Front Carriers Ltd.v Atlantic and Orient Shipping Corp.

Whether a charterparty has been concluded is determined objectively from the parties’ communications and surrounding circumstances. An erroneous name does not prevent contract formation where the parties objectively intended to contract with an identifiable party possessing agreed characteristics, and the error concerns the name rather than the identity of the contracting party. The court may consider the non-existence of the named entity and the parties’ response to a correction. A separate doctrine of misnomer is unnecessary: the issue is one of construction. Silence will not ordinarily amount to acceptance or create binding obligations, absent exceptional or special circumstances.

Front Carriers Limited sought an order under section 32 of the Arbitration Act 1996 confirming that an arbitral tribunal had substantive jurisdiction. It alleged that Atlantic and Orient Shipping Corporation had chartered a vessel from it. The respondent denied any binding charterparty, relying principally on references in the negotiations and draft documents to a non-existent company, Front Carrier Inc.

The central issue was whether the parties had concluded a charterparty on 7 March 2005, and, if so, whether the reference to Front Carrier Inc prevented Front Carriers Limited from being the contracting party.

1. Jurisdiction and contract formation. Front Carriers Limited established that a fixture had been concluded on 7 March 2005. The arbitration clause was therefore effective and the claimant was entitled to the order sought.
2. Objective construction. The question was what two reasonable businessmen, contracting in the relevant terms and circumstances, must objectively be taken to have intended. The essential terms had been agreed on 4 March and the subjects were lifted on 7 March. Both parties intended to fix the vessel with its disponent owner, provided that owner was within the Golden Ocean group. The precise corporate name was incidental.
3. Erroneous corporate name. The reference to Front Carrier Inc did not make that name a contractual term identifying the counterparty. Neither party intended to contract with a non-existent entity. The subsequent correction to Front Carriers Limited, without objection from the respondent, confirmed that the identity and place of incorporation of the particular group company were not material. The court treated the issue as one of construction rather than the application of a separate doctrine of misnomer, consistently with The Tutova and Seb Trygg Holding AG v Manches.
4. Alternative arguments. It was unnecessary to decide rectification, estoppel by convention, or whether later communications amounted to offer and acceptance. If no fixture had been concluded on 7 March, silence and inaction would not have amounted to acceptance or created an estoppel in the circumstances. Absent exceptional or special circumstances, silence is ineffective to create binding obligations, applying the principle stated in Leonidas D.
5. Order. The claimant established that Atlantic and Orient Shipping Corporation had chartered the vessel subsequently named Double Happiness from Front Carriers Limited on the terms recorded in the 4 and 7 March recaps.

First-instance decision. No prior appellate decision is stated in the judgment.