buyer’s liability under the sale contract would correspond with the charterer’s liability under the charterparty. It also avoided the commercially unattractive result that a second notice would be required under the sale contract although unnecessary under the charterparty.
5. The authorities did not require a different conclusion. OK Petroleum AB v Vitol Energy SA [1995] 2 Lloyd's Law Reports 160 supported incorporation of laytime provisions, including notice of readiness provisions, subject to inconsistency with the sale contract. Gill and Duffus SA v Rionda Futures Limited [1994] 2 Lloyd's Law Reports 67 turned on the wording and context of its own contract. The present contracts were construed differently.
6. The additional words all other conditions as per relevant charterparty in the 9 July 1998 contract confirmed, rather than restricted, the same construction. The tribunal’s decision was therefore upheld and the appeal dismissed.

1. GAFTA Board of Appeal: Award dated 31 October 2003. The tribunal held that the notice of readiness was valid under the sale contracts.
2. High Court (Commercial Court): Appeal under section 69 of the Arbitration Act 1996 dismissed. The tribunal’s decision was upheld.