Oceanografia SA DE CV v DSND Subsea AS

Where parties agree that no contract will arise until specified terms are signed, that requirement is ordinarily a condition precedent to contractual formation. A party entitled to insist on signature may nevertheless waive that requirement by election. Waiver requires a choice between inconsistent courses, a clear and unequivocal communication by words or conduct, and knowledge of the right being abandoned. Private reservations do not prevent waiver where outward conduct indicates an election to proceed as if the contract were binding. The same conduct may establish an estoppel by convention where both parties act on the common assumption that the contract exists.

DSND chartered the vessel Botnica to Oceanografia SA de CV under negotiated terms based on the Supplytime 89 form. Clause 18.1 of Exhibit A stated that the offer was subject to the signing of mutually agreeable contract terms and conditions. DSND signed the full charterparty, but Oceanografia did not.

Oceanografia nevertheless paid mobilisation sums, accepted the vessel, signed operational documents and later acted by reference to the charterparty. The arbitrators held that the charterparty was binding and that they had jurisdiction under the London arbitration clause. Oceanografia challenged that award under section 67 of the Arbitration Act 1996. The central questions were the effect of the signing requirement, whether it had been waived, and whether an estoppel by convention arose.

1. Challenge dismissed. The arbitrators reached the correct conclusion on jurisdiction. The court conducted a full rehearing of the jurisdiction issue, applying the approach described in Peterson Farms Inc v C M Farming Ltd [2004] 1 Lloyd’s Rep 603.
2. All necessary charterparty terms had been agreed by 1 September 2001, apart from matters relating to the surety bond. The outstanding amount of the bond did not prevent contractual agreement, subject to the signing requirement and the alleged condition concerning Finnish Maritime Administration approval.
3. Clause 18.1 objectively meant that no binding contract would arise until both parties had signed all the agreed charterparty terms and conditions. The reference to contract terms was not confined to Exhibit A. The parties’ signing practice under an earlier charterparty was not relevant because that contract contained no equivalent wording. The construction was supported by the principle stated in Von Hatzfeldt–Wildenburg v Alexander [1912] 1 Ch 284.
4. No collateral condition precedent required approval for the vessel’s winter use before the charterparty could bind the parties. The contemporaneous documents did not support such an oral term, and the notice provisions assumed that the charterparty was already operative while approval remained uncertain.
5. Oceanografia waived the signing requirement by election. Applying the three requirements identified by Lord Goff in Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The “Kanchenjunga”) [1990] 1 Lloyd’s Rep 391, there was a choice between insisting on signature and proceeding without it; Oceanografia knew of that choice; and its later conduct, after the lack of approval was known, clearly and unequivocally indicated that it had elected to be bound.
6. The same post-approval conduct established a shared assumption that the vessel operated under the 28 August charterparty. Oceanografia was therefore estopped by convention from denying that it was bound by the charterparty, including clause 31 of Part II providing for London arbitration.

The judgment describes a prior arbitration on jurisdiction. The arbitrators’ declaratory award dated 17 September 2004 held that the charterparty was binding and that the tribunal had jurisdiction. The section 67 challenge was dismissed.