Polestar Maritime Ltd v YHM Shipping Co Ltd & Anor

Under the Norwegian Saleform 1993, an obligation to deliver a vessel with its national and international trading certificates valid and unextended refers to certificates the vessel had at inspection. It does not generally require the seller to obtain entirely new certificates required by law after inspection. Any contractual amendment intended to remove an obligation arising under the standard form must use clear words. A provision allowing the seller three banking days to make arrangements for delivery documentation may include steps needed to enable the seller to tender compliant documents, including securing release of a vessel detained by port authorities.

The claimant sellers appealed on three questions of law arising from an arbitration award concerning the sale of the vessel Rewa under an amended Norwegian Saleform 1993.

The arbitrator held that the buyers were entitled to cancel because the vessel lacked an International Sewage Pollution Prevention certificate and was detained at the time of the proposed delivery. The issues concerned the scope of the certificate obligation in clause 11, whether Addendum No 1 altered that obligation, and whether the clause 14 period of three banking days extended to arrangements necessary to make the bill of sale tenderable.

1. The appeal succeeded. The arbitrator should have held that the buyers were not entitled to cancel the memorandum of agreement. The award was remitted for determination of the precise terms of remission.

2. Clause 11 required delivery with the national and international trading certificates which the vessel had at the time of inspection, valid and unextended at delivery. The reference to those certificates, together with other certificates the vessel had at inspection, identified categories of existing documents. It did not impose a general obligation to obtain a completely new certificate required by law after inspection. That construction was supported by the contractual certainty required for a condition precedent to payment and by the Saleform’s as-was basis of sale (paras [15]-[17]).

3. Although it was unnecessary to decide the second question after answering the first, Addendum No 1 did not modify clause 11. Clear words would have been needed to extinguish the assumed obligation to provide an ISPP certificate, and item 12 of the Addendum contained no such wording (paras [18]-[21]).

4. The three-banking-day allowance in clause 14 was not confined to executing or procuring the documents listed in clause 8. It extended to arrangements necessary to enable the sellers to tender those documents in the stipulated form. Because detention prevented tender of a bill of sale warranting that the vessel was free from detentions, securing the vessel’s release was such an arrangement. The arbitrator therefore erred on the third question (paras [22]-[24]).

5. The buyers’ refusal to complete was a breach of contract. The sellers were entitled to the resulting relief, subject to the terms of remission (para [25]).

1. Arbitration: By an award dated 15 June 2010, the arbitrator held that the buyers were entitled to cancel the memorandum of agreement.
2. High Court (Commercial Court): The sellers’ appeal on questions of law succeeded. The award was remitted to the arbitrator.