In Mansel Oil Ltd v Troon Storage Tankers SA (The “Ailsa Craig”)  EWCA Civ 425 (referred to in the June 2008 bulletin) the shipowner appealed against a decision of the Commercial Court where it was held that the charterer had properly cancelled the charterparty after failing to nominate a discharge port. The vessel had been converted at owner’s expense to a floating storage facility for petroleum products. Upon completion of the modifications, the vessel was to be delivered by the owner to a West African port which port was to be nominated by the charterer. The charterparty gave the charterer the option of cancelling should the vessel not be delivered by a certain date. This date was revised following a request by the charterer for further modifications. When it became clear that the vessel would miss the cancelling date, the charterer purported to cancel the charter.
The Commercial Court had to decide as a preliminary issue whether the charterer’s failure to nominate a delivery port barred the charterer from exercising its rights under the cancellation clause. The owner argued that the charterer’s obligation to nominate a delivery port more than 30 days before the earliest delivery date was a precondition to the charterer exercising its right to cancel under the charterparty. Clarke J found that there was no express clause in the charterparty requiring the charterer to nominate a delivery port prior to the charterer exercising its right to cancel. He did not see how such a term could be implied as the charterer’s nomination of a delivery port would have served no purpose. The Court of Appeal affirmed the decision of the lower court. It ruled that the charterparty contained no such provision and that the implication of such a term would be pointless. The court noted that charterparties do not generally require parties to make pointless nominations, nor do charterparties require that pointless nominations be made as a condition precedent to exercising other rights.