P v A & Anor

A post-contractual laycan notice under a voyage charter may define an essential part of the parties’ obligations. Once given, it is irrevocable unless the charterparty provides otherwise or the parties agree to a variation. The notice may incorporate the loading port, cargo and timing of the voyage into the contract. A charterer who insists on moving the notified laycan, and proposes a different voyage instead, may demonstrate a clear intention not to be bound by an essential contractual term. Whether that conduct is repudiatory depends on the substance of the communications and the tribunal’s factual findings. A contractual clause providing for the charter to become null and void after an extended cargo delay may support the commercial explanation for the conduct, but need not be essential to the finding of repudiation.

The charterers appealed under section 69 of the Arbitration Act 1996 against an award arising from a Contract of Affreightment for six cargoes. The contract required the charterers to give 30 days’ notice with a 10-day laycan spread, after which the owners were to nominate a vessel.

The charterers nominated a 5–14 October laycan for the fifth voyage. Their shippers later postponed cargo availability to 21–30 October. The charterers sought to move the laycan and proposed a substitute voyage. The majority arbitrators held that the original nomination was binding and that the charterers’ conduct was repudiatory. The central issues were whether the laycan nomination was irrevocable and whether the tribunal had erred in law in reaching that conclusion.

1. The appeal was dismissed. The tribunal was entitled to conclude that the charterers’ communications evinced an intention not to be bound by the original nomination for the fifth voyage.
2. The structure of the Contract of Affreightment made the laycan notice essential to defining the timing of each voyage. It identified when the vessel was required to engage on its approach voyage and the earliest date on which notice of readiness could be tendered. The notice also identified the loading port and cargo.
3. The notice therefore became part of the contract when given and could not be changed unilaterally. It was commercially unreal and uncertain to allow the charterers to alter the laycan freely before vessel nomination. The need for later confirmation of the vessel did not give the charterers a right to reject a qualifying vessel.
4. The arbitrators’ factual findings were inconsistent with the charterers’ argument that they had merely indicated a later cancelling date. The charterers had stated that they could not provide cargo for the original period, claimed an entitlement to move the laycan, and proposed a different voyage. Treating that conduct as a repudiatory breach was at least within the range of conclusions open to the tribunal.
5. Clause 4, which could render the fifth voyage charter null and void after a sufficient delay in cargo availability beyond the charterers’ control, was not necessary to the repudiation finding. It nevertheless provided a possible explanation for the charterers’ position and the owners’ decision not to nominate a vessel.

• High Court (Commercial Court): appeal under section 69 of the Arbitration Act 1996 dismissed. The arbitral award was upheld.