Finco International AG v Integra Petrochemicals Europe AG - Contract Dispute

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  Finco International AG v Integra Petrochemicals Europe AG [2026] EWHC 727 (Comm) (27 March 2026)

URL: https://www.bailii.org/ew/cases/EWHC/Comm/2026/727.html
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[2026] EWHC 727 (Comm) | | |
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| | | Neutral Citation Number: [2026] EWHC 727 (Comm) |
| | | Case No: LM-2025-000007 |
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT

| | | Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL |
| | | 27 March 2026 |
B e f o r e :

Stephen Midwinter KC sitting as a Deputy High Court Judge

Between:
| | FINCO INTERNATIONAL AG | Claimant |
| | - and ? | |
| | INTEGRA PETROCHEMICALS EUROPE AG | Defendant |

**Oliver Caplin KC and Isabelle Winstanley (instructed by HFW LLP) for the Claimant
Steven Berry KC and John Robb (instructed by Hannaford Turner LLP) for the Defendant

Hearing dates: 9 ? 12 March 2026**

HTML VERSION OF JUDGMENT ____________________

Crown Copyright ©

1. Stephen Midwinter KC sitting as a Deputy High Court Judge:
3. Introduction
4. On 4 October 2023 the Claimant (" FinCo ") and the Defendant (" Integra ") entered into a contract whereby Integra agreed to sell and FinCo agreed to buy a cargo of 10kt of methyl tertbutyl ether (" MTBE "). The agreed contract terms were set out in an email 'recap' that incorporated v.1.2 of the BP Oil International Limited General Terms and Conditions for Sales and Purchases of Crude Oil and Petroleum Products (the " BP GTCs ").
6. The contract terms as initially agreed included " Delivery dates: 10 - 24 November 2023 " and provided for " Delivery: DES ARA ". "DES" is short for "delivery ex ship" and "ARA" means "Amsterdam, Rotterdam, Antwerp". On 6 October 2023 the delivery term was amended by agreement so as to provide for " Delivery: CIF ARA ". "CIF" is short for "cost insurance freight".
8. On 5 October 2023, Integra sent notice by email nominating the M/T Aramon as the performing vessel under the contract. FinCo responded to that notice in terms indicating a concern that the vessel would not 'fit' at the jetties at the discharge terminal that FinCo (or rather its onward customer) wished to use. Integra responded by agreeing to check whether a smaller vessel was available but on 9 October 2023 confirmed that that was not the case. There is a dispute between the parties as to whether FinCo's responses to the nomination of the Aramon amounted to a valid rejection of the nomination.
10. Further communications were exchanged between the parties over the period 10 ? 13 October 2023 during which FinCo identified the intended discharge terminal as "GES" (i.e. "Global Energy Storage") in Amsterdam and options were discussed for discharging the MTBE from the Aramon at the GES terminal using barges or at a different terminal in Amsterdam from which it could be moved to the GES terminal by onshore pipe or other means. The legal effect of those communications is disputed. (There is also a factual dispute as to whether a telephone call took place on 10 October 2023).
12. The MTBE was loaded on to the Aramon at the loading port in the Persian Gulf on 24 October 2023. A bill of lading was issued with FinCo named as the notify party. The estimated date for arrival at ARA at the time of loading was around 17 November 2023.
14. FinCo wrote to Integra from time to time asking for updates on loading and on the estimated arrival of the Aramon at ARA. Integra responded to those requests. There were also emails exchanged concerning arrangements for nominating barges to be used to discharge the MTBE in Amsterdam.
16. On 22 November 2023, Integra informed FinCo that the Aramon 's ETA at ARA was now 27 November 2023. (The date had slipped due to a delay during a previous stop at Barcelona).
18. On 25 November 2023, FinCo sent an email to Integra purporting to terminate the contract on the grounds that Integra " has not given a valid nomination of a Vessel capable of discharging at the Discharge Terminal within the discharge window of 10-24 November 2023." Integra did not accept that termination.
20. The Aramon arrived at ARA on 27 November 2023 and purported to tender a notice of readiness (" NOR ").
22. On 4 December 2023, Integra demanded and was paid the contract price of US$11,395,070.96 under the standby letter of credit that had been provided to it by FinCo.
24. FinCo maintained the position that the contract had been terminated and that Integra had no entitlement to the price. On 14 December 2023, Integra sold the MTBE to a third party in the market at a price of US$9,588,323.57. After deducting certain costs of sales, Integra paid FinCo the balance of US$8,728,990.29.
26. On 26 April 2024, FinCo launched these proceedings seeking restitution of the balance of the price paid to Integra via the letter of credit (US$2,666,080.67) on the grounds of total failure of consideration (because the price had not in fact become due), plus certain relatively small amounts said to have been incurred by way of damages as a result of Integra's alleged breach of contract.
28. The principal issue that I must decide is whether FinCo was entitled to terminate the contract when it purported to do so on 25 November 2023. If it was, then the contract price did not become due (and Integra was in breach of contract) and FinCo's claims will succeed. If it was not, Integra became entitled to the contract price 3 working days after tender of NOR (and was not in breach of contract) and the claims will fail.
30. FinCo contends that it was entitled to terminate the contract on either of two grounds (which it says are reflected in what it said in the notice of termination sent on 25 November 2023, but whether or not that is right does not matter):
32. i) A repudiatory breach of contract by Integra in failing to deliver the MTBE to the discharge terminal within the contractual " delivery dates ".
33. ii) A breach of contract (amounting to a renunciation or repudiation) by Integra in refusing or failing to nominate a suitable vessel for delivery after FinCo had rejected the Aramon.
34. In response, Integra contends that (in short):
36. i) When the contract delivery terms were amended from DES to CIF (i) the point of delivery changed from the discharge terminal to the point at which the MTBE entered the Aramon 's tanks at the loading port or alternatively (ii) the stated " delivery dates " became 'indicative' only. Integra therefore complied with the contract because the MTBE was delivered when loaded on 24 October 2023 or because the delivery dates were indicative only such that the fact that the vessel was not ready to discharge at the discharge terminal within the delivery dates does not involve a breach.
37. ii) FinCo did not validly reject the nomination of the Aramon (or agreed or is estopped by convention from denying that the Aramon had been validly nominated) and Integra therefore complied with its contractual obligations by nominating that vessel.
38. I address each of the two grounds of termination on which FinCo relies (which I shall call the "delivery dates issue" and the "nomination issue" respectively) in turn below.
40. At trial I heard witness evidence from the traders who agreed the contract on each side, Stefan Ehrhardt of FinCo and Jordan Oxtoby of Integra. I am satisfied that both were honest witnesses doing their best to assist the Court. They had strong opposing views as to the effect of what they had agreed, which they were not shy about defending under cross-examination, and I do not criticise them for that. There was one relatively minor factual disagreement between them, which was as to whether they had a conversation on 10 October 2023, in relation to which I set out my findings below.
42. However, ultimately, the issues that I have to decide turn on questions of interpretation of the contract terms and analysis of the parties' actions and communications (which are set out clearly in the contemporaneous documents) in order to determine how the contract terms apply to them. In relation to the nomination issue, where the parties make arguments of waiver and estoppel, as well as asserting an alleged implied term and an alleged collateral contract, I have considered all of the various ways in which the arguments are put and endeavour to address them in the course of my analysis below.
44. I have also had the benefit of helpful written and oral submissions from counsel for both sides, for which I am grateful as always.
46. The Delivery Dates Issue
47. As I have already indicated, the parties' contract expressly incorporated the BP GTCs. I was told that the BP GTCs are amongst the most commonly used general terms and conditions in the international oil and gas trading industry. The BP GTCs are divided into parts that set out (at Parts 1 to 7) terms applicable to contracts entered into by reference to the various different types of commonly-used delivery terms, followed by terms in Parts 8 and 9 that are generally applicable. Where parties use the BP GTCs, they will generally set out additional terms that are specific to their particular trade (including terms as to quantity, price and dates) separately in a short document or 'recap' (though the additional terms may also be purely oral). Those additional transaction-specific terms are referred to in the BP GTCs as " Special Provisions " and the BP GTCs and Special Provisions together form the " Agreement ". In the event of inconsistency, the Special Provisions prevail over the BP GTCs (s.74.4 of the BP GTCs).
49. Part 2 of the BP GTCs (sections 8 ? 16) sets out the terms applicable to CIF and CFR contracts. Section 8 sets out the basic delivery obligation in a CIF/CFR contract as follows:
51. Subject to the provisions of the Agreement, Crude Oil or Product shall be placed by the Seller on board the Vessel procured by the Seller for carriage CIF/CFR from the Loading Terminal to the agreed Discharge Terminal.
52. In other words, in a CIF/CFR contract, delivery takes place when the product is placed on board the vessel that has been procured by the Seller to take it to the agreed Discharge Terminal (and risk and property in the product will generally pass to the Buyer as the product passes the vessel's permanent discharge hose at the Loading Terminal (s.10.1)). That ties in with the generally-understood effect of a CIF/CFR contract as set out in Incoterms.
54. Section 11 sets out provisions in connection with laydays and discharge dates in a CIF/CFR contract. The relevant provisions for present purposes are s.11.2 and s.11.3. They provide as follows:
56. 11.2 Where Laydays are specified in the Special Provisions and the Seller provides the Buyer with a date or range of dates either expressly or impliedly indicating the date or range of dates within which the Vessel shall arrive at the Discharge Terminal (the "Indicative Discharge Date"), this shall be indicative only. The Seller shall not assume any responsibility for the delivery of the Crude Oil or Product at the Discharge Terminal [?]
57. 11.3 Where no Laydays are specified in the Special Provisions and the Seller provides the Buyer with the Indicative Discharge Date, this shall be indicative only (provided that the Seller has ensured that the Vessel has tendered NOR at the Loading Terminal at a time consistent with arrival at the Discharge Terminal within the Indicative Discharge Date, given a reasonable assessment of the customary loading and voyage time). The Seller shall not assume any responsibility for the delivery of the Crude Oil or Product at the Discharge Terminal [?]
58. Part 3 of the BP GTCs (sections 17 ? 23) sets out the terms applicable to DES contracts. Section 17 sets out the basic delivery obligation in a DES contract as follows:
60. Subject to the provisions of the Agreement, the Crude Oil or Product shall be delivered by the Seller to the Buyer, in bulk Ex Ship at the agreed Discharge Terminal(s). Except as expressly modified by the Agreement or by the Special Provisions, references to Ex Ship herein shall also refer to DAP, as defined in the Incoterms? 2010.
61. In other words, in a DES contract, delivery takes place when the product is delivered at the Discharge Terminal (and risk and property in the product pass to the Buyer as the product passes the vessel's permanent discharge hose at the Discharge Terminal (s.19.1)). As set out in Incoterms (in relation to a DAP ("delivered at place") contract) delivery at the Discharge Terminal is effected by the seller placing the product at the disposal of the buyer on board the arriving vessel, ready for discharge.
63. Section 20 sets out provisions in connection with laydays in a DES contract and provides simply that the laydays are " the day or range of days in which the Seller's nominated Vessel must tender NOR at the Discharge Terminal " (s.20.1).
65. The Special Provisions in the parties' contract included " Delivery Dates: 10 ? 24 November 2023." As initially agreed, the delivery term was "DES". That was amended by agreement to "CIF". It is common ground that, if the contract had remained on DES terms, the fact that the Aramon arrived and tendered NOR at Amsterdam on 27 November 2023 ? after the end of the stated delivery dates ? would have been a breach of contract and (time being generally of the essence per s.74.13) would have justified termination. The question is whether, by amending the delivery term to "CIF", the effect of the stated delivery dates was changed. FinCo say that it was not. Integra say that it was, in one of two ways:
67. i) Integra's primary case is that the change to CIF terms meant that the date of delivery under the contract became the date when the product was placed on board the vessel procured by Integra to transport the MTBE to ARA (per s.8.1) ? so that delivery in fact took place early when the MTBE was loaded on to the Aramon on 24 October 2023.
68. ii) Integra's alternative case is that the change to CIF terms meant that the stated delivery dates have the effect set out in s.11.3 (there being no specified laydays in the contract). That means that the dates are indicative only, and Integra's duty was to ensure that the Aramon tendered NOR at the loading terminal at a time consistent with arrival at Amsterdam within the stated dates, which it did (it being common ground that the ETA of the Aramon at Amsterdam at the time of loading was consistent with the stated delivery dates).
69. The question turns on interpretation of the contract, which involves construing the language used by the parties in its contractual context, having regard to the factual background in which the contract was agreed and the fact that the parties are likely to have intended their agreement to make commercial sense, so as to ascertain what a reasonable person would understand the parties to have intended their contract to mean.
71. The parties referred me to a number of case authorities and commentaries in support of their respective cases. As the parties acknowledged, in a dispute of this kind the utility of considering different cases that were concerned with the interpretation of different contracts between different parties is likely to be limited. However, particularly where one is dealing with what is said to be the effect of using well-known terms such as 'DES' and 'CIF', I think it can be useful to have regard to previous authorities in which experienced judges and commentators have considered similar issues, while always keeping firmly in mind the fact that my role is to construe the terms of the particular contract with which we are concerned.
73. I draw the following propositions from the authorities that I was shown:
75. i) There is no magic in the use of the labels 'DES' or 'CIF' as such. It is always open to the parties to depart from the 'usual' attributes or features of any 'type' of delivery contract ? what matters in every case are the terms that the parties have agreed (see e.g. The Albazero [1975] 2 Lloyd's Rep 295 at 302 per Roskill LJ).
76. ii) Subject to that, it is usually the case that the inclusion of delivery dates in a contract that is on CIF terms does not give rise to an obligation on the seller to deliver the goods at the contractual destination (sometimes known as 'complete delivery') within those dates. It is more usual for a CIF contract to place an obligation on the seller with respect to the time of loading (or tender of documents) with dates for delivery at the contractual destination treated as being indicative only (see e.g. Benjamin on the Sale of Goods (12 th Ed) at paragraphs 19-109 ? 19-112, referring to The Wise [1989] 2 Lloyd's Rep 451).
77. iii) However, it is always open to parties to a CIF contract to agree to impose an obligation to effect 'complete delivery' by a specified date or within a specified window (Benjamin, ibid) and there are cases in which particular language in a CIF contract has been construed as having that effect (e.g. The Orient Prince [1985] 1 Lloyd's Rep 389 and Cargill International SA v Bangladesh Sugar & Food Industries [1998] 1 WLR 461). The editors of Benjamin suggest that "clear words" are required to impose such an obligation in a CIF contract. To the extent that that reflects the fact that commercial parties entering into a CIF contract can be expected to know the usual position, and therefore to make clear if they intend to depart from it, I would agree with that as a general common sense proposition. The usual position in a CIF contract forms part of the factual background against which the contract falls to be construed. However, ultimately, the question is always one of construing the terms that the parties have agreed in the usual way and it would be wrong to refer to a requirement for 'clear words' as though it were a separate requirement. In other words, a judge might properly conclude that the true construction of a particular CIF contract was that the delivery dates imposed an obligation on the seller to effect 'complete delivery' within the specified window even if the language was not particularly clearly expressed.
78. Against that background I come to consider the two arguments advanced by Integra as to the effect of the stated " delivery dates " in the contract when it was amended so as to be on CIF terms.
80. Integra's primary case is that, given that an undoubted effect of the amendment to CIF terms was that delivery took place upon loading of the vessel (and not upon arrival at the discharge terminal) the proper construction of the " delivery dates " after the amendment to CIF terms is that they are the dates upon which such loading was to take place.
82. That argument is intellectually neat and might have represented the way in which the contract fell to be construed if I were to ignore the factual background and commercial sense. I am, however, confident that it is not how a reasonable person having regard to the background would understand the contract. In short, it is part of the factual background that prior to amendment the " delivery dates " were the dates on which the MTBE was to be delivered at ARA. It is manifestly improbable that the parties would have intended, by changing the delivery term to CIF, to refer to the same period as being the date for loading in the Persian Gulf, which was likely to be some weeks earlier, with there being no indication whatsoever as to when the MTBE might be expected at ARA. That would have represented a significant change to the likely contract timing, in what was agreed to be a falling market, falsifying the basis on which the price had been agreed, with no explanation or justification. In the circumstances, the primary case lacks commercial sense when considered against the known factual background and I reject it.
84. Integra's alternative case is that, as a result of the amendment to CIF terms, the " delivery dates " must be interpreted in accordance with Part 2 of the BP GTCs and in particular s.11, which means that those dates are indicative only and that Integra's obligation was to ensure that the nominated vessel tendered NOR at the port of loading at a time consistent with making 'complete delivery' in Amsterdam during that period.
86. In my view, Integra's alternative case is correct:
88. i) The effect of the amendment of the delivery terms from DES to CIF was to mean that the terms in Part 3 of the BP GTCs ceased to apply and the terms in Part 2 of the BP GTCs applied to the contract instead. The terms of Part 2 include s.11.
89. ii) The terms of s.11 are clear and are directly applicable to what happened here. Integra provided FinCo with a range of dates that expressly or impliedly indicated the range of dates within which the vessel was to arrive at the Discharge Terminal, which were incorporated into the contract as the " delivery dates ". Pursuant to s.11.2 those dates amounted to an " Indicative Discharge Date ". No laydays were specified in the Special Provisions. That means that s.11.3 applies and the Indicative Discharge Date is indicative only, and Integra assumed no responsibility for the delivery of the product at the Discharge Terminal.
90. iii) I do not regard the fact that the definition of " Indicative Discharge Date " refers to an indication as to the date of 'arrival' rather than a date of 'delivery' at the Discharge Terminal to be significant or to mean that the definition does not apply to the " delivery dates " stated in the contract. Though there may be a technical difference between the dates of 'arrival' and 'delivery' at the Discharge Terminal it is improbable that s.11.2 is drawing that distinction. That is underlined by the fact that the date produced by the definition, though based on an indication of 'arrival' dates, is termed the indicative " discharge " date not the indicative " arrival " date, and by the fact that the clause goes on to provide that the seller assumes no obligations in relation to delivery at the Discharge Terminal, such that any difference between 'arrival' and 'delivery' at the destination is not likely to be material to the parties' obligations. In any event, providing dates for delivery at the Discharge Terminal must amount to at least an implied indication of the date of arrival, which is sufficient to bring the " delivery dates " in this contract within the definition of Indicative Discharge Date in s.11.2.
91. iv) Integra's case as to the meaning and effect of s.11 is consistent with the way in which CIF contracts usually operate, according to the authorities, subject to agreement to the contrary. While their subjective understanding is not relevant to the construction of the contract, I note that it is also consistent with the way in which Mr Ehrhardt and Mr Oxtoby, both experienced traders familiar with the BP GTCs, understood s.11 to operate.
92. v) The crucial question is whether there is anything in the Special Provisions that amounts to agreement to the contrary, i.e. which indicates that the parties did not intend the " delivery dates " to be construed in accordance with s.11 but instead to impose an obligation on Integra to deliver within those dates. The answer to that question must be "no". There is nothing relevant in the 'recap' beyond the statement of the " delivery dates " themselves. While they may have given rise to an obligation to deliver within those dates when the contract was on DES terms, the fact is that the parties changed the delivery terms to CIF. There is nothing in the contract terms to indicate that they did not intend the full consequences of that change, as flow from the BP GTCs, to apply. FinCo's case amounts to a suggestion that the parties intended to create a hybrid, incorporating most of the effect of the BP GTCs relating to CIF contracts, but in this respect retaining the effect of the BP GTCs relating to DES contracts. That is an improbable, and in my judgment untenable, construction.
93. FinCo placed significant reliance in support of its position that the " delivery dates " should be treated as giving rise to an obligation to deliver at Amsterdam within those dates notwithstanding the change to CIF terms on (a) the fact that the change to CIF terms was introduced as a consequence of FinCo agreeing to open a standby letter of credit at the time of loading rather than on complete delivery (the corollary of which was that FinCo wanted to take property in the MTBE on loading rather than on complete delivery) and (b) the fact that in the email recording the amendment from DES to CIF on 6 October 2023 Mr Oxtoby concluded with the words " all else is the same ". I do not think that either point is capable of bearing the weight that FinCo sought to put on it. The fact that the reason for the change to CIF terms related to the terms for payment does not mean that the parties did not intend the full consequences of the change to CIF terms to apply. And reliance on the words " all else is the same " is question begging. Mr Oxtoby's email records the fact that the contract was changing from DES to CIF terms. An effect of that change was that the nature of the obligation created by the " delivery dates " changed (along with a host of other changes caused by the move from Part 3 to Part 2 of the BP GTCs). But the " delivery dates " themselves did not change. In other words, what Mr Oxtoby said ? " all else is the same " ? is equally consistent with either party's case.
95. FinCo also placed reliance on the principle that a contract term will not lightly be construed as being intended to give up a remedy for breach that arises by operation of law (e.g. Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689). I do not think that that principle is apposite here. By choosing to contract on CIF terms, the parties agreed that the terms of their contract would be those set out in Part 2 of the BP GTCs (plus the Special Provisions) rather than the terms set out in Part 3 (or any other part). Insofar as the rights and obligations of the parties arising under CIF terms are different from those arising under DES terms, those differences are the result of choosing to contract on CIF terms. They are not the result of disapplying remedies that would otherwise arise for a breach of contract by operation of law. In any event, even if the Gilbert-Ash principle were engaged, I would conclude that the choice of CIF terms represented a clear expression of an intention to contract on a CIF basis (and thus to give the " delivery dates " the effect that they are given by s.11.3 of the BP GTCs).
97. It follows that the obligation placed on Integra by the " delivery dates " in the contract was as set out in s.11.3 of the BP GTCs ? to ensure that the performing vessel tendered NOR at the Loading Terminal at a time consistent with arrival at the Discharge Terminal within the Indicative Discharge Date, given a reasonable assessment of the customary loading and voyage time. If the performing vessel was the Aramon, Integra complied with that obligation when that vessel tendered NOR at the loading terminal in the Persian Gulf prior to loading on 24 October 2023, at which time the ETA at ARA was 17 November 2023. The fact that the Aramon did not tender NOR at Amsterdam until after midnight on 24 November 2023 was not, therefore, a breach of contract and FinCo's purported termination was not justified on that ground.
99. The Nomination Issue
100. The Contract Terms
101. Section 14 of the BP GTCs sets out terms in relation to nomination of a vessel. By s.14.2.1, the Seller is required to give the buyer a notice of nomination of the vessel on which the product is to be shipped either (i) on or about the time the agreement is entered into between the parties or (ii) no later than 5 days prior to the first day of the loading terminal laydays of the vessel so nominated, whichever is later. The notice of nomination is required to set out various specified information, including as to the length of the vessel (s.14.2.1(d)) and the loading terminal laydays (or bill of lading date if known) as well as the ETA at the Discharge Terminal (s.14.2.1(c)).
103. What the Buyer is to do in response to that nomination is set out in s.14.4 and s.14.6. By s.14.4 the Buyer shall, within 1 Business Day after receipt of the Seller's nomination (or such other period as may be specified in the Special Provisions), specify the final Discharge Terminal if not already specified in the Special Provisions. Section 14.6 is headed " Rejection of nominations and Vessel." Sections 14.6.1, 14.6.2 and 14.6.3 provide as follows:
105. 14.6.1 The Buyer shall give notice accepting or rejecting any Vessel nominated by the Seller within 1 Business Day of receipt of the Seller's nomination.
106. 14.6.2 Notwithstanding anything to the contrary express or implied elsewhere, the Buyer shall have the right (which right may only be exercised prior to the passing of property hereunder) to refuse, on any reasonable grounds, to accept any Vessel named pursuant to Section 14.2 including any Vessel referred to in Section 14.2.1(g). The Buyer shall not be liable for any loss or damage, direct or indirect, which the Seller may suffer as a result of the Buyer exercising such right.
107. 14.6.3 Notwithstanding any prior acceptance of a Vessel (whether named in the Special Provisions or nominated or substituted pursuant to Sections 14.2 or 14.5), the Buyer shall have the right (which right may only be exercised prior to the passing of property hereunder) to reject the Vessel in question on any reasonable grounds if such Vessel is involved in any incident or more recent information regarding such Vessel becomes available to the Buyer at any time after such prior acceptance.
108. The parties disagree as to the proper construction of s.14.6.
110. FinCo's position is that each of s.14.6.1, 14.6.2 and 14.6.3 sets out a separate right to reject a vessel (or to refuse to accept it, which amounts to the same thing). On that basis, a failure by the Buyer to give notice accepting or rejecting the vessel within 1 Business Day of receiving the nomination under s.14.6.1 has no impact on the Buyer's separate entitlement under s.14.6.2 to refuse to accept the vessel on reasonable grounds at any time thereafter (up to the point at which property passes, i.e. usually when the product passes the vessel's permanent hose at the loading terminal).
112. Integra's position is that the Buyer is obliged to accept or reject the vessel within 1 Business Day (s.14.6.1) and may only reject the vessel later if something new arises (s.14.6.3). On Integra's case, s.14.6.2 does not create a separate right to reject the vessel at any time prior to the passing of property but instead sets out and limits the basis on which a Buyer may reject a vessel under s.14.6.1.
114. It is very easy for a judge faced with a dispute as to how a contract works in a given situation to criticise the drafting of the contract as lacking clarity. The truth is that the unpredictability of events is such that it is virtually impossible to draft a contract so as to cover any situation that might arise without leaving room for argument or doubt. The fact that the BP GTCs are extensively used, and that there is apparently no authority in which the dispute arising here has been canvassed before, suggests that the terms as to nomination and rejection usually operate perfectly well as they stand. However, it does seem to me that s.14.6 of the BP GTCs is ambiguous as to how s.14.6.1 and s.14.6.2 are intended to operate together. In circumstances where the BP GTCs are in widespread use in the market, it might be helpful if those involved in their drafting could make clearer the effect of failing to accept or reject a vessel pursuant to s.14.6.1 when they next come to consider revisions to the terms.
116. The conclusion that I have come to is that, on the terms of s.14.6 as they currently stand, Integra's position is correct and that, on a true construction, s.14.6.2 does not create a right to reject (or refuse to accept) a vessel that is separate from and additional to the right to reject provided for by s.14.6.1. I say that because:
118. i) On FinCo's interpretation, the contract is strangely silent as to the grounds on which a vessel can be rejected pursuant to s.14.6.1. While rejections under s.14.6.2 and 14.6.3 must be on reasonable grounds, no such requirement is stated in s.14.6.1. That means either that a rejection under s.14.6.1 can be given on unreasonable grounds (which seems improbable and is not what FinCo suggested) or that a reasonableness requirement must be implied into s.14.6.1 (which was FinCo's case). It seems to me to be awkward and unsatisfactory to have to imply a reasonableness requirement into s.14.6.1 when such a requirement has been expressly included in s.14.6.2 and s.14.6.3 and expressly not included in s.14.6.1. On Integra's interpretation the mystery is solved and the provisions fit together without the need for implication ? s.14.6.2 sets out the Buyer's right to reject, including the requirement for reasonableness, with s.14.6.1 setting out how that right is to be exercised. That seems to me to be more likely to represent what the drafter intended.
119. ii) Clarity and timing are important in commercial contracts of this kind: parties acting in a fast-moving market need to know clearly and quickly where they stand. On Integra's interpretation, the position as to acceptance or rejection of the vessel based on the information known to the Buyer at the time of nomination is settled promptly and clearly. On FinCo's interpretation, the utility of s.14.6.1 is greatly reduced and what appears on the face of it to be an orderly contractual framework for prompt identification of a performing vessel is undermined: on FinCo's case a Buyer can fail to give any notice and wait until shortly before the nominated vessel is loaded before exercising its right to refuse to accept the vessel under s.14.6.2 (presumably by giving notice, though s.14.6.2 does not expressly say so). A Buyer who acts in that way might face a damages claim for breach of s.14.6.1, but the rejection would be valid and the parties' arrangements would be thrown into disarray ? the Seller having to find a new vessel so as to comply with the obligation to tender NOR at the loading terminal in time to meet the Indicative Discharge Dates, having to cancel the loading that was about to take place or resell the product which it has been about to load, and having to bring a claim for any damages it can prove to have been caused by that. In the meantime, the apparently absolute and unqualified obligation on the Buyer to give notice within 1 Business Day accepting or rejecting the vessel becomes something altogether less unqualified: the Buyer can ignore it and retain the right to reject the vessel at an undefined time up to the moment that property passes. I find it improbable that the drafter intended to create an apparently important time-limited right to reject in s.14.6.1 and then water it down so significantly, and create such capacity for uncertainty and disarray, in s.14.6.2. I would want to see that intention spelt out much more clearly before I accepted that that was what the drafter had in mind.
120. iii) The 1 Business Day time limit in s.14.6 appears to be intended to align (and in any event does align) with the similar time limit for nomination of a Discharge Terminal by the Buyer in s.14.4. It makes sense that the Buyer should be required to state its position on both the acceptability of the vessel and the location of the Discharge Terminal at the same time. The Seller is similarly required to respond to the nomination of Discharge Terminal within 1 Business Day. It is difficult to see any sense in the Buyer being obliged to act within 1 Business Day in s.14.4 (without any fallback right to act later and with the Seller required to respond within 1 Business Day) but for the obligation to accept or reject the vessel in s.14.6.1 to be qualified by a broader right to refuse to accept the vessel at a later time in s.14.6.2.
121. iv) It is difficult to see any sensible reason why the parties would intend to create the kind of overlapping rights to reject or refuse to accept the vessel to which FinCo's interpretation leads. Integra's interpretation leads to a sensible commercial position: the Buyer is required to accept or reject the vessel within 1 Business Day of nomination based on the information that it has at the time (and on the grounds set out in s.14.6.2); if the vessel is accepted and something new emerges thereafter that provides a reasonable basis for rejection, the vessel can be rejected pursuant to s.14.6.3. Why should an additional right to reject the vessel based on information that the buyer already has be appropriate or needed? The contract contains many provisions requiring action within short time periods. FinCo's case serves only to protect a Buyer who knows of a reason for rejection within 1 Business Day (and so cannot rely on s.14.6.3) but who, instead of giving notice at that time as required, chooses not to say anything and then decides to raise it later. It is very far from obvious why the parties should want to give the Buyer that right.
122. There are three arguments that can be put forward (and which FinCo does put forward) against that view.
124. First, s.14.6.2 opens with the words " notwithstanding anything to the contrary express or implied elsewhere ". Counsel for FinCo suggested that this indicated that the right to refuse to accept a vessel in s.14.6.2 was intended to operate notwithstanding a failure to comply with the requirement to give notice in accordance with s.14.6.1. That is not how I read that language: as I have said, as I read it, s.14.6.2 is spelling out the right to reject which is to exist notwithstanding anything to the contrary that may be said elsewhere, and s.14.6.1 sets out how that right to reject may be exercised ? by giving notice within 1 Business Day of receiving the nomination. The terms therefore operate harmoniously together; there is no inconsistency to which the opening words of s.14.6.2 apply.
126. Second, s.14.6.2 states in parenthesis that the right to reject " may only be exercised prior to the passing of property hereunder." At first sight, it is difficult to see what that provision adds if the right to reject is in any event subject to the 1 Business Day time limit in s.14.6.1. However, I think that the answer provided by counsel for Integra is correct: the effect of those words in s.14.6.2 is that the passing of property brings to an end the right to reject the vessel pursuant to s.14.6.1 even if less than 1 Business Day has passed since nomination is received because at that point property in the product on the vessel has passed to the Buyer. It would be inconsistent with that for the Buyer to reject the nomination of the vessel ? the cargo is already on the vessel and already belongs to the Buyer. How often that situation arises in practice I do not know, but that does seem to me to be a sensible construction of the clause.
128. Third, FinCo points out that s.14.6.1 does not specify the consequence of a failure to give notice (save that time is not of the essence such that a delay in compliance does not entitle the Seller to terminate (s.74.13)) and it therefore involves reading something in to s.14.6.1 to say that a failure to give notice means that the vessel is treated as having been accepted. That is true, but does not alter my view. The idea that a failure to exercise a right to reject means that the thing not rejected is treated as being accepted is a commonplace in commercial dealings and is, in my judgment, a natural interpretation of s.14.6.1 ? indeed the same must also be true of other provisions where notice of approval is required (such as the Seller's approval of the Discharge Terminal in s.14.4.1) and where no express provision is made as to the consequences of a failure to give such notice. It makes sense that a party who wishes to object to what has been proposed is required to say so clearly and swiftly, and if the party chooses to say nothing, is treated as having no objection. Any other interpretation would be a recipe for confusion and disarray which commercial parties (and particularly those who have taken the trouble to set out clear time limits within which action is required) are most unlikely to have intended. In any event, it is difficult to see how a Seller who has received neither acceptance nor rejection could be under any obligation to nominate a new vessel.
130. I therefore find that FinCo was obliged to give notice accepting or rejecting a vessel nominated by Integra within 1 Business Day of receipt of the nomination and that, in the absence of notice rejecting a vessel, it was to be taken as having been accepted. Or, put in a different way, if FinCo did not reject a nominated vessel within 1 Business Day of receipt of the nomination, there was no obligation on Integra to nominate a different vessel.
132. I note that FinCo ran an alternative case at trial to the effect that, if s.14 does not contain an express obligation requiring the Seller to nominate a vessel that is suitable, a term to that effect should be implied. As was recognised during argument, the suggested implied term did not add anything to the argument: the contract contains express terms dealing with nomination and rejection, which permit a Buyer to reject a vessel on any reasonable ground provided it complies with the requirements for doing so. There is no need and no scope for implication of a different obligation beyond what the contract provides.
134. The consequences of a rejection of a vessel are set out in s.14.8 and include (s.14.8.3) an obligation to nominate a suitable vessel (which I interpret simply to mean that the Seller must perform the obligation to nominate again, and the Buyer will have the right to reject that vessel pursuant to s.14.6 if not acceptable to it) and ensure it tenders NOR at the loading terminal in accordance with s.11.
136. Section 15 of the BP GTCs concerns the vessel's arrival. Section 15.3 places an obligation on the Buyer to provide or cause to be provided free of charge a Berth which the vessel can when fully laden safely reach and leave and where it can always lie safely afloat. Section 15.5 sets out provisions applicable where the vessel is to be discharged by lighters. By s.15.5.2 either party may request to discharge the vessel to lighters, with such request subject to acceptance by the other party not to be unreasonably withheld. The costs of lightering are to be borne by the buyer if it is required by the Discharge Terminal or requested by the buyer (s.15.5.3) and by the seller if requested by the seller (s.15.5.4). Where discharge is to be by lighter, the place of lightering is deemed to be the Berth.
138. Amongst the general provisions of the BP GTCs applicable to all types of contract, the parties referred to s.70.4, which provides that " notices may not be given by instant messaging " and s.74.5, which provides that the terms of the Agreement " shall not be modified unless mutually agreed by the parties, which agreement must be evidenced in writing".
140. The Facts
141. As I have already noted, Integra nominated the Aramon as the performing vessel under the contract by email sent and received on 5 October 2023. The nomination was accompanied by documents setting out various information about the vessel, including its dimensions.
143. Mr Ehrhardt and Mr Oxtoby generally communicated with each other via WhatsApp, an instant messaging service. On 6 October 2023, Mr Ehrhardt sent Mr Oxtoby a series of messages saying " I was not aware you were planning to bring it on an LR?I need to check if my potential customer can take it in ARA. An MR would be much preferred?the main issue is the LR?it won't fit to the jetty?please check if you can find an MR ". The reference to LR is to the size of the Aramon? it is a long-range vessel (with a capacity of 55,000 DWT or more) as opposed to a smaller medium-range vessel (with a capacity of 35,000 ? 55,000 DWT). Mr Oxtoby responded on the same day saying " the best we can do at this stage is work base case the LR1 and we will check if we can load an MR instead. Checking on my side. "
145. Behind the scenes on both sides were commercial imperatives that Mr Ehrhardt and Mr Oxtoby did not want to reveal to each other: Mr Ehrhardt was in the process of arranging an onward sale at a very advantageous price to a customer who had storage at GES Amsterdam; Integra had arranged a number of sales in Europe and it was strongly in its interest to use the Aramon to ship them. It was of course completely proper for Mr Ehrhardt and Mr Oxtoby to keep these matters to themselves in order to maintain the strength of their negotiating positions with each other.
147. Later on 6 October 2023, FinCo sent Integra an email saying " Our customer is still checking the vessel but it will be very difficult to get an LR discharged. "
149. The next communication came on Monday 9 October 2023. Mr Ehrhardt was in Dubai. He sent Mr Oxtoby a series of instant messages saying " The vessel will go to Amsterdam (99%)? But that terminal most likely does not accept LR. Not 100% sure how to resolve that yet.? Any chance to check for an MR? Otherwise, we would need to do a board board on barges, I think. We will find a solution. " Mr Oxtoby responded an hour later: " We can't load an MR unfortunately, not possible on this one. Board to board shouldn't be an issue, cost for your side ? can you clear the ship this morning still as we need to lift subs. " Mr Ehrhardt replied: " On the cost side, we need to discuss. I bought CIF ARA and of course the vessel then needs to fit. But this is the sellers responsibility. "
151. Later the same morning, Integra's operations department contacted FinCo's operations department by email asking them to clear the vessel. FinCo responded by passing on a message from its customer and saying " the vessel is not cleared for any jetty's here due to the fact that the vessel is too long for our jetty's [sic]. If you want to arrange STS all costs will be for your account. Please send a new vessel. " The term "STS" is short for "ship to ship" and in this context means delivery via barges.
153. Mr Ehrhardt and Mr Oxtoby exchanged instant messages on 10 October 2023 and sought to speak to discuss the position. Communication was rendered more difficult than usual by the fact that Mr Ehrhardt was in Dubai where certain restrictions on WhatsApp use exist. Mr Ehrhardt's evidence was that he could not remember having spoken to Mr Oxtoby. Mr Oxtoby's evidence was that the two men spoke on 10 October 2023 and agreed that the MTBE would be shipped on the Aramon, and that Integra would arrange for discharge at Amsterdam into barges with the details of the cost of that operation to be worked out later.
155. Having heard the evidence and considered the documents, I have come to the conclusion that it is likely that the two men did speak on 10 October 2023 and that the substance of their conversation was as reflected in an email sent by Mr Oxtoby to the FinCo operations team on 12 October 2023, copied to Mr Ehrdhardt, in which he said:
157. " I spoke with Stefan a couple of days ago regarding the delivery of the product since GES can't accept the LR1. Could you please clear the ship for delivery and we will provide a logistical solution which best suits. Possibilities I discussed with Stefan are a STS at a buoy, shore line loop at EVOS A'dam or running the product through Finco tanks and delivering in barges. When the product loads and we know the quality, we agree we will provide one of the above solution and deliver CIF to GES A'dam. Appreciate your acceptance on that basis soonest. "
158. The reference to Mr Oxtoby having spoken with Mr Ehrhardt " a couple of days ago " is clear. It is unlikely that Mr Oxtoby would have invented that conversation, and unlikely that Mr Ehrhardt reading in copy would not have said something if no such conversation had ever happened. It also seems to me that the content of the email is inherently likely accurately to reflect what was discussed in that conversation, for the same reasons.
160. FinCo's operations team responded to that email on 13 October 2023 by email as follows:
162. " as the vessel has been rejected by the receiving terminal, we cannot clear the vessel. We understand that you are going to discharge the MTBE from the vessel into barges by STS. We can only check clearance of these barges once nominated by you to us."
163. Mr Oxtoby responded to say that he would appreciate clearance of the Aramon ASAP. There was no reply to that email and no further correspondence concerning nomination of the vessel at that stage.
165. On 18 October 2023, FinCo wrote to Integra by email asking to be kept closely informed about the loading of the Aramon and also asking when FinCo should expect nomination of the barges or smaller vessels that would bring the MTBE from the Aramon to the terminal.
167. Integra replied stating that the Aramon was planned to load on 19 October 2023 and that they would provide an ETA for ARA later. This was later updated to 20 October 2023 and then to 24 October 2023.
169. The MTBE was loaded onto the Aramon at Jubail on 24 October 2023. The bill of lading was issued showing "to the order of Aramco" as the consignee and FinCo as the notify party with the port of discharge as ARA.
171. On 25 October 2023 FinCo requested, and was provided with, confirmation of loading and the Aramon 's ETA at ARA. At that time, the ETA was 17 November 2023.
173. On 31 October 2023 FinCo asked for an updated ETA and as to when barge nominations would be provided. Integra responded by providing a copy of the bill of lading, an updated ETA (c.16 November 2023) and stating that barge nominations would be provided " in due course " after the Aramon had left its previous stop in the western Mediterranean.
175. On 7 November 2023, Integra wrote to FinCo asking for final confirmation of the discharge port as GES Amsterdam and for berthing information. FinCo responded by asking for the Aramon 's latest ETA at ARA (to which they were told that it was 17 ? 18 November) and on 8 November 2023 by confirming GES Amsterdam as the discharge port and providing technical details. Integra replied that they would revert with barge nominations in due course.
177. Also on 8 November 2023, FinCo contacted Integra to say that they had noticed that the Aramon was due to stop at Barcelona and asking whether that was the last stop before Amsterdam (to which Integra replied that it was, as far as they were aware; this was updated on 15 November 2023 with information that the vessel was due to stop at Tarragona).
179. Over the week that followed it became increasingly likely that the Aramon would arrive at Amsterdam after 24 November 2023 due to a delay at the port of Barcelona. FinCo set about sourcing alternative MTBE in order to fulfil its onward sale (which as I have noted was a sale at a highly advantageous price for FinCo) and was successful in doing so. It might be inferred that, having found an alternative source, FinCo no longer had an incentive to take delivery of the MTBE from Integra. However, FinCo's motivations are not relevant to any issue that I have to decide and were not explored in evidence and I have not wasted time speculating about them.
181. On 22 November 2023, Integra contacted FinCo to say that the ETA for the Aramon at ARA was now 27 November 2023. Separately, Integra sent information in relation to barges that could be used to discharge the MTBE from the Aramon to the GES terminal, asking FinCo to " screen " them. On 23 November 2023, FinCo responded to say that " From a technical point of view, the two barges have been approved by GES Amsterdam B.V. We can only check acceptance of any vessels or barges with the receiving terminals/customers upon receipt of your fully workable nomination. " Integra sent a 'formal' nomination of barges later the same day.
183. In parallel, a dispute was developing on the question of whether FinCo was required to take delivery of the MTBE when the Aramon arrived. On 25 November 2023, Mr Ehrhardt sent notice of termination by email. Correspondence followed in which each side set out its position in terms largely consistent with the dispute as argued at trial.
185. On 28 November 2023, Integra arranged for the MTBE to be discharged onto a barge called the MTS Prinses. In an internal email setting out the details of the barge fixture, the Integra chartering manager Mr Kegl included a line stating " **demurrage: Finco never accepted our nomination and instead cancelled the deal ? check dispute status with trader JO. " FinCo relied at trial on that email as indicating that Integra accepted that FinCo had validly rejected the nomination of the Aramon. I do not think that Mr Kegl's email can bear that weight, or indeed that it advances the debate at all: the reference to FinCo not having 'accepted our nomination' is an offhand phrase used in a brief internal email dealing with the barge fixture in circumstances where the parties were already in dispute and had set out their positions. I am confident that Mr Kegl was not intending to express any view on the merits of the dispute, still less any considered view as to whether FinCo's position was factually or legally correct as a matter of analysis, and in any event I would not regard the parties' own expressed views as to the merits of their position after a dispute has arisen as being particularly helpful. I do not regard that email as indicating the answer to any of the issues that I have to decide.
187. Analysis
188. It is accepted that Integra's nomination of the Aramon on 5 October 2023 was a proper nomination pursuant to s.14.2.1 of the BP GTCs. FinCo's case is that:
190. i) It rejected that nomination by one or all of (i) the instant messages from Mr Ehrhardt to Mr Oxtoby on 6 October 2023; (ii) the email from FinCo operations to Integra on 6 October 2023; (iii) the email from FinCo operations to Integra on 9 October 2023 and/or (iv) the email from FinCo operations to Mr Oxtoby on 13 October 2023.
191. ii) Integra's failure or refusal to nominate a different vessel upon receiving that rejection was a breach of contract that amounted to a renunciation or repudiation which it accepted.
192. Integra says that:
194. i) FinCo did not validly reject the nomination of the Aramon because (i) the instant messages from Mr Ehrhardt could not constitute notice of rejection pursuant to s.70(4) of the BP GTCS and in any event did not amount to a rejection of the vessel; (ii) the email of 6 October 2023 did not amount to a rejection of the vessel; and (iii) the emails of 9 and 13 October 2023 were too late and did not amount to rejections.
195. ii) In any event, FinCo did not validly reject the nomination of the vessel on those occasions because its reason (the length of the vessel) did not constitute reasonable grounds.
196. iii) The discussion between Mr Ehrhardt and Mr Oxtoby on 10 October 2023 gave rise to a collateral contract to the effect that FinCo accepted the nomination of the Aramon in return for Integra agreeing to arrange discharge to barges for transport to the GES terminal. Alternatively there was an estoppel by convention to similar effect arising out of the parties' dealings between 10 October 2023 and 25 November 2023 as a whole.
197. I take those points in turn, save that it is convenient to consider the arguments about the email of 13 October 2023 as part of the consideration as to the effect of the discussion that took place on 10 October 2023 and the correspondence that followed it.
199. The communications up to 10 October 2023
200. I agree with Integra that the instant messages sent by Mr Ehrhardt on 6 October 2023 cannot constitute valid notice of rejection pursuant to s.14.6.1 of the BP GTCs because s.70(4) provides that notice cannot be given by instant messaging. That is a clear and straightforward contractual term and there is no justification for ignoring it.
202. I accept that Mr Ehrhardt and Mr Oxtoby used instant messaging to communicate between themselves to a significant extent but I reject any suggestion that they understood that instant messaging was a suitable medium for giving notice where required to do so by the contract or that there was any waiver of s.70(4). On the contrary, it seems clear that both men understood that contract notices needed to come by email (and the nomination of the Aramon on 5 October 2023, the proposal on 12 October 2023, as well as the nomination of barges on 23 November 2023 and the notice of termination on 25 November 2023, were all sent by email) and used instant messaging for more informal communication. More generally, while it is undoubtedly the case that instant messaging is widely used in business, it seems to me that it is the very informality of instant messaging that constitutes a significant part of its attractiveness, and that that is well understood by those engaged in business, who would generally expect contractual notices to be sent by more formal means (hence s.70(4)).
204. I also agree that the terms of Mr Ehrhardt's messages on 6 October 2023 were not such as to amount to a rejection of the Aramon in any event. The messages rather identify a potential issue with the Aramon and invite and initiate a constructive debate as to how that issue might be resolved. A rejection of a vessel pursuant to s.14.6 of the BP GTCs is a serious matter, requiring the Seller to find a new vessel on which to transport the contract product. It is important that a rejection be communicated unequivocally so that the parties know where they stand. The terms of Mr Ehrhardt's instant messages fall far short of an unequivocal statement that the Aramon is rejected as the performing vessel under the contract.
206. The same is true of the email of 6 October 2023. The statement that " our customer is still checking the vessel but it will be very difficult to get an LR discharged " is not a rejection of the Aramon. It expressly contemplates the possibility that the Aramon might be acceptable, and at most indicates that the parties will need to discuss the method of discharge. It is not an unequivocal statement that the Aramon is not accepted as the performing vessel under the contract.
208. It follows from my findings concerning the proper construction of s.14.6 of the BP GTCs that any purported rejection of the Aramon after 6 October 2023 was too late (unless it was based on new information such that s.14.6.3 applied). FinCo had not given notice within 1 Business Day rejecting the vessel and in those circumstances it was to be treated as having been accepted (or, if different, Integra was not in breach of contract in not nominating a different vessel when the right to reject the Aramon had lapsed).
210. The findings I have made to this point are in fact sufficient to dispose of the nomination issue. I will nevertheless go on to consider the remaining arguments in case I am wrong in my findings thus far, and because the points were fully argued.
212. Had it not been too late, I would have held that the email of 9 October 2023 was an unequivocal rejection of the Aramon. The concluding sentences " if you want to arrange STS, all costs will be for your account. Please send a new vessel " seem to me, in the context of what had gone before, to amount to an unequivocal statement that FinCo was not prepared to accept the Aramon unless Integra was prepared to arrange discharge to a barge or other vessel that could berth at the jetty at GES.
214. If I had accepted any of the communications sent by FinCo in the period before 10 October 2023 to be valid rejections, it would still have been necessary to consider the effect of the parties' communications after 10 October 2023. I turn to that issue below.
216. The reasonableness of the reason
217. If and to the extent that the communications sent by FinCo prior to 10 October 2023 amounted to rejections of the Aramon, the reason given was that the vessel was too long to berth alongside the jetty at GES Amsterdam. It is common ground that a rejection under s.14.6 must be on "reasonable grounds" in order to be valid. Is the length of the vessel a "reasonable" ground? The answer to that must depend on the circumstances:
219. i) "Reasonableness" in this context must be an objective standard. In order to be "reasonable" the ground for rejection must be one that a reasonable Buyer would consider to be a sufficient reason for rejecting the vessel in the circumstances existing at the date of rejection.
220. ii) It was common ground between the parties, and I agree, that if there was nowhere in ARA (or perhaps in Amsterdam) that the Aramon could safely berth due to its size, that would amount to a reasonable ground for rejecting the vessel. That is perhaps obvious: in circumstances where the contract provides for delivery in ARA, it could hardly be sensible for the Seller to nominate, or for the Buyer to be required to accept, a vessel that cannot berth at all in ARA (or in one of the three ports contained within it). Nevertheless, the example illustrates the fact that a vessel's size can in principle be capable of amounting to a reasonable ground for rejection.
221. iii) At the other extreme, I think it was also common ground, and I certainly agree, that if the vast majority of berths in Amsterdam could accommodate the Aramon, it would not be reasonable for FinCo to reject the vessel because it happened to have an unusually small jetty that it wished to use to take delivery. Even if that did not follow as a matter of general analysis, it seems to me that it would follow from the fact that (ARA having been agreed as the delivery destination in the contract) Integra has the right under the contract to reject a Discharge Terminal nominated by FinCo on reasonable grounds. If it were reasonable for FinCo to reject a vessel because it wished to use a Discharge Terminal within ARA with an unusually small jetty, it seems to me that it would be equally reasonable for Integra to reject a terminal within ARA with unusually small jetties as the Discharge Terminal, which would lead to absurdity which the parties cannot be taken to have intended.
222. iv) In between those two extremes, whether or not the fact that the vessel will not fit at the terminal that the Buyer wishes to use amounts to a reasonable ground for rejection must be a matter of degree, having regard to the size of the vessel, the available terminals at the port of discharge, the nature of the constraints at the terminal that the Buyer wishes to use and perhaps also the cost in terms of expense and delay involved in undertaking delivery using the vessel at the available terminals.
223. v) I think it is relevant that the BP GTCs expressly contemplate that discharge of the product at the Discharge Terminal might have to take place by way of lighters or ship-to-ship transfer and contain provision for the terms and costs of discharge in that way. While lighters are generally used in situations where a vessel cannot fit a berth because of its draft, as I understand the term it is broad enough to include discharge to barges for other reasons, and in any event there is an obvious analogy between a vessel being unable to fit a berth due to its draft and a vessel being unable to fit a berth due to its length. It would, at the very least, be surprising if every situation in which a vessel needed to discharge into lighters or by ship-to-ship transfer due to its size represented a basis for rejection of the vessel in circumstances where the BP GTCs expressly contemplate that as a possible means of discharge and make provision for it.
224. vi) A reasonable Buyer would also have to consider the fact that in a CIF contract the mode of discharge of the cargo is generally not something with which the Seller need be concerned or which it is required to finance. On the other hand, if the use of a particular vessel at a Discharge Terminal that cannot be said to be unusual would cause the Buyer to incur substantial costs that would materially alter the financial impact of the trade, it may be that a reasonable Buyer would consider that to be a sufficient reason to reject the vessel. As I have said, ultimately it seems to me that what is reasonable must be a matter of degree.
225. In my judgment, the present case falls close to the line. It was certainly reasonable for Integra to nominate the Aramon as the performing vessel in the expectation that it would be able to discharge at a wide range of terminals in ARA. But the evidence does not establish that the jetties at the GES terminal were unusually short or that the choice of that terminal as the Discharge Terminal was unreasonable or unusual in the context of a delivery of MTBE in Amsterdam. I also have relatively little evidence about the cost of using lighters at the GES terminal and whether that would be a cost which reasonable traders would ordinarily expect a Buyer to bear. The conclusion that I have come to is that, based on the evidence available to me, a reasonable Buyer would regard the fact that the Aramon was too long to berth alongside the jetties at GES Amsterdam as a sufficient ground for rejecting the vessel, at least in the absence of any proposal from the Seller as to how the product should otherwise be discharged.
227. That means that, if the communications sent by FinCo prior to 10 October 2023 had otherwise been valid notices of rejection, I would have held that the ground relied upon by FinCo was reasonable and thus that the notices were not invalid on that basis, and that Integra was required to re-perform the obligation to nominate.
229. The effect of the parties' communications 10 October ? 25 November 2023
230. I have accepted Integra's case that Mr Oxtoby and Mr Ehrhardt spoke by telephone on 10 October 2023 and have indicated that I consider it likely that the content of that conversation is reflected in what Mr Oxtoby says in his email to FinCo's operations team, referring to his conversation with Mr Ehrhardt, on 12 October 2023.
232. Integra contended that the conversation between Mr Oxtoby and Mr Ehrhardt resulted in a collateral contract that FinCo would accept the nomination of the Aramon in exchange for a promise by Integra to arrange and pay for a discharge of the vessel at GES Amsterdam by barge. I find that no such collateral contract was entered into on that call. Mr Oxtoby's oral evidence was that, while options for discharge were discussed on the call, there was no agreement as to who would pay for them (though in re-examination he agreed with a suggestion that Integra would have paid for them at least "in the first instance"). Moreover, in order to be valid under the contract, any collateral contract would have had to be evidenced in writing (per s.74.5 of the BP GTCs). The email of 12 October 2023 does not suggest that Mr Oxtoby and Mr Ehrhardt had concluded an agreement when they spoke: it says instead that they had " discussed " " possibilities ". In my judgment, that is likely accurately to reflect what had happened, i.e. that Mr Ehrhardt and Mr Oxtoby discussed possible ways in which the MTBE might be discharged from the Aramon and taken to the GES terminal, but did not reach any concluded agreement. If they had done so, I consider it likely that Mr Oxtoby would have said so in terms (and there would be evidence of Mr Oxtoby and Mr Ehrhardt communicating that agreement back to their colleagues to be documented).
234. In my view, the correct analysis of the communications between the parties in the period 10 ? 13 October 2023 is that:
236. i) The conversation on 10 October 2023 between Mr Oxtoby and Mr Ehrhardt was a discussion of possible ways to resolve the position, during which the idea of discharging from the Aramon at Amsterdam onto barges or at a different terminal was discussed but no concluded agreement reached.
237. ii) Mr Oxtoby's email of 12 October 2023 amounted to a re-nomination by Integra of the Aramon as the performing vessel under the contract, on the basis that Integra was offering to arrange (and impliedly to bear the cost of) a " logistical solution " by which the MTBE would be discharged from the Aramon and delivered to the GES terminal. That is what the email is saying and I am confident that it is how it would have been understood by a reasonable recipient. In other words, having discussed the " possibilities " with Mr Ehrhardt on 10 October 2023, Mr Oxtoby was now putting forward a firm proposal based on that discussion. If, contrary to my findings above, FinCo had validly rejected the nomination of the Aramon prior to 12 October 2023, the effect of this email was therefore to re-nominate the Aramon as a suitable vessel on the basis of the proposal set out in the email.
238. iii) The email in response from FinCo to Integra on 13 October 2023 saying that FinCo " cannot clear the vessel " was an unequivocal statement of rejection of the re-nomination. However, since Integra was offering to arrange and pay for the cost of discharge from the Aramon to the GES terminal, there were no longer reasonable grounds for that rejection. A reasonable Buyer would not regard the size of the vessel as a sufficient ground for rejecting it if the Seller has offered to make arrangements for discharge that are not themselves objectionable and which render the size of the vessel irrelevant. No reason for rejecting the offer to discharge via barges was suggested at the time. In argument FinCo suggested that using barges as part of the method of discharge might increase the risk that the MTBE might not be at specification when it reached FinCo's customer. But no such concern was raised at the time and there is no evidence before me to establish the substance or extent of any such risk. It cannot be the case that such a risk necessarily represents a reasonable ground for rejection of a vessel, particularly in circumstances where discharge to lighters or barges is a common method of delivery (and one for which s.15.5 of the BP GTCs expressly provides).
239. iv) If, contrary to my findings, the initial nomination of the Aramon had been validly rejected, the email of 12 October 2023 was therefore a valid re-nomination of the Aramon on terms that adequately addressed the ground for rejection of the initial nomination. That re-nomination was not itself validly rejected.
240. The final issue to consider in relation to the nomination issue is Integra's case that, if it were wrong on all other arguments, there was an estoppel by convention arising out of the parties' communications in the period between 10 October 2023 and 25 November 2023 that prevents FinCo from denying that the Aramon was validly nominated under the contract.
242. What emerges from the parties' communications is that:
244. i) The parties were proceeding throughout the period between 13 October 2023 and 25 November 2023 on the basis of a common understanding that the MTBE would be shipped on the Aramon to Amsterdam and discharged to barges for delivery to the GES terminal.
245. ii) That understanding is reflected in the communications by which FinCo sought and was provided with an update on loading of the Aramon, sought and took delivery of the bill of lading naming it as the notify party, sought and was provided with updates on the Aramon 's ETA at ARA, confirmed the GES terminal as the Discharge Terminal and sought and was provided with barge nominations for discharge from the Aramon to the GES terminal.
246. iii) The parties seem to have held differing views as to the correct legal analysis of what was happening. Integra was proceeding on the basis that the nomination of the Aramon as the performing vessel under the contract was effective and that the arrangements for the barges to be nominated in due course to effect discharge did not affect that. FinCo seems to have had a more equivocal position. At times it seems to have been proceeding on the basis that the nomination of the Aramon had been rejected, but that the MTBE would be shipped to Amsterdam on the Aramon and that the barges would constitute the performing vessels under the contract, to be nominated in due course. That position is difficult to square with seeking and receiving a copy of the bill of lading for the Aramon naming FinCo as the notify party and more generally seems a little unrealistic: there was no suggestion that the quality of the MTBE (for example) was going to be remeasured when it was discharged from the Aramon, or that risk and property in the MTBE had not passed to FinCo when the MTBE was loaded on to the Aramon in the usual way.
247. iv) Though it does not matter for the purposes of the argument on estoppel, my own view, for the reasons set out above, is that Integra were right about the legal analysis. The nomination of the Aramon had not been validly rejected. The result was that the Aramon was the performing vessel under the contract (and risk and property in the MTBE passed to FinCo upon loading in the Persian Gulf). The use of barges was in effect a lightering (or STS) arrangement requested by the Seller and to be arranged at Integra's expense in accordance with s.15 of the BP GTCs.
248. An estoppel by convention arises where parties to a contract (i) proceed on a basis as to the factual or legal position that differs from the actual position and which is shared between them by words or conduct that 'cross the line' (known as a "common assumption"); (ii) the relevant words or conduct were such as to indicate that the other person was expected to rely on them; (iii) the person alleging the estoppel relied on the common assumption in connection with the performance of the contract rather than merely upon their own independent view and (iv) some element of detriment or benefit exists that renders it unconscionable for the person alleged to be estopped to rely on the true factual or legal position (see e.g. Tinkler v Commissioners for HMRC [2022] AC 886, approving the summary of the principles set out by Briggs J in HMRC v Benchdollar Ltd [2010] 1 All ER 174).
250. Had it been necessary, I would have found that an estoppel by convention arose in the present case that prevented FinCo from asserting that Integra had breached its obligation to nominate a vessel under the contract. The parties proceeded on the basis that Integra could perform the contract by delivering the MTBE to Amsterdam on the Aramon and arranging discharge at Amsterdam into barges that would be nominated later. That basis was reflected in the communications that I have referred to above and, if it was inconsistent with the actual position according to the contract terms properly construed, amounted to a 'common assumption' as defined above. The fact that the parties may have had differing views as to the right legal analysis of the events underlying that common assumption does not matter. The communications relied upon were formal business communications upon which Integra was expected to rely and I am sure did rely in continuing to proceed with the delivery of the MTBE to Amsterdam on the Aramon and in making arrangements for the nomination of barges. If Integra had understood that FinCo would treat the delivery of the MTBE in that way as a breach of contract, it would obviously have sought either to formalise the understanding that Integra could comply with the contract in that way or sought an alternative buyer, rather than find itself embroiled in a legal dispute. For the same reasons I consider that Integra suffered 'detriment' in relying on the common assumption that would render it unconscionable for FinCo to insist on what for the purposes of this argument is assumed to be the 'true' contractual position and rely on Integra's conduct as a repudiation of the contract.
252. More generally, stepping back, it is very difficult to see how Integra could possibly be said to have repudiated or renounced the contract in circumstances where, on any view, its actions were consistent with an intention to maintain and perform the contract. Even if FinCo's analysis of the basis on which the parties were proceeding was right, it was clearly understood that Integra was going to nominate barges to transport the MTBE from the Aramon to the GES terminal in due course (and it did so on 23 November 2023). In those circumstances, bringing the MTBE to Amsterdam on the Aramon was plainly not an indication of an intention not to perform the contract: on any view that was what both parties thought at the time that Integra was supposed to be doing.
254. In short, for the various reasons that I have set out, I find that FinCo was not entitled to terminate the contract on 25 November 2023 (or on any later date) by reason of a failure on the part of Integra to comply with its obligations in relation to vessel nomination.
256. Quantum
257. There were two disputed points on quantum with which I can deal shortly.
259. Integra contended that FinCo should be required to give credit against its damages claim for the profit said to have been earned by it as a result of being able to source MTBE for its onward customer at prices lower than that payable to Integra under the contract. Whilst I accept Integra's case in principle that, if FinCo was able to increase its profit on its onward sale as a result of Integra's breach of contract, that increase in profit represents a benefit arising from the breach for which FinCo would have to give credit against its damages claim, I do not regard Integra's case as having been made out on the evidence. The point seems to have been a late brainwave on the part of Integra's legal team, as a result of which the available evidence about FinCo's onward sale at trial was very limited. It seems likely that FinCo was able to source MTBE at prices that might have been lower than those payable under the contract with Integra in which was agreed to be a falling market, but what those prices were was unclear, and how such prices would have impacted the overall profitability of FinCo's onward sale was entirely opaque. I therefore reject Integra's case as to the alleged credit.
261. FinCo contended that, even if its case failed in all other respects, it is entitled to be paid US$215,500 representing part of the sum that Integra purported to deduct from the proceeds of its sale of the MTBE to a third party before paying FinCo the balance. FinCo accepts that Integra was entitled to deduct expenses incurred in that sale from the amount that it paid to FinCo. The US$215,000 is said to represent a loss incurred by Integra on a hedge that it entered into in respect of the sale to the third party. FinCo points out that the documents suggest that the hedge was in fact entered into not by Integra but by a different company in the same group, Integra Petrochemicals Pte Ltd, and queries whether the loss on the hedge represents a cost incurred by Integra.
263. Again, this point was not the subject of detailed evidence, probably because it was something on which the FinCo legal team only appears to have focussed at a late stage. When cross-examined, Mr Oxtoby explained that Integra Petrochemicals Pte Ltd is a Singaporean entity that 'clears' hedging activity on behalf of the group. It seems to me to be likely that the loss on the hedge will have been charged back by Integra Petrochemicals Pte Ltd to Integra, as the party whose sale was protected by the hedge. Whilst I would accept that it is possible that Integra's group accounting is arranged in such a way that the Singaporean entity enters into hedges to protect Integra's profits without there being an arrangement whereby any loss on the hedges is charged to Integra (which would presumably mean that any profits on hedges protecting its positions would similarly not be credited to Integra) I consider that to be improbable. I do not think that Integra can fairly be criticised for not providing additional evidence on this issue in circumstances where the point had not clearly been raised. In the circumstances I am not prepared to find that the US$215,500 was improperly deducted from the price realised by Integra for the MTBE before it accounted to FinCo for the proceeds.
265. Conclusion
266. For the reasons that I have set out above, the claim is dismissed.

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URL: https://www.bailii.org/ew/cases/EWHC/Comm/2026/727.html