Mansel Oil Ltd & Anor v Troon Storage Tankers SA

Under a charterparty giving charterers an option to nominate the delivery port, the option will ordinarily carry an obligation to nominate. That obligation must be performed within a reasonable time, assessed in the light of the owners’ duty to co-operate and the need to avoid delay.

However, nomination is not required merely to preserve a right to cancel for non-delivery where, on the assumed facts, the vessel could not possibly have reached any nominated port by the cancelling date and the absence of nomination caused no delay. A commercially futile nomination need not be made unless the charterparty clearly requires it.

The claimants were charterers and guarantors under an amended Shelltime 4 time charterparty. The vessel was to be delivered at a port in the West Africa Ghana/Nigeria range, selected by the charterers, and the charterers could cancel if the vessel was not ready and at their disposal by 15 November 2007.

The vessel remained in Piraeus and was not delivered by that date. The charterers had not nominated a delivery port. On a preliminary issue, the court had to determine whether the absence of nomination prevented cancellation, it being assumed that nomination would have been futile because the vessel could not have reached the delivery range in time.

1. Preliminary issue answered “No”. The charterers were not deprived of the right to cancel merely because they had not nominated a delivery port.
2. The charterparty, construed in its commercial context, ordinarily required the charterers to nominate the delivery port. Nomination completed the definition of the owners’ delivery obligation. It was therefore ordinarily a condition precedent to cancellation for non-delivery.
3. The obligation arose within a reasonable time. The nomination had to be sufficiently early to prevent delay caused by its absence and not so late that the vessel could not meet the cancelling date because of the lateness of the nomination. It did not necessarily arise before the owners’ estimated delivery notice or before the approach voyage began.
4. On the assumed facts, the time for nomination never arose. The vessel could not have met the cancelling date whatever port was nominated, and the absence of nomination caused no delay. The charterers therefore had not failed to perform an obligation that had become due.
5. Alternatively, a nomination was unnecessary because it would have been futile. The charterparty contained no express provision making nomination indispensable in circumstances where the vessel could not possibly arrive by the cancelling date. Commercial construction did not require the charterers to perform an idle ceremony merely to avoid an argument about cancellation.
6. The court followed the ratio identified in Hudson’s Bay Co v Domingo Mumbru Sociedad Anonima [1922] 10 Lloyd’s Rep 476, while distinguishing charterparties requiring notice to trigger a contractual mechanism. The issue of whether the underlying negotiations afforded the owners a separate defence was left open.

First-instance determination of a preliminary issue ordered by Cooke J. The judgment itself records no appeal.