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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> PEC Ltd v Thai Maparn Trading Co Ltd [2011] EWHC 3306 (Comm) (13 December 2011) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2011/3306.html Cite as: [2011] EWHC 3306 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/12/2011

MR JUSTICE HAMBLEN:

Introduction

1. The Claimant Buyers ("the Buyers") appeal pursuant to s.69 of the Arbitration Act 1996 from the decision of the GAFTA Board of Appeal dismissing the Buyers' claim for damages. The Appeal Award ("the Award") allowed the appeal of the Respondent Sellers ("the Sellers") from a first tier GAFTA Award, dated 4 March 2010 which had awarded damages of US$ 14,520,000 to the Buyers.
2. The case concerns an FOB contract for the sale of 22,000 mt of Thai parboiled long grain rice ("the contract"). The contractual shipment period was "During April -- 07 May 2008 with min. 10 working days of pre-advice of vessel arrival." The contract incorporated the terms of GAFTA Form No. 120, clause 7 of which provides that the buyer may claim an extension of the delivery period by an additional period of up to 21 days.
3. The Buyers failed to provide a vessel to lift the goods during the original delivery period although they had nominated a vessel which was said to have a laycan of 25 April to 7 May 2008. The Buyers contended that the reason that no vessel was presented was because the Sellers were "in repeated anticipatory renunciatory and repudiatory breach". In support of that contention they relied in particular on the Buyers' failure to respond to requests to confirm the load readiness of the cargo. The Board rejected this claim at para. 5.3.5 of the Award and found at para. 5.3.4 that "neither the contract nor GAFTA Form No. 120 provided for any notice to be given by Sellers regarding loadreadiness of the cargo and Sellers, consequently, were under no obligation to respond to Buyers' requests". The conclusion that there was no anticipatory breach by the Sellers is not challenged on appeal. It follows that, as was common ground, because the Buyers did not present a vessel within the original delivery period, the validity of the claim depends (at least) on whether they made a valid claim for an extension of the delivery period in accordance with clause 7 of GAFTA Form No. 120 (paragraph. 6.3 of the Award).
4. The issue on this appeal is whether one or other of the "notices" relied on by the Buyers constituted a valid claim for an extension in accordance with clause 7. It is common ground that if the appeal succeeds, the award will need to be remitted for the Board of Appeal to deal with all remaining issues.
5. The Board of Appeal concluded that no valid claim for an extension was made, essentially because they found that the "notices" made the grant of an extension subject to conditions which were not fulfilled. It is the correctness of that conclusion which is challenged on this appeal, an issue which turns on the proper construction of the messages in question.

Background facts

6. The background facts are set out in section 2 of the Award which provides so far as material as set out below..:

"2.1 THE CONTRACT

On 8 January Sellers agreed to sell and Buyers agreed to buy about 22,000 metric tons of Thai Parboiled Long Grain Rice.

The contract contained the following terms relevant to the dispute:

"Commodity: Thai parboiled long grain rice 100 pct sortexed as per official export standards of Thailand

Quantity: 22,000 MT (5 Pct more or less at buyer's option and at contract price)

Shipment: During April – 07 May 2008 with min. 10 working days of pre-advice of vessel arrival.

Price: At US$ 385 per M/Ton FOB Stowed

Kohsichang Thailand.

….

.

All other terms and conditions while not in contradiction with the above shall be as per GATFA 120 including arbitration in London as per GAFTA 125".

Buyers sold the goods on to SSA General Trading Co LLC, a company registered in Dubai.

….

2.5 On 14 April Pawan Jain inter alia e-mailed Sellers that:

" …As per concern 2200mt (5% more or less, at buyer's option) Contract No TME-PEC- 080108 dated 8^th January 2008, vessel nominated for the same 'MV Sunrise Ocean' laycan time will be between 25^th April to 7 May in Thailand. Please confirm the status/schedule for 22.000MT …"

2.6 On 16 April Buyers sent the following to Sellers:

"We are pleased to advise you that against the above Letter of Credit we nominate vessel MV Sunrise Ocean or its substitute with laycan 25^th April to 7^th May 2008 and port of loading is Kohsichang, Thailand kly ensure material is ready and bag packed in out brand name triple one and red eagle"

2.7 On 22 April Pawan Jain appointed Seaway Express Co Ltd as ship's agent.

2.8 On 23 April at 13.19 hours Seaway Express Co.Ltd sent Sellers the following e-mail:

SUBJECT ; REF M/V "SUNRISE OCEAN" 22,000 MT BAGGED RICE

KINDLY BE INFORMED THAT THE CAPTIONED VESSEL HAS BEEN NOMINATED TO LOAD YOUR 22,00 MT THAI PARBOILED RICE FOR ACCOUNT OF MESSRS. PAWAN JAIN & SONS AT KOHSICHANG WITH LAYDAYS 25^TH APRIL/07^TH MAY 2008. WE SHALL REVERT HER E.T.A UPON RECEIPT OF FURTHER NEWS. MEANTIME WOULD YOU KINDLY CONFIRM YOU WILL PREPARE CARGO READY FOR LOADING ACCORDINGLY.

2.9 Sellers replied the same day at 14.14 hours:

"We confirm receipt of your mail msg dated April 23 2008 and wish to advise you that we do not have cargo ready on A/C of Pawan Jain & Sons and hence, with due respect, we reject nomination of above vessel."

2.10 Still on 23 April at 15.30 hours Seaway Express sent the following to Sellers:

"SUBJECT: M.V "SUNRISE OCEAN"22,000 BAGGED RICE

Further to our below e mail kindly be informed that the captined vessel presently given ETA on 3^rd May 2008. Kindly arrange cargo load ready in time."

2.11 On 24 April at 13.07 hours Seaway Express sent the following e-mail to Sellers which inter alia read:

"SUBJECT – REF M/V "SUNRISE OCEAN" 22,000 MT BAGGED RICE

Kindly be informed that the captioned vessel has been nominated to load your 22,000 Metric Tons of Thai Long Grain Parboiled Rice for account of Messrs PEC Ltd at Kohsichang, the vessel is expected to arrive at Kohsichang on 03^rd May 2008 subj AGW/WP/UCE. You are therefore kindly requested to prepare cargo ready for loading timely and confirm you are arranging accordingly."

2.12 On 25 April Seaway Express e-mailed Sellers:

"SUBJECT – REF M/V " SUNRISE OCEAN"22,000 MT BAGGED RICE

Refer to our below e mil which sent to you yesterday, we are still awaiting your confirmation of cargo readiness. Many thanks for your attention/cooperation."

2.13 On 30 April Seaway Express sent the following to Sellers:

SUBJECT REF M/V SUNRISE OCEAN" 22,,000 MT BAGGED RICE ACCT PEC LTD

Kindly be informed that the captioned vessel ETA at Kohsichang on/about 03^rd May 2008 subj AGW/WP/UCE and she will load your 22,000 metric tons Thai Long Grain parboiled Rice for account of Messrs PEC Ltd. You will prepare cargo ready timely.

Kindly advise your cargo load readiness as soon as possible. Many thanks for your attention and cooperation."

2.14 M/V SUNRISE OCEAN on 2 May arrived at Kakinada where she loaded a cargo of rice for Nigeria.

2.15 On 3 May 2008 at 22:25 hrs, the Master of M/V SUNRISE OCEAN sent an email to Sellers and Buyers stating:

"PLEASE NOTE ETA BANGKOK 15 MAY 2008, WP AGW."

2.16 On 8^th May Buyers at 20.54 hours sent the following to Sellers:

"Please refer to our various notices for the above contract, also from our shipping agent regarding nomination of the vessel along with the ETA notice of the Master of the Vessel. Since we did not hear from you regarding readiness of the material we did not place the vessel to avoid demurrage.

As a gesture of goodwill, without prejudice to our rights, we are ready to extend the delivery period by 21 days. We are ready to ear all charges for storage, interest insurance and other such normal expenses due for the extension of 21 days. We would once again request you advise us the readiness of the material as per the contract within 2 days.

The last date of shipment was 7^th May 2008 and if we do not receive any reply regarding the cargo readiness for loading from your side within 2 days we put you in default of the contract."

2.17 On 8^th May at 15.08 hours, Buyers' London Solicitors, Zaiwalla & Co, sent the following to Sellers:

"Re: Sale purchase contract No. TNT PEC-080108 dated 8^th January 2008.

We have been instructed by PEC Ltd of New Delhi who have a Sale Purchase Contract No. TNT PEC-08018 dated 8^th January 2008 for sale of 22,000 MT (5 pct more or less at buyer's option) of Thai Parboiled long grain rice.

Under this contract you have contracted to ship April- 07^th May 2008 22,000 mt of rice 100 pct sorted as per official standards of Thailand to our clients the buyers.

The shipment tern required our client to advise you of the vessel's arrival for loading. Our client informed you by their message of 16 April 2008 of the nomination of the vessel MV SUNRISE OCEAN or its substitute with lay can 25 April to 7 May 2008.

Because of your company's failure to perform another contract earlier Mr Jain of our client visited Bangkok for a personal meeting with your company but that meeting could not take place because he was told by your office that the concerned person in your company was unavailable.

Despite your clear indication that you are not going to perform your obligation under the Contract and therefore you are in breach of the Contract, our client hereby gives you Notice under Clause 7 of Gafta Form No. 119 that they require the delivery period to be extended byan additional period of 30 days.

In view of the fact that you have not yet completed full shipment of rice under our client's earlier purchase contract No TMT SGT 070108 dated 7^th January 2008, we are writing this letter to invite you to confirm to us within 7 days that you do intend to perform the aforesaid contract.

We must give you further notice that if you fail to respond to this letter within 7 days then our client will take it that it is not your intention to ship the contracted rice cargo under the aforesaid contract. In that event we will hold you in breach and claim the loss suffered by us to your non performance as damages.

We must clarify that your failure to give us confirmation, which we have sought in this letter as an anticipatory breach of the said contract and our client will thereafter commence arbitration for the claim under GAFTA Rules.

We await to hear from you within 7 days."

2.18 On 12^th May Sellers sent the following to Buyers:

"We confirm receipt of your mails nominating MV "SUNRISE OCEAN" to lift 22,000 M/Tons bagged rice under above contract, and in this connection we invite your kind attention to the shipment clause under above contract which clearly states:

"SHIPMENT: DURING APRIL – 07^th MAY 2008 WITH MIN 10 WORKING DAYS OF PRE-ADVICE OF VESSEL ARRIVAL."

Therefore since shipment date under above contract already expired, and hence, under all reserve, we reject nomination of above vessel. We also, without any prejudice to treat and declare above contract as null and void.

Please be notified accordingly."

2.19 On 12^th May Zaiwalla & Co sent the following:

We refer to our latter dated 8^th May 2008 in which we asked you to confirm to us within 7 days that your company does intend to perform the aforesaid contract within the extended period. As you are aware the contract stood extended on 8^th May under Clause 7 of Gafte Form No 120 by a notice given by our client.

To our client's surprise they have received today an e mail dated 12^th may in which you reject our client's nomination of the vessel MV Sunrise Ocean to lift 22,000 mt bagged rice under the above extended contract. Your rejection of the nomination of the vessel is entirely ill conceived under English Law, which governs the aforesaid contract.

You and your email of 12^th May 2008 by a declaration on behalf of your company that you consider the above contract as "null and void". We take this declaration to be your response to our letter of 8^th May extended delivery date contract.

In the circumstances our client has no option but to treat your company's conduct in particular, your declaration that the above contract is null and void as wrongful repudiation of the contract by your company. Kindly note that our clients now have no alternative but to accept you repudiation of the contract and claim damages from your company.

We must therefore give you notice of our clients commencement of arbitration under Gafta Rules against your company in which they will claim all their losses which they have suffered as a result of you repudiatory breach as damages. We will notify you of the appointment of our client's Arbitrators as soon as possible."

2.20 Buyers claimed arbitration against Sellers. By their Award of Arbitration No. 13-800 of 4 March 2010 the arbitrators awarded Buyers US$ 14,520,000.00 in respect of damages….."

7. The relevant "notices" are the Buyers' message of 8^th May set out in paragraph 2.11 ("the Buyers' message") and Zaiwalla's notice of 8^th May set out in paragraph 2.12 ("the Zaiwalla message"). It was common ground between the parties that, taking time zone differences into account, the messages were sent within a few minutes of each other, with the Buyers' message being first in time.

Clause 7 of GAFTA 120

8. Clause 7 of GAFTA 120 provides as follows:

"EXTENSION OF DELIVERY -- The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period. In this event Sellers shall carry the goods for Buyers' account and all charges for storage, interest, insurance and other such normal carrying expenses shall be for Buyers' account, unless the vessel presents in readiness to load within the contractual delivery period.

Should Buyers fail to present a vessel in readiness to load under the extension period, Sellers shall have the option of declaring Buyers to be in default, or shall be entitled to demand payment at the contract price plus such charges as stated above, less current FOB charges, against warehouse warrants and the tender of such warehouse warrants shall be considered complete delivery of the contract on the part of Sellers."

9. As the Sellers submitted, the contractual delivery period is a fundamental term of an FOB contract. It defines the parties' respective obligations to deliver and take delivery of the goods. It is therefore essential that the delivery period should be defined with clarity and certainty. Clause 6 of GAFTA Form No. 120 provides this certainty ("Delivery during ... at Buyers' call"), with the clarification that provided the vessel is presented in readiness to load within the delivery period. Sellers shall if necessary complete loading after the delivery period and carrying charges shall not apply. Similarly, the parties' typed contract in the present case provides a clearly defined delivery period.
10. However, clause 7 of GAFTA Form No. 120 permits the Buyers unilaterally to claim an extension of the delivery period by an additional period of not more than 21 consecutive days, provided that they serve a valid notice. In order to be valid, the notice must claim an extension and be served in time. There was an issue, not dealt with by the Board of Appeal and not arising on this appeal, whether the "notices" relied on by the Buyers were served in time.
11. As the Sellers further submitted, in considering whether the notice claimed an extension it should be borne in mind that the effect of a valid claim for an extension is to vary both parties' contractual rights and obligations in an important respect, so that the parties need to know whether or not an extension has been validly claimed. Certainty as to the existence and duration of any extension period is as important as certainty as to the original delivery period. The Sellers need to know whether they are required to bring forward the goods for delivery despite the expiry of the original delivery period; and, if so, for what additional period up to a maximum of 21 days they need to arrange storage, insurance, etc. The Buyers need to know whether they must provide a vessel during the extended period and whether they are liable for carrying charges.
12. Against that background the Sellers submitted that the requirements of a valid "claim" for extension should include the following:

(1) There must be an actual "claim" -- not merely an indication that the Buyers may make a claim for an extension at some future time.

(2) The claim for an extension must be unconditional -- a "claim" which is dependent on certain things happening in the future, including the condition of a response from the Sellers, lacks the necessary certainty; unless and until the conditions have been fulfilled, the parties do not know where they are. Indeed, if the condition refers to something which may happen after the deadline for claiming an extension, the claim would only take effect once the condition is fulfilled and would therefore be out of time.

(3) The claim must be unqualified -- once the extension is validly claimed, the contractual delivery period is varied for all purposes; the Buyers cannot purport to reserve a right to rely on the original delivery period.

(4) The duration of the extended delivery period must be stated with certainty -- it must be not more than 21 consecutive days, although it may be less.

(5) The "notice" relied on must be viewed as a whole -- it is no use picking out isolated parts of the "notice".

13. I do not consider that it would be appropriate to seek to set out specific legal requirements for a valid claim for an extension, although the Buyers did not dispute points (1), (3), (4) and (5). However, I accept the general point made by the Sellers that because of the contractual importance of the claim for an extension and the need for certainty, the "notice" has to be clear as to both the fact that an extension is being claimed and as to its duration. I also accept that the "notice" has to be construed as a whole.

The conclusion of the Board of Appeal

14. The Board of Appeal's reasons for concluding that the "notices" did not "claim extension" were set out in paragraph 7.3 as follows:

"The plain and unambiguous language of GAFTA No 120 clause 7 EXTENSION OF DELIVERY confers an unconditional right on the buyer to extend delivery up to a maximum of 21 days. The seller's consent is not required. Apparently, the buyer is free to make the exercise of his otherwise unrestricted right dependent on the seller's approval or any other condition, with the consequence, of course, that if the seller does not agree or the condition is not fulfilled the delivery period will not be extended. Buyers and their solicitors have imposed conditions on Buyer's concession of an extension. Sellers did not fulfil the conditions and WE FIND THAT the contract period was not extended in accordance GAFTA 120 clause 7 EXTENSION OF DELIVERY. It follows that Buyers did not present a vessel in readiness to load within the delivery period and are in breach of their obligation to load the contract goods. It furthermore follows that they cannot claim damages against Sellers for non-delivery."

15. The crucial part of Board of Appeal's reasoning is their conclusion that "Buyers and their solicitors have imposed conditions on Buyer's concession of an extension." The Board of Appeal construed the messages as laying down conditions for an extension of the delivery period which had to be agreed or fulfilled, but were not.
16. In relation to the Zaiwalla message the Board of Appeal further stated that "… it is highly doubtful whether a Gafta Form No. 119 notice was a valid Gafta Form No 120 extension notice at all." In the light of their conclusion on conditionality they did not need to decide this further point, but they clearly had at least serious doubts as to whether this was a valid notice at all given its purported invocation of GAFTA Form No. 119.

Discussion

17. The Buyers submitted that the Board of Appeal's construction is plainly wrong and contended as follows:

(1) Neither message seeks to impose any condition on extension. Both messages are explicit in requiring or granting an extension. The position was that this was the day after the shipping period had expired, which was the last day for an extension under Clause 7. The Buyers had the right to extend, and did so without condition. Whilst both messages went on to require confirmation as to the Seller's intention to comply with its contractual obligations, this did not attach any element of conditionality to the extension.

(2) What the Buyers said in the messages was not that the extension was conditional, but that there would be a default under the contract if readiness to load was not confirmed in two/seven days. On no basis was the consequence of the failure to confirm that the extension should be ineffective. Rather, it was assumed that the extension was effective, but that the Sellers would be in renunciatory/repudiatory breach if it did not confirm its intention to perform.

(3) If it matters, the Buyers were fully entitled to seek to require an early answer from the Sellers. There had been a long history of failure to respond to requests to confirm that the Sellers would honour the contract, and, even though the Board of Appeal found that the Sellers' conduct had not been repudiatory, the danger of non-performance by the Sellers was obvious and it was entirely reasonable to put the Sellers on the spot: see the remarks of Flaux J in The Pro Victor [2010] 2 Ll. Rep 158 at 173. Even if that were wrong, it would not matter, since the Buyers did not purport to accept the Sellers' repudiation once the two/seven days had expired.

(4) The Buyers' message was a valid notice claiming an extension. If so, then irrespective of any defect in the message of the same day from Zaiwalla, the first notice in time was effective to extend the contract for 21 days. On that basis any issue as to the interpretation of the Zaiwalla message would not arise.

(5) Alternatively, if the Buyers' message was not a valid notice then it was superseded by the valid notice given by Zaiwalla. Alternatively the two messages when construed together constituted a valid claim for an extension.

18. In relation to the Buyers' message I agree with the Board of Appeal and the Sellers that this was not a valid claim for an extension in accordance with clause 7. In particular:

(1) It stated that the Buyers were "ready" to extend the delivery period, not that they were doing so. This indicates a preparedness to do so in the future, depending on the Sellers' response.

(2) That this was a proposal rather than the exercise of a unilateral right is further supported by the reference to it being "a gesture of goodwill" and "without prejudice to our right",

(3) The "right" in question was made referable to the Sellers' alleged defaults in failing to inform the Buyers of the load readiness of the cargo for the purpose of shipment in the original shipment period, the "last date" of which was "7^th May 2008". However, if an extension of the delivery period had been claimed that would be an affirmation of the contract and there could be no question of being able to rely on alleged breaches relating to the original delivery period. The "right" being asserted by the Buyers was accordingly inconsistent with an extension of the delivery period having been claimed.

(4) Even if, as the Buyers argued, it was referable to the right to treat the Sellers as being in repudiatory breach of the extended delivery period, an inconsistency remains. If the delivery period had been extended then it is difficult to see how there could any question of treating the Sellers as being in default in two days time. Even if no confirmation of load readiness was given the Sellers would still have 19 days of the extended delivery period remaining and can hardly have been in default or repudiation in respect of that extended period.

(5) Reading the message as a whole the Buyers were offering the Sellers a choice. Either they advised readiness of the cargo within two days, in which case the Buyers would extend the delivery period; or they did not do so, in which case the Buyers would put them in default.

(6) As the Board of Appeal found at paragraph. 7.3:

"Buyers' own message, however, did not just simply claim 21 days more time but combined their readiness to extend the delivery period with the request that unless Sellers advise within 2 days the readiness of the cargo they would put Sellers in default."

(7) The effect of combining these matters in the terms used was to make the extension conditional upon the Sellers confirming the readiness of the cargo. This never happened so that there was no valid claim for an extension.

19. In relation to Zaiwalla's message there is a stronger argument that no condition was imposed on the extension. The message is not expressed in terms of being "ready" to extend the delivery period, but states that the Buyers "hereby give you Notice under Clause 7" and that they "require" the delivery period to be extended.
20. If the message had stopped, there can be little doubt that it would have been a claim to an extension (leaving aside for the moment the GAFTA Form No. 119 issue). However, the message then went on to require the Sellers to confirm their intention to ship the cargo within 7 days failing which they would treat the Sellers as being default. The claim to be entitled to do so raises similar inconsistencies with an extension having been claimed as are set out in paragraph 17(3) and (4) above.
21. It was forcefully submitted by the Buyers that this further assertion does not undermine the clear claim for an extension made earlier in the message. Against that it has to be recognised that the trade tribunal, the Board of Appeal, concluded that the message was conditional and that deference should be paid to their view on an issue of this kind, involving as it does construction of a message passing between trading parties against the background of their prior dealings and of the trade and trade contract in question. As stated by Jackson J in Kershaw Mechanical Services Ltd v Kendrick Construction Ltd [2006] 4 All ER 79 at [57] after a consideration of the relevant case law:

"1. The court should read an arbitral award as a whole in a fair and reasonable way. The court should not engage in minute textual analysis.

2. Where the arbitrator's experience assists him in determining a question of law, such as the interpretation of contractual documents or correspondence passing between members of his own trade or industry, the court will accord some deference to the arbitrator's decision on that question. The court will only reverse that decision if it is satisfied that the arbitrator, despite the benefit of his relevant experience, has come to the wrong answer."

22. My own conclusion, giving due weight to the views of the trade tribunal, is that, taken on its own, it is unclear whether the message is claiming an extension regardless of the Sellers' requested response. A notice that does not make it clear that the delivery period is being extended is not a sufficient or valid notice, for reasons already stated.
23. In any event, I consider that the correct approach is to construe the two messages together. That was the reality facing a reasonable person in the position of the Sellers faced with these two messages coming shortly after each other. He would not reasonably construe the Zaiwalla message as superseding the Buyers' message. There is no stated or other clear basis for so doing, nor did the Board of Appeal so find. If one construes the messages together then, having regard to my conclusions as to the proper construction of the Buyers' message, the Zaiwalla message would be reasonably understood in the same way. The uncertainty would be resolved by concluding that it had the same aim as the earlier message, namely offering the Sellers a choice between confirming their willingness to perform and there being an extension of the delivery period, or being put in default. That would be a conditional extension.
24. Even if that be wrong, on any view the effect of construing the two messages together was to leave it unclear as to whether an extension was being claimed. There was one message which claimed a conditional extension and another message which may or may not have been claiming a conditional extension. Further the two messages imposed different requirements as to the response required and as to timeframe in which that was to be done. They also referred to different contracts and different extension periods. The reasonable conclusion to be drawn would be that it was entirely unclear what the Buyers were claiming and on what basis. That too would be fatal to the extension claim.
25. For all these reasons I agree with the Board of Appeal's conclusion that the contract period was not extended in accordance with clause 7 of GAFTA Form No. 120.
26. For completeness I shall nevertheless address the further issue as to whether Zaiwalla's reference to the wrong contract form and the wrong extension period means that their message was not a valid claim for an extension in any event.
27. The Buyers submitted as follows:

(1) Both parties knew or reasonably would have known, their contract incorporated the GAFTA Form No. 120, clause 7 of which provided for an extension of the shipment period of 21 days. It did not incorporate GAFTA Form No. 119.

(2) It was, or would have been obvious, to the reasonable commercial person in the position of the recipient of the Zaiwalla message that the critical sentence meant:

"Despite your clear indication that you are not going to perform your obligation under the Contract and therefore that you are in breach of the Contract, our client hereby gives you Notice under clause 7 of Gafta Form 120 that they require the delivery period to be extended by an additional 21 days."

(3) The technique which the Court adopts to arrive at the conclusion of the reasonable person in the recipient's position, and even to alter the words of the notice as being, or meaning, those set out above has been referred to as "rectification by construction" or "common law rectification", but is actually a technique of construction.

(4) Relevant authorities include the judgment of Lord Hoffmann in Chartbrook v Persimmon [2009] 1 AC 1101 at [14 – 26]; the judgment of Lord Neuberger in Pink Floyd Music Limited v EMI Records [2010] EWCA Civ 1429 at [16 – 21].; the judgment of Lord Clarke in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 at [14], and the judgment of Lord Hoffman in Mannai Investment Company Limited v Eagle Star Life Insurance [1997] AC 749.

(5) As Lord Hoffman stated at [25] of his judgment in Chartbrook:

"What is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the Court is allowed. All that is required is that it is should be clear that something has gone wrong with the language and that it should be clear what the reasonable person would have understood the parties to have meant."

28. In the present case the Buyers submitted that it is clear that something has gone wrong with the language. The matrix of fact was that parties did not contract on GAFTA Form No. 119 for a 30 day extension, but on GAFTA Form No. 120 for a 21 day extension. So, either the message was, on its face, claiming an extension under a contract form which formed no part of the contract, or the reasonable commercial person, aware of the matrix of fact, would have understood that something had gone wrong with the drafting. He would have understood the message to mean that Zaiwalla was seeking to apply the extension provisions incorporated into the contract, whatever they were.
29. Just as in the Mannai decision, another case involving notices, the Court construed the notice as referring to the "12^th January" rather than, as stated, "13^th January", so here GAFTA Form No. 119 should be construed as referring to GAFTA Form No.120 and 30 days as referring to 21 days.
30. The authorities make it plain that it must be clear not only that something has gone wrong with the language but also that what the language should be.
31. As stated by Lord Hoffmann in the passage cited above "it should be clear what the reasonable person would have understood the parties to have meant." In the Pink Floyd case Lord Neuberger MR stated as follows at [21]:

".. before the court can be satisfied that something has gone wrong, the court has to be satisfied both that there has been "a clear mistake" and that it is clear "what correction ought to be made" (per Lord Hoffmann in Chartbrook [2009] 1 AC 1101 , paras 22-24, approving the analysis of Brightman LJ in East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 , as refined by Carnwath LJ in KPMG LLP v Network Rail Infrastructure Ltd [2007] Bus LR 1336) ."

32. As the Sellers submitted, this is not a case like Mannai where there was only one alternative date which there could be. The present case involves not merely an alleged "mistake" as to the relevant GAFTA Form but also as to the period of extension claimed. The alternative period was not fixed at 21 days but could be any period up to 21 days. The Buyers submitted that having regard to their own message the intention must have been to refer to the maximum available period, but that does not necessarily or clearly follow.
33. Further, there is force in the Sellers' point that a reasonable commercial person in their position could justifiably take the view that whatever may have been intended no extension had been validly claimed. One expects experienced businessmen, let alone their lawyers, to take care to purport to exercise contractual rights in a proper manner. Why should the Sellers have to try to second guess what may have been intended? On the face of it this was a clearly invalid notice and the Sellers should be entitled to treat it as such.
34. This would appear to have been the view of the Board of Appeal. They emphasised that the message came from a "London city firm of lawyers" and that it was "highly doubtful" whether a GAFTA Form No. 119 notice was a GAFTA Form No. 120 notice.
35. For all these reasons I am not satisfied that the Board of Appeal has erred in law in failing to construe a GAFTA Form No. 119 Notice claiming a 30 day extension as a GAFTA Form No. 120 Notice claiming a 21 day extension.

Conclusion

36. I accordingly conclude that the appeal must be dismissed.