Southeaster Maritime Ltd v Trafigura Maritime Logistics Pte Ltd mv "Aquafreedom"

In charterparty negotiations, an agreement expressed to be on subjects is ordinarily non-binding until the subjects are lifted. A charterers’ management-approval subject is a condition precedent, not a condition subsequent. Where agreement is also subject to review and agreement of previously agreed terms, no contract arises until all terms have been agreed, unless the language clearly provides otherwise. A response which proposes altered contractual wording is a counter-offer rather than a request for information. A clear communication that a party is not prepared to do the business may withdraw any outstanding offer, regardless of whether it is sent by WhatsApp or email.

The claimant owned the vessel Aquafreedom. The defendant negotiated through brokers for a four-year time charterparty with optional extensions. A recap circulated on 30 January 2023 recorded terms subject to review of previously agreed terms and to charterers’ management approval after all terms had been agreed.

The parties continued negotiating, but did not agree several provisions, including drydocking, ETS and CII wording. After a period of silence, the defendant purported to accept the claimant’s last substantive email and then lift its management-approval subject on 6 February 2023. The claimant sought summary judgment declaring that no binding charterparty had been concluded.

1. Summary judgment. The court applied the realistic-prospect test in Easyair Ltd (t/a Openair) v Opal Telecom Ltd and held that the issues could be determined summarily. The contractual effect of the recap was a question of construction, and the relevant communications showed whether agreement had been reached.
2. Effect of the subjects. Applying The Leonidas, as approved in The Newcastle Express, the CMA subject signalled that no binding contract existed until charterers’ management approval had been given. The subject was a condition precedent. The parties’ agreement therefore remained commercial rather than legal, and either could withdraw before the subject was lifted.
3. Review of terms. The provisions requiring review of previously agreed terms and agreement of all terms operated in tandem with the CMA subject. Agreement on all terms was a precondition to any binding contract, even if the CMA subject had stood alone. The gaps concerning the prior terms, trading exclusions, cargo wording and other provisions reinforced that conclusion. The Pacific Champ and TopTip Holding v Mercuria did not require a different result; neither addressed the present combination of clauses, and the relevant reasoning in The Pacific Champ was obiter.
4. No agreement on 6 February. The responses to the claimant’s last email included counter-offers. In particular, the proposed 120-day drydocking period, alternative ETS wording and modified CII obligation required further agreement. The defendant could not rewind the negotiations and accept the earlier email. The parties never agreed all terms.
5. Withdrawal by WhatsApp. In any event, the message that the owners did not agree the terms and were not there to do the business objectively communicated that they were not prepared to contract. The use of WhatsApp did not reduce its legal significance. It was passed through authorised brokers before the defendant purported to lift the subject.
6. Estoppel. The rejection of the owners’ proposed board-approval subject did not represent that the defendant’s CMA subject had a different legal effect. No estoppel arose.
7. Disposition. The owners’ application for summary judgment succeeded.