The Aquafreedom Case – Analyzing the English High Court's Decision and Its Potential Outcome Under Norwegian Law

Background of the case
Negotiations for a 4-year time charterparty began on January 25, 2023, and continued until early February. These negotiations were conducted through brokers using both emails and WhatsApp messages, and progressed in the following stages:

1. Initial agreement (January 30, 2023):

• Both parties agreed on a "recap" of terms, subject to review and charterers' management approval (CMA). This approval had to be given within two working days after finalizing all terms.

2. Further negotiations (February 1-2, 2023):

• Both sides exchanged proposals and counterproposals on key clauses related to environmental regulations like the Carbon Intensity Indicator (CII), Energy Efficiency
  Existing Ship Index (EEXI), and the EU Emissions Trading System (ETS).

3. Silence period (February 2-6, 2023):

• The vessel owners hesitated to respond due to concerns about Trafigura’s behavior in relation to another vessel.

4. Final communications (February 6, 2023):

• Trafigura, sensing that the owners might back out, sent a message retracting their counterproposals and accepting the owner terms. However, the owners responded
  via WhatsApp, stating they were not willing to proceed. Trafigura then claimed to lift their management approval condition (CMA) and declared the contract "fully fixed"

The dispute
A disagreement emerged over whether these communications amounted to a binding charterparty. Trafigura argued that the correspondence formed a contract, and questioned whether WhatsApp could be used for formal negotiations. The owners disagreed, asserting that no binding agreement had been reached as not all terms were finalized.

Judgment
The High Court ruled in favor of the vessel owners, determining that no binding contract had been formed. The key reasons were:

- The CMA condition was a condition precedent, meaning a contract could not exist until this approval was granted.
- The parties had not agreed on all terms by February 6th 2023, as required by the recap.

Potential outcome under Norwegian law

Under Norwegian contract law, governed by the Norwegian Contracts Act (Avtaleloven), a contract is formed when there is a clear offer and acceptance, and both parties show mutual intent to be bound. If a condition precedent, like the CMA, is in place, no contract exists until that condition is satisfied.

Norwegian law also emphasizes principles of good faith (god tro) and loyalty (lojalitetsplikt) in negotiations. While there is no general obligation to share all information, a duty to disclose arises when remaining silent would be dishonest. This duty is based on loyalty and good business practices.

In this case:
- If the vessel owners had genuine concerns about Trafigura's behavior and communicated those concerns, Norwegian courts might assess whether Trafigura acted in good faith when they accepted the terms and lifted the CMA condition.

Contract interpretation in Norwegian law
Norwegian courts prioritize finding a shared subjective understanding of the contract terms. If no mutual understanding is found, an objective interpretation is used, based on the typical meaning of the terms.

Like the English court, Norwegian courts would likely uphold the requirement that all terms be agreed upon before the CMA condition is lifted, meaning no contract would have been formed until then.

Withdrawal from negotiations
Under Norwegian law, parties are allowed to withdraw from negotiations if no binding contract has been formed. Since the vessel owners communicated their position that the terms were not finalized, Norwegian courts would likely support their right to withdraw from the deal.

Conclusion
Both English and Norwegian law follow similar principles regarding contract formation, interpretation, and duties of good faith. In this case, under both legal systems, it is likely that the outcome would have been the same: no binding time charterparty was formed between the vessel owners and Trafigura.