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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 >> A v B  EWHC 793 (Comm) (31 March 2021)
Cite as:  WLR(D) 205,  Bus LR 882,  EWHC 793 (Comm)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
Rolls Building, Fetter Lane,
London, EC4A 1NL
B e f o r e :
Angharad M Parry (instructed by Studio Legale Associato Ridolfi Ghigi Longanesi) for the Defendant
Hearing date: 16 December 2020
Crown Copyright ©
Mr Justice Henshaw:
(B) BACKGROUND TO THE DISPUTE
(1) Contract and Vessel Nomination
(2) The Award
(3) The Appeal and the Challenge
(C) APPEAL QUESTION 1: WAS THE MAKING OF A "FALSE" NOMINATION A BREACH OF CONDITION?
(D) APPEAL QUESTION 2: OBLIGATION TO NOMINATE A VESSEL ALREADY CHARTERED
(E) APPEAL QUESTION 3/FIRST SECTION 68 ISSUE: OBLIGATION TO PROVIDE COPY CHARTERPARTY
(F) SECOND SECTION 68 ISSUE: CUMULATIVE EFFECT OF BREACHES
(G) APPEAL QUESTIONS 4 AND 5: INTEREST
(B) BACKGROUND TO THE DISPUTE
(1) Contract and Vessel Nomination
"PORT OF LOADING TO BE DECLARED NOT PRIOR 8 DAYS TO THE DELIVERY PERIOD AND LATEST UPON NOMINATION OF THE PERFORMING VESSEL. BUYERS PRESENT SINGLE DECK, SELF TRIMMING BULK CARRIER, SUITABLE FOR LOADING AT SELLER'S BERTH."
1st APRIL 2018 TO 15TH APRIL 2018, BOTH DATES INCLUDED, NO EXTENSION"
IF REQUIRED, BUYERS SHALL SEND BY EMAIL/FAX/COURIER A WORKING COPY OF THE C/P OR BOOKING NOTE DULY SIGNED AND STAMPED TO SELLERS AT THEIR FIRST REQUEST"
BUYERS SHALL SERVE TO THE SELLERS NOT LESS THAN 8 DAYS' PRE-ADVICE WITH THE FOLLOWING INFORMATION
- VESSEL'S NAME AND AGE
- DIMENSIONS OF THE VESSEL (LOA/BEAM/DM)
- OWNERS NAME
- DEMURRAGE/DESPATCH RATE
- COUNTRY OF DESTINATION
- ESTIMATED QUANTITY TO BE LOADED"
ALL OTHER TERMS, CONDITIONS AND RULES, NOT IN CONTRADICTION WITH THE ABOVE CONTAINED IN FORM 49 OF GAFTA APPLY TO THIS TRANSACTION AND THE DETAILS ABOVE GIVEN SHALL BE TAKEN AS HAVING BEEN WRITTEN INTO SUCH FORM IN THE APPROPRIATE PLACES"
"Delivery during .................................................at Buyers' call.
Nomination of Vessel. Buyers shall serve not less than ......................consecutive days' notice of the name and probable readiness date of the vessel and the estimated tonnage required. The Sellers shall have the goods ready to be delivered to the Buyers at any time within the contract period of delivery. The Buyer has the right to substitute any nominated vessel. Buyer's obligations regarding pre-advice shall only apply to the original vessel nominated. No new pre-advice is required to be given in respect of any substitute vessel, provided that the substitute vessel arrives no earlier than the estimated time of arrival of the original vessel nominated and always within the delivery period. Provided the vessel is presented at the loading port in readiness to load within the delivery period, Sellers shall if necessary complete loading after the delivery period and carrying charges shall not apply. Notice of substitution to be given as soon as possible but in any event no later than one business day before the estimated time of arrival of the original vessel. ."
"Your continuous refusal and failure to provide the charterparty in respect of the m/v Tai Hunter, coupled with her current position and itinerary, supports our allegation that your nomination of the referred vessel was a fanciful nomination after all. I[n] turn, fanciful nomination constitutes a repudiatory breach which we hereby accept."
"The reference is made to your email of this afternoon with the nomination of a substitute 'Mariana' (OBN or Sub) with ETA 05.04.18 and destination of Portugal. For the reasons set out in our previous correspondence of 26th and 27th March the relevance of this nomination is unclear. We would wish to remind you that after effects of the acceptance of the repudiatory breach was termination of the contract no.: CORN-196.131217 dated 13/12/17. Hence we fail to understand the rationale behind your new nomination.
Even if you are not in an agreement with us as to lawfulness of the steps taken towards the contract cancellation, you are reminded of your duty to mitigate damages and losses."
We take issue with your rejection of the MV Mariana, as well as with your refusal to declare the loadport in your email of 26 March. Your emails of 26 and 28 March [are] both constitutive of an anticipatory breach and/or renunciation to the contract. So, we take the contract as terminated.
We will purchase equivalent goods against you and will claim the price difference along with any additional expenses we may suffer."
"3. In the event parties decide to contest or reconfirm, as the case may be, the lawfulness of the old contract termination by [the Sellers] through arbitration at Gafta, then depending on the outcomes of such arbitration the new Purchase Price of the new contract shall be adjusted in the following way:
a) in the event final and unappealable arbitration award finds that [the Sellers] unlawfully terminated the old contract then the new Purchase Price payable to [the Sellers] under the new contract shall be reduced up to USD177.59 per mt and [the Sellers] shall reimburse the overpaid amount to [the Buyers] at first request
b) in the event final and unappealable arbitration award finds that [the Sellers] lawfully terminated the old contract then the new Purchase Price payable to [the Sellers] under the new contract shall be increased to USD202 per mt and [the Buyers] shall pay the difference of USD12.00 per mt to [the Sellers] at first request."
(2) The Award
"10.1 Were Buyers in breach of contract for nominating a vessel which was unlikely or impossible to arrive at the contractual range of load ports by the ETA given by Buyers.
10.2 If this was a breach of contract then was it a breach of a condition, as argued by Sellers, which entitled them to terminate the Contract?
10.3 Were Buyers in breach of contract by the nominated vessel not yet being chartered by Buyers or sub-buyers?
10.4 Were Buyers in breach of contract by their failure to send a copy of the charterparty of the vessel?
10.5 Were Sellers, by terminating the Contract and accepting the repudiatory breaches, discharged from any further liability and were the messages substituting the original nomination valid?"
"11.8 We contrasted this with the nomination of MV "Tai Hunter" which was loading in Odessa at the time of nomination for onward shipment of goods to Egypt. Sellers may have been acting on the information provided by Odemara at the time of the nomination in the respect that they were told that the MV "Tai Hunter" would be destined for Ireland. Given that information, it would have been more probable that the nomination would have been "manifestly false" but that information was not correct as the vessel's destination was Egypt.
11.9 Given the time scale, it would, however, be entirely possible that the MV "Tai Hunter" would be ready to load by the end of the contract delivery period. She was nominated on 20 March 2018 and the last day of the delivery period was 15 April 2018. This was not at all similar to the "Giray" [in Texaco] whose passage time from Istanbul to Milford Haven would have ensured that the contract delivery period was exceeded by the time she presented. However, but for serious congestion, MV "Tai Hunter" would have been able to return to Odessa, Yuzhny or Chernomorsk by the end of the contract delivery period. In our opinion, the performance of MV "Tai Hunter" was not self-evidently impossible and was not manifestly incapable of fulfilment as was the "Giray" in the Texaco v Eurogulf. We do not, therefore, consider that the nomination was "manifestly false in the sense that it could never possibly be fulfilled". We do, however, go onto discuss the validity of the nomination (as opposed to being manifestly false) in more detail below."
"11.4 It is a buyer's duty under an FOB contract to name the vessel and give shipping instructions in time to enable the seller to deliver contractual goods so they can be shipped in accordance with those instructions. Buyers are, therefore, obliged to nominate a vessel which allows the seller to deliver contractual goods before the end of the shipment period and to give suitable pre-advice so that the seller can have goods available and ready to load.
11.17 Sellers adduced Scrutton on Charterparties (23rd Edition) Art 67 and argued the need for certainty over the time of arrival of a vessel. Although this is a text on charterparties, the Board agreed with Sellers that an estimated time of arrival from a shipowner (and therefore a buyer in string) should be given honestly and on reasonable grounds and that a vessel should depart for a load port in such time as to enable her to arrive by the ETA.
11.18 An FOB seller has to make goods ready for delivery onto the vessel nominated by a buyer and the date of delivery given by a buyer is one which is required to give certainty to enable a seller to meet their obligations to the buyer. It follows, therefore, that the ETA (or "probable readiness date" contained at clause 6 of Gafta 49) is a date which needs to be honestly given and a seller can rely upon.
11.19 The Board considered at length whether the nomination of MV "Tai Hunter" was a valid nomination. Whilst there was some sympathy with the view that the nomination was in fact valid, ultimately, we considered that it does not amount to commercial business sense that a buyer can nominate a vessel which is incapable of performance on the date given, even if that date is an "estimated" or "probable" date. The Board considered that the estimated or probable readiness date was incorporated to provide for disruption from weather and other such events. In our view, a nomination which contained ambitious or incorrect information was not valid as it did not give the correct information to enable the Seller to perform the contract. Buyers' nomination gave an ETA of 1 April, however, since congestion in Egypt was predicted to prevent the vessel's return to Odessa within the delivery period, the ETA given was unreasonably ambitious. The nomination given on 20 March was therefore invalid.
11.20 Buyers had sent the nomination down the string in good faith but, in the words of Mr Justice Hirst [in Texaco], this was neither here nor there. By sending a nomination for a vessel which was not valid, Buyers left themselves open to a challenge on that nomination.
11.21 The Board therefore FINDS that a nomination must be valid for a performing vessel at the time of the nomination and Buyers did not give a true and accurate probable or estimated time of arrival which would enable Sellers to deliver the contractual goods so they could be shipped in accordance with Buyers' instructions."
"11.22 Having considered the submissions and evidence WE FIND THAT that Buyers' failure to provide a valid nomination was not a breach of condition upon which the contract could be terminated. Whilst the parties require certainty in the nomination of a performing vessel which gives rise to an interdependence of obligations, Buyers had further time to make a valid nomination with sufficient pre-advice before the end of the delivery period. In addition, the wording of clause 6 of Gafta contract 49 provided a "probable readiness date" and "estimated time of arrival" and this wording was not unequivocal and did not indicate to us that a breach was that of a condition and would go the root of the contract.
11.23 The Board, however, did accept the wording of Roskill, LJ in that we should not be over ready to construe a term as a condition rather than a term which gives right to damages. Contracts are made to be performed and not to be avoided and, in the view of the Board, it makes commercial business sense to treat a nomination clause as a warranty, not a condition. Thus, a technical breach by Buyers would not allow Sellers the opportunity to terminate the contract.
11.24 The Board considered that Sellers' remedy for an invalid nomination would be to reject the nomination. Instead, Sellers chose to assert that Buyers' declaration constituted a repudiatory breach of contract which they accepted which led to the contract being terminated. A rejection of the original nomination would have the effect of allowing Buyers the opportunity to provide a further but valid nomination and in doing so, allow the contract to be performed."
The reference in § 11.23 to Roskill LJ was to his judgment in Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. ("The Hansa Nord")  Q.B. 44,  2 Lloyd's Rep. 445 (CA).
"11.28 In the absence of an express term to substitute a vessel, it is always open for an FOB buyer to substitute the vessel. In this Appeal, clause 6 of Gafta 49 gives a right of substitution but this clause does not refer to the validity of the original nomination. It follows that for a substitution to be made then the original nomination has to be valid. We have found that Buyers had breached the terms of the contract by not providing a valid original nomination and, this simply had the effect of that nomination falling away. This was curable by Buyers providing a proper and valid nomination to Sellers within the terms of the contract. Buyers had ample time to do so as the contract period did not expire for another 18 days after Sellers' notification of accepting Buyer's renunciation on 28 March 2018.
11.32 Accordingly, Sellers were obliged to nominate a load port. The nomination was to be at the latest on the nomination of the performing vessel. We have found the performing vessel to be MV "Marinas" substituted by MV "Deribas" and it follows that Sellers were obliged to nominate a load port at that time. Sellers chose not to do so citing that they had already terminated the contract. Buyers accepted this as an anticipatory breach of contract on 3 April 2018.
11.33 WE FIND THAT whilst Buyers' invalid nomination of MV "Tai Hunter" was a breach of contract, it was not, however, a breach of a condition of the contract such that would bring the contract to an end. Sellers had no right to terminate the contract and hence, Sellers' refusal to accept a valid nomination of MV "Mariana" substituted by MV "Deribas" was a breach of contract.
"11.34 We do not have sufficient evidence to make a finding on whether MV "Tai Hunter" was fixed at the time of nomination. We do, however, uphold the view of the First Tier Tribunal that a buyer is obliged to nominate only a ship which had either been fixed or had a reasonable expectation of being fixed."
"11.36 It was, however, a contractual obligation for Buyers (although not Buyers' sub-buyer in string) to provide a copy of the charterparty or booking note of the performing vessel. In the Board's view, there was no merit to Buyers' argument that the string was long as it was evidenced that it contained only six parties. In the view of the Board, the charterparty was required to be passed by Buyers to Sellers "at their first request" for MV "Tai Hunter" as this was a vessel which Buyers had nominated and by their failure to do so then Buyers were in breach of contract.
11.37 Sellers did not claim any damages specific to this breach. We have found that Sellers terminated the contract by accepting Buyers' nomination as a breach of condition and, further, by their failure to accept a valid nomination (or substitution) and failure to nominate a load port. Hence, whilst Sellers have succeeded on this point, Buyers are not liable to them in damages."
"11.42 The Settlement Agreement made no provision for interest to be made. Pursuant to §49(3) of the Arbitration Act 1996, the Board may award interest from such dates, at such rates and with such rests as it considers meets the justice of the case.
11.43 Clause 18(c) of Gafta 49 states that the damages payable shall be based on the difference between the cont[r]act price and either the default price or on the actual or estimated value of the goods on the date of default. Buyers had accepted Sellers' breach of contract on 3 April 2018 and the next business day was 4 April 2018. The Board therefore awards interest on the amount of USD 325,762.50, at the rate of 4% per annum, compounded at three monthly rests, from 4 April 2018 until payment has been made."
(3) The Appeal and the Challenge
i) Is the obligation on the buyer of goods FOB not to make a false nomination of a vessel (i.e. one of a vessel that, at the date of nomination, is incapable of arriving at the loadport at or around the ETA provided or within the delivery period) a condition, breach of which entitles the seller to terminate the contract?
ii) On a true construction of the Contract, were the Buyers obliged to nominate a vessel which had been chartered by them or by their sub-buyers at the date of nomination?
iii) Was the obligation of the Buyers to provide a copy of the Charterparty, by which the vessel nominated had been chartered, to the Sellers "at their first request" a condition, breach of which entitled the Sellers to terminate the Contract?
iv) Can a Tribunal lawfully exercise its discretion under section 49 of the Arbitration Act 1996 by awarding interest to run from a date earlier than the date when the losing party's obligation to pay the principal sum found due arose and, if so, in what circumstances?
v) Having found that the Sellers were liable to the Buyers under the terms of the Settlement Agreement, was the Board wrong in law to award interest from the 4 April 2018 rather than from the date when, according to the Settlement Agreement, that sum became due to the Buyers?
i) the Board did not answer the question set out at 24.iii) above; and
ii) the Board failed to answer the question of whether the Buyers were in repudiatory breach of contract or renounced the contract by, cumulatively, (a) making a nomination of a vessel which was false, (b) failing to name the owners of the Vessel when they nominated it, (c) nominating a vessel which neither they nor their sub-charterers had chartered and (d) failing to provide a copy of the charterparty at the Sellers' first request.
(C) APPEAL QUESTION 1: WAS THE MAKING OF A "FALSE" NOMINATION A BREACH OF CONDITION?
"I think the second is the right view, and that the clause is to be interpreted as meaning that in view of the facts as known to the sellers at the time they made the contract, and made the statement 'Expected ready to load', the expectation was one which was made honestly and upon reasonable ground." (p740 rhc)
"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 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 charterparty of expected readiness, that is, the date when he expects that he will be ready to load. The protection that is afforded to that charterer under that clause is this. As was clearly settled in [Sanday v Keighley Maxted] he is entitled to have that statement of position, as it is called, the statement of expectation as to when the ship arrives or is likely to arrive made honestly and made on reasonable grounds." (p370)
"The question in this case is whether the statement by the owner: "expected ready to load under this charter about July 1, 1965," is likewise a " condition." The meaning of such a clause is settled by a decision of this court. It is an assurance by the owner that he honestly expects that the vessel will be ready to load on that date and that his expectation is based on reasonable grounds: see Samuel Sanday & Co. v. Keighley Maxted & Co. (1922) 27 Com.Cas. 296. The clause with that meaning has been held in this court to be a "condition" which, if not fulfilled, entitled the other party to treat himself as discharged: see Finnish Government v. H. Ford & Co. Ltd. (1921) 6 Ll.L.Rep. 188. Those were sale of goods cases. But I think the clause should receive the same interpretation in charterparty cases. It seems to me that, if the owner of a ship or his agent states in a charter that she is " expected ready to load about July 1, 1965," he is making a representation as to his own state of mind; that is, of what he himself expects: and, what is more, he puts it in the contract as a term of it, binding himself to its truth. If he or his agent breaks that term by making the statement without any honest belief in its truth or without any reasonable grounds for it, he must take the consequences. It is at lowest a misrepresentation which entitles the other party to rescind: and at highest a breach of contract which goes to the root of the matter. The charterer who is misled by the statement is entitled, on discovering its falsity, to throw up the charter. It may, therefore, properly be described as a "condition.""
I am confirmed in this view by the illustration given by Scrutton LJ himself in all the editions of his work on charterparties:
"A ship was chartered 'expected to be at X about December 15 shall with all convenient speed sail to X.' The ship was in fact then on such a voyage that she could not complete it and be at X by December 15. Submitted, that the charterer was entitled to throw up the charter."
See, e.g., Scrutton on Charterparties, 17th ed, (1964), p. 79, case 4." (p194B-F)
"On these grounds, and particularly having regard to the importance to the charterer of the ability to be able to rely upon the shipowner giving no assurance as to expected readiness save on grounds both honest and reasonable, I would be for holding that clause 1 in the present case imported a condition. That the owners were in breach of it is common ground. It is equally undisputed that if, as I think, the circumstances entitled the charterers to repudiate on July 17, the fact that they did so by reliance on an untenable plea of force majeure does not invalidate their act of cancellation. In the result, I would be for reversing the finding of the arbitrators and of the judge on the first question and for holding that on July 17, 1965, the charterers were entitled to cancel the charterparty, as they in fact purported to do. If I am right in so holding, that is an end of this case. ..." (p.200 B-D)
"In my judgment, such a term in a charterparty ought to be regarded as a condition of the contract, in the old sense of the word "condition": that is, that when it has been broken, the other party can, if he wishes, by intimation to the party in breach, elect to be released from performance of his further obligation under the contract; and he can validly do so without having to establish the fact of particular case the breach has produced serious consequence which can be treated as 'going to the root of the contract' or as being 'fundamental', or whatever other metaphor may be thought appropriate for a frustration case." (p205A-C)
"There is nothing expressly in this contract to provide the circumstances in which a particular vessel shall be nominated, and the rights of the parties are to be regulated by the general law as it applies to an f.o.b. contract. As I understand it, the general law applying in such a contract merely is that the buyers shall provide a vessel which is capable of loading within the stipulated time, and if, as a matter of courtesy or convenience, the buyers inform the sellers that they propose to provide vessel A, I can see no reason in principle why they should not change their minds and provide vessel B at a later stage, always assuming that vessel B is provided within such a time as to make it possible for her to fulfil the buyers' obligations under the contract." (p167rhc)
It will be noted, though, that that reasoning proceeded on the footing that there was no express obligation to nominate a vessel, the nomination being no more than a courtesy.
"There was no difference between Counsel as to the general principles applicable under an f.o.b. contract as to the respective duties at common law of the sellers and buyers. If the contract names a date for shipment of the goods, there is an obligation upon the buyers to tender a ship on which the sellers can place the goods by such a date as would enable the sellers to complete putting the goods on board by the end of the period named in the contract of sale. Furthermore, as common sense demands, the buyers must give adequate notice to the sellers of at least the expected readiness date at the named port of shipment of the vessel nominated by the buyers to lift the goods which he has agreed to purchase from the sellers." (p.87)
"In the present case, unless cl. 7 of GAFTA 64 applies, the elaborate provisions in relation to the "nomination of vessel" in cl. 7 of the Anec form apply. I have earlier in this judgment set out the terms in full of that clause, but I would emphasise that under it the buyer has to nominate his vessel to the seller in writing in time for the Seller to receive at least 15 days notice of earliest readiness of tonnage at first port of loading. This of course can only be a notice based on the best estimate possible bona fide arrived at by the buyer on the information reasonably available to him at the time that he gives the notice. The latter is apparent from the second sentence of Anec cl. 7 where that sentence provides for what further action is to be taken in relation to documentary instructions to be given by the buyer at least 10 days before the "estimated" arrival of the vessel.
The words "expected ready to load" by a certain date mean that in view of the facts known to the promissor when making his contract he honestly expects that the vessel will be ready as stated and that his expectation is based on reasonable rounds. This obligation is a condition, and any breach will entitle the charterer to terminate.
I take this passage from Scrutton on Charterparties, 18th Ed., at p. 77. It is based upon the authority of the Court of Appeal in The Mihalis Angelos,  2 Lloyd's Rep 43;  I Q.8. 164."
"impossible to reach the conclusion that a failure to comply with the provisions of cl. 7 of the Anec form is not a failure to comply with a condition of the contract as distinct from a mere warranty" (p89rhc)
unless the buyers were saved by a finding the arbitrators had made regarding trade custom (which, Mocatta J held, they were not).
"I therefore consider that it was a condition precedent of this contract that a proper nomination pursuant to cl. 7 of the Anec form should have been given in relation to the Nestos. I have also given my reasons for thinking that the bad nominations given in respect of that vessel before the buyers terminated the contract were capable of being withdrawn and substituted by a good nomination. On the other hand, the facts in relation to the Nestos are extremely mysterious as the matters to which I have earlier drawn attention both in this passage and at an earlier stage in this judgment demonstrate. It is for the buyers who are claiming damages in respect of a non shipment of goods upon the Nestos to prove their case. On the material before me I am quite unable to find that even if the sellers had repudiated the contract, which is the basis upon which I am dealing with this matter, the buyers would by not later than 15 days before Aug. 21 have given a prior notice nominating the Nestos in accordance with the provisions of cl. 7 of the Anec form. For this reason I consider in any event that the buyers' claim against the sellers for damages in respect of the non-shipment of 2000 tonnes upon the Nestos must fail." (p94)
"In this Court we heard an interesting and elaborate argument on both sides as to whether it was indeed a condition of the validity of a nomination under this contract that at the time of nomination the buyers should have given the full 15 days' notice to the sellers of the nominated vessel's earliest date of readiness to load. Having regard to the conclusion I have reached on another point on which the validity of Nestos claim for damages depends, I find it unnecessary to express a concluded opinion on that matter. I content myself with saying simply that as at present advised I am not persuaded by Mr. Rokison's argument that the learned Judge was wrong in the conclusion he reached on the point. Mr. Hallgarten for his part accepted, and in my judgment rightly accepted, the Judge's view that, assuming the original nomination of Nestos to have been bad, there was nevertheless nothing to prevent the buyers in due course from substituting a good nomination." (p.224lhc)
"The Nestos in fact arrived on Aug. 21. So that between the date July 29, when the buyers accepted the sellers' repudiation of the contract, and the date when, as it turned out, Nestos was first ready to load, there would have been ample opportunity for the buyers to give a valid notice complying with the provisions of cl. 7 of the Anec form. It seems to me that when the evidence rested in the state in which it did at least an evidential burden was then cast on the sellers to lead evidence to show, if they could, that if they, the sellers, had not repudiated the contract, the buyers would nevertheless still have failed before Aug. 21 to give a due and timely nomination under cl. 7 of Nestos to arrive at Rio Grande on Aug. 21. The sellers, in my judgment, fail to discharge that evidential burden." (p.224 rhc)
"The relevant clause 7 in that case will be found in the judgment of Mocatta J, at p. 85:
"7. Nomination of Vessel. Buyer to give nomination of vessel to seller, in writing, in time for seller to receive with minimum 15 days' notice of earliest readiness of tonnage at first or sole port of loading."
Mocatta J. held at p. 89 of his judgment that the finding which I have just quoted did not preclude his reaching the conclusion that that clause was as a matter of construction a condition, a breach of which entitled the innocent party to rescind. His decision was reversed on appeal on a different point: see  2 Lloyd's Rep. 216. But Bridge L.J. at p. 224 was at pains to say that as then advised he was not persuaded that on this question the learned judge had reached the wrong conclusion: see also the judgment of Megaw L.J. at p. 229. With resect, I think that Mocatta J. was plainly correct in his conclusion on this question." (p.730D-E)
It was unnecessary for Lord Roskill to consider any issue relating to substitute nomination.
"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-lzegem P.V.B.A.  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.
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 to the ability of the other party to perform another 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 follows that in my opinion the umpire, the Board of Appeal and the Court of Appeal all reached the correct conclusion and for the reasons I have given I would dismiss the appellants' appeal. It will have been observed that I have reached this conclusion as a matter of the construction of the relevant clause. I have thus far paid no regard to the finding in paragraph 5 of the special case that "This term in an f.o.b. contract is regarded in the trade as of such great and fundamental importance that any breach thereof goes to the root of the contract." Naturally, though the crucial question of construction is a matter of law for the court, the court will give much weight to the view of the trade tribunal concerned." (p. 727E-730A)
" (1) 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, and (2) broadly speaking time will be considered of the essence in "mercantile" contracts .
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." (p. 716E-F)
"The second general point which I desire to mention concerns stipulations as to time in mercantile contracts, in regard to which it has been said that, broadly speaking, time will be considered to be of the essence. To treat time limits thus means treating them as conditions, and he who would do so must pay respect to the principle enunciated by Roskill L.J. in Cehave N.V. v. Bremer Handelsgesellschaft m.b.H.  Q.B. 44, 71A, that contracts are made to be performed and not to be avoided.
The treatment of time limits as conditions in mercantile contracts does not appear to me to be justifiable by any presumption of fact or rule of law, but rather to be a practical expedient founded on and dictated by the experience of businessmen, just the kind of thing which Bowen L.J. could have had in mind when framing his classic observations on the implied term in The Moorcock (1889) 14 PD 64, 68
In order to identify an implied term (concerning which both parties to the contract, being men of business, would say, "of course; it goes without saying") one must construe the contract in the light of the surrounding circumstances and, to understand how that is done, we cannot do better than read the passage from Lord Wilberforce's speech in the Reardon Smith case  1 W.L.R. 989, 995E-997C to which my noble and learned friend, Lord Scarman, has already referred your Lordships.
The law having been established, why should we regard the term here in question as a condition? I start by expressing my full agreement with the reasons given in your Lordships' speeches. Among the points which have weighed with me are the following:
(1) There are enormous practical advantages in certainty, not least in regard to string contracts where today's buyer may be tomorrow's seller.
(2) Most members of the string will have many ongoing contracts simultaneously and they must be able to do business with confidence in the legal results of their actions.
(3) Decisions would be too difficult if the term were innominate, litigation would be rife and years might elapse before the results were known.
(4) The difficulty of assessing damages is an indication in favour of condition: McDougall v. Aeromarine of Emsworth Ltd.  1 W.L.R. 1126, 1133.
(5) One can at least say that recent litigation has provided indications that the term is a condition. Parties to similar contracts should (failing a strong contra indication) be able to rely on this: The Mihalis Angelos  1 QB 164, 199F per Edmund-Davies L.I.
(6) To make " total loss " the only test of a condition is contrary to authority and experience, when one recalls that terms as to the date of sailing, deviation from a voyage and the date of delivery are regarded as conditions, but that failure to comply with them does not always have serious consequences.
(7) Nor need an implied condition pass the total loss test: see (6) above.
(8) If the consequences of breach of condition turn out to be slight, the innocent party may treat the condition as an innominate term or a warranty.
(9) While the sellers could have made time of the essence, if it were not so already, this would require reasonable notice, which might well not be practical either in a string contract or at all.
(10) In Tarrabochia v. Hickie (1856) 1 H. & N. 183, 188 upon which the appellants strongly relied, Bramwell B. said:
" No doubt it is competent for the parties, if they think fit, to declare in express terms that any matter shall be a condition precedent, but when they have not so expressed themselves, it is necessary for those who construe the instrument to see whether they intend to do it. Since, however, they could have done it, those who construe the instrument should be chary in doing for them that which they might, but have not done for themselves."
But in that very case both Pollock C.B. and Bramwell B., without the benefit of any express term, said that, where the agreement was that a ship should sail on a particular day, that was a condition precedent.
(11) To accept the argument that conditions ought not to be implied "because the parties themselves know how to describe a term" would logically condemn the entire doctrine of implied terms.
(12) Arbitrators and courts might if the term were innominate, give different answers concerning the effect of a breach in very similar transactions, and parties could never learn by experience what was likely to happen in a given situation. So-called string contracts are not made, or adjudicated on, in strings." (p. 719E-721B, paragraph breaks interpolated)
i) The pre-advice clause is a time clause in a mercantile contract in respect of which there is a need for certainty. The court will require precise compliance with stipulations as to time wherever the circumstances of the case indicate that this will fulfil the intentions of the parties.
ii) There was an interdependence of obligations: until the Buyers had performed their obligation to nominate the vessel, the Sellers were not able to make arrangements to load the vessel and ultimately to load her when she arrived.
iii) The Contract was part of a string, which underlines or augments the need for certainty so that all parties can know where they stand.
"Even where no objection can be taken to the original nomination on this ground, it is questionable whether the buyer would be entitled to make a substitute nomination where the seller had acted in reliance on the original one. Suppose the buyer nominates a ship for loading on a day early in the shipment period and the seller acts in reliance on the nomination by getting the goods to the docks ready for shipment on that day. If the buyer could with impunity withdraw the ship and nominate another to load on a different day, much later in the shipment period, the seller could be gravely prejudiced: e.g. if he had to pay storage charges, or if the goods deteriorated. It has been suggested that the seller can recover damages for such loss but that the precise legal basis for such a claim is by no means clear; however, this may be clarified by express provision in the contract for the method, and/or the effect, of a substitution."
"Re our conversation, I am telexing to advise that we have been victim of fraudulent misrepresentation by our buyer and consequently cannot perform under our contract. We were advised of this situation by Mr. Geerts, a senior employee of Holdifima, part of a major group who was represented as a major investor of a newly formed company which the Benelux Bank also had a stake and was handling the supply of J.P.I.A. to a major U.S. oil company ..." (p. 543 lhc)
"Even if the above conclusion is wrong, Mr. Hirst has a second string to his bow, namely, he submits that the defendants made a manifestly false nomination of the Giray on Feb. 5 and 7. In using the word "false" he makes it clear that for O. 14 purposes he accepts that the fault lay entirely with the defendants' sub-buyers, but he submits, nonetheless, that this was a nomination manifestly incapable of fulfilment because of the position of the vessel." (p. 544)
" if Mr. Gaisman can establish an arguable case, Mr. Hirst would not be entitled to succeed under O.14 [summary judgment] under this heading. But, in my judgment, Mr. Gaisman's case under this heading also is without substance.
Firstly, I consider that the nomination was manifestly false, though, of course, through no fault of the defendants. Mr. Gaisman accepts that, to use his words, a "Mickey Mouse" nomination would amount to a repudiation; whether or not this particular nomination merits the Walt Disney epithet I need not decide, but I am quite satisfied that it was false in the sense that it could never possibly be fulfilled, and the fact that the parties only discovered this subsequently to the actual making of the nomination I consider to be neither here nor there.
Secondly, the notion of a substitute nomination by Mr. Robinson is on the facts of this case wholly artificial and fanciful, and without any conceivable practical reality, as the telex of Feb. 11 plainly demonstrates.
The Argentinos case [Ampro], dealing with a true and proper nomination of vessel A, which was unfortunately slightly but critically delayed, and then a real, actual and potentially effective substitution of vessel B, is wholly distinguishable on its facts, and, in my judgment, of no assistance in the present context.
As a result, Mr. Hirst would have been entitled to succeed on his alternative case also." (p. 545 lhc)
"It is generally a buyer's duty under a FOB contract to "name the vessel and give shipping instructions in time to enable the seller to send forward the goods so that they can be shipped in accordance with the instructions": Henderson & Glass v Radmore & Co, (1922) 10 Ll L R 727 per Bankes LJ. Subject to any contractual provisions to the contrary, a buyer who has nominated a vessel to load the cargo is entitled to withdraw the nomination and replace it with another, provided that the second nomination is in time to allow the vessel so nominated to fulfil the buyer's contractual obligations and is otherwise in accordance with the contract: Agricultores Federados Argentinos v Ampro SA,  2 Ll L R 157, 167 ." (§ 12)
"Where a nomination which is not in accordance with the contract is followed by one which is in accordance with the contract, the second nomination is good and the seller is bound to load in accordance with it. Thus, where the buyer nominated a ship to load at the wrong port and then (within the shipment period) nominated the same ship to load at the right port the second nomination was held good"
"I think that telegram means: "As we cannot do a deal for the Hernodia at Goole we will send the Hernodia to Hull, Grimsby or Immingham, and load her under the contract there." I do not think it can possibly mean anything so silly as to say: "We are going to tender her at Goole." I do not think it means that. I think it means: "This ship, the Hernodia, which we offer, and ask you to load at Goole, shall come to you for the contract Goole," and the proper answer to that would have been: "Well, which port would you like her to come to, Hull, Grimsby or Immingham?" But the sellers reply: "Regret absolutely impossible now to arrange Hernodia, even against contract. We cannot arrange to load her at Goole independently of the contract, and we cannot arrange to ship at Hull, Grimsby or Immingham under the contract, as the time is too short." I think the arbitrator was right in holding that the tender was not a bad one, but was a good one, and that his award must be confirmed with costs." (p. 346 rhc)
i) Where a contract of sale requires the buyer to nominate a vessel by a particular date (including by stipulating a notice period and a shipment period), then it is (subject to any contrary intention expressed in the contract) a condition of the contract that the buyer provide a valid nomination by the relevant deadline. That is a stipulation as to time in a mercantile contract in relation to which the parties should be taken to have intended time to be of the essence.
ii) Accordingly, if by the latest date on which a valid nomination could be made the buyer has failed to provide one, then there is a breach of condition that will entitle the seller to treat the contract as being at an end.
iii) A valid nomination is one made honestly and on reasonable grounds, and otherwise in accordance with the contract terms.
iv) A valid nomination may be preceded by an initial nomination that is or becomes invalid, because either (a) it is 'non-contractual' in the sense of failing to provide the contractually stipulated notice period, or stating an ETA outside the contractual shipment window, (b) it is not made both honestly and on reasonable grounds, or (c) it becomes invalid due to subsequent events e.g. unforeseeable delays.
v) The giving of the initial invalid nomination is not in itself a breach of condition: no breach of condition occurs provided that a valid and timely nomination is given in due course.
vi) An initial invalid nomination made otherwise than honestly and in good faith (e.g. of a vessel which the buyer knows could not possibly meet the contractual lifting deadline) may evince an intention not to perform the contract, and thus entitle the seller to treat the contract as having been renounced by the buyer.
vii) It is unnecessary to decide in the present case whether, and if so in what circumstances, a prior invalid nomination could amount to a breach of contract sounding in damages, no such claim having been advanced or arising on this appeal.
(D) APPEAL QUESTION 2: OBLIGATION TO NOMINATE A VESSEL ALREADY CHARTERED
(E) APPEAL QUESTION 3/FIRST SECTION 68 ISSUE: OBLIGATION TO PROVIDE COPY CHARTERPARTY
"Were Buyers in breach of contract for nominating a vessel which was unlikely or impossible to arrive at the contractual range of load ports by the ETA given by Buyers."
"If this was a breach of contract then was it a breach of a condition, as argued by Sellers, which entitled them to terminate the Contract?"
"(7) In determining whether there has been substantial injustice, the court is not required to decide for itself what would have happened in the arbitration had there been no irregularity. The applicant does not need to show that the result would necessarily or even probably have been different. What the applicant is required to show is that had he had an opportunity to address the point, the tribunal might well have reached a different view and produced a significantly different outcome."
(F) SECOND SECTION 68 ISSUE: CUMULATIVE EFFECT OF BREACHES
"It is unclear that the tribunal reached a decision on this point. If they did and concluded that the conduct of the Buyer was not repudiatory that was a decision of mixed fact and law and does not appear to be obviously wrong."
i) the nomination of the Tai Hunter was, the Board found, invalid because the ETA was overly ambitious and the nomination was not made on reasonable grounds: however, the Board found that the Buyers still had ample time to make a valid nomination (and in due course did so);
ii) the initial nomination of the Tai Hunter failed, it appears, to state the name of that vessel's owners: however, that failure was of no consequence because the Tai Hunter nomination could still be (and was) replaced;
iii) there was no finding of breach in relation to the allegation that the Tai Hunter had not been fixed, by the date of its nomination, by the Buyers or their sub-buyers; and
iv) the Board found the Buyers' failure to provide a copy of the charterparty relating to the Tai Hunter at the Sellers' first request to be a breach of contract: however, that failure was also of no consequence for the same reason as indicated in (ii) above.
"The bar which must be cleared before there is an entitlement in the innocent party to treat himself as discharged is a "high" one. A number of expressions have been used to describe the circumstances that warrant discharge, the most common being that the breach must "go to the root of the contract". It has also been said that the breach must "affect the very substance of the contract", or "frustrate the commercial purpose of the venture", and, at the present day, a test which is frequently applied is that stated by Diplock L.J. in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [ 2 QB 260]:
"Does the occurrence of the event deprive the party who has further undertakings to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?"" (footnotes omitted)
(G) APPEAL QUESTIONS 4 AND 5: INTEREST
i) Interest is awarded not to punish the defendant but to compensate the claimant for being kept out of the money it is owed: BP Exploration Co (Libya) Ltd v Hunt (No. 2)  1 WLR 783, 845-846.
ii) The basic rule is that interest is awarded from the date of loss: Kuwait Airways v Kuwait Insurance  Ll. Rep IR 678, 685-686 (where the learned judge goes on to cite three main exceptions to this rule, all of which involve payment from a later date than the date of loss).
iii) Here, the Buyers have not been kept out of their money until the Board's decision becomes unappealable, and certainly not since 4 April 2018. Under § 3(a) of the Settlement Agreement (quoted in § 14 above), the Sellers did not become due to make any payment to the Buyers until their "first request" following the arbitration award becoming final and unappealable. That time has not yet arrived. Accordingly, no interest should have been awarded.