In Polestar Maritime Ltd v YHM Shipping Co Ltd (The Rewa), the buyer of a vessel appealed against a decision that it had not been entitled to cancel a MOA and was liable in damages for breach of contract for refusing to complete the transaction. The sale contract was on an amended Norwegian Saleform 1993. In dismissing the appeal, the Court of Appeal considered the interpretation of clauses 11 and 14 of the contract.
Clause 11 provided that “the vessel shall be delivered with … her National/International trading certificates, as well as all other certificates the Vessel had at the time of her inspection“. After the vessel had been inspected, a new MARPOL provision came into force requiring the vessel to have an International Sewage Pollution Prevention (ISPP) Certificate. The vessel did not have such a certificate on delivery, which the buyer said entitled it to cancel the sale contract. The Court of Appeal disagreed, holding that the contract was an “as was” sale and purchase contract. The seller was obliged under clause 11 to ensure that, on delivery, the vessel had on board all certificates (ie both National / International trading certificates and all other certificates) that she had at the time of her inspection. Absent specific wording to that effect, there was no obligation to provide further certificates that the vessel did not have at the time of her inspection.
Clause 14 stated: “provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation as per Clause 8“. The vessel was detained due to her lack of ISPP Certificate, although the detention was in fact lifted within a day. The buyer, meanwhile, argued that the detention gave it further entitlement to cancel the sale contract as the vessel was not free from detentions as the seller had covenanted in the bill of sale. The Court held that clause 14 allowed the seller three banking days to ‘make arrangements’, not ‘to provide’, the documents referred to, which included taking steps to enable them to provide the documentation: in this case to lift the detention and deliver the bill of sale in which it covenanted that the vessel would be free of detentions.
The buyer therefore failed to persuade the Court that it had been entitled to cancel the MOA under either clause 11 or clause 14. The court applied a commercial, common sense meaning to both clauses which it was required to interpret, and generally discouraged parties from referring to previous versions and drafting committee’s commentaries to aid construction save where there are problems with ambiguous wording.