Bremer Handels GmbH v Raiffeisen Hauptgenossenschaft eG (No.1)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE KERR,SIR GEORGE BAKER |
| Judgment Date | 17 March 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0317-2 |
| Docket Number | 82/0103 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 March 1982 |
[1982] EWCA Civ J0317-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Lord Justice Waller
Lord Justice Kerr
Sir George Baker
82/0103
MR. A. B. R. HALLGARTEN Q.C. and MR. A. M. D. HAVELOCK-ALLEN (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Appellants (Sellers).
MR. D. B. JOHNSON, Q.C. and MR. R. G. WOOD (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Respondents (Buyers).
I will ask Lord Justice Kerr to deliver the first judgment in this matter.
This is an appeal from Lloyd J. in yet another GAFTA award in the form of a special case arising out of the soyabean meal embargo in the United States as from 27th June 1973. The contract had been made in January 1973 for a total of 2,000 tons to be shipped at the monthly rate of 500 tons in May, June, July and August 1973. As usual, the court is only concerned with the June portion. Of this 199.580 tons were shipped on the M.V. "Pegasus" on 18th July under the licensing system introduced on 2nd July, which permitted the shipment of 40 per cent, and the subsequent appropriation of this quantity was accepted by the buyers. We are therefore only concerned with the balance of 300.420 tons, the remaining 60 per cent. The sellers shipped this quantity in September pursuant to the further licensing system introduced on 19th July, but the buyers rejected the subsequent appropriation and claimed damages in respect of this quantity. Both the umpire and the Board of Appeal found in favour of the buyers. The present award is for U.S. $118,365.48, the difference between the contract price of $191 and the market price on 11th July of $585 per ton, and there is no issue on quantum.
The judge upheld the award in favour of the buyers, and two main arguments have been raised before us, both of which he rejected. First, that the award should be remitted to the Board on the ground of misconduct in relation to many of its findings of fact. It was said in the notice of motion that the award contains findings which are "ambiguous, uncertain and confusing", and, in relation to one crucial finding in paragraph 10 of the award dealing with the question whether or not the sellers had goods available on lighters on 27th June, the notice of appeal goes so far as to say that the finding was "perverse and unreliable and/or that it had probably been incorporated into the Award as a result of a clerical error or misunderstanding on the part of the Board and that to give it any effect would or might do grave injustice to the Sellers."
Secondly, failing remission of the award, the sellers submit that the buyers waived the sellers' failure to fulfill the balance of 60 per cent by means of appropriations with June bills of lading and extended the shipment period generally. It is therefore submitted that they should have accepted an appropriation made by the sellers on 28th September in alleged reliance on the alleged waiver, and that thereafter they have no further claim against the sellers.
In opening the appeal on the question of remission, Mr. Hallgarten Q.C. made some general observations to the effect that, quite apart from what happened in the present case, these sellers have been particularly unfortunate in other cases, and intimated that they feel that there may have been some prejudice against them in the numerous GAFTA arbitrations in which they have been involved. He said that the sellers were successful in what he referred to as the "test case" in Bremer v. Vanden (1978) 2 Ll.L.R. 109 which reached the House of Lords, but suggested that, both before and after this case, they were singularly unfortunate in the findings made against them in a number of awards, with the result that they have had to pay heavy damages in many cases. We clearly cannot take any account of this general allegation in deciding the present appeal, but I propose to deal with it briefly, since it would be unfortunate if a particular party which has figured in many of these arbitrations should feel aggrieved by a sense of injustice.
In this connection, as it seems to me, a number of matters must be borne in mind.
The sellers in this case clearly appear to have been one of the largest, and were perhaps in fact the largest, shippers and sellers of soyabean meal from the United States for June 1973. The special case finds on their own evidence that they were committed to sales of about 44,000 tons for the June position of which they intended to ship 33,000 tons themselves and to complete the balance of 11,000 tons by means of "second hand" purchases previously concluded. This inevitably placed them in a particularly vulnerable position from the outset. The judge mentioned at the beginning of his judgment that the present case is said to be the 30th special case to have come before the courts as the result of the embargo. Leaving aside questions of waiver which will differ from case to case, I would expect that, in the great majority of awards, where the question was whether or not the sellers could succeed in bringing themselves within the well-known clauses 21 and 22 of GAFTA Form No. 100, the outcome has gone against the sellers, whoever they might be. The reasons are easy to see.
First, the facts relating to the embargo made matters particularly difficult for sellers. It was only in force during the last four days of June and was not absolute, but subject to "loopholes", to which I refer hereafter. Further, as frequently happens, many sellers—including the present ones—appear to have relied on being able to perform by means of bills of lading dated towards the very end of June and in the first eight days of July, for which an extension could be claimed under clause 9. Secondly, it must be remembered that clauses 21 and 22 themselves involve difficulties for sellers who seek to invoke them. Many of their complexities have only been resolved by the courts in a number of decisions extending over several years. A review of the main developments concerning clause 21 can be found in the recent judgment of this court in Tradax Export S.A. v. Cook Industries Inc. (given on 6th November 1981, not yet reported). However, in the Vanden case, these sellers—and shippers generally—were relieved by the House of Lords from the burden of having to establish what has become known as the "but for" point, viz., that but for the embargo the goods would in fact have been shipped. If this had not happened, the sellers in the present case would have had no prospect of appealing this, and no doubt other, awards. Nevertheless, the combination of the facts relating to the embargo, and the difficulties of clauses 21 and 22, may well give the impression to shippers and sellers that, as I put it during the argument, their difficulties are as great as trying to hold water in a sieve; no sooner is one hole plugged than there is an escape elsewhere. But I think that this is inevitable in the light of the strict approach to the interpretation of commercial contracts which our law adopts. It must then follow that arbitrations are liable to result in awards in favour of buyers, and that, in a situation of a phenomenal rise in the market price by the middle of July, with an almost equally steep fall thereafter, the financial consequences for shippers and sellers will be severe.
The second matter which the sellers should bear in mind, as pointed out by the judge, is that this was a time when the various Appeal Boards of GAFTA were working under immense pressure. Moreover, different Boards may well have reached different conclusions in similar cases, depending on their own impressions of the evidence and arguments addressed to them, as they would be entitled. One of the disadvantages of the special case procedure is that it involves a combination of the facts "being found by an arbitral tribunal and the legal issues then having to be decided by the courts strictly on the basis of these findings. I can recall many cases where the parties and their legal advisers have felt greatly at risk, depending not only on what findings would be made in the special cases, but also often on precisely how these would be worded. It is to be hoped that this disadvantage will be mitigated by the Arbitration Act 1979, which has repealed this procedure except for outstanding cases, and that section 1(5) reasons for the award—may allow a greater degree of flexibility in this respect where the justice of the case appears to demand it.
I have said all this in deference to Mr. Hallgarten's initial general plea ad misericordiam, and I now turn to the issues before us. However, in relation to the application for remission, some of these background matters are also of some direct relevance.
It is necessary at the outset to consider the chronology. The relevant events took place in the summer of 1973. The umpire made his award on 13th August 1974. The hearing of the appeal took place on 5th October 1976. At that time the Vanden case (reported in (1977) 1 W.L.R.133) had recently been decided by Mocatta J., but it was on its way upwards on appeal, and it was unknown whether or to what extent his conclusions on the many issues arising in these cases would be upheld, reversed or varied. That case then reached the House of Lords and was decided in March 1978. The present award was not published until 27th February 1979, so that there was nearly a year during which...
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