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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bulk Carriers Ltd v Andre Et Cie SA [2001] EWCA Civ 588 (10 April 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/588.html Cite as: [2001] 2 LLR 65, [2001] 2 All ER (Comm) 510, [2001] 2 Lloyd's Rep 65, [2001] EWCA Civ 588

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM COMMERCIAL COURT
(MR JUSTICE LONGMORE)

		Royal Courts of Justice Strand London WC2 Tuesday, 10th April 2001

LORD JUSTICE POTTER: Lord Justice Clarke will give the first judgment.

LORD JUSTICE CLARKE:

Introduction

1. Universal Bulk carriers Private Limited ("the owners") were the unsuccessful respondents to arbitration proceedings brought by Andre et Cie SA ("the charterers") arising out of a charterparty made on 3rd October 1996 between the owners "as disponent owners" and the charterers whereby the charterers chartered a vessel to be nominated for the carriage of a cargo of heavy grain, soyas or sorghums ("HSS") from the US Gulf Mississippi River to West Malaysia. By their award made and published on 11th May 1999, the arbitrators awarded and directed that the owners should pay the charterers the sum of US$304,425 together with interest and costs. The award was for damages for repudiatory breach of the charterparty on the part of the owners which was accepted by the charterers. The breach was a refusal to nominate a vessel in accordance with the charterparty.
2. The owners appealed against the award with the permission of Aikens J on three issues. On 18th January 2000 Longmore J ("the judge") dismissed the appeal: see [2000] 1 Lloyd's Rep 459. He granted the owners permission to appeal to this court on the following question which he certified to be of general public importance, namely whether a clause narrowing laycan in a voyage charterparty is, in the absence of words to the contrary, always a condition precedent to an obligation to nominate a vessel.
3. The two other issues argued at the hearing before the judge pursuant to the permission granted by Aikens J were not the subject of permission to appeal to this court and have not been pursued in this appeal. Although the certified question is formulated in general terms, the issue which arises between the parties on this appeal depends on the true construction of clause 42 of the charterparty.

The charterparty

4. The charterparty, which was dated 3rd October 1996, was for a vessel to be nominated and was on an amended Baltimore berth grain Form C of 1913. Clauses 8 to 42 were additional typed clauses. The relevant terms were as follows:

Ie lines 7 to 10.

"That the vessel shall... with all convenient speed sail and proceed to 1/2 safe berth(s), 1 safe port [US Gulf excluding Brownsville] or Charterers' option 1/2 safe berth(s) Mississippi River and there load... a full and complete cargo of bulk HSS.

Clause 8:

... PERFORMING VESSEL TO BE NOMINATED 13 DAYS PRIOR ETA LOADPORT DURING EUROPEAN WORKING HOURS, TOGETHER WITH FULL ITINERARY AND APPROXIMATE LOADABLE CARGO QUANTITY.

Clause 9:

The Owners to give the Charterers... ten (10) days' notice of the vessel's expected readiness at the loading port and the approximate quantity of cargo required.

Clause 20:

The Master to make wireless application for the loading port orders to the Charterers... 96 hours prior to the vessel's expected readiness, and the Charterers are to wireless the Master the loading-port-orders within 48 hours of receipt of the Master's application.

Clause 40:

On above mentioned cargo Charterers to have the option to 'Wash Out' the nominated voyage, which is to be declared by Charterers latest on the day when narrowing of laycan is due. In case of such occurrence, settlement to be made without penalties for both parties, and a commission of 1.25% on 55,000 metric ton to be paid to broker and equally shared between both parties.

Clause 42:

Laycan on first half December to be narrowed to 10 days spread 32 days prior of the first layday."

The facts

5. Like the judge, I can take the facts essentially as they are set out in the award in tabular form.

"(1) The charterparty was negotiated and concluded by Mr Alberto Molaschi, the chartering broker employed by the charterers in Switzerland, and Mr Andrea Molaschi, his brother, a broker employed by the ship brokers Pacific Dragon Co Ltd in Hong Kong ("Pacific Dragon") and Mr Raza Taqi, the chief executive of the shipowners in Singapore. It was made for the charterers to fulfil obligations undertaken by them under a sale contract dated 14th December 1995 which was for shipments of cargo during the period 1st -31st December 1996

(2) Charterers sent a telex to Pacific Dragon narrowing the laycan to 1st - 10th December 1996 on 24th October 1996 but Pacific Dragon failed to pass the message on due to some technical problem, perhaps with the owners' telex machine. Whatever the explanation, however, it was common ground that no laycan narrowing notice was received by the owners at that time, or indeed by 12 noon 4th November 1996, the last possible day.

(3) On 20th November 1996 Mr Alberto Molaschi telephoned his brother Andrea Molaschi at Pacific Dragon to ask when the charterers could expect to receive the owners' nomination for vessel and what its estimated time of arrival was. Andrea Molaschi then telephoned Mr Raza Taqi and apparently informed him that the laydays was 1st -10th December and asked that the owners nominate a vessel to perform the fixture. The owners refused to accept the notice of narrowing and contended that they were no longer obliged to nominate a vessel because the charterers had failed to comply with the contractual laycan narrowing provision. That was followed up by a telex from the owners in these terms:

'Received today charterers' verbal notice of

narrowing of laydays to 1/10 December.

Please note as per charterparty: "Laycan

first half December to be narrowed to 10 days

spread 32 prior first layday.' Regret this

is not acceptable to owners. Therefore

charterers' notice is rejected.

(4) Pacific Dragon replied the same day on the charterers' behalf:

'Charterers note owners' last. Dates

verbally mentioned this afternoon over the

phone were not intended as an official notice

of narrowing. On behalf of charterers we

must insist that laycan was agreed as first

half December to be narrowed to a 10 day

spread within that period and that agreement

is still valid and in place. If charterers'

narrowing option is not exercised, the laycan

becomes entirely open within the 15 days

spread as fixed, and charterers therefore

await owners' nomination within that laycan

spread as per charterparty, i.e. latest 13

days prior ETA of the vessel.'

(5) The owners relied on 22nd November noting that the dates mentioned on the telephone were not dates for narrowing laycan and rejecting the charterers' contention as to the continuing 15 days spread. The charterers replied the same day that if the owners were not willing to comply with the charterers' request for the nomination of the vessel with a laycan of 1st -10th December the owners were nevertheless bound to nominate a vessel within a laycan of 1st - to 15th December and they requested confirmation that the owners would perform accordingly, failing which they would consider the owners to be in breach of the charterparty.

(6) On 25th November 1996 the owners maintained their position and contended that the giving of the notice of narrowing of laydays was a condition precedent to the requirement that they nominate a vessel."

Like the judge I can omit certain exchanges which take the matter no further.

"(7) On 29th November 1996 the charterers purported to remind the owners that they had not yet received the nomination of the vessel and warning them that they had until latest midnight on 2nd December in which to nominate, failing which they would be in repudiatory breach. They again asked the owners to confirm that they intended to comply with their obligations.

(8) On 2nd December the owners replied, maintaining that it was the charterers who were in breach of the charterparty in failing to give the owners the required contractual notice to enable the owners to nominate a suitable vessel under the charterparty. They purported to accept that repudiation.

(9) On 3rd December 1996 the charterers replied saying:-

(a) that it was clear that the owners had no

intention of nominating a vessel and

performing their obligations under the

charterparty;

(b) that the owners were wrongfully claiming

that the charterers were in repudiatory

breach of charterparty; and

(c) that the owners had without any grounds

unilaterally terminated the contract and

that this itself was a repudiatory

breach which the charterers accepted."

As the judge put it, battle lines were thus drawn.

"(10) On the same day, 3rd December, the charterers chartered the vessel 'MARIA BOTTIGLIERI' to carry the cargo in question at a higher rate of freight with a laycan of 10th – 15th December 1996. She completed loading on 29th December, at which point freight was payable under the charterparty for that vessel. The charterers claim the loss of $304,425, which the majority of the tribunal awarded to them."

It will be apparent that the market was rising.

6. It was not argued before the arbitrators that the charterers at any stage gave a notice narrowing the laycan spread under clause 42.

The Decisions of the Arbitrators and the Judge

7. In the form in which it was before the arbitrators and the judge, the question which gives rise to this appeal was whether the giving by the charterers of a notice narrowing laycan under clause 42 was a condition precedent to the nomination of a vessel by the owners and thus to the performance of the charterparty. There was a division of opinion between the arbitrators. The majority, Mr Anthony Scott and Mr Alec Kazantsis, answered the question "no", whereas the minority arbitrator, Mr Robert Gaisford, would have answered it "yes".
8. The majority held that clause 42 gave the charterers an option to narrow the laycan spread to 10 days but that, if the spread was not narrowed, it remained the first half of December, viz 0001 hours on 1st December to 1200 hours on 16th December. Mr Gaisford would have held that clause 42 did not give the charterers an option but imposed an obligation on them to narrow the laycan spread to 10 days and that a notice giving notice of that narrowing was a condition precedent to the owners' obligation to nominate a vessel under clause 8.
9. The judge answered the question in the negative as the majority had done, but did so on a different basis. He held that clause 42 did not give the charterers an option but imposed an obligation upon them to narrow the spread 32 days before the first layday, but that performance of that obligation was not a condition precedent to the owners' obligation to nominate a vessel under clause 8. He held that the term was not a condition of the contract.
10. It had not been argued by the owners before the arbitrators that, if clause 42 was an innominate or intermediate term, the charterers' failure to narrow the laydays was a repudiatory breach of the charterparty. The owners attempted to raise that question before the judge, but he held that it was not a question of law in respect of which leave to appeal had been given and declined to entertain it. He added, however, that it was in any event a most unpromising argument. It was not suggested on this appeal on behalf of the owners that the charterers' failure to give a notice narrowing the laydays was a repudiatory breach of the charterparty, as opposed to a condition precedent to the owners' obligation to nominate a vessel.

Issues on the Appeal

11. It follows that the questions for decision on this appeal are whether clause 42 gave the charterers an option to narrow the laycan or whether it imposed an obligation to do so and, if so, whether or not that obligation was a condition of the charterparty. It has been common ground throughout that, whether clause 42 conferred an option or imposed a duty, in either case it did so on the charterers and not the owners.

Option or Obligation?

12. As I stated earlier, the judge preferred the view of Mr Gaisford to that of the majority and held that clause 42 did not confer an option on the charterers. In paragraph 2 of his dissenting opinion Mr Gaisford said this:

"In my view the giving of the laycan narrowing notice referred to in clause 42 is not an option but an obligation. It is clear that the parties were quite able to express a provision as an option if they wished to (see, for example, clause 40) but clause 42 contains no words which might fairly be regarded as pertaining to an option but, on the contrary, states that the laycan is 'to be narrowed'. It is silent as to which party is to do the narrowing but it was common ground that whether it was an obligation or an option, it was that of the charterers. I accept that the narrowing of laydays would appear to be of greater benefit to the Charterers than to the Owners in that the wider the laycan spread, the greater the flexibility the Owners would have in fixing the appropriate tonnage to perform under the Charterparty and, in all probability, the wider the choice of such tonnage. However, I cannot accept that it follows that it is consequently a mere option. The fact is that the parties agreed that such notice would be given (for whosoever's benefit it might in fact inure) and, having so agreed, the timing of the laycan narrowing notice must assume considerable importance to the parties in arranging their affairs. "

13. The judge agreed with Mr Gaisford for the reasons which he gave. In short, the parties knew how to create an option if they wanted to and the words "to be" in the phrase "to be narrowed" naturally import an obligation of some kind rather than an option. He held that the view of the majority required one to read clause 42 as if some such words as "if the charterers choose" or "at charterers' option" were in the clause when they are not.
14. On this appeal the charterers served a respondents' notice asserting that the majority arbitrators were correct and that the clause conferred an option on the charterers. Mr Davey submitted that the clause was inserted into the charterparty entirely for the charterers' benefit and that the parties must have intended that the charterers should have an unfettered choice whether to narrow the laycan spread to 10 days, failing which the spread would remain "on first half of December", that is between 0001 on 1st December and 1200 on 16th December.
15. In support of his submission that the clause was for charterers' benefit Mr Davey relied upon what the judge described as the simple but classic words of Devlin J in Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd's Rep 367 at 370, where he said:

"A charterer manifestly wants, if he can get it, a fixed date for the arrival of the ship at the port of loading. He has to make arrangements to bring down the cargo and to have it ready to load when the ship arrives and he wants to know as near as he can what that date is going to be. On the other hand, it is to the interest of the shipowner, if he can have it, to have the date as flexible as possible because of the inevitable delays due to bad weather or other circumstances that there might be in the course of a voyage. He can never be sure that he can arrive at a port on a fixed and certain day. Therefore, in order to accommodate these two views as far as possible it has been the general practice for a long time past to have a clause under which the shipowner, without pledging himself to a fixed day, gives a date in the charterparty of expected readiness, that is the date when he expects that he will be ready to load. "

16. For my part, I agree with Mr Davey that clause 42 was almost certainly introduced for the benefit of the charterers for the reasons given by Devlin J. I also agree with him that the clause would work well as an option because, whether or not the charterers exercised the option, the position would be clear. Thus, if the option to narrow the laycan spread to 10 days was not exercised 32 days prior to the first layday, the laycan would remain "on first half December". On the other hand, if the option was exercised, the laycan spread would be 10 days within the first half of December. Which 10 days within the first half of December would depend upon how the option was exercised.
17. However that may be, I do not think that clause 42 was drafted in such a way as to confer an option on the charterers. As the judge correctly pointed out, the parties were able to provide expressly for an option if they wished to do so. Most strikingly, they did so in clause 40 which provided for the charterers to have the option to "wash out" the nominated voyage, in which event they were to declare the exercise of the option "on the day when narrowing of laycan is due". That must, I think, be a reference to the narrowing of laycan in clause 42. Again, as the judge pointed out, the words "to be" in the phrase, "to be narrowed" naturally import an obligation of some kind rather than an option. Indeed, the words "to be" are used throughout the charterparty to import obligations. See also to the same effect The Didymi [1984] 1 Lloyd's Rep 583 per Sir John Donaldson MR at 587, where he said that the words "to be narrowed" suggests a duty to narrow, albeit one which contains an option within it. In these circumstances I agree with the judge that clause 42 does not confer an option on the charterers, but imposes a duty.

Whose Duty?

18. I have already indicated that it is and was common ground that, if clause 42 imposes a duty, it does so on the charterers and not the owners. I must say that despite that common ground it seems to me to be at least arguable that the parties intended to impose the duty on the owners and not the charterers because it is difficult to see how the narrowing of the laycan spread can be for owners' benefit, and one might have thought that in those circumstances a clause imposing a duty to narrow a spread for the benefit of the charterers would be imposed upon the owners and not the charterers.
19. However that may be, having regard to the common ground and to the basis upon which the argument proceeded before the arbitrators, before the judge and before us, I shall assume that the clause imposed a duty on the charterers and not the owners. I should perhaps observe in this regard that no-one suggested the contrary during the exchanges between the parties which I set out earlier and, indeed, the relationship between clauses 40 and 42 perhaps suggests that, just as it would be for the charterers to exercise the option in clause 40, so is would be for them to discharge the duty in clause 42.

Is Clause 42 a Condition?

Relevant Principles

20. The judge referred to the well known decision of the House of Lords in Bunge Corporation v Tradax Export SA [1981] 1 WLR 711. The leading speech was given by Lord Roskill with whom the other members of the appellate committee agreed. As the judge observed, at pages 728 to 729 Lord Roskill expressly approved the following extracts from paragraphs 481 and 482 of volume 9 of the 4th edition of Halsbury's Laws of England, 1975:

"481. The modern law, in the case of contracts of all types, may be summarised as follows. Time will not be considered to be of the essence unless: (1) the parties expressly stipulate that conditions as to time must be strictly complied with; or (2) the nature of the subject matter of the contract or the surrounding circumstances show that time should be considered to be of the essence; or (3) a party who has been subjected to unreasonable delay gives notice to the party in default making time of the essence.

482. Apart from express agreement or notice making time of the essence, the court will require precise compliance with stipulations as to time wherever the circumstances of the case indicate that this would fulfil the intention of the parties. Broadly speaking, time will be considered of the essence in 'mercantile' contracts and in other cases where the nature of the contract or of the subject matter or the circumstances of the case require precise compliance."

Lord Roskill added:

"My Lords, I venture to doubt whether much help is necessarily to be derived in determining whether a particular term is to be construed as a condition or as an innominate term by attaching a particular label to the contract. Plainly there are terms in a mercantile contract, as your Lordships' House pointed out in Bremer Handelsgesellschaft m.b.H. v Vanden Avenne-Izegem P.V.B.A. [1978] 2 Lloyd's Rep. 109, which are not to be considered as conditions. But the need for certainty in mercantile contracts is often of great importance and sometimes may well be a determining factor in deciding the true construction of a particular term in such a contract."

21. Lord Wilberforce too expressly approved those paragraphs from Halsbury, as he put it (at page 716):

"... in particular by asserting (1) that the court will require precise compliance with stipulations as to time whenever the circumstances of the case indicate that this would fulfil the intention of the parties and (2) that broadly speaking time will be considered of the essence in 'mercantile' contracts."

22. The House of Lords was there considering a contract for the sale and purchase of soya bean meal with shipment of 5000 tons in each of the months, May, June and July 1975 fob one US Golf port at sellers' option. The contract was on GAFTA Form 119 which included clause 7 which provided in respect of the May shipment "Period of delivery - during May 1975 at buyers' call. Buyers shall give at least 15 days notice of probable readiness of vessels..." By notice under clause 8 the period of delivery was extended for one calendar month. As a result the last day upon which the sellers could ship goods in performance of the contract was June 30th 1975 and the last day for the buyers to give the requisite notice under clause 7 was June 12th. In the event notice was not given until June 17th. The sellers subsequently declared the buyers in default and claimed damages on the basis that the term as to notice was a condition of the contract.
23. The House of Lords was thus considering a classic "mercantile" contract; viz an international contract for the sale of goods. This is a very different case. As the judge put it, the question is whether the nature of the subject matter of the contract or the surrounding circumstances show that the relevant clause was intended to be a condition.

Application of the Principles to the Facts

24. In the course of his speech in Bunge v Tradax Lord Wilberforce said at pages 715H to 716B:

"It remains true, as Lord Roskill has pointed out in Cehave N.V. V Bremer Handelsgesellschaft m.b.H. (The Hansa Nord) [1976] QB 44, that the courts should not be too ready to interpret contractual clauses as conditions. And I have myself commended, and continue to commend, the greater flexibility in the law of contracts to which Hongkong Fir points the way (Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as H.E. Hansen-Tangen) [1976] 1 W.L.R. 989, 998). But I do not doubt that, in suitable cases, the courts should not be reluctant, if the intentions of the parties as shown by the contract so indicate, to hold that an obligation has the force of a condition, and that indeed they should usually do so in the case of time clauses in mercantile contracts. To such cases the 'gravity of the breach' approach of the Hongkong Fir case [1962] 2 QB 26 would be unsuitable."

To like effect Lord Roskill said at page 727D to F:

"In short, while recognising the modern approach and not being over-ready to construe terms as conditions unless the contract clearly requires the court so to do, none the less the basic principles of construction for determining whether or not a particular term is a condition remain as before, always bearing in mind on the one hand the need for certainty and on the other the desirability of not, when legitimate, allowing rescission where the breach complained of is highly technical and where damages would clearly be an adequate remedy. It is therefore in my opinion wrong to use the language employed by Diplock LJ in the Hongkong Fir case [1962] 2 QB 26 as directed to the determination of the question which terms of a particular contract are conditions and which are only innominate terms."

On the facts of that case Lord Wilberforce summarised the position as follows (at page 716G):

"In this present context it is clearly essential that both buyer and seller (who may change roles in the next series of contracts, or even in the same chain of contracts) should know precisely what their obligations are, most especially because the ability of the seller to fulfil his obligation may well be totally dependent on punctual performance by the buyer."

See also per Lord Lowry at page 720D.

25. Lord Roskill stressed (at page 727D) in a passage just before the passage which I quoted a moment ago, the importance of avoiding commercial confusion in view of the possibility of long string contracts being involved, as he put it "a point of considerable importance in the present case". He also added this (at page 729F):

"To my mind the most important single factor in favour of Mr Staughton's submission is that until the requirement of the 15-day consecutive notice was fulfilled, the respondents could not nominate the 'one Gulf port' as the loading port, which under the instant contract it was their sole right to do. I agree with Mr Staughton that in a mercantile contract when a term has to be performed by one party as a condition precedent top the dots dot ^^ term, especially an essential term such as the nomination of a single loading port, the term as to time for the performance of the former obligation will in general fall to be treated as a condition. Until the 15 consecutive days' notice had been given, the respondents could not know for certain which loading port they should nominate so as to ensure that the contract goods would be available for loading on the ship's arrival at that port before the end of the shipment period."

It was accordingly held that clause 7 was a condition of the contract.

26. In my opinion very different considerations apply to clause 42 of the charterparty in this case. In Bunge v Tradax the sellers could not nominate the loading port until the buyers had given the 15 days notice of probable readiness so that clause 7 was an example of a clause in which the performance by A was a condition precedent to the ability of B to perform another term of the contract. Thus the contract could not be performed in accordance with its terms unless the notice was given.
27. That was not the case here. It is common ground that the effect of clause 42 was that, unless and until the charterers gave a notice narrowing the laycan spread to 10 days, the spread would be "on first half December", that is a spread of 15 and a half days. If no notice was given, since there are 31 days in December, the laycan spread would be from 0001 on 1st December to 1200 on 16th December.
28. It follows that it was not necessary for the charterers to narrow the spread to 10 days in order to enable the charterparty to be performed in accordance with its terms. Clause 42 required the charterers to give notice narrowing the spread to 10 days "32 days prior to the first layday". It is common ground that the last time at which a contractual notice could be given was therefore 1200 on 4th November on the basis that 32 days notice plus 10 days laycan spread from that time would expire at 1200 on 16th December.
29. If no notice was given at or before 1200 on 4th November it would be too late to give an effective notice narrowing the spread. The laycan spread would then be fixed. If a notice were given after that time, it would of course be open to the owners to accept it if they wished, in which case it would have effect to narrow the laydays, but the owners would equally be entitled to reject a late notice as non-contractual, in which event the laycan spread would not be narrowed but remain 15 and a half days in accordance with the first part of clause 42.
30. The owners' obligation under clause 8 was to nominate a vessel "latest 13 days prior to ETA loadport". The owners' ability to perform that obligation was not in any way dependent upon whether or not the charterers gave a notice narrowing the laycan spread under clause 42. Indeed the clause was easier to comply with if the laycan spread was not narrowed because with a spread of 15 and a half days the flexibility available to the owners in deciding the vessel's ETA at the loadport was greater than it would have been if the spread had been narrowed to 10 days.
31. I should perhaps add in parentheses that we are not concerned with an alternative argument advanced before the judge but not the arbitrators that the charterers were in breach of an obligation to nominate a loading port before the owners were under any obligation to nominate a vessel. The judge declined to answer that question for the reasons given at [2000] Lloyd's Reo 459 at 465-456 and it is not a live issue on this appeal.
32. Given that the charterparty could be performed in accordance with its terms whether or not the charterers discharged their obligations to narrow the laycan spread in accordance with clause 42, it does not seem to me to be likely that the parties intended that clause 42 was a condition of the contract such that any breach of it would entitle the owners to treat the charterparty as at an end. It makes no commercial sense to hold that the parties intended that the owners should be able to treat the whole contract as at an end if the charterers served a notice, say, two days late. It seems to me to make much better sense to hold that in such circumstances the owners had a choice. The choice was either to treat the notice as contractual, with the consequence that the laycan spread would be narrowed to ten days in accordance with the notice, or to treat the notice as non-contractual, with the consequence that the laycan spread was not narrowed but remained 15 and a half days "on first half December", namely from 0001 on 1st December to 1200 on 16th November.
33. Both before the judge and before us Mr Mawrey relied upon the decision of Mance J in Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (The "Niizuru") [1996] 2 Lloyd's Rep 66. In that case the charterparty included a clause which provided:

"Owners to narrow laycan to a 15 day spread 25 days prior to the narrowed laycan."

Mance J held that that clause was a condition of the charterparty. Mr Mawrey submitted that similar reasoning to that adopted by Mance J leads to the conclusion that clause 42 in this charterparty is also a condition of it.

34. However, the The Niizuru was a very different case from this. It concerned not a voyage charterparty but a time charterparty for 18 months plus 40 days more or less in charterers' option. The concepts of laycan spread and narrowing of such a spread (which are essentially voyage charterparty concepts) were used in connection with the delivery of the vessel under the time charterparty in that case. Thus the charterparty provided, so far as relevant, as follows:

"Vessel to be placed at the disposal of the Charterers on dropping last outward sea pilot via one safe port Singapore/Japan range port, in Owners' option any time day or night..."

Clause 14 (lines 94-96) provided:

"That if required by Charterers, time not to commence before 20th February, 1992 and should vessel not have delivered as per lines 18 and 19 above on or before 28th April 1992 but not later than 24.00 hours their Agents to have the option of cancelling this Charter at any time not later than the day of vessel's readiness."

After setting out clause 14 Mance J said at page 68:

"It was common ground before the arbitrators that in accordance with the exchange of fixture telexes a further provision (described before me as "the laycan narrowing provision") was incorporated in the charter, relating to cl.14:

Owners to narrow laycan to a 15 day spread 25 days prior to the narrowed laycan.

Clause 29 reads:

Owners to give Charterers 30/20/15/10 days approximate notice of delivery date and probable port. Then five days approximate notice of delivery time and exact delivery port. Owners to give Charterers 30/20/15/10 days approximate notice of delivery date and probable port. Then five days approximate notice of redelivery time with exact delivery port. Charterers will do their utmost to give an accurate redelivery notice."

On the facts the owners did not "narrow laycan to a 15 day spread 25 days prior to the narrowed laycan" in accordance with clause 14, but they did tender delivery under the charterparty. The charterers asserted that the tender was non-contractual, although in the event they accepted delivery at 0001 on 17th April 1992. Mance J held that hire was only payable from that time as the time of actual delivery.

35. He did so on the basis that owners' purported tender of delivery earlier was not contractual because they had failed to comply with clause 14, which was a condition precedent to their right to tender delivery under the charterparty. His reasoning can be seen from the following passages in his judgment.

"Under this time charter, which is not by demise, delivery refers to the placing by the owners of the vessel at the disposal of the charterers as provided by lines 18-19, with a view to starting the time for payment of hire running. It is common ground (a) that, under cl.14, the charterers were under no obligation to accept the vessel as delivered and time as having commenced for charter-party purposes before Feb.20, 1992 and were entitled to cancel the charter-party if she was not delivered by 24 00 hours on Apr.28, 1992, and (b) that, had owners narrowed the laycan dates 25 days prior to the narrowed laycan in compliance with the laycan narrowing provision, the narrowed dates so specified would have had a like effect to the dates originally specified in clause 14. A proper 25-day notice given under the laycan narrowing provision on Mar.17 1992 should have specified a 15-day laycan spread commencing not earlier than Apr.11, 1992."

At page 69:

"In my judgment compliance by owners with the laycan narrowing provision is as a matter of contractual construction to be regarded as a condition precedent to delivery and the running of time. I mean in this context both that the laycan requires to be narrowed and that this narrowing requires to be done by advance notice given at least 25 days prior to the start of the narrowed laycan. The whole purpose of the provision is to give charterers 25 days notice of a narrower band of dates than provided by cl.14. This narrower band would define the limits of charterers' liability for hire in replacement of the original dates mentioned in cl.14 (the breadth of which probably reflected the fact that the charter was entered into as long previously as mid-November, 1991). On owners' case, owners can avoid defining the limits of charterers' liability in the contractually prescribed manner, and can thereby force the vessel on charterers at short notice either without identifying any new substitute laycan dates at all, or by identifying them at the shortest notice that they wish. Bearing in mind, firstly, that cl.14 introduces what are in effect pre-conditions to charterers' liability, and, secondly, that the laycan narrowing provision is intended to redefine those pre-conditions more narrowly, it is natural in my judgment to view compliance with the laycan narrowing provision as a pre-condition to the tendering of delivery."

At page 70:

"The common-sense of the matter is, in my judgment, that the laycan narrowing provision is part of the machinery of delivery which must be complied with before any valid delivery can be tendered. In the language of the old cases, the delivery was, according to the evident sense and meaning of the parties,'dependent' upon the laycan dates being first narrowed under the laycan narrowing provision (cf. Cehave NV v Bremer Handelsgesellschaft m.b.H (The Hansa Nord), [1975] 2 Lloyd's Rep 445 at p.449, col.1; [1976] 1 QB 44 AT P.58b-c)."

Mance J then preferred to Bunge v Tradax and added at page 70:

"There are similarities between the present situation and that arising under a contract calling for presentation of documents. The presentation of documents complying with such a contract is a pre-condition to the buyers' obligation to accept the documents. But a rejection of non-complying documents does not terminate any further obligation or right to perform on either side. The seller may re-present complying documents, within the contractually appointed period. Only if the seller fails to present complying documents by the conclusion of the contract may the buyer treat himself as discharged from further performance and claim damages for non-delivery.

The question whether the laycan narrowing provision operates as a condition precedent to delivery and the running of time must certainly be answered by considering the role and significance of the provision in its context in the particular charter. Here the context of the laycan narrowing provision is cl.14 which demonstrates the importance which the parties attached to the dates between which delivery takes place and time may commence to run. Submissions that breach of a laycan narrowing clause in the context of a charter of 18 months, 40 days more or less, 'can hardly, if ever' justify any remedy other than damages fail to address this point."

36. In short Mance J concluded that both principle and authority supported the charterers' case that compliance with the laycan narrowing provision was a condition precedent to delivery. However, he correctly stressed in one of the passages which I have just quoted that that question must be answered by considering the role and significance of the provision in its context of the particular charterparty.
37. He also pointed to two cases where the clause concerned was held to be a condition, namely Bunge v Tradax, to which I have already referred, and Greenwich Marine Inc v Federal Commerce & Navigation & Co Ltd ("The Mavro Vetranic") [1985] 1 Lloyd's Rep 580. Thus he noted (at page 71) that in the former case, in holding that the notice clause was a condition, the House of Lords stressed that the sellers' ability to nominate a port and ship the goods within the shipment period (itself a condition) must have depended upon the notice given by the buyers. As he put it, there was a natural interdependence between the two obligations.
38. He noted that in The Mavro Vetranic, which related to a voyage charter which contained a term requiring the owners "... 20 days prior to ETA... to nominate performing vessels and to narrow quantity to 5... per cent", Staughton J held that that term was a condition, even though improper nominations under the clause did not affect the charterers' ability to perform any conditions due for performance by them under the charterparty. He did so on the basis that the owners' breach might well have been a most serious matter for the charterers and might put them in breach of contracts with others and that time is commonly of the essence in a mercantile contract. He also referred to the need for certainty in such matters.
39. Mance J expressed his final conclusion thus (at page 71):

"Neither of these cases was concerned with a provision in a time charter or is directly parallel to the present. But I have already stated that the context and purpose of the laycan narrowing provision demonstrates its importance in the present time charter. In other respects the reasoning in both cases is also very much in point. The laycan narrowing provision was self-evidently designed to enable charterers to arrange their affair – whether they chose to do so in advance of sub-charter(s) with others which might well have contained parallel laycan provisions, or to do so only after receipt of a proper 25-day notice. It was for owners to arrange their affairs so as to give proper notice. By attempting to deliver at short notice in the present case, owners were seeking to throw onto charterers the onus of showing why hire should not be paid for a period for which charterers should not have been asked to pay hire in the first place, without having the stipulated advance notice."

40. In my judgment this is a very different case from The Niizuru and the other cases referred to by Mance J. This is not a case in which there was a natural interdependence between clause 42 and clause 8. Nor was the performance of the charterers' obligation to narrow in clause 42 of importance to the owners. Indeed it is difficult to see why they were not likely to be better off if the charterers failed to narrow the laycan spread because of the greater flexibility which would be available to them from a 15 and a half day spread instead of a 10 day spread. Moreover the conclusion reached by the judge did not make the position in any way uncertain because, for the reasons which I gave earlier, the position would be quite clear by 1200 on the last day for the giving of a notice, namely 1200 on 4th November. It would then be clear whether the spread would remain at 15 and a half days or become 10 days, and, if so which 10 days they would be.
41. The judge concluded his judgment on this point in this way (at p 464), after quoting part of the passage from the judgment of Mance J from page 70-71 which I have just cited.

"Here, by contrast, it is actually found by the majority of the arbitrators that the charterers' failure to narrow the laydays conferred no advantage on the owners so it just cannot be 'self-evident' (to use Mance J's phrase) that the provision for laydays to be narrowed was designed to enable the owners to arrange their affairs if by that one means, as I think one must, arrange their affairs more advantageously to themselves than in the absence of any such narrowing. It is not necessary to say that the owners could obtain no conceivable benefit from a narrowing of the laydays but one can say with considerable confidence that any disadvantage they might theoretically suffer from the laydays not being narrowed would be a disadvantage which could be compensated in damages.

In these circumstance, I do not think that clause 42 can have been intended to be a condition any breach of which would entitle the owners to terminate the charter."

I entirely agree.

Conclusion

42. For the reasons given by the judge and the reasons which I have tried to set out above (which are I think essentially the same as his) I would hold that clause 42 did not confer an option but an obligation upon the charterers, but that it was not a condition of the contract or a condition precedent to the performance by either party of any other obligation (or indeed option) in the charterparty. Moreover, I would answer the certified question, namely whether a clause narrowing laycan in a voyage charterparty is, in the absence of words to the contrary, always a condition precedent to an obligation to nominate a vessel, in the negative. While it may well be so in relation to interdependent time provisions, the terms of the particular charterparty and the circumstances of the case may lead to a different conclusion. This is such a case. As already stated, in the circumstances of this charterparty clause 42 was not in my opinion a condition precedent to the owners' obligation to nominate a vessel under clause 8.
43. I would dismiss the appeal.

MR JUSTICE BENNETT: I agree.

LORD JUSTICE POTTER: I also agree.

(Appeal dismissed with costs of the appeal and the court below in favour of the respondents, to be subject to detailed assessment).