Briety Shipping Inc v Trafigura Maritime Logistics PTE Ltd

In a floating hire formula, a clause requiring TTF to be deducted from JKM produces a negative figure when TTF is higher. The signed result must be used in the monthly average; the word spread, a table beginning at zero, and commercial disadvantage do not authorise conversion into an absolute value. The formula was tied to the known Atlantic-to-Asia arbitrage and did not extend to an unexpressed reverse arbitrage or general freight-rate proxy. An unforeseen market reversal did not justify rewriting the bargain. Rectification failed because the heads of agreement was not binding, the final charterparty superseded it, and neither common nor unilateral mistake was proved. A contractual time bar would run from when each underpayment fell due, notwithstanding a continuing rate dispute.

Briety, the owner of an LNG carrier, claimed unpaid hire and declaratory relief under a five-year time charterparty with Trafigura. The dispute concerned whether the JKM-TTF formula required TTF to be deducted from JKM as a signed figure, or whether any negative result had to be converted into an absolute value so that hire increased when TTF exceeded JKM.

Briety alternatively sought rectification for common or unilateral mistake. Trafigura relied on the contractual wording and disputed the rectification claims. The court also considered the status of an earlier heads of agreement and whether the claim was time-barred.

The claim was dismissed, including the alternative rectification claims.

1. Construction. Clause 10 required TTF to be deducted from JKM. If TTF exceeded JKM, the result was a negative number which remained negative when the daily figures were averaged. The contract contained no further absolute-value conversion. The word spread, the table beginning at zero, and the commercial consequences did not justify adding such a step. The court applied the objective and unitary approach summarised in The Ocean Neptune [2018] EWHC 163 (Comm), with the caution on commercial common sense in Merthyr (South Wales) Limited v Merthyr Tydfil County Borough Council [2019] EWCA Civ 526.
2. The contractual mechanism was objectively tied to the known Atlantic-to-Asia arbitrage. The evidence did not establish a corresponding reverse arbitrage, a reliable freight-rate correlation, or any wider general profit-sharing purpose. The later market reversal therefore did not alter the proper construction of the clause.
3. Rectification. The heads of agreement was not a binding charterparty. It contemplated a later formal charterparty, remained subject to conditions, and left material operating terms for further agreement. Even if it had been binding, the detailed TCP was intended to supersede it. The principles concerning superseding agreements in The Aktor [2008] 2 Lloyds Law Reports 246 and Electrosteel Castings Ltd v Scan-Trans Shipping and Chartering Sdn Bhd [2003] 1 Lloyd's Rep 190 supported that conclusion. An entire agreement clause was not an absolute bar to rectification, but was evidence relevant to supersession. No common continuing intention or unilateral mistake was proved.
4. Time bar. Although academic because the substantive claim failed, the 12-month contractual period would have applied. An underpayment claim accrued when the relevant hire fell due. A continuing dispute permitted payment of the Floor and protected against withdrawal, but did not postpone accrual. Any contractual interest issue did not prevent an award under section 35A of the Senior Courts Act.

The action against Trafigura was dismissed.

not stated in the judgment.