Geden Operations Ltd v Dry Bulk Handy Holdings Inc M/V "Bulk Uruguay"

Anticipatory breach arises through renunciation or self-induced impossibility, but in either case the anticipated breach must be repudiatory. Self-induced impossibility requires future non-performance to be inevitable, not merely uncertain or unlikely. A contractual obligation depending on a third party’s consent does not automatically amount to renunciation. Whether words or conduct show an intention not to perform is ordinarily a question of fact. For an innominate term, the court must assess prospectively whether the conduct would deprive the innocent party of substantially the whole benefit of the contract.

The claimant charterers appealed under section 69 of the Arbitration Act 1996 against an award concerning a three-year time charter of the vessel M/V “Bulk Uruguay”. The dispute concerned whether the owners’ insistence that Gulf of Aden voyages required head owners’ consent amounted to an anticipatory repudiatory breach.

The majority arbitrators held that the owners had not renounced their obligations, that future performance was uncertain rather than impossible, and that the charterers would not have been deprived of substantially the whole benefit of the charter. The charterers contended that the tribunal had erred in law.

1. Appeal dismissed. The tribunal had applied the correct legal tests, and its conclusions were findings of fact that could not be reviewed under section 69 of the Arbitration Act 1996.
2. Anticipatory breach has two forms: renunciation, consisting of words or conduct evincing an intention no longer to be bound; and self-induced impossibility, consisting of conduct putting performance out of the contracting party’s power. In both cases the anticipated breach must be repudiatory, namely a breach of condition or an innominate-term breach going to the root of the contract or depriving the innocent party of substantially the whole benefit of it. Popplewell J relied on the analysis in Universal Carriers v Citati [1957] 2 QB 401 (paras [15]-[17]).
3. Self-induced impossibility is narrowly confined. Future performance must be inevitable, apart from possibilities so remote that they can practically be ignored. Conduct making performance uncertain, even very unlikely, is insufficient (para [18]).
4. Making performance dependent on a third party’s discretion does not, as a matter of law, automatically establish renunciation. The question remains whether a reasonable person would conclude from the particular words and conduct that the contracting party intended not to perform. Relevant considerations include the degree of uncertainty, the nature of the contingency and the person controlling it (paras [20]-[22]).
5. For the substantial-benefit inquiry, the relevant benefit is assessed prospectively at the date of the alleged anticipatory breach. The court must consider the charterers’ intended use of the vessel and the commercial effect of the alleged restriction, rather than treating one hypothetical failure to comply with a voyage order as necessarily repudiatory. The tribunal’s findings about likely trading patterns, competitive disadvantage, value and alternative trading opportunities supported its conclusion (paras [25]-[29]).
6. The tribunal’s conclusion that the owners’ conduct did not evince an intention not to perform was open to it on the facts. The appeal therefore failed on both grounds (paras [23], [29]).

• Arbitration tribunal: By majority award dated 17 July 2013, the owners were held not to be in anticipatory breach; the charterers’ termination was repudiatory, and damages exceeding US$6.5 million were awarded to the owners.
• High Court (Commercial Court): Permission to appeal was granted on 11 November 2013. Popplewell J dismissed the section 69 appeal.