Tryggingarfelagio Foroyar P/F v CPT Empresas Maritimas SA

Contract formation is determined objectively by the parties’ communications and conduct. Parties may conclude a binding contract while leaving detailed terms or a formal document to be settled later, provided the agreement is workable and sufficiently certain. In commercial emergency services, the surrounding industry practice and the parties’ conduct may establish incorporation of standard terms. Immediate performance and the absence of objection to a proposed standard form may support assent to that form. The court must assess the whole course of negotiations, including later communications, rather than isolating a single offer and acceptance. On the evidence, the agreement incorporated the BIMCO Wreckhire terms, including its English arbitration clause.

The claimant, a Faroese hull and machinery underwriter, claimed against a Chilean towage and salvage company for damage allegedly caused during firefighting services provided to the vessel Athena. The claimant had commenced proceedings in Chile. The defendant contended that the services were supplied under a BIMCO Wreckhire agreement containing an English arbitration clause and sought to restrain the Chilean proceedings.

An interim anti-suit injunction had previously been granted. The present proceedings were brought under section 72(1) of the Arbitration Act 1996 to determine whether a valid arbitration agreement existed. The central issues were whether a contract had been concluded before the written terms were finalised and whether the BIMCO Wreckhire terms, particularly the arbitration clause, had been incorporated.

1. Applicable law and contractual principles. Under Article 8 of the Rome Convention, English law governed the existence and validity of the alleged agreement. The court applied the objective approach stated in RTS Flexible Systems Ltd v Molenski Alois Muller GmbH & Co [2010] UKSC 14. The question was what the parties communicated by words and conduct, viewed objectively, and whether they intended legal relations and agreed terms sufficient for a binding contract.
2. Initial agreement. The communications on 5 July 2007 objectively established a concluded agreement for the provision of the offered firefighting services. The offer contained the essential terms. The parties expected a written agreement containing further detail, but the agreement was not subject to the execution of that document. The absence of further terms did not make the agreement unworkable or wholly uncertain. CPT’s immediate performance reinforced that conclusion. The salvage provisions of the Chilean Commercial Code did not apply.
3. Standard terms and BIMCO Wreckhire. The parties’ negotiations had to be assessed as a whole. The authorities, including Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601, British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504 and Trentham (G. Percy) Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25, supported the possibility of a binding contract notwithstanding outstanding detailed terms, depending on the parties’ intention and the factual matrix.
4. In the emergency salvage context, standard contractual terms were the almost invariable industry practice. CPT’s reference to a BIMCO contract in its recap was not rejected. Thor’s subsequent conduct, including requesting performance and failing to object when the proposed form was identified as Wreckhire, supported an inference of assent. Wreckhire, rather than Towhire, was appropriate because the services were firefighting and salvage assistance rather than towage.
5. Disposition. CPT discharged the burden of proving incorporation of the BIMCO Wreckhire arbitration clause. CPT was therefore entitled to a permanent anti-suit injunction restraining continuation of the Chilean proceedings.