Thai Maparn Trading Co Ltd v Louis Drefyus Commodities Asia Pte Ltd [2011] EWHC 2494 (Comm)

[2011] EWHC 2494 (Comm)

Case No 2010 FOLIO 1089

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 04/10/2011

Before

THE HONOURABLE MR JUSTICE BEATSON

Between

Thai Maparn Trading Co LtdClaimant

Louis Drefyus Commodities Asia Pte LtdDefendant

Timothy Young QC (instructed by Elborne Mitchell LLP) for Claimant

Philip Edey QC (instructed by Hill Dickinson) for Defendant

Hearing Hearing date: 14 September 2011

Judgment

[1]These are appeals under section 69 of the Arbitration Act 1996 (“the 1996 Act”) against arbitration awards Nos. 4188 and 4196 of the Board of Appeal of the Grain and Feed Trade Association Ltd (“GAFTA”), both dated 19th August 2010.

[2]Both awards (by identically constituted Boards) concern contracts for the sale of rice FOB Bangkok/Kohsichang based on GAFTA form 120. In both, the Board upheld the respective first tier awards (made respectively on 24 July and 13 August 2009) that the Claimant, as FOB seller (the “sellers”) repudiated the contract by making it clear to the Defendant (the “buyers”) that they did not and would not have cargo available to meet the vessel nominated in each case by the buyers. It was held that such repudiation was a “default” for the purposes of clause 23 of GAFTA 120; and that the buyers were therefore entitled to damages assessed as at the date of such default pursuant to clause 23. The commercial background is that, at the material times, the price of rice was rising and was higher than the contract price.

[3]In the case of both awards, the sellers’ case before the arbitrators was that the buyers had inter alia failed to serve Notice of Readiness on the sellers, to confirm the quantity to be loaded as required by the contract, given short notice of the arrival of the vessel which the sellers were entitled to regard as non-contractual, and that the nomination was a sham because there was no intention that the sellers’ cargo would be loaded on the vessel nominated: paragraph 5 of each of the awards.

[4]In the case of each award, the grounds of appeal identify three questions of law on which Mr. Young QC, on behalf of the sellers, submitted the Board erred. The first two questions (concerning liability) arise in both awards. There is a difference in the third question (concerning quantum) which results from factual differences concerning the date on which it is said the buyers accepted the sellers’ default.

[5]The first two questions are:- “(a) Where an FOB contract expressly requires a buyer to give a vessel nomination notice a specified period of time before the vessel’s estimated time of arrival (or readiness to load), is the seller entitled to reject (or not accept) a notice as given by that buyer which contains an uncontractual shorter period of notice? (b) Is the seller in repudiation or renunciation of contract where, in receipt of an uncontractually short period of notice, he rejects that notice and says that he does not have cargo to meet the vessel as thus nominated to load on an uncontractual date?”

[6]In both cases the third question is premised on the assumption that the sellers wrongly rejected the nomination notice, and relates to whether the sellers’ liability is for substantial damages, as the Boards held, or only for nominal damages, because the buyers did not accept the sellers’ renunciation in the case of award 4188 until after end of the shipment period, and in the case of award 4196 until the last date of the shipment period. (c 1) In the case of award No 4188 the question is: Where a seller wrongly rejects such a nomination notice but the buyer neither accepts that rejection as terminating the contract before the end of the shipment period nor secures the lifting vessel’s presentation to load within that period, is the seller in repudiation of the contract so as to generate a liability in damages (calculated by reference to the time of the wrongful rejection)? (c 2)In the case of award No 4196 it is: Where a seller wrongly rejects such a notice but the buyer does not accept that rejection as a repudiation or present a vessel for loading at or about the time specified in the notice, or thereafter give any notice advising a fresh time of readiness to load of a vessel either at all or by 7 working days prior to the end of the contractual shipment period, is the seller liable for the repudiation or renunciation of the contract so as to generate a liability in substantial damages (calculated by reference to the time of the rejection of the notice as given)?

The contracts

[7]The contracts were on materially the same terms save for the shipment period: see paragraph 3 of both awards. In the first contract (the subject of award 4188) it was 1 February 2008 – 31 March 2008. In the second contract (the subject of award 4196) it was 1 March 2008 – 30 April 2008.

[8]The other relevant terms are:

“Quantity: Exact quantity to be declared on Buyers nomination of vessel. Partial shipment/cargo/part cargo allowed at buyers’ option Loading terms: Buyer to give minimum 7 (seven) working days written pre-advise [sic] of vessel’s ETA. Notice of Readiness (NOR) tenderable in writing between the normal business hours… … Governing contract(s) All other terms and conditions as per GAFTA 120 where not in conflict with terms contained herein …”

Notice of Readiness (NOR) tenderable in writing between the normal business hours…

[9]The relevant clauses of GAFTA 120 are:

“PERIOD OF DELIVERY ... 6…Nomination of vessel – Buyers shall serve not less than…..consecutive day’s (sic) notice of the name and probable readiness date of the vessel and the estimated tonnage required…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 … 10. LOADING … Notification of the vessel’s readiness to load at the port of loading shall be served on sellers at their office at the port between [specified hours]. … Any time lost at Port of Loading through riots, strikes or any cause whatsoever beyond Seller’s control, not to count as laytime. … 21 NOTICES … For the purposes of serving notices in a string, any notice received after 16:00 hours on a business day shall be deemed to have been received on the business day following. … 23. DEFAULT – In default of fulfillment of contract by either party, the following provisions shall apply:- (a) The party other than the defaulter shall, at their discretion, have the right, after serving notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages payable shall be based on, but not limited to, the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods, on the date of default, established under (b) above. …” (a) The party other than the defaulter shall, at their discretion, have the right, after serving notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price. (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration. (c) The damages payable shall be based on, but not limited to, the difference between the contract price and either the default price established under (a) above or upon the actual or estimated value of the goods, on the date of default, established under (b) above. …”

The findings of the Boards of Appeal:

[10]The material findings of fact in the two awards are, with the exception of the date on which the buyers accepted the sellers’ renunciation, very similar. So are the questions in the grounds of appeal and the submissions. It is therefore convenient to set out the findings of fact and law in each award and then to consider the parties’ submissions together. Unless otherwise stated, paragraph references are to the award under consideration. (1). Award 4188

[11]Award 4188contains the following findings:(a) On Friday 7 March 2008 the buyers nominated MV Med Salvador or substitute to the Sellers to load 17,500 mts in complete fulfillment of the contract and gave an estimated time of arrival at Kohsichang of 11 March, saying that they expected the sellers to bring the cargo alongside latest 17 March: paragraph 4.1.

(b) “Counting the seven days pre-advice requirement under the Contract [i.e. “7 working days”], effectively meant the vessel could not be contractually nominated to load until 19 March. Buyers had therefore failed to give the requisite seven working days notice of the vessel”: paragraph 8.14.

(c) The buyers’ breach “was not considered enough for the nomination to be rejected”; “both parties agreed this was an issue of warranty rather than of condition”. “Sellers did not have to abide by the short notice of vessel as they were entitled to the seven working days before their obligation to load commenced”, they were thus “protected by the contract”, and “in other words Buyers’ breach of serving the required notice period was remediable at no cost to Sellers as they only had to accept the vessel as per contract from 19 March”: paragraph 8.15.

(d) The buyers “had fulfilled their obligation in declaring the exact weight of the goods to be loaded …. in complete fulfillment of contract in their nomination of MV Med Salvador … [and] … duly met their contractual obligation in terms of tonnage to be loaded”: paragraph 8.16.

(e) “The Buyer’s nomination of vessel [contained] all the information it was required to under the Contract” and the notice sent on 7 March was “valid and contractual”: paragraph 8.17.

(f) “On 13 March Sellers sent the following message to Buyers: ‘[Thanks] for [your] fax dated March 07, 2008 … wish to advise you that as we are not ready with cargo and printed bags, and hence, we cannot accept your above nomination’”: paragraph 4.2.

(g) The Sellers’ words were clear: they said they could not accept the nomination “as they were not ready with cargo and printed bags”: paragraph 8.19. There was no mention of the nomination being invalid due to the short notice or that the Sellers suspected the nomination to be a sham: paragraph 8.19.

(h) Since “the words used were both comprehensive and unambiguous in that the cargo and printed bags were unavailable to meet the vessel” and “the nomination notice was valid”, the Sellers “were obliged to accept it, albeit only as from 19 March”, and as they did not because they were not ready with cargo and printed bags “they were in anticipatory breach of contract entitling Buyers to accept this repudiation as bringing the Contract to an end”: paragraph 8.20.

(i) Since the nomination gave an ETA at Kohsichang on 11 March although the cargo was not called for until 17 March the Sellers were “aware that the vessel would probably start loading on arrival by other suppliers before Sellers were due to present their cargo” and “there was still time to supply the missing information and NOR”: paragraph 8.25.

(j) On 18 March the buyers responded to the Sellers’ message of 13 March, stating: “… Our nomination was made on 7 March and we provided you with the contractually required pre-advice period. We clearly advised you in our nomination that cargo had to be alongside latest March 17. If you do not provide cargo as contracted we will have to seriously consider our contractual position. Please urgently provide us with your expected loading program …”:paragraph 4.3.

(k) There is no finding in the award that anything (such as that the nominated vessel either tendered Notice of Readiness or presented for loading) happened between 18 and 31 March, the end of the shipment period.

(l) On 8 April, the buyers accepted the Sellers’ message of 13 March as being in repudiation of the Contract: paragraph 4.4.

(m) The date of the Sellers’ breach was 13 March, the date the Sellers’ repudiation message was sent, and the default date was 14 March, the following business day: paragraph 8.26. Damages were accordingly calculated by reference to that default date: paragraph 8.28. (2). Award 4196

[12]Award 4196contains the following findings:(a) On Wednesday 19 March 2008 the buyers nominated MV Goa or substitute to the Sellers to load 4,000 mts against the contract. They advised the vessel was already at Kohsichang and that she would be ready to load on 27 March: paragraph 4.1.

(b) As the buyers’ nomination was timed at 5:57pm, by clause 21 of GAFTA 120, it was deemed to have been received by the Sellers on the next business day. Counting the “7 working days” pre-advice requirement under the contract, “effectively meant that the vessel could not be contractually nominated to load until 31 March” and the “Buyers therefore failed to give the requisite seven working days notice of the vessel”: paragraph 8.11.

(c) The buyers’ breach “was not considered enough for the nomination to be rejected”; “both parties agreed this was an issue of warranty rather than a condition precedent”. “Sellers did not have to abide by the short notice of vessel as they were entitled to the seven working days before their obligation to load commenced”, they were thus “protected by the contract”, and “in other words Buyers’ breach of serving the full notice period was remedied [(sic)] at no cost to Sellers as they only had to accept the vessel as per contract from 31 March”: paragraph 8.12.

(d) The buyers “had fulfilled their obligation in declaring the exact weight of the goods to be loaded” in their nomination of MV Goa “and therefore … duly met their contractual obligation in terms of tonnage to be loaded: paragraph 8.13.

(e) The buyers’ “nomination of vessel [contained] all the information it was required to under the Contract” and the notice sent on 19 March was “valid and contractual”: paragraph 8.15.

(f) Since the nomination stated the vessel was already at Kohsichang and gave its dead weight, sellers were aware of the vessel’s arrival at the load port and that it was probably loading other cargo: paragraph 8.22.

(g) “On 20 March Sellers sent the following message to Buyers: [Thanks] for [your] below mail n nomination of MV ‘Goa’ to load 4000 M/Tons … [Thai rice] … but we regret, with due respect, due to unavailability of goods and printed bags, we cannot accept [your nomination] of [vessel]” “We thank [you] in anticipation for [your] good understandings”: paragraph 4.2.

(h) The Sellers’ words were clear: “they said they could not accept the nomination … due to unavailability of goods and printed bags”: paragraph 8.17. There was no mention of the nomination being invalid due to the short notice or that the Sellers suspected the nomination to be a sham or advice as to when the cargo was to be available: paragraph 8.18.

(i) Since “the words used were both comprehensive and unambiguous in that the cargo and printed bags were unavailable to meet the MV Goa” and “the nomination notice was valid”, the Sellers “were obliged to accept it, albeit as from 31 March” and, as they did not because the cargo and printed bags were unavailable, “they were in anticipatory breach of contract entitling Buyers to accept this repudiation as bringing the Contract to an end”: paragraph 8.18.

(j) There was no evidence of any further communication thereafter between the parties before 30 April, the last day of the contract shipment period: paragraph 8.20. There is no finding that a further notice was sent 7 working days before 30th April or that the nominated vessel either tendered Notice of Readiness or presented for loading on or by 30 April.

(k) On 30 April the buyers responded to the Sellers’ email of 20 March stating: “… We hereby advise you that we accept that message [the email of 20 March] as your intention to default against the contract…”: paragraph 4.3.

(l) Since the Sellers’ email of 20 March was sent at 9:14pm, the date of Sellers’ breach was 21 March, and the default date was 24 March, the following business day: paragraph 8.23. Damages were accordingly calculated by reference to that default date: paragraph 8. 25

Discussion

[13]Mr. Young submitted that the conclusions of the Board that the sellers were in default on 14 March (award 4188) and 24 March (award 4196) were, on the findings of fact, “impossible conclusion[s] in law and can only have resulted from … misdirection[s] in law”: grounds of application and appeal, paragraph 3. His starting point was that the requirement in the contracts that “minimum 7 working days written” prior notice of the nominated vessels’ ETA was materially indistinguishable from time requirements in the clauses (in GAFTA forms 119 and 79A) considered by the House of Lords in Bunge Corp.. New York v Tradax Export SA, Panama [1981] 1 W.L.R. 711 and by the Court of Appeal in Cargill UK Ltd. v Continental UK Ltd. [1989] 2 Lloyd’s Rep. 290. The time requirements in those cases were held to be conditions, the breach of which entitled the sellers, in the first case to terminate the contract, and, in the second, to reject the vessel’s Notice of Readiness.

[14]Before the arbitration the sellers appear to have in fact argued that the “minimum 7 working days written” prior notice of the nominated vessel’s ETA requirements were warranties. This is stated in award 4196 and is a matter of inference in award 4188. Mr. Young stated that, in the present case, the issue of whether the prior notice requirement was or was not a condition did not arise because the sellers did not treat the buyers’ giving short notice as terminating the contracts. But, notwithstanding some tension with the position taken by the sellers in the arbitrations, he argued that Bunge v Tradax andCargill v Continental show the court will require precise compliance with stipulations as to time because of the need for certainty in commercial contracts, and that there should not be a different approach to the question which arises in the case of these two awards. That question is whether the notices as given by the buyers were or were not contractually valid notices.

[15]In the light of the findings of fact made by the Boards, Mr. Young submitted they erred in law in concluding (award 4188, paragraph 8.20; award 4196, paragraph 8.18) that the notices were valid and the sellers were obliged to accept them and prepare for loading the vessels. He argued this was so because, absent 7 working days’ notice, the notices were incapable of operation so as to generate any contractual obligation on the sellers to load or make preparations to load. Accordingly, the sellers were entitled to treat the notices relied upon by the buyers as invalid, and to reject them. Rejection of an invalid notice cannot be a breach of contract, let alone a repudiation or renunciation of it, as the Boards held. He submitted that, in effect, the Boards permitted the buyers to rely on their own breaches to generate an obligation on the sellers to have goods ready to load. He also submitted the Boards erred in law in finding in the two awards that the notices should be treated as requiring the dates of 19 rather than 17 March (award 4188) and 31 rather than 27 March (award 4196), and that this protected the sellers.

[16]The second limb of Mr. Young’s submissions proceeded on the basis that logically the rejection of an invalid notice could be renunciatory where the rejecting party makes it clear that it will not perform even if a valid notice is later given. He, however, argued that, in the case of these two awards, the Boards reached conclusions which no reasonable Board properly directed as to the law could reach. They were, to borrow language used in public law contexts, Wednesbury unreasonable. On the basis of The Hermosa [1982] 1 Lloyd’s Rep. 570, 572-3 and “The Pro Victor”

[2009] EWHC 2974 (Comm)

[2010] 2 Lloyd’s Rep. 158 the findings in the Boards’ conclusions in the two awards that the sellers’ messages of 13 and 20 March were “clear and unequivocal” in repudiating the contracts are, he submitted, unsustainable. In The Hermosa Donaldson LJ stated that “dissolution of a contract upon the basis of renunciation is a drastic conclusion which should only be held to arise in clear cases of a refusal to perform contractual obligations”, and “the refusal must not only be clear but absolute”. Mr. Young submitted that the messages in the present cases plainly did not say that the sellers would not have cargo available at any time within the respective contract shipment periods. They were expressly referable to the buyers’ notices and said only that the sellers wished to advise the buyers that they could not accept the nomination, as they did not have cargo and bags ready for the dates stipulated by the buyers; i.e. 17 and 27 March.

[17]The third limb of Mr. Young’s submissions was that, even if the rejection of the notices in these two cases was clearly renunciatory, in view of the communications on 8 April (award 4188) and 30 April (award 4196) the Boards erred in law in concluding that the buyers’ damages were to be assessed by reference to the dates of the sellers’ renunciations, that is on 13 or 14 March (award 4188) and 20 or 24 March (award 4196). On those dates (see The Simona [1989] A.C. 788) the contracts and the obligations under them remained alive and to be performed by both parties. Those obligations included the buyers’ obligations to tender a Notice of Readiness and to present the nominated vessel at a berth in order to load. There is no finding in award 4188 that the buyers presented a vessel for loading or gave Notice of Readiness within the shipment period or at all. In the case of award 4196 there is no finding that a fresh notice was given seven working days prior to the end of the shipment period. Mr. Young submitted that damages should have been assessed by reference to the dates on which the buyers accepted the sellers’ renunciations. But by that time, in the case of award 4188 the shipment period had ended and, in the case of award 4196, it was no longer possible to give the required “minimum 7 working days written” prior notice of the nominated vessel’s ETA. The result was that only nominal damages should have been awarded.

[18]There is no need for me to deal with the submission of Mr. Edey QC, on behalf of the buyers, that contrary to the Boards’ findings, the short notices of ETA in these cases were not breaches of the contract. He accepted that this was ultimately irrelevant because the Boards rightly held that, even if the short notices were breaches, the sellers’ response to them and their subsequent conduct were still capable, as a matter of law, of constituting a renunciation of the contract and did so in both these cases.

[19]I have concluded that, notwithstanding the force of Mr. Young’s submissions, the sellers’ appeals should be dismissed in respect of both liability and quantum. I reject the contention that the short notices were invalid and of no effect. As Mr. Edey submitted, this assumes that the obligation in the contracts to provide the cargo after the tender of valid Notice of Readiness depends on seven days notice of the vessels’ ETAs. But the notice of ETA is of an “estimated” time of arrival. It is conceivable that the vessel will in fact arrive before the expiry of the period stated in that notice. Time would start to run when Notice of Readiness is given. There is nothing in the contracts which suggests that the obligation to provide a cargo after tender of a valid Notice of Readiness (triggering the running of laytime) is dependant on first serving a notice giving 7 working days’ notice of ETA. Indeed, clauses 6 and 10 of GAFTA 120 indicate that laytime starts to run from the Notice of Readiness provided it is given within the delivery period, and subject only to the specified exceptions. Seven working days’ notice of ETA is not one of those exceptions. The effect of clauses 6 and 10 is that the sellers would be protected if the vessel was presented without the requisite notice and the sellers do not have cargo because, as the Boards found, laytime would not run after Notice of Readiness was tendered until the expiry of seven days after the notice.

[20]The buyers also relied on the fact that clause 2 of GAFTA 120, which did not apply to these contracts, provides that “… [t]he quantity required to be declared 2 days before commencement of loading” because if a feature of the GAFTA 120 scheme is the required quantity of cargo need only be finally stated by the buyers 2 days before commencement of loading, it would be surprising to find that the giving of a notice with an ETA less than 7 working days away relieved the sellers of any obligations under the contract. While this provides some indirect support for their submissions, the fact that clause 2 was disapplied in these contracts, means that the significance of that support is limited.

[21]Secondly, the cases on which Mr. Young relied do not assist the sellers. In Bunge v Tradax the breach consisted not of giving less than the requisite number of days’ notice but of giving notice after the last date on which it could legitimately be given because the required 15 days notice would have ended after the last possible date for shipment: see the finding in the Court of Appeal, [1980] 1 Lloyd’s Rep.294 at 301, which was not challenged in the House of Lords. In Cargill v Continental the notice in respect of the substitute vessel was too late given the end of the shipment period and not merely too short. Moreover, (see [1989] 2 Lloyd’s Rep. 290, 294, 295) it was a term of the contract that if the requisite notice was not given, Notice of Readiness could not be tendered.

[22]I also note that to regard the giving of full notice as a condition precedent to the sellers’ obligation to provide and load the cargo is not consistent with the approach in the commentaries on charterparties: see, Cooke, Young, Taylor and others, Voyage Charters (3rd ed.,) §4.19 in relation to short or absent notices of ETA in the context of voyage charters, and Coghlin, Baker, Kenny and Kimball, Time Charters (6th ed., 2008) §§7.19, 7.20 and 15.14 in relation to notices of estimated time of delivery and redelivery. See also, Schofield, Laytime and Demurrage (6th ed., 2011) §§3.255 and 3.258 and Davies, Commencement of Laytime (4th ed., 2006) §131. I accept Mr. Edey’s submission that there is no reason why the position should be different in the present context.

[23]As far as liability is concerned, in view of my conclusion on the nature of the obligation to give notice of the vessel’s ETA, it is not necessary to reach decisions on the other matters relied on by Mr. Young. In particular, he submitted that in the light of Glencore v LORICO [1997] 2 Lloyd’s Rep. 386 the sellers did not have to give a legally correct reason for the rejection: it sufficed that there was in fact such a reason. He also submitted that the conclusions of the Boards that the sellers’ messages of 13 and 20 March constituted clear and unequivocal repudiations of the respective contracts were legally unsustainable.

[24]Leaving aside the fact that the first point was not one raised by the sellers before the Boards, the difficulty with it is that the general principle that a party can later rely on a good point not expressed at the time does not apply where the point which the party fails to identify at the time is one which, had it been identified, could have been put right: see Heisler v Anglo-DalLtd [1954] 2 Lloyd’s Rep.5, at 11. In Glencore v LORICO the Heisler proviso to the general principle did not apply because (see 395) the time for the performance of the buyers’ letter of credit obligation had passed. But in both the cases before me the buyer could have remedied the defect by furnishing a new notice of ETA within the shipment period. In the case of award 4188 that ended 24 days after the short notice. In the case of award 4196 it ended over a month after the short notice.

[25]What of the submission that the findings that the messages of 13 and 20 March constituted clear and unequivocal repudiations of the respective contracts are unsustainable? While bearing in mind Donalson LJ’s observations in The Hermosa as to the approach to whether conduct constitutes a repudiation of a contract, I incline to the view that, in the light of the evidence before the Boards and their findings of fact, it cannot be said that these findings were legally unsustainable and that no reasonable tribunal could have made them. See in particular the Boards’ findings that the sellers gave no indication that the problem was that the notice was short, or as to when cargo would be available: award 4188, paragraphs 8.19 - 8.20; award 4196, paragraphs 8.17-8.18. I also take into account the findings as to market conditions and the evidence that led the Boards to conclude that sellers knew that buyers would be loading other cargos before the sellers’ cargos. In all these circumstances I consider that it was open to experienced GAFTA Boards of Appeal to conclude that the sellers’ messages were repudiatory. There is in addition, in the case of award 4188, the sellers’ failure to respond to the buyers’ message of 18 March asking for their loading programme, and, in the case of award 4196, the sellers’ statement in their message of 20 March thanking the buyers “in anticipation for [your] good understandings”. The Boards were entitled to take those matters into account.

[26]Mr. Young accepted that if he was wrong on the effect of short service of the vessels’ ETAs, he was also wrong on quantum. Accordingly, this issue also does not fall for decision. As I heard full submissions, I shall, however, deal with it. The position is governed by clause 23 of GAFTA 120 rather than common law principles. Clause 23 provides that damages are to be assessed as “the difference between the contract price and ... the actual or estimated value of the goods, on the date of default...”.

[27]In both cases the Boards held the “date of default” to be the business day after the sellers’ repudiatory messages; that is respectively 14 and 24 March: award 4188, paragraph 8.26; award 4196, paragraph 8.23. Mr. Young submitted that the contracts remained open for performance until the buyers accepted the sellers’ repudiation, and that the date of that acceptance is therefore the date of default. It followed, he argued, that, since in award 4188, that date was after the end of the shipment period, and in award 4196 it was the last day of the shipment period, and the buyers had not tendered Notice of Readiness at all or, in award 4196, provided written advice of ETA within seven days of the end of the shipment period, only nominal damages could be awarded. This argument is, however, not consistent with the decision in Toprak v Finagrain [1979] 2 Lloyd’s Rep.98.

[28]In Toprak v Finagrain the “date of default” in an equivalent GAFTA default clause, clause 28 of GAFTA 27, was held to mean the date of the breach not the date on which such breach is accepted as repudiatory by the other party. Both at first instance and in the Court of Appeal it was clear that the reason in that case that a later date was taken on the particular facts of that case was because the buyer in default had sought and obtained an indulgence from the innocent sellers: see Robert Goff J at 110, Lord Denning MR at 115 and Roskill LJ at 116-117. Robert Goff J (whose judgment was described by Roskill LJ as “admirable”) stated (at 109) that subsequent actions of the parties may have some effect upon their respective rights”, and gave the examples of an agreed postponement of the contractual date for performance, estoppel, and forbearance. But he distinguished those scenarios from the position where the innocent party does not immediately treat the other party as in default, but decides to wait for a time, and while he waits the contract remains open to performance. He stated that “the mere fact that he waits, and does not treat the other party as in default until a later date, does not mean that, for the purposes of [clause 28 of GAFTA 27] the ‘date of default’ is changed; that date remains the day when the time for performance came and went without due performance”.

[29]Mr. Young’s acceptance that, if he was wrong on the effect of short service of the vessels’ ETAs, he was also wrong on quantum also means his submissions about the distinct position in relation to award 4196 fall away. He submitted that any damages should be nominal because the buyers did not present the nominated vessel for loading either when they estimated, in their original notice, they would or 7 working days’ after that notice. But, in the light of my earlier conclusions (see [16]) it would have been open to the buyers to tender Notice of Readiness on 30h April rather than terminating the contract.

Conclusion

[30]For the reasons I have given, the appeals against the two awards are dismissed.