Mansel Oil Ltd & Anor v Troon Storage Tankers SA

In a charterparty providing for delivery at a port selected from a contractual range, the charterer’s duty to nominate the port arises only when nomination is neither too late to permit delivery by the cancelling date nor so early that the vessel would be delayed by the absence of nomination.

Where that time has not arrived, failure to nominate is not a default and does not prevent the charterer exercising the cancellation right. The charterparty should not be construed as requiring a pointless early nomination or as making such nomination a condition precedent to cancellation, particularly where both parties know that the vessel cannot meet the cancelling date.

The charterparty required delivery of the vessel at a port within the WAF–Ghana/Nigeria range, at the charterers’ option, and allowed cancellation if the vessel was not ready and at their disposal by the cancelling date.

The vessel remained at Piraeus undergoing repairs and conversion works. It was not delivered by the extended cancelling date, and the charterers cancelled without nominating a delivery port. The High Court, in [2008] EWHC 1269 (Comm), held that the time for nomination had not arisen and that the absence of nomination did not prevent cancellation.

The owners appealed. The central issue was whether nomination of a delivery port was required before the charterers could exercise the cancellation right.

Appeal dismissed. Longmore LJ gave the leading judgment, with which Waller LJ and Richards LJ agreed.

1. The owners’ construction would have made nomination of a delivery port a condition precedent to cancellation, although the charterparty contained no such provision. It was therefore, in substance, an attempt to imply a term. The proposed term could not satisfy the accepted tests for implication and would be pointless where both parties knew that the vessel was undergoing repairs and could not meet the cancelling date.
2. The High Court correctly identified the time for nomination. It would arise only when nomination was not so late that the vessel could thereby miss the cancelling date, and was early enough to prevent delay resulting from the absence of nomination. Until the vessel approached the deviation point near Cape Palmas, the owners could do everything necessary to comply with the charterparty without knowing the nominated port. The relevant time therefore never arrived.
3. Because the nomination obligation had not arisen, the charterers had not failed to nominate. Their cancellation was not barred by the absence of nomination.
4. Georgia Maritime Corporation v Sealand Industries (Bermuda) Ltd (The North Sea) was distinguishable. The first-instance decision proceeded on the basis that the time for nomination had arrived. It was unnecessary to choose between that ratio and the obiter observations of the Court of Appeal. The latter observations, and the earlier decision in Hudson’s Bay Co v Domingo Mumbru Sociedad Anonima, supported the conclusion that a futile nomination requirement could not defeat cancellation where timely compliance was impossible.

• Court of Appeal (Civil Division): dismissed the owners’ appeal and confirmed the High Court’s answer to the preliminary issue.
• High Court (Queen’s Bench Division, Commercial Court): in [2008] EWHC 1269 (Comm), held that the time for nominating a delivery port had not arisen and that the charterers were not prevented from cancelling.