Greatship (India) Ltd v Oceanografia SA de CV

Clear contractual language must be applied according to its natural meaning. Commercial considerations cannot justify rewriting an unambiguous agreement. Under a charterparty clause distinguishing withdrawal from suspension of performance, a right to suspend triggered by payment remaining due was not subject to a notice or grace period that applied expressly to withdrawal. Temporary suspension was an intermediate remedy: the vessel remained on hire, and the charterer could remedy the position by paying. A notice term was not implied where the detailed standard-form contract operated coherently without it and there was no business necessity.

The claimant owners appealed under section 69 of the Arbitration Act 1996 against a Third Partial Final Award concerning the construction of clause 10(e) of an amended BIMCO Supplytime 1989 charterparty. The arbitrators had held that the owners’ right to suspend performance for non-payment was subject to the five-banking-day notification and grace-period provisions applicable to withdrawal. They rejected an alternative implied-term argument. The central issue was whether owners had to give charterers five banking days’ notice before suspending performance.

1. Appeal allowed. Owners were not required to give charterers five banking days’ notice before exercising the right under clause 10(e)[4] to suspend performance of their obligations.
2. Per Gloster J, the words “while payment remains due” referred naturally to the period after payment fell due under clause 10(e)[1] and Box 23 and remained unpaid. Clause 10(e)[4] contained no express reference to notice or a grace period. The notice requirement in clause 10(e)[3] therefore did not qualify the separate suspension right.
3. The clause’s structure supported that conclusion. Clause 10(e)[1] addressed payment, [2] the financial consequences of late payment, [3] permanent withdrawal, and [4] the lesser right of temporary suspension. The location of [4] after [3] did not create a contractual link between the remedies.
4. The court applied the approach restated in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900: clear and unambiguous language must be applied, while commercial common sense may assist only where the language permits competing constructions. The owners’ construction was not uncommercial. Suspension was temporary, the vessel remained on hire, and payment could remedy the default. Permanent withdrawal was more drastic and was appropriately subject to express notice and a grace period.
5. The later BIMCO Supplytime 2005 wording did not assist construction of the earlier form. Nor was an implied notice term justified. The charterparty could operate properly without it, and detailed standard-form contracts carry a strong presumption of completeness, consistent with A-G of Belize v Belize Telecom [2009] 1 WLR 1988 and Mediterranean Salvage v Seamar Trading [2009] EWCA 531.

• High Court (Commercial Court): allowed the section 69 appeal from the arbitrators’ Third Partial Final Award. The court held that suspension under clause 10(e)[4] did not require five banking days’ notice.
• Arbitration: the arbitrators had construed the clause as requiring the notice and grace-period provisions applicable to withdrawal to apply also to suspension.