Bangladesh Export Import Company Ltd (Plaintiff/Appellant) v Sucden Kerry Sa (Defendants/Respondent)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL,LORD JUSTICE MILLETT,LORD JUSTICE BELDAM |
| Judgment Date | 13 October 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J1013-5 |
| Date | 13 October 1994 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBCMF 93/0689/B |
[1994] EWCA Civ J1013-5
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(Mr Justice Cresswell) (Master Miller)
Before: Lord Justice Neill Lord Justice Beldam Lord Justice Millett
QBCMF 93/0689/B
QBCMF 94/0877/B
MR M TUGENDHAT QC and MR A HOSSAIN (Instructed by Messrs Ambrose Appelbe & Pyke, London WC2A 3RA) appeared on behalf of the Appellant
MR T YOUNG (Instructed by Messrs Richards Butler, London EC3A 7EE) appeared on behalf of the Respondent
( )
Thursday, 13 October 1994
LORD JUSTICE NEILLIn the first appeal Bangladesh Export Import Co. Ltd. (BEI) appeal against the order of Cresswell J. dated 26 April 1993 whereby it was ordered:
(1) That BEI's claim for certain declarations be dismissed;
(2) That there be judgment for Sucden Kerry SA (SKI) on the counterclaim for damages to be assessed by a Queen's Bench Master in the absence of agreement between the parties.
The second appeal is against the order of Master Miller dated 24 May 1994 whereby it was adjudged that BEI do pay to SKI the sum of $2,698,869.76 on SKI's counterclaim in the action. The damages due to BEI were assessed by Master Miller at $2,214,800. Interest on the said sums was assessed at $484,069.76.
BEI is a Bangladesh registered company which is engaged, inter alia, in the import and export of goods into and from Bangladesh. Mr. Salman Rahman is a director of BEI.
SKI is a French company registered in Paris. Mr. Nicholas Schimpff is an employee of SKI who at all material times dealt with the BEI transactions. SKI is a trader in sugar both on the terminal sugar markets and on the physical market.
In 1988 the import of sugar into Bangladesh was controlled by a government system of import licences. It seems that licences to import sugar were granted only to certain specified export houses within Bangladesh, of which BEI was one. In addition the import of sugar could be made by licences granted to certain Bangladesh companies who held Special Trading Arrangements (STA's). The companies who held STA's included Meenhar Sea Foods Ltd. (Meenhar), Nipa Trading International Ltd. (Nipa), and Nisu Ltd. (Nisu). A company holding a STA could nominate another company to make use of the STA.
During 1988 BEI entered into a number of contracts with SKI for the import of sugar into Bangladesh. Some of these contracts were cancelled and others were performed.
On 23 February 1989 BEI and SKI entered into an agreement in writing (the First Protocol). The First Protocol provided for the establishment of a joint account for the physical sale of sugar by SKI to BEI on a c & f free out Chittagong basis. It was recited in the First Protocol that SKI was a leader in the world sugar trade and had "the expertise of the trading of sugar within the terminal sugar markets as well as within the physical sugar market". It was further recited that BEI was willing to buy sugar at a price of US$ 325 per net metric ton c & f free out Chittagong and that both BEI and SKI wished to take advantage of and benefit from their respective strengths.
During 1989 a number of contracts were made between BEI and SKI which were expressed to be within the terms of the First Protocol. These contracts provided for the sale of specified quantities of sugar by SKI to BEI on a c & f free out Chittagong basis.
On 25 October 1989 a meeting took place in Dacca which was attended by Mr. Rahman and Mr. Schimpff at which a second protocol for 1990 was discussed. On 25 December 1989 Mr. Schimpff sent to BEI a document headed "Second Protocol", but this document was not signed by BEI.
On 5 April 1990 it was orally agreed between BEI and SKI in the course of a telephone conversation between Mr. Rahman and Mr. Schimpff that inter alia SKI would sell to BEI 10,000 metric tons of white refined sugar medium grain (10% more at SKI's option). This oral agreement was confirmed by a telex sent by SKI to BEI on 6 April 1990 and by SKI's contract note dated 5 April 1990. It is sufficient to refer to part of the contract note dated 5 April 1990 which included the following terms:
" Quantity. 10,000 metric tons 10% more or less at sellers' option.
Quality. White refined sugar….
Origin. Malaysia.
Destination. Bangladesh.
……
Price . U.S.$455 per net metric ton cost and freight free out Chittagong.
…….
Payment. By an irrevocable letter of credit to be opened by a bank agreeable to the sellers and confirmed by a first class bank in Europe acceptable to sellers at buyers' expense and received fully in order latest six days after conclusion of business.
In the event that sellers do not receive letter of credit fully operational fully in order and fully confirmed within six days of conclusion of business sellers have the right either to extend the contract/shipment period or cancel the contract or resell the sugar at buyers' expense and account.
Letter of credit to be payable at sight against presentation of shipping documents:
1. Signed commercial invoices in octuplicate.
2. Complete set signed on board clean negotiable ocean bill(s) of lading made out to order and endorsed to order of name of opening bank marked freight prepaid.
……..
3. A copy of beneficiary's declaration of insurance …
4. Certificate of origin …. from the Chamber of Commerce.
…….
8. Certificate regarding radiation from the concerned government authority or an official laboratory of the exporting country to the effect that sugar does not exceed the Bangladesh permissible level (i.e. 50 BQ/KG for caesium 137).
The additional conditions in the contract included:
"8. Full set of non-negotiable shipping documents to be couriered and/or faxed … to buyers by the seller before arrival of vessel at Chittagong."
The contract also included the following further terms:
"Discharging agent of the vessel in Bangladesh will be M/S Aquatic Shipping Ltd. …. Dhaka." and
"Licence. To be obtained by buyers. The inability to obtain import licence shall not be justification for declaration of force majeure."
In addition by a special clause SKI had the option, declarable at the latest by 15 September 1990 to sell to BEI a further quantity of about 20,000 metric tons of white crystal and/or refined sugar at sellers' option. The price for this further quantity was expressed to be U.S.$445 per net metric ton cost and freight free out Chittagong.
I should refer next to the telex dated 6 April 1990 sent by SKI to Mr.Rahmann. The telex began:
"Further to our phone conversation in the frame of our joint account protocol dated 26 October 1989 we confirm having done the following business on 5.4.90."
Later after the terms of the contract had been set out, the telex concluded:
"Above business [is] part of our J/A protocol dated 26.10.89.
It has been mutually agreed that USD 7, corresponding to the discount in price granted …. shall be deducted from [BEI's] share of results of joint account.
Thanks for the business."
BEI rely in particular on provisions in the recitals in the protocol dated 26 October 1989 (the second protocol), which was referred to in the telex of 6 April 1990:
"……….
2. Beximco is dealing as a private trader for the sale of sugar in the Bangladesh internal market.
………
4. Beximco as buyers and SKI as sellers have entered and will be entering into contracts of supply of sugar to Bangladesh some of which provide SKI with the option to supply.
Sugar under such contracts to be applied against the import licences already in Beximco's hands or to be obtained by Beximco for year 1990. Prices of such contracts in U.S. dollars per net metric ton cost and freight free out Chittagong being mutually agreed between Beximco and SKI upon conclusion of each contract.
5. Both Beximco and SKI wish to take advantage benefit from their respective strength as stated hereabove."
Following the conclusion of the agreement of April 1990 BEI obtained nominations under STAs in respect of about 30,000 metric tons of sugar.
On 30 August 1990. however, the government of Bangladesh informed MEENHAR, NIPA and NISU that it had been decided to cancel permission for the importation of sugar into Bangladesh. Early in September 1990 MEENHAR, NISU and NIPA cancelled their nominations under the STAs. Accordingly from the beginning of September 1990 it was no longer lawful under the law of Bangladesh for BEI to import sugar into Bangladesh.
On 14 September 1990 SKI exercised or purported to exercise the option contained in the contract of April 1990 in respect of the further 20,000 metric tons. The relevant part of the telex (79) was in these terms:
"In the frame of the above mentioned sale we hereby declare that in conformity with the option linked to our sale to you dated 5.4.90 we should deliver to you about 20,000 m/t metric ton shipment October/November 1990."
It is unnecessary for the purposes of the present appeal to trace the subsequent events in detail. Meetings took place between the parties and the shipment of the 20,000 tons was postponed for a time. By June 1991, however, it had become clear that BEI were unwilling to accept any further sugar under the April 1990 contract.
On 17 June 1991 SKI sent a telex to BEI which included the sentence:
"You therefore now leave us no other choice but to declare you in default due to your breach of your contractual obligations and to claim from you compensation for damages incurred by us in this respect."
On 13 December 1991 SKI brought the present proceedings.
BEI raised a number of defences. The principal defence...
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