A v B

In an FOB sale contract requiring vessel nomination, time is generally of the essence. The buyer must provide a valid nomination by the contractual deadline. A valid nomination is made honestly, on reasonable grounds, and in accordance with the contract.

An initially invalid nomination does not itself constitute a breach of condition if the buyer can and does provide a valid and timely replacement. An exceptionally obvious nomination of a vessel incapable of performing may instead evince renunciation. An obligation to provide a copy charterparty promptly after nomination is not, on these facts, a condition. A tribunal’s failure to address an issue warrants relief under section 68 only where substantial injustice is shown.

The claimant sellers sold Ukrainian feed corn to the defendant buyers under an FOB contract incorporating GAFTA Form 49. The buyers nominated the Tai Hunter with an estimated arrival date which was found to be unreasonably ambitious, failed initially to provide the requested charterparty, and later nominated substitute vessels.

The GAFTA Board of Appeal found the initial nomination invalid but not a breach of condition, and held that the sellers had wrongfully terminated the contract. It awarded the buyers damages and interest. The sellers appealed on questions concerning the validity and status of the nomination, the need for an existing charterparty, provision of the charterparty copy, and interest. They also brought challenges under section 68 of the Arbitration Act 1996.

1. Nomination. A contractual requirement to nominate a vessel by a specified date, including through a notice and shipment period, is ordinarily a condition as to time in a mercantile contract. The buyer must provide a valid nomination by the final date on which one can be made. A valid nomination must be honest, based on reasonable grounds, and contractually compliant.
2. An initially invalid nomination may be cured by a subsequent valid and timely nomination. The initial invalid nomination is not itself a breach of condition where the buyer remains able to perform within the contractual timetable. A knowingly impossible or plainly fictitious nomination may nevertheless amount to renunciation if it evinces an intention not to perform. The Board was therefore entitled to conclude that the Tai Hunter nomination did not entitle the sellers to terminate.
3. The contract did not require the nominated vessel already to have been chartered at the date of nomination. The buyer’s obligation was to take sufficiently timely and effective steps to secure a vessel capable of performing. The obligation to provide a charterparty copy on first request did not alter that construction.
4. The buyers were in breach by failing to provide the requested charterparty, but prompt provision of a copy relating to an initial nomination which might be replaced was not a condition. The court dismissed the section 69 appeal and section 68 challenge on this issue. Although the Board had failed fully to address the issue, no substantial injustice resulted because the court determined the point.
5. The Board had also failed to address, with reasons, whether the alleged breaches cumulatively amounted to repudiation or renunciation. Section 68 relief nevertheless failed. The sellers’ case was not reasonably arguable: the nomination was not made in bad faith, a valid replacement remained possible, and the individual matters had no sufficient cumulative effect.
6. Interest from 4 April 2018 was permissible under section 49(3) of the Arbitration Act 1996. Properly construed, the Settlement Agreement adjusted the price paid on that date and compensated the buyers for being kept out of the money. All section 68 and section 69 challenges were dismissed and the Award was upheld.

The judgment was a first-instance determination of appeals under sections 68 and 69 of the Arbitration Act 1996 from a GAFTA Board of Appeal award. Permission to appeal had been granted by Teare J. The High Court dismissed all challenges and upheld the Award.