On SK Shipping (S) Pte Ltd v. Petroexport Ltd. [2009] All ER (D) 278.

WHEN SILENCE IS NO LONGER GOLDEN

A recent decision of the English Commercial Court has cast doubt on the hitherto largely accepted view that silence is equivocal.

In his judgment handed down on 24th November 2009, Mr Justice Flaux determined that where, after exhibiting, by word and behaviour, a distinct disinclination to perform a charterparty, a Charterer remains silent in the face of a notice by Owners to confirm by a given deadline that he will perform by the contractual deadline, that silence should not be viewed as equivocal but rather as confirmation of his earlier repudiatory words and behaviour; and this even when at the time Owners held Charterers in repudiatory breach the deadline for Charterers to perform the charterparty had not yet expired.

The case is SK Shipping (S) Pte Ltd v. Petroexport Ltd. The whole case should be read in its entirety but, in essence, Charterers had shown a serious disinclination to load Owners’ vessel by inter alia asking for the vessel to proceed slowly to her port of loading in Pakistan and by their various messages suggesting that there might not be any cargo for her load, intimating that therefore Charterers would have no use for the vessel and even stating that “Due to circumstances beyond charterers’ control it may become necessary to declare force majeure [sic]“.

The judge took all these earlier messages into account and found them to be repudiatory in nature so that when Owners failed to confirm that they would perform the charterparty by the deadline set by Charterers, this silence, added to the earlier messages and conduct of Charterers, was found by the judge to justify the Owners holding Charterers in repudiatory breach.

In this connection, Mr Justice Flaux’s actual words are worthy of quotation. At para 117 of the judgment he had this to say:

“117. However there was in effect a refusal on the part of the defendant to provide that confirmation. Mr Phillips submitted that silence would not suffice for renunciation, because it is equivocal. I do not accept that submission, as it seems to me it must depend on the context. Renunciation may be by words or conduct and where one party is seeking confirmation that the other will perform, a failure to give the confirmation may be renunciatory, especially if, as in the present case, it is preceded by other conduct which is renunciatory [my highlighting].”

The confirmation referred to in line 1 was, of course, the confirmation requested by Owners that Charterers would perform the charterparty. Undoubtedly, like Mr Phillips, their Counsel, Charterers had taken the view that by keeping silent they would be safe and Owners would have to wait until the expiry of the period within which performance was still possible before validly holding Charterers in breach. They were wrong and it may be anticipated that Mr Justice Flaux’s judgment and his words in para 117 will be invoked in many other cases in the future.

Jakob S. Smid
Vernate, 22nd January 2010