The English High Court decision in Polestar v YHM (The “Rewa”) was discussed in an earlier website article: NSF - What Certificates on Delivery? The case concerned the sale of a vessel “as was“ on an amended Norwegian Saleform 1993 and whether the seller was required to deliver the vessel with certificates that were relevant at the time of inspection, or certificates that had, since the date of inspection, become relevant. Between inspection and delivery of the vessel a new MARPOL provision had come into force requiring the vessel to have an International Sewage Pollution Prevention (ISPP) Certificate. The buyer had sought to cancel the Memorandum of Agreement (MoA) on this basis. In the same period, the value of the vessel had halved.
At arbitration the buyers’ argument had prevailed but the sellers had successfully appealed that decision before the High Court. The case has now been heard by the Court of Appeal. When dismissing the buyers’ appeal the interpretation of clauses 11 and 14 of the contract were considered.
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“.
The Court of Appeal held that the sellers’ obligation on delivery was to ensure the vessel had on board all certificates that she had at the time of her inspection and that, 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.
A further ground of appeal was that the vessel had been detained because of the absence of the ISPP Certificate. The buyer had argued that the detention gave them a further entitlement to cancel since, as the seller had covenanted in the bill of sale, the vessel was not free from detentions. However, 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 set out in Clause 8“.
The Court of Appeal held that clause 14 allowed the seller three banking days to “make arrangements”, which meant the clause contemplated the sellers taking such steps to provide the necessary documentation for the valid legal transfer of the vessel in accordance with the bill of sale and MoA. The vessel had been delivered on 30 September and thus the seller had three banking days after that date to lift the detention and to deliver the vessel free from detentions.
Therefore, and in a welcome decision that arguably demonstrates a commercial common sense approach, the appeal failed and the buyer was not entitled to cancel the MoA under either clause 11 or clause 14.
Article by Malcolm Shelmerdine
