UK: Does Short Notice Of Nominated Vessels’ ETA Invalidate The Notice?

Last Updated: 17 December 2011
Article by Stuart Shepherd and Katy Hanks

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

The background facts

This was an appeal by the Sellers (Thai Maparn Trading) under S. 69 Arbitration Act 1996 (error of law) against two arbitration awards issued by the GAFTA Board of Appeal.

The dispute arose out of two FOB contracts for the sale of rice based on GAFTA Form 120. In both cases, the GAFTA Board had upheld the first tier GAFTA awards that the Sellers (Claimants in the appeal) had repudiated the contracts by making it clear to the Buyers (Louis Dreyfus, Defendants in the appeal) that they did not and would not have cargo available to meet the vessel nominated in each case by the Buyers. The GAFTA Board held that these repudiations amounted to a default under Clause 23 of GAFTA 120 and that the Buyers were, therefore, entitled to damages assessed as at the date of the Sellers' default. In both cases, the Sellers had tried (and failed) to argue that the Buyers had given short notice of the arrival of the vessel, which was non-contractual, thus entitling the Sellers to reject the nominations.

The contractual provisions

Both contracts stipulated loading terms that required the Buyers to give a minimum of 7 working days written pre-advice of the vessel's ETA and for NOR to be tendered in writing during normal business hours. The relevant terms of GAFTA 120, as incorporated into each of the two contracts, provided as follows:

  • The Buyers were to serve not less than a certain number of consecutive days notice of the name and probable readiness date of the vessel and the estimated tonnage required. Provided that the vessel was presented at the loading port in readiness to load within the delivery period, the Sellers should, if necessary, complete loading after the delivery period. Any notice received after 16.00 hours on a business day would be deemed to have been received on the business day following (Clause 6 - Nomination of vessel).
  • Notification of the vessel's readiness to load at the port of loading was to be served on the Sellers at their office at the port between certain specified hours (Clause 10 - Loading).
  • If either party defaulted in fulfilling the contract, the damages payable were to be based on, but not limited to, the difference between the contract price and either (a) the default price obtained by the innocent party by selling to or purchasing from an alternative supplier; or (b) the actual or estimated value of the goods on the default date (Clause 23(c) - Default).

The findings of the GAFTA Boards of Appeal

In each case, the Buyers nominated the vessels under the contracts, at the same time giving their written pre-advice of the vessels' ETAs, but then called on the Sellers to bring the cargo alongside the vessels on dates that were before the requisite 7 working days notice periods would expire. However, the nominations of the vessels were valid in all other material respects.

In response to the nominations, the Sellers responded with messages that stated, in respect of the first cargo, "we are not ready with cargo and printed bags, and hence, we cannot accept your above nomination" and, in respect of the second cargo, "we regret, with due respect, due to unavailability of goods and printed bags, we cannot accept [your nomination]". In neither case did the Sellers state that their rejection of the nomination was because they regarded the nomination itself as invalid.

The Boards of Appeal held that the short notice in both cases was insufficient to entitle the Sellers to reject the nominations, since they could instead have simply accepted the vessels when the 7 working day periods expired.

Against this background, the GAFTA Boards held that the Sellers' responses to the Buyers' nominations and pre-advice of ETAs were in anticipatory repudiatory breach of contract, entitling the Buyers to accept the repudiation and bring the contracts to an end. The arbitrators took the day after the date of the Sellers' message that constituted repudiation in the case of each contract as the default date for the purposes of calculating damages.

The Sellers appealed to the Court.

The Commercial Court decision

Mr Justice Beatson disagreed with the Sellers' counsel that the contractual requirement of "minimum 7 working days written" prior notice of the nominated vessels' ETA was a condition precedent to the Sellers' obligation to provide and load the cargo. He also rejected the contention that the short notices were invalid and of no effect, because this would wrongly assume that the obligation in the contracts to provide the cargo after the tender of valid NOR depended on 7 days notice of the vessels' ETA. In fact, the notice of ETA was only an estimated time of arrival and the vessel might well arrive before the expiry of the period stated even if at the time it was given it was anticipated that she would arrive more than 7 days later.

So far as triggering the obligation to load the cargo - and for the purposes of laytime and demurrage - time would, prima facie, start to run when the NOR was given because it was the NOR that triggered the obligation to load and the running of laytime. However, as the Boards found, on a proper construction of the contract the obligation to load and the running of laytime would not commence on the date of the NOR if the NOR was tendered before the expiry of 7 days from the nomination, because the Sellers were entitled to be given 7 days notice to have the cargo available for loading. In such case, time would begin to run from expiry of 7 days after the notice.

The judge distinguished this matter from Bunge v. Tradax [1981] UKHL 11 because there 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 in that case would have ended after the last contractual date of shipment.

The judge saw no reason to criticise the GAFTA Board's findings that the Sellers' messages were repudiatory, based on the evidence before them. Regarding the date of default, the judge referred to Toprak v. Finagrain [1979] 2 Lloyd's Rep 98, where it was held that the date of default in an equivalent GAFTA default clause was the date of the breach and not the date on which the breach was accepted as repudiatory by the other party. He rejected the argument that, as long as the contracts remained open for performance because the Buyers had not stated they were treating the contracts as repudiated, then only nominal damages were claimable.


This case illustrates that the courts will look at the substantive purpose of the obligations to give notice of nominations and will not permit technical points to be used to invalidate otherwise valid nominations. It also offers a lesson that when responding to such notices, whether valid or not, the receiving party needs to choose its words extremely carefully so as not to appear to be itself refusing to perform the contract – and thereby risk putting itself in default.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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