Ramburs Inc v Agrifert SA

Under a FOB sale, a buyer’s contractual right to substitute a nominated vessel remains subject to the contract’s nomination and pre-advice requirements unless the wording clearly creates a complete and exclusive code. The substitute vessel must therefore be nominated in time and with the information required by the contract. A clause preserving the original delivery period does not, by itself, remove those requirements. On an appeal under section 69 of the Arbitration Act 1996, a respondent cannot introduce a new mixed question of law and fact where the arbitral tribunal made no potentially relevant findings.

The sellers sold maize to the buyers on FOB terms incorporating GAFTA Form 49. The contract required advance nomination and detailed pre-advice of the vessel. The buyers first nominated the m/v “Puffin” and later substituted the m/v “Sea Way”. The First Tier GAFTA Tribunal held that the sellers were entitled to terminate, but the GAFTA Board of Appeal allowed the buyers’ appeal. The sellers appealed to the Commercial Court under section 69 of the Arbitration Act 1996.

The issues were whether the GAFTA substitution provision displaced the contractual nomination and pre-advice requirements for a substitute vessel, whether the “Sea Way” nomination was valid, and whether the buyers could alternatively argue that any breach was not repudiatory.

The appeal was allowed. The buyers’ alternative argument that any failure to comply with the nomination requirements was not repudiatory was not permitted on the section 69 appeal. It had not been distinctly advanced in the arbitration and was a mixed question of law and fact. The court was confined to the findings in the award, and potentially relevant findings had not been made.

1. A buyer under a FOB contract generally has the duty to name the vessel and give shipping instructions in time to enable shipment in accordance with the contract. Subject to the contract, a nominated vessel may be withdrawn and replaced, but the substitute must be nominated in time to perform the buyer’s contractual obligations and must otherwise comply with the contract: Henderson & Glass v Radmore & Co (1922) 10 Ll L R 727 and Agricultores Federados Argentinos v Ampro SA [1965] 2 Ll L R 157 were considered.
2. The reasoning in Cargill UK Ltd v Continental UK Ltd [1989] 2 Ll Rep 290 supported the conclusion that detailed nomination provisions cannot be circumvented by late substitution. The contractual requirement concerns the vessel that is to load the cargo, not merely an earlier vessel later abandoned.
3. The GAFTA 49 wording made the right to substitute express, but did not constitute a complete code dispensing with nomination and pre-advice requirements. The provision that substitution must not affect the original delivery period qualified the right; it did not remove the other contractual protections. The sellers’ interest in information about the actual loading vessel, including its dimensions and draft, gave the pre-advice provisions a continuing commercial purpose.
4. The “Sea Way” nomination was not made in accordance with the contract. The buyers were in default and their claim failed.

The court answered both stated questions in favour of the sellers.

• First Tier GAFTA Tribunal held that the sellers were entitled to terminate because the buyers had failed validly to nominate a vessel.
• GAFTA Board of Appeal allowed the buyers’ appeal.
• High Court (Commercial Court), on the sellers’ appeal under section 69 of the Arbitration Act 1996, allowed the appeal, held the substitution invalid, and dismissed the buyers’ claim.