Bremer Handelsgesellschaft m.b.H. v Finagrain, Compagnie Commerciale Agricole et Financière S.A. (Cape Palmas)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE FOX,SIR GEORGE BAKER |
| Judgment Date | 12 June 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0612-4 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 81/0289 |
| Date | 12 June 1981 |
[1981] EWCA Civ J0612-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL CIVIL DIVISION
On Appeal from Mr. Justice Goff
Royal Courts of Justice
The Master of The Rolls
(Lord Denning)
Lord Justice Fox
Sir George Baker
81/0289
In The Matter of The Arbitration Act, 1950
and
In The Matter of An Arbitration
MR. N. MERRIMAN (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Appellants.
MR. P.N. LEGH-JONES (instructed by Messrs. Richards, Butler & Co.) appeared on behalf of the Respondents.
This is another case which arises out of the export of soyabean from the United States of America in 1973. There was a great flood on the Mississippi. The USA authorities put an embargo on the export of soyabean from the United States to Europe. It has led to hundreds of arbitrations here in London.
The facts of this case are simple. A contract of sale was made on 30th May, 1973. The seller was Messrs, Bremer Handelsgesellschaft of Hamburg, and the buyer was Messrs. Finagrain of Geneva. The goods were 900 metric tonnes of soyabean meal minimum 50 per cent. protein and fat combined. It all was to be shipped on one steamer in the month of June, 1973. The price was US $475 per metric tonne, destination CIF Rotterdam. The conditions of contract incorporated GAFTA Form 100. The material clauses are numbers 21 and 22.
The obligation of the sellers was to ship 900 tonnes in the month of June, 1973, the last day being 30th June, 1973. On 27th June, 1973 the United States authorities placed a complete embargo on the export of soyabean from the United States. The embargo was relieved a little on 2nd July, 1973, but it extended right over those crucial days—the last days of shipment—from 27th to 30th June, 1973. The embargo effectively prevented the sellers, Bremer Handelsgesellschaft, from shipping these goods in accordance with the contract by the end of June, 1973. If it were not for the embargo they would have fulfilled the contract. They had the soyabean of 50 per cent, protein in store or warehouse in Chicago. They had the boat at Chicago, the CAPE palmas ready to load. She would have loaded by 30th June, 1973, but the embargo stopped the seller from fulfilling the contract. The Umpire and the Board of Appeal considered whether the Sellers could have got through any loopholes, but the answer was No. These are crucial findings in the Award.
THE CLAUSE 22 FINDING
"18. Since the CAPE palmas in fact loaded between Friday, 29th June, 1973, and Monday, 2nd July, 1973, it is reasonable to assume that she would have loaded a considerable part of her intended cargo of soyabean meal by midnight on Saturday, 30th June, 1973. She would certainly have completed loading within the extension period of up to eight days available to the shippers under Clause 9 of GAFTA 100. Further, of the soyabean in store at Duluth and Superior, it is likely that priority would have been given to the 50 per cent. meal because it commanded a premium and because it was to be applied to May, 1973 contracts at very high prices.
"19. Insofar as it is a question of fact, therefore, WE FIND that the Sellers would have loaded the Contract goods (being only 900 metric tonnes out of the CAPE PALMAS booking for 11,500 metric tonnes) by 30th June, 1973, or, if not, then well within the period of extension available under Clause 9 of GAFTA 100, but for the embargo, which was a force majeure event, and that the Sellers were delayed by such force majeure. They were accordingly in a position to give notices under Clause 22 of GAFTA 100."
THE CLAUSE 21 FINDING
"20. Further, the embargo prevented the Sellers from fulfilling the Contract with June bills of lading. As appears from the foregoing, the Sellers' sole arrangements for shipping 50 per cent. meal and thus fulfilling their only commitments for such goods for June, 1973 were with the CAPE PALMAS at Superior on 29th June, 1973, to load goods already in store there. As at 5 p.m. Eastern Daily Time on 27th June, 1973, the CAPE PALMAS had not arrived in the port of Duluth/Superior so that loading could not have commenced, and the Sellers gave evidence that they had no goods on lighter destined for an exporting licence at that time, and that the loophole in the saving clause of Bulletin No. 86 was not open to them. Accordingly, insofar as it is a question of fact, WE FIND that the embargo imposed by Bulletin No. 86 prevented the Sellers from fulfilling the Contract with June bills of lading."
So the facts bring the case within both Clause 22 and Clause 21. What then is the interrelation of Clauses 21 and 22?
THE LAW
I expressed my view in Tradax -v- Andre (1976) 1 Lloyd's at page 421, right-hand column:-
"The contention of the buyers is that 'prohibition of export' is specially dealt with in Clause 21 and should, therefore, be excluded from the general exclusion of 'force majeure' in Clause 22. They rely on the maxim generalia specialibus non derogant. This is a telling argument, but I do not think it should prevail. A prohibition of export is well within the term 'force majeure'. It comes within both Clause 22 and Clause 21. But in some cases it may only cause 'delay' in shipment: in which case the shippers can operate Clause 22, and claim an extension as in Fairclough, Dodd & Jones Ltd. -v- J.H. Vantol (1956) 2 Lloyd's Rep. 437; 1957 1 W.L.R. 136. In other cases a prohibition of export may 'prevent fulfilment', in which case Clause 21 operates automatically to cancel the contract without more ado. In order to see whether it is within Clause 22 or Clause 21, it is necessary to inquire whether the prohibition of export only 'delays' the shipment or whether it 'prevents the fulfilment' of the contract. As soon as an embargo is imposed (causing delay) the shipper may invoke Clause 22. But when the delay lasts so long that shipment proves 'impossible during the contract period', then Clause 21 operates so as to cancel the contract automatically. The 'contract period' is the period specified in the contract for shipment. The contract period here expired on 30th June. At that time there was a prohibition of export save for goods on lighter, etc. It was, therefore, within Clause 21, provided that the sellers proved the prohibition did prevent their fulfilling the contract."
I stand by that analysis. It is entirely in accord with what the House of Lords held later in Bremer -v- Vanden (1978) 2 Lloyd's 109. But I went wrong (according to the House of Lords) in another passage in Tradax -v- Andre, when I said at page 424, left-hand column:-
"If the sellers rely on Clause 21, they must show that the advice of the prohibition was given by the sellers without delay. This means that the shippers at the head of the string must give the first advice without delay, and that it should be passed on down the string without delay. In this case the advice was not given by the sellers to their buyers until 12th July, 1973. It is for the Board to say whether it was given and passed on 'without delay'. These notices are conditions. The seller must satisfy them in order to get the benefit of the clauses. They are not merely exhortatory: nor is the remedy only in damages."
That passage was set out by Lord Wilberforce in Bremer -v-Vanden (1978) 2 Lloyd's at page 113 and expressly disapproved. He said (at page 113):-
"The 'cancellation' effected (in Clause 21) by the first sentence is not expressed to be conditional upon the second sentence being complied with: it operates automatically upon the relevant event." Lord Dilhorne put it very clearly at page 121, left-hand column:-
"The second sentence of Clause 21 imposes a distinct and definite obligation on the sellers, and one which they must discharge without delay. On 29th June they informed the buyers of the embargo. Although they did not then claim cancellation, it must have been obvious to the buyers that shipment was prohibited. Clause 21 provides for automatic cancellation if one of the stipulated events preventing fulfilment occurs….. If there was a breach by the sellers of this obligation, they may be liable in damages for loss incurred by the buyers in consequence but the contract does not in my opinion provide that cancellation is conditional upon the sellers complying with this obligation."
In view of these explicit statements in the House, I think we must hold that Clause 21 operates in this case in this way: In case of prohibition of export preventing fulfilment during the contract period, the contract is cancelled. Such cancellation is automatic without any need for the seller to invoke the clause or to give any notice about it to the buyer: or for the buyer to invoke it or to give any notice of it to the seller.
THE CONTRACT PERIOD
But the question then arises: What is the meaning of "contract period", especially in view of Clauses 9 and 22 which provide for extension in certain circumstances?
No doubt if the shippers give a valid eight day extension notice under Clause 9 or a valid one month force majeure notice under Clause 22— before the contract is automatically cancelled—such a notice will operate to extend the time for shipment. But 1 do not think that a Clause 9 or Clause 22 notice can be given after the contract is automatically cancelled. I think that the words "contract period" in Clause 21 mean the original period stipulated in the contract. That is, in this case, the month of June, 1973.
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