Finco International AG v Integra Petrochemicals Europe AG

In a CIF contract incorporating standard terms, stated destination delivery dates are ordinarily indicative where the contract terms provide that the seller assumes no responsibility for delivery at the discharge terminal. The court must construe the particular agreement, including any special provisions, and must not treat customary CIF consequences as an inflexible rule. A vessel nomination must be rejected in the contractual time and manner. A failure to reject within that period results in acceptance, subject to any contractual right arising from genuinely new information. Whether a rejection ground is reasonable is an objective, fact-sensitive question. Parties may also become estopped by convention where their words and conduct establish a shared basis on which performance proceeds and reliance makes it unconscionable to assert the true position.

FinCo agreed to buy, and Integra agreed to sell, 10kt of methyl tert-butyl ether under a recap incorporating the BP Oil International Limited General Terms and Conditions for Sales and Purchases of Crude Oil and Petroleum Products. The contract initially provided for DES ARA delivery dates of 10–24 November 2023, but the delivery term was amended to CIF ARA.

Integra nominated the M/T Aramon. FinCo raised concerns that the vessel could not berth at its intended Amsterdam terminal and later purported to terminate the contract because the vessel arrived after the stated dates and because Integra had allegedly failed to nominate a suitable vessel. Integra demanded payment under a standby letter of credit and later resold the cargo. FinCo sought restitution and damages. The central questions were the effect of the DES-to-CIF amendment, the construction and operation of the vessel nomination provisions, and the parties’ subsequent communications.

1. Claim dismissed. FinCo was not entitled to terminate the contract on either the delivery dates issue or the nomination issue.
2. Under the BP GTCs, the change from DES to CIF meant that Part 2, including sections 11.2 and 11.3, applied instead of Part 3. The stated delivery dates therefore constituted an Indicative Discharge Date. They were indicative only, and Integra assumed no responsibility for delivery at the discharge terminal. Integra complied by ensuring that the Aramon tendered notice of readiness at the loading terminal at a time consistent with arrival at Amsterdam within the stated period.
3. The court rejected Integra’s primary construction that the delivery dates became dates for loading. That construction lacked commercial sense in the factual context because it would have shifted the contractual timing materially earlier without indication.
4. Section 14.6 required FinCo to accept or reject the nominated vessel within one Business Day. Section 14.6.2 stated the reasonable-grounds requirement and section 14.6.1 prescribed how that right was exercised; it did not create a separate later right of rejection. In the absence of timely rejection, the Aramon was treated as accepted, and Integra was not obliged to nominate another vessel.
5. A rejection based on vessel size is objectively reasonable only if the circumstances justify it. Relevant considerations include available terminals, the nature of the intended terminal’s constraints, the cost and delay of alternative discharge arrangements, and the BP GTCs’ express provision for lightering or ship-to-ship transfer. The initial rejection was in any event too late. Had it been timely, the vessel’s inability to berth at GES would, on the evidence, have been a reasonable ground.
6. The communications after 10 October 2023 did not create a collateral contract, including because section 74.5 required written evidence of contractual modification. Integra’s 12 October email was a re-nomination accompanied by an offer to arrange a logistical solution. FinCo’s 13 October rejection was unequivocal but unreasonable because the proposed arrangements removed the significance of the vessel’s size.
7. Alternatively, an estoppel by convention would have prevented FinCo from asserting a breach. The parties proceeded on the shared basis that the cargo would travel on the Aramon and be discharged into barges for delivery to GES, and Integra relied on that basis to its detriment. The court also rejected the alleged quantum credit and the challenge to Integra’s deduction for hedging loss.