Thai Maparn Trading Co Ltd v Louis Drefyus Commodities Asia Pte Ltd

A short notice of a vessel’s estimated time of arrival is not necessarily invalid or incapable of triggering contractual obligations under an FOB sale contract. The effect depends on the contract. Where the contract provides that laytime begins on a valid Notice of Readiness, and does not make the seven-day ETA notice a condition precedent, the seller remains obliged to provide cargo, although laytime will not run until the notice period has elapsed. A seller’s clear statement that cargo is unavailable may amount to repudiation. Under a GAFTA default clause, damages are generally assessed by reference to the date of breach, rather than the later date on which repudiation is accepted, subject to subsequent agreement, estoppel, indulgence or forbearance affecting the parties’ rights.

The claimant sellers appealed under section 69 of the Arbitration Act 1996 against two GAFTA Board of Appeal awards concerning FOB contracts for the sale of rice under GAFTA form 120. The buyers had nominated vessels on less than seven working days’ notice of estimated arrival. The sellers replied that they could not accept the nominations because cargo and printed bags were unavailable.

The Boards held that the nominations were valid, that the sellers’ responses amounted to repudiatory breaches, and that damages were to be assessed by reference to the following business day. The central issues were whether the short nominations were invalid, whether the sellers’ responses were repudiatory, and whether the date of default for damages was the date of breach or acceptance.

1. Appeals dismissed. The sellers’ appeals against both GAFTA awards failed on liability and quantum.
2. The seven-working-day ETA notice was not a condition precedent to the sellers’ obligation to provide cargo. The ETA was an estimate, and the vessel might arrive before the notice period expired. Nothing in the contracts made the obligation to provide cargo after a valid Notice of Readiness dependent on prior service of seven working days’ notice.
3. Clauses 6 and 10 of GAFTA 120 indicated that laytime began when Notice of Readiness was tendered within the delivery period, subject to specified exceptions. The sellers were protected because, where the vessel arrived without the requisite notice, laytime would not run until seven working days after the notice.
4. The authorities relied upon on time stipulations were distinguishable. In Bunge Corp. New York v Tradax Export SA, Panama [1981] 1 W.L.R. 711, the notice was given after the last permissible date. In Cargill UK Ltd. v Continental UK Ltd. [1989] 2 Lloyd’s Rep. 290, the notice was too late in light of the shipment period and the contract expressly prevented tender of Notice of Readiness without the requisite notice.
5. Although it was unnecessary to decide the alternative repudiation issue, the Boards were entitled to find that the sellers’ messages were clear and unequivocal repudiations. They gave no indication that the problem was merely short notice or when cargo would become available. The surrounding market evidence and the sellers’ failure to respond to a request for a loading programme were also relevant.
6. As an alternative on quantum, clause 23 of GAFTA 120 required damages to be assessed by reference to the date of default. Following Toprak v Finagrain [1979] 2 Lloyd’s Rep. 98, that ordinarily meant the date of breach, not the later date of acceptance, unless subsequent conduct altered the parties’ rights.

The judgment itself was a first-instance appeal under section 69 of the Arbitration Act 1996 against two GAFTA Board of Appeal awards. Both appeals were dismissed.