'218. The Respondent has submitted that the Claimant breached the Contract in four ways:

(a) By failing to establish a letter of credit before the arrival of the vessel in breach of Clause 11(f) …

(b) By failing to establish a letter of credit within five working days of signing the Contract in breach of Clause 6 …

(c) By failing to nominate the vessel at least five days before its arrival at the load port in breach of Clause 11(f) …

(d) By failing to notify the estimated time of arrival of the vessel at the load port in breach of Clause 10 …

219. By virtue of the express choice of English law in Clause 15 of the Contract, the Claimant's first claim and the Respondent's defences thereto are governed by English law.

220. It was accepted by the parties that, as a matter of English law, a party only has the right to terminate a contract and to treat itself as being discharged from the further performance of its own obligations under that contract if its counterparty has breached a condition of the contract … For the Respondent to prevail in respect of one or more of its defences, it must, therefore, establish that the Claimant has breached a condition of the Contract and not, for instance, a mere warranty.

(1) Breach of Clause 11(f) - failure to establish a letter of credit before the arrival of the vessel

221. Clause 11(f) of the Contract reads:

Clause 11 Loading Terms

[…]

f) Vessel to be nominated a least 5 working days before arrival at load port and acceptable L/C to reach seller's bank before vessel arrives

222. It is not in dispute that a notice of readiness (NoR) was issued by the captain of the vessel at 0207 hours on 7 October 2010 … and that [Claimant] had not sent a letter of credit to [Respondent]'s bank at that time.

223. The Respondent submits on this basis that:

There can be no doubt that establishing a letter of credit is a condition precedent to be satisfied for any obligation on a seller to load goods. Breach of such a condition by the buyer is a repudiatory breach which entitles a Seller to terminate the contract.1

224. The Tribunal does not interpret Clause 11(f) of the Contract as a condition, the breach of which would entitle [Respondent] to treat itself as discharged from further performance, for the following reasons.

225. Clause 6 of the Contract states that "Buyer shall establish an irrevocable, non-transferable and at sight acceptable Letter of Credit for contract quantity within 5 working days of signing of the contract…" … This is a condition in the Contract relating to the substance, form and timing of delivery of the letter of credit. It is not reasonable to read the deadline for establishing a letter of credit in Clause 6 as being subject to change depending upon when the vessel arrives at the designated port by reference to Clause 11(f). This would be commercially absurd because the schedule of the vessel is not within the control of [Claimant] and this will often be the case where the buyer is not the owner or charterer of the vessel. It is imperative for the Buyer to know exactly how long it has available to establish a letter of credit; it would make no commercial sense if that period could be curtailed by the early arrival of the vessel (perhaps due to more favourable than expected weather conditions) such that the Buyer would be put in technical breach and the Seller would obtain an immediate right to treat itself as discharged from further performance.

226. The proper interpretation of Clause 11(f), as was submitted by the Claimant, is that [Respondent] was not obliged to place the cargo on board the vessel if the vessel arrived prior to receipt of the letter of credit by [Respondent]'s bank … Clause 11 established the "Loading Terms" for the goods and not conditions in respect of the Buyer's and Seller's obligations under the Contract.

227. The Tribunal thus concludes that a breach of Clause 11(f) of the Contract would not have entitled the Respondent to terminate the Contract on 9 October 2010.

(2) Breach of Clause 6 - failure to establish a letter of credit within five working days of signing of the Contract

228. Clause 6 of the Contract, so far as material, reads:

Payment

(A) Buyer shall establish an irrevocable, non-transferable and at sight acceptable Letter of Credit for contract quantity within 5 working days of signing of the contract for an amount in US Dollars sufficient to cover 110% (one hundred ten percent) of the shipment value to be made from any Prime Bank available for negotiation at the counters of Seller's Bank. All banking charges outside opening Bank are for account of the Seller.

229. Clause 7(g) then lists some "special conditions" that are to be stipulated in the letter of credit:

Special conditions be stipulated in the Letter of Credit:-

i. All banking charges outside opening Bank are for account of the Beneficiary

ii. Charter Party Bills of Lading acceptable

iii. All documents must be presented to negotiating Bank within 14 days of shipment date but in any event not later than the expiry date of this credit

iv. The Letter of Credit to stipulate "This credit is negotiable at the counters of any Bank"

v. A tolerance of 10% more or less in credit amount and quantity is acceptable.

230. There does not appear to be a dispute between the parties as to the proper characterisation of the obligation to establish a letter of credit (LoC). It is a condition, such that a breach by the Claimant of this obligation would in principle entitle the Respondent to treat itself as discharged from its own obligations under the Contract.

(i) The evidence relating to the Claimant's establishment of a LoC and the chronology of events relating to the LoC

231. The evidence relating to the Claimant's establishment of a LoC and the chronology of events relating to the LoC is as follows.

232. The Contract was signed on 4 October 2010 … It was amended on 5 October 2010 to extend the period for the establishment of the LoC from two working days to "within five working days of signing of the contract" …

233. On 5 October 2010, the Claimant sold the consignment to [its customer] for USD … for delivery between 10-20 October 2010 …

234. On 7 October 2010, a meeting was held between [representatives] of the Respondent and [another buyer] at which it was agreed that [the other buyer] would purchase the consignment at USD … On the same day, [a representative] of the Respondent emailed the Claimant … to inform them that "we will not be able to execute this contract" due to unexpected delays in securing a mechanical plot …

235. On 8 October 2010, the Claimant sent its draft LoC to the Respondent with the following covering email:

Dear …

Please find attached herewith LC Application Draft for your confirmation.

Please be noted today is 1st working day in China after long holiday and we will open LC within today so please confirm the attached LC Application Draft ASAP.

Best regards,

………

236. The Claimant was seeking to establish a back-to-back LoC with [its customer].

237. On the same day, [a representative] of the Claimant sent another email requesting that the Respondent "confirm the attached LC Draft URGENTLY" … The full text of the email reads:

Dear …

With reference to below mail [i.e. the email reproduced above], please confirm the attached LC Draft URGENTLY.

We have already forwarded this LC Application to bank as today is the last wotking [sic] day of the week but our bank is asking for confirmation before opening the LC so we hereby request you to please confirm the LC Draft in order to open the LC ASAP so we can forward you the SWIFT copy of the LC within today.

Since the vessel is already arrived at Loading Port so please arrange for cargo and all the documentation requierd [sic] immediately in order to berth the vessel for loading ASAP as the detention charges are USD40,000 per day.

Waiting for your quick confirmation …

238. The Tribunal accepts the Respondent's argument that it was not a condition precedent for the opening of a LoC to obtain the Respondent's "confirmation" of its terms … The Tribunal does not, however, accept the Respondent's submission on the reason for the Claimant's request for confirmation:

Accordingly, what this incorrect stand taken by Claimant shows is that the Claimant was either seeking to buy time without any basis possibly because it was aware of its inability to open a back to back LC or was hoping to get [Respondent's representative] who was in collusion with them to confirm a non-contractual draft LC to further their ulterior motives but what the claimant did not realize was that by this time [Respondent's representative]'s game had been discovered.2

239. Far from "seeking to buy time", what the Claimant's emails demonstrate emphatically is that the Claimant was ready, willing and able to open a LoC on 8 October 2010. The reason the Claimant was seeking "confirmation" was likely to have been for the practical reason that any amendments to the LoC in favour of the Respondent would have to be reflected in [Claimant's customer]'s LoC in favour of the Claimant. It was thus prudent to ensure that the Respondent was content with the terms of the LoC so that no consequential amendments would have to be made …

240. Indeed, [Respondent's representative]'s response to the Claimant's second email of 8 October 2010 unequivocally confirms that it was the Respondent who was "seeking to buy time"; no doubt because a day earlier it had finally executed a contract to sell the same consignment to [another buyer]. [Respondent's representative]'s response reads:

With reference to our last email dated 7th October 2010, We are finding out some solution regarding the contract, We request you give us some time up to 10th October 2010 …

241. The very next day, on 9 October 2010, [Respondent's representative] sent another email to the Claimant purporting to cancel the Contract on the basis that a LoC had not been established:

Dear Sirs

As per above contract dated 4.10.10 … we are sorry that under Clause No. 6 of above contract the LC was supposed to be established and sent to us within 5 working days from the date of signing the contract.

The Contract was signed on 4.10.2010, failing to provide the same within stipulated period it is assumed that the same is not being honoured by you and therefore, we take it as cancelled.

Due to the same, we are forced to confirm our consignment to some other buyer. However, we will look forward to offer you our next consignment to start some business.

With regards,

………

242. The Tribunal makes the following findings in respect of this evidence and the chronology of events.

243. The Respondent's confirmation of a draft of the LoC was not a condition precedent for the establishment of the LoC but was self-evidently a prudent step for the Claimant to take given that it was seeking a back-to-back LoC with [its customer]. The Claimant informed the Respondent on 8 October 2010 that the LoC could be opened on the same day. On 8 October 2010 the Claimant twice requested the Respondent to confirm that it was content with the draft LoC. [Respondent's representative] finally replied on 8 October and requested until 10 October 2010 in order to "find[…] out some solution regarding the contract". This request makes perfect sense in light of what was unknown to the Claimant at the time: the same consignment had been sold to [another buyer] the day before.

244. In the event, the Respondent's "solution" was to write to the Claimant the next day and purport to cancel the Contract on the basis that the Claimant had not established the LoC within the contractually stipulated time. The Respondent thus represented on 8 October 2010 that it would require until 10 October to comment upon the Claimant's draft LoC, but then purported to cancel the Contract on 9 October because the LoC had not been established by 9 October. The Respondent's actions can only be explained against the background of its agreement with [another buyer] on 7 October to sell them the same consignment of [goods]. Indeed, [Respondent's representative]'s email of 9 October states expressly that "we are forced to confirm our consignment to some other buyer".

(ii) The four questions that must be resolved

245. These findings of fact raise four questions:

(a) Was the Respondent entitled to treat itself as discharged from the Contract on 9 October 2010 on the basis of the Claimant's failure to establish a LoC by that date?

(b) If no to (a), did the Respondent's communication of 9 October 2010 amount to a renunciation of the Contract?

(c) If yes to (b), did the Claimant accept that renunciation and, if so, when?

(d) If yes to (c), was the Claimant obliged to comply with its obligation to establish a LoC during the interim period between the date of the Respondent's renunciation and the Claimant's acceptance of that renunciation in order for the Claimant's acceptance to be valid?

(iii) The first question

246. The Respondent is correct that the Contract was signed on 4 October 2010 despite the fact that it was subsequently amended on 5 October 2010 … The Contract has a signing clause that states: "In witness whereof this contract is made on this 4th day of October, 2010 and duly signed by the authorized representatives of the Seller and the Buyer." … Next to [Respondent's representative]'s signature on behalf of [Respondent], moreover, there is a handwritten date of "04-10-10" … The Tribunal finds that this is conclusive as to the date of the signing of the Contract. The Claimant submitted that the Contract must be deemed to have been signed on 5 October 2010 … because certain amendments to Clause 6 of the Contract were only sent by [Respondent] to [Claimant] on 5 October 2010 … This was clearly an amendment to the Contract as executed on 4 October 2010 and thus cannot have the effect of delaying the signing of the Contract until 5 October 2010.

247. The amendment to Clause 6 that was executed on 5 October 2010 imposed an obligation upon the Claimant to establish a LoC "within five working days of signing of the contract" … This language clearly indicates that the day of the signing of the Contract is excluded and hence, given that 9(10 October 2010 fell on the weekend,3 the Claimant had until 11 October 2010 to establish the LoC.

248. It follows that the Claimant was not in breach of that obligation on 9 October 2010. Furthermore, even if the Tribunal were wrong on this, the Tribunal would have found that by virtue of the Respondent's email of 8 October 2010, by which it requested until 10 October 2010 to provide its confirmation of the LoC, the Respondent would be estopped from relying upon an earlier date for the performance of the Claimant's obligation under Clause 6 of the Contract in order to justify its renunciation of the Contract.

249. Thus, in conclusion, the Respondent was not entitled to treat itself as discharged from the Contract on 9 October 2010 on the basis of the Claimant's failure to establish a LoC at that point in time because the time for the Claimant to perform that obligation expired on 11 October 2010. The Claimant, in other words, was not in breach on 9 October 2010.

(iv) The second question

250. It is clear that the Respondent's communication of 9 October 2010 amounts to a renunciation of the Contract4 By that communication, the Respondent unequivocally renounced the Contract in its entirety: the Claimant was informed that "we [the Respondent] take it as cancelled" and that:

Due to the same, we are forced to confirm our consignment to some other buyer. However, we will look forward to offer you our next consignment to start some business.

251. This amounts to an absolute refusal on the Respondent's part to perform its obligations under the Contract and thus a renunciation of the Contract.

(v) The third question

252. The Claimant adopted a series of actions following the Respondent's renunciation of the Contract on 9 October 2010 which are not mutually consistent.

253. First, on 9 October 2010, the Claimant wrote to the Respondent in reply to [Respondent's representative]'s email of the same day by which he purported to cancel the Contract on behalf of the Respondent. The Claimant stated that: "We are totally shocked to receive this type of email from your end after signed the contract [sic]. We feel that you are finding some excuse to back out from this contract." … The Claimant closed the email with the following:

In light of the above we again request you to please make all the necessary arrangements to load our vsl failing which we hv no option but to claim you the following:

1) Daily detention charges starting from 7th October @ USD40000 PDPR until our vsl get berth and deadfreight if any.

2) All extra cost for buying other cargo.

3) All the legal expenses.

A line of reply this regard shall be highly appreciated ...

254. No reply to this email from the Respondent was forthcoming.

255. Second, on 11 October 2010, the Claimant requested an injunction from the [court in Respondent's country] restraining the Respondent from dealing with the consignment … That injunction was granted on 13 October 2010 but discharged on 9 November 2010 on the basis that the proper forum to seek relief was this Tribunal …

256. Third, on 14 October 2010, the Claimant requested an affiliated company … to assist in finding a replacement cargo on an urgent basis … That replacement cargo was in fact secured on 20 October 2010 …

257. Fourth, the Claimant's solicitors wrote to the Respondent on 20 October 2010 with the following request:

Please may we have your confirmation by close of business UK time today, Wednesday 20 October, that you will deliver the goods to our clients in accordance with your obligations under the above Contract, whereupon our clients will arrange for the injunction to be lifted …

258. Fifth, the Claimant filed its Request for Arbitration in the present proceedings on 22 October 2010 claiming damages on the basis that the Respondent was in breach of contract by refusing to ship the goods …

259. Thus, to summarise the contradictory nature of the Claimant's actions, its email of 9 October 2010, the Claimant requested that the Respondent perform its obligations under the Contract, failing which it would claim damages for breach. Then the Claimant sought an injunction essentially to require the Respondent to perform its obligations on 11 October but then on 14 October took steps to secure a replacement cargo. The Claimant made a final demand for performance on 20 October and, when it was not forthcoming, then instituted the present arbitration on 22 October and claimed damages.

260. The issue is further complicated by the fact that at the time of the renunciation, the Respondent's action constituted an anticipatory breach because it was not required to deliver the goods until after the LoC was due to be established on 11 October 2010. If the LoC had subsequently been established, and the Respondent then refused to deliver the goods, it would have been a repudiatory breach, but in the event the Claimant did not subsequently establish the LoC (the significance of this is considered under the "fourth question" below). Nonetheless, it is clear that the Respondent's anticipatory breach of the Contract on 9 October 2010 took a continuing form: at no point after 9 October 2010 did the Respondent indicate that it might nonetheless be willing to perform its obligations by delivering the goods despite the Claimant's insistence that it do so in response to the Respondent's renunciation.

261. The test for what amounts to an act of acceptance of a repudiation of a contract in English law is summarised in Lord Steyn's speech in Vitol S.A. v. Norelf Ltd:5

An act of acceptance of a repudiation requires no particular form: a communication does not have to be couched in the language of acceptance. It is sufficient that the communication or conduct clearly and unequivocally conveys to the repudiating party that that aggrieved party is treating the contract as at an end.6

262. Applying this test to the evidence, the Tribunal concludes that the Claimant did accept the Respondent's continuing anticipatory breach but only on 22 October 2010 when it filed its Request for Arbitration in the present proceedings.7 By virtue of this Request for Arbitration, the Claimant clearly and unequivocally conveyed to the Respondent that it was treating the Contract as at an end. Contrary to the Respondent's position, the Tribunal does not consider that there were any steps taken by the Claimant after that date that were so inconsistent with this acceptance that would have the effect invalidating it. The issue then arises as to whether or not the Claimant is in some way prevented from relying upon this acceptance in law because it had failed to perform its obligation to establish a LoC in the interim period. This is the fourth question.

(vi) The fourth question

263. The Tribunal has found that the Respondent's communication of 9 October 2010 amounted to a renunciation of the Contract and an anticipatory breach, but that, given its inconsistent conduct in the interim, the Claimant only clearly and unequivocally conveyed to the Respondent that it was treating the Contract as at an end on 22 October 2010 when it filed its Request for Arbitration. The question that arises is whether the Claimant was bound to comply with its obligation to establish a LoC during this interim period and, if so, what the consequences are in law given its failure to do so.

264. The Respondent maintains that the Claimant was bound to establish a LoC during this interim period and its failure to do so entitled the Respondent to terminate the Contract on the basis of the Claimant's repudiatory breach … The Respondent is correct that, as a matter of English law, an innocent party who does not accept an anticipatory breach is obliged to continue to perform its own obligations under the contract.8

265. The Claimant, however, has relied upon the doctrine of estoppel, and in particular the case of Fercometal S.A.R.L. v. Mediterranean Shipping Co.,9 to argue that "the law does not require an innocent party to perform, if performance would be a nullity, in circumstances where the guilty party has made it clear that he in unable and unwilling to perform".10 In Fercometal it was submitted on behalf of the owners that, in circumstances where the owners had affirmed a charterparty following the charterers' repudiation of it, the charterers' conduct had induced or caused them to abstain from having the ship ready prior to the cancellation date (the charterparty gave the charterers the option of cancelling the charterparty if the vessel was not ready by a certain date). Lord Ackner rejected this submission on the facts but endorsed the following principle:

Of course, it is always open to A, who has refused to accept B's repudiation of the contract, and thereby kept the contract alive, to contend that in relation to a particular right or obligation under the contract, B is estopped from contending that he, B, is entitled to exercise that right or that he, A, has remained bound by that obligation. If B represents to A that he no longer intends to exercise that right or requires that obligation to be fulfilled by A and A acts upon that representation, then clearly B cannot be heard thereafter to say that he is entitled to exercise that right or that A is in breach of contract by not fulfilling that obligation.11

266. In the present case, the Respondent on 9 October 2010 unequivocally renounced the Contract by informing the Claimant that it considered the Contract as "cancelled" and that the consignment had been confirmed to another buyer … Indeed, by the time the period for the Claimant to establish a LoC had expired on 11 October 2010, it would have been impossible for the Respondent to tender the requisite quantity of [goods] given that it had sold the consignment to [another buyer] on 7 October 2010. This was conceded by [Respondent's CEO] in cross-examination at the hearing …

267. [Respondent's CEO] suggested in re-examination that he would have been able to secure a replacement cargo easily from other sources outside of [port of shipment] … There is, however, no contemporaneous evidence to support this assertion; to the contrary, the trucking sampling receipts show that it had taken the Respondent more than two months to accumulate its stockpile of [the required quantity of goods] in [port of shipment] …

268. Thus, on 9 October 2010 when the Respondent renounced the Contract, it had unequivocally represented to the Claimant that it was not going to deliver the goods and had represented that the consignment had been confirmed to another buyer.

269. The Claimant, for its part, had unequivocally represented the day before on 8 October 2010 that it was ready, willing and able to open a LoC on that day 9-10 October 2010 was the weekend. A draft LoC was sent to the Claimant by [its bank] on 11 October and was subject only to the Claimant's approval … The Claimant took no steps to approve the draft LoC and have it issued. The Tribunal deduces from the contemporaneous evidence on the record that the Claimant relied upon the Respondent's representation and thus refrained from approving the LoC and having it issued because in the circumstances it would have been wholly futile and would have resulted in wasted costs in the form of fees payable to [its bank] and having the funds tied up for the duration of the LoC.

270. The Respondent is, therefore, estopped from relying upon the Claimant's failure to comply with its obligation to establish a LoC under Clause 6 of the Contract notwithstanding that the Claimant had kept the Contract alive until 22 October 2010. In light of the Tribunal's conclusion, is the Respondent permitted to rely upon alleged "deficiencies" in the draft LoC provided to the Claimant on 11 October 2010 to argue that the Claimant was not in a position to comply with Clause 6 of the Contract on that date … These points are irrelevant because, following the Respondent's renunciation of the Contract on 9 October 2010 and the Claimant's action based upon that renunciation (viz. omitting to take steps to have the LoC issued), the Respondent is now estopped from asserting that the Claimant is in breach of the Contract for failing to perform its obligation in Clause 6 of the Contract.

271. Even if the Tribunal were wrong in respect of the estoppel in favour of the Claimant, the Respondent's case would still fail because at no point in time did it accept the Claimant's repudiatory breach in failing to establish a LoC after 9 October 2010. At the hearing, the Respondent placed reliance on a counter-affidavit put before the [state] court in the injunction proceedings, which reads in relevant part: …

Even up to 7 October 2010, the Petitioner has not even sent a draft of the proposed letter of credit much less established the letter of credit. Assuming a valid contract (though there was none) this was in repudiatory breach of the Petitioner's obligation and there was and therefore could be no obligation at all on the Answering Respondent to load the goods ...

272. This passage of an affidavit submitted to the [state] court cannot amount to the acceptance of the Claimant's repudiatory breach. It rests upon an incorrect assertion about the date for the Claimant's performance of its obligation to establish a LoC (it fell due on 11 October 2010) and does not amount to the acceptance of [Claimant]'s repudiatory breach as of 11 October 2010 such that it no longer had the obligation to tender the goods at all (the reference is simply to loading the goods which is an obligation that would only arise after the LoC had been established).'

1
Respondent's Post-Hearing Brief ….

2
Respondent's Post-Hearing Brief …

3
The Tribunal does not accept the Respondent's submission that Saturday should be considered to be a working day because in [Respondent's country] banks are open for business on Saturdays … This is a Contract governed by English law and the financing arrangements had an international dimension, which is demonstrated by the fact that the Claimant's correspondent bank was in Geneva.

4
As previously noted, the Respondent maintained that this communication constituted a lawful acceptance of the Claimant's repudiatory breach of failing to open a LoC … The Claimant maintained that it constituted a renunciation or a repudiatory breach …

5
[1996] AC 800; CA/T18.

6
[1996] AC 800, 811; CA/T18.

7
The Claimant maintained that there were several possible dates: on 9 October 2010 by virtue of the Claimant's communication to the Respondent …; on 20 October 2010 when [Claimant] concluded a contract for the substitute cargo …; on 22 October 2010 when [Claimant] commenced this arbitration; or on 9 November 2010 when the injunction was set aside by the [state court]. …The Respondent maintained that the Claimant only gave up its contradictory position on seeking specific performance of the Contract on 14 December 2011 when it filed its Statement of Claim in these proceedings or when the appeal before the [state] courts was withdrawn in January 2012 …

8
Fercometal S.A.R.L. v. Mediterranean Shipping Co. [1989] 1 AC 788; CA/T10.

9
[1989] 1 AC 788; CA/T10.

10
Claimant's Skeleton Argument …

11
[1989] 1 AC 788, 805; CA/T10.