Bunge S.A. v Kruse
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MEGAW,LORD JUSTICE EVELEIGH,SIR DAVID CAIRNS |
| Judgment Date | 18 January 1980 |
| Judgment citation (vLex) | [1980] EWCA Civ J0118-5 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 January 1980 |
| Docket Number | SJ. 283/77 |
[1980] EWCA Civ J0118-5
In The Supreme Court of Judicature
Court of Appeal
(Civil Division)
(On appeal from Mr. Justice Brandon sitting in the Commercial Court)
Lord Justice Megaw
Lord Justice Eveleigh
and
Sir David Cairns
In The Matter of the Arbitration Act 1950
and
In The Matter of an Arbitration
MR. N. LEGH-JONES (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Appellant Buyer.
MR. D. GRACE (instructed by Messrs. Thomas Cooper & Stibbard) appeared on behalf of the Respondent Seller.
In August 1972, a contract was made under which Bunge S. A., the appellants before us, bought from Mr. P. Kruse, the respondent, 6000 metric tons of United States soyabean meal c. i. f.. Bremen, to be shipped in six shipments of 1000 tons in each month from April to September 1973. The contract incorporated the terms of the contract form GAFTA 100, which in its turn incorporated the arbitration provisions of GAFTA 125. I shall refer to Mr. Kruse as "the seller" and to Bunge S. A. as "the buyer".
The seller failed to appropriate any goods to the July, August or September shipments. A part of the resulting claim by the buyer was settled between the parties. There remained in dispute between them claims by the buyer for default in respect of 420 tons under each of the three shipments. Those claims were, at least purportedly, referred by the buyer to arbitration under the Rules of the Grain and Feed Trade Association. I say "purportedly" because the seller has contended that the arbitrator whom the buyer purported to appoint, for each of the three arbitrations, was not duly appointed in accordance with the Rules, and that, accordingly, the whole of the three arbitration proceedings, and the purported awards thereon, were and are a nullity.
In November 1974, the Umpire who had been appointed on disagreement between the arbitrators (or supposed arbitrators), in respect of each of these three arbitrations, held that the buyer's arbitrator was duly appointed, but decided against the buyer on its substantive claims: that is, the Umpire held that the seller was not liable for damages in respect of any of the three claims. The buyer appealed (or, as the seller would say, purported to appeal) to the Board of Appeal of GAFTA by three appeals. The parties were represented by counsel. Counsel on each side made their submissions, which are recorded or summarised in the Board of Appeal's Awards, and invited the Board to make findings of facts as desired by the respective parties. The j, buyer asked the Board of Appeal, and the Board agreed, to state their Award,in each of the three arbitrations, in the form of a Special Case under section 21(1)(b) of the Arbitration Act, 1950. The questions of law for the decision of the court, in each case, included questions directed towards the issue whether the respective arbitrations were time-barred, by reason of matters affecting the validity of the purported appointment of the buyer's arbitrator. There was also a question of law, in each case, on what may be called the substantive, as distinct from the procedural, issue. That question, as to the July shipment, was simply, "Whether the sellers are liable in damages to the buyers for having failed to appropriate 420 tons of soyabean meal to the contract under July bills of lading". In the August and September awards the question was identical, save for the substitution of "August" and "September" for "July".
The Board of Appeal, subject to the decision of the court on the questions asked, reached different conclusions in respect of the July claim on the one hand and the August and September claims on the other hand. In respect of the July shipment they held that the claim was time-barred. By an alternative award, however, they said that if the claim were not time-barred, then the buyer's claim succeeded; the seller was in default on the July shipment. They assessed the amount payable by the seller at $109,767. (As a result of a later decision of the House of Lords, it is accepted that that amount in any event would have to be somewhat reduced). In respect of the August and September shipments the Board held that it had a discretion to extend the time limits under the Rules and that that discretion should be exercised in favour of the buyer and, on the substantive issue, they held in favour of the buyer and assessed the amount payable in respect of each of those months' shipments.
On the three cases stated, there being a separate case on each award, the arguments of counsel before Mr. Justice Brandon (as he then was) lasted some 11 days, much of the time being occupied by submissions on the procedural issues. Muchof the judgment of Mr. Justice Brandon is also concerned with those issues. On the procedural issues, Mr. Justice Brandon accepted some of the submissions of the seller, and rejected others of these submissions. On the substantive issues, he held in favour of the seller. The seller, he held was not liable for breach of contract in respect of any of the three shipments. Accordingly, the procedural issues did not have to be decided. For, if the claims were not procedurally barred, the buyer still would take nothing by reason of any of these claims, because the claims would fail on the substantive issues raised. Nevertheless, the learned judge expressed his conclusion, which was, to put it summarily, that, although there had been a non-compliance with the time limits under the GAFTA Arbitration Rules in respect of the July shipment claim, and the July claim alone, and although there was no discretion in the GAFTA Board of Appeal to extend the time limits in respect of the arbitration on that claim, nevertheless he, the judge, had power, under section 27 of the Arbitration Act, 1950, to extend the time limits; and in his discretion he thought it right to do so.
Mr. Justice Brandon gave his reasons in a single judgment relating to all three appeals; but, necessarily, there were three separate formal judgments.
The buyers appeal, by way of three appeals which have been called on and heard together. The sellers served what they describe as "Respondents' Notice of Additional Grounds of Appeal". There is a separate such notice in each appeal. The substance of them is to challenge the judge's decision adverse to the sellers on the procedural questions as to the validity of the appointment of the arbitrator and of the validity of the awards.
In view of the conclusion which we have reached on the buyer's appeals, it would be a waste of time for the court to go on to hear argument on the procedural issues raised by the respondent's notices.
I therefore turn to the issues raised, or sought to be raised, by the buyer's appeals.
So far as concerns the appeals relating to the August and September shipments, it became clear at an early stage of counsel's submissions that they could not proceed unless we saw fit to grant leave to amend the relevant notices of appeal. We did not think fit to grant such leave. It is desirable that I should deal, first, with that matter. In so doing, I shall at the same time be setting out some of the background to the further submissions which were made in relation to the July shipment appeal.
Clause 21 of the GAFTA 100 form of contract, incorporated into the present contract, reads as follows: "Prohibition - In cases of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the Government of the country of origin or of the territories where the port or ports of shipment named herein is/are situate, preventing fulfilment, this Contract or any unfulfilled portion thereof so affected shall be cancelled. In the event of shipment proving impossible during the contract period by reason of any of the causes enumerated herein, Sellers shall advise Buyers without delay with the reasons therefor. If required, Sellers must produce proof to justify their claim for cancellation".
In June and July 1973, provisions having the force of law were issued by the United States Department of Commerce in so-called Export Control Bulletins affecting the export of soyabean meal. These provisions have been referred to in many cases in the English courts. Their effect was summarised by Lord Denning, M. R., in ( Tradax v. Andre 1976) 1 Ll. R. at page 420. I need not set them out in any detail. On 13th June 1973, Bulletin 84(a) required exporters of soyabean meal (amongst other commodities) to report to the Department anticipated exports "as of the close of business June 13, 1973". On the 27th June, 1973, Bulletin No. 86 brought into force the requirement ofvalidated export licences as from 5 p. m. on that date. There was an exception from that requirement (this exception has been called "the loop-hole" in the present proceedings) in these terms: "Shipment of commodities removed from general licence as a result of changes set forth in Part A above which were on lighter destined for an exporting vessel or for which loading aboard an exporting vessel had actually commenced as of 5 p. m. E. D. T.. June 27th 1973, may be exported under the previous general licence provisions. Any other shipment of such commodities requires a validated licence for export".
On 2nd July 1973, Bulletin No, 88 brought into being a licensing system. Applications for licences had to be accompanied by a copy of the contract of sale for export and other documentation. When the Office of Export Control had verified the authenticity of the application and the supporting documentation, it would issue a validated export licence for 40 per cent of the unfulfilled balance of the contract.
The reason why the Board of Appeal held in favour of...
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