Bilgent Shipping PTE Ltd & Anor v ADM International Sarl & Oldendorff Carriers GmbH & Co KG

Contractual construction requires the court to ascertain the objective meaning of the language used, read in the context of the agreement as a whole and tested against its commercial consequences. Where a cancellation clause requires a notice of readiness to be given “as per” another clause, the incorporated requirements ordinarily govern whether the notice is valid for cancellation purposes. That may differ where the parties have amended the standard terms so that the cancellation deadline is outside office hours and the office-hours requirement has been removed from the incorporated clause. In that event, the contract may create separate regimes for cancellation and the commencement of laytime.

These were two appeals under section 69 of the Arbitration Act 1996 arising from related voyage charterparty arbitrations. The vessel Alpha Harmony tendered notice of readiness by email at 0704 on Sunday 10 May 2015. Both charterparties contained provisions concerning the permitted hours for tendering notice of readiness, but their cancellation clauses and amendments differed.

Bilgent cancelled the sub-charter on 10 May. ADM cancelled the head charter on 11 May. The arbitration tribunals held that neither cancellation was valid. The central issue was whether the notice was effective for cancellation purposes despite having been tendered outside the specified office hours.

1. Sub-charter. Clause 16 made the cancellation option dependent on notice of readiness being delivered “as per clause 14”. That wording incorporated the requirements in clause 14, including delivery during the specified weekday or Saturday office hours. The requirements were not inconsistent with the cancellation deadline. A notice tendered outside those hours was therefore not a notice of readiness as required by clause 16.
2. The court rejected the argument that this construction was uncommercial. The office-hours requirement served the commercial purpose of promoting certainty about whether notice had been validly given. It would create uncertainty if the same notice were invalid for laytime purposes but valid for cancellation purposes. Applying the approach in The Petr Schmidt [1998] 2 Lloyd’s Rep. 1, the notice tendered at 0704 on Sunday took effect when office hours next opened, on Monday. Bilgent was therefore entitled to cancel the sub-charter.
3. Head charter. The amendments to the standard form were materially different. Clause 4 fixed the cancellation deadline at 2359, the office-hours requirement had been deleted from clause 17, and the office-hours provision appeared instead in clause 70, which concerned laytime. Read objectively, clauses 4 and 17 showed that notice of readiness did not have to be delivered within office hours to prevent cancellation, although clause 70 continued to govern laytime.
4. The parties were entitled to agree different regimes for different purposes. The possibility that a notice might be valid to prevent cancellation but invalid to commence laytime did not justify rewriting the amended charterparty. ADM therefore had no right to cancel the head charter. The further issue whether cancellation at 0555 was too late did not arise.

Bilgent’s appeal was allowed. ADM’s appeal was dismissed.

• Arbitration tribunals: Held that the cancellations were invalid in the two related arbitrations.
• High Court (Commercial Court): Permission to appeal was given by Knowles J. Mr Justice Teare allowed Bilgent’s appeal and dismissed ADM’s appeal.