Bunge SA (Claimant v Nibulon Trading BV (Defendant
| Jurisdiction | England & Wales |
| Judge | Mr Justice Walker |
| Judgment Date | 13 December 2013 |
| Neutral Citation | [2013] EWHC 3936 (Comm) |
| Docket Number | 2013 Folio 381 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 December 2013 |
[2013] EWHC 3936 (Comm)
Mr Justice Walker
2013 Folio 381
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4A 1NL
Andrew Baker QC and Dr Malcolm Jarvis (instructed by Reed Smith LLP) for the Claimant
John Russell (instructed by Hill Dickinson LLP) for the Defendant
Hearing date: 22 November 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A. Introduction: the appeal and the outcome
This is an appeal by Bunge SA ("buyers") from an award dated 22 February 2013 by a board of appeal of the Grain and Feed Trade Association ("GAFTA"). The board held in favour of Nibulon Trading BV ("sellers") that buyers' claim was time barred.
In this regard the board reversed the decision of arbitrators ("the tribunal") in an award dated 6 January 2012. The board accordingly allowed sellers' appeal from that decision without the need to examine whether the tribunal had been right to hold on the merits that buyers succeeded in their claim for default damages arising from non-performance of a contract dated 21 June 2006 for Ukrainian wheat.
At the hearing before me Mr Andrew Baker QC and Dr Malcolm Jarvis appeared on behalf of buyers and Mr John Russell appeared on behalf of sellers. I am grateful to the legal teams on both sides for their succinct and forceful written skeleton arguments and oral submissions. My conclusion is that crucial elements in the submissions for buyers are right. The result is that the appeal must be allowed, and the matter remitted to the board so that it can consider the merits of sellers' appeal from the tribunal's award. My reasons are set out below under the following headings:
B. The questions on appeal
| A. Introduction: the appeal and the outcome | 3 |
| B. The questions on appeal | 3 |
| C. The 2006 rules | 5 |
| D. The tribunal's award | 8 |
| E. The board's award | 8 |
| F. Overview: sub-issues (1) and (2) to (4) | 12 |
| G. Sub-issue (2): waiver | 13 |
| H. Sub-issue (3): discretion | 15 |
| [There is no section I] | 18 |
| J. Sub-issue (4): consequences | 18 |
| K. Conclusion | 20 |
The time bar was held by the board to have arisen under rule 4.10 of the relevant arbitration rules. These were GAFTA no. 125, Arbitration Rules effective for contracts dated from 1 st January 2006, which I shall refer to as "the 2006 rules". Under rule 4.10 the general position is that a claim lapses if neither party submits documentary evidence or submissions within one year from the date of the notice claiming arbitration. Rule 4.10 also, however, enables either party to extend the time limit by notice served during the thirty consecutive days prior to the expiry date. This may be done for successive periods of a year, but not so as to exceed 6 years from the date of the notice claiming arbitration.
The board, disagreeing with what was said at paragraph 5.5 of the tribunal's award, held that a second renewal notice given by buyers on 31 October 2008 was too early and thus ineffective. Accordingly the time bar in rule 4.10 applied. Under rule 21(a) the tribunal was given a discretion to admit a claim, even though it would otherwise be time-barred. However the board held that this discretion had not been exercised by the tribunal. The board made other findings concerning this discretion and concerning whether sellers had waived their rights to rely upon the time bar.
Buyers accepted the board's conclusion as to the meaning of clause 4.10, and accordingly also accepted the consequence that the renewal notices were premature. However they contended that what the board said as regards the discretionary power to admit the claim was obviously wrong. In these circumstances His Honour Judge Mackie QC granted leave to appeal under section 69 of the Arbitration Act 1996 on two questions of law. They were:
(1) Is the meaning and effect of paragraph 5.5 of the First-Tier Award that the first-tier tribunal exercised its discretion to admit the Buyer's claim under rule 21(a) of GAFTA No. 125 Arbitration Rules?
(2) Upon the proper construction of the aforesaid rule 21(a), does the first-tier tribunal have discretion to admit a claim only where it is satisfied that the circumstances of the claim were outside the reasonable contemplation of the parties at the time of the contract?
I shall refer to these questions as "Question (1)" and "Question (2)" respectively. Leave was sought on Question (2) because of what was said in paragraph 6.13 of the board's award. The passage in question stated that under the provisions of rule 21(a) the only basis upon which the tribunal would have been able to exercise their discretion to admit a claim "was if the circumstances of the claim were outside the reasonable contemplation of the parties at the time of the contract". Buyers said this was plainly wrong, for it overlooked a second set of circumstances in which the discretion could be exercised and which constituted the circumstances which the tribunal plainly had in mind.
In their response to the application for leave to appeal sellers agreed with buyers that the answer to Question (2) must be, "no". This was because rule 21(a) plainly did not confine the tribunal's discretion only to the set of circumstances identified in Question (2). Sellers had always accepted that rule 21(a) identified two sets of circumstances in which the tribunal had discretion to admit a claim: the first was that identified in Question (2), and the second was when the conduct of one party made it unjust to hold the other party to the strict terms of the relevant time limit. However, sellers then went on to assert that Question (2) had only been posed because buyers had misunderstood what had been said by the board. Sellers' analysis, amplified and clarified at the hearing before me, involved three stages. First, they said that the two sets of circumstances identified in rule 21(a) involved what I would describe as "threshold" criteria: only if one or other of them were satisfied could the tribunal go on to consider whether to exercise discretion in buyers' favour. Second, they said that they were entitled to appeal to the board on the question whether these threshold criteria were met. Third, they said that they did indeed appeal to the board on the question whether these threshold criteria were met, and that when paragraph 6.13 was read in context the board had reached a conclusion of fact that neither threshold criterion was made out. Accordingly, submitted sellers, the board had found that the tribunal had no discretion and Question (1) did not arise.
Buyers replied that if there were such a conclusion on the part of the board, then permission should be granted for a proposed third question of law:
(3) Is the board of appeal entitled to overrule the admission of a claim by the first-tier tribunal under Rule 21(a) by reference to the board's view whether 'the circumstances were outside the reasonable contemplation of the parties when they entered into the contract and it would be just to extend time' or 'the conduct of one party makes it unjust to hold the other party to the strict terms of the time limit in question'?
As to this proposed third question, His Honour Judge Mackie QC directed that the judge hearing the appeal would consider whether to grant permission.
C. The 2006 rules
The rules referred to by the parties in their skeleton arguments were rules 4.10 and 21. I consider that rules 10 and 12 have potential relevance as well. I begin with rule 4.10, which stated:
4.10 Lapse of Claim
If neither party submits any documentary evidence or submissions as set out in this Rule or as ordered by the tribunal, within 1 year from the date of the notice claiming arbitration, then, the claimant's claim shall be deemed to have lapsed on the expiry of the said period of 1 year unless before that date the claim is renewed:
(a) by a notice served by either party on the other, such notice to be served during the 30 consecutive days prior to the expiry date, or
(b) by the service of documentary evidence or submissions by either party,
in which case the claim and counterclaim are each renewed for a further year.
The claim may be thus renewed for successive periods of 1 year, but not to exceed more than 6 years from the date of the first notice served in accordance with Rule 2. Wherever a claim is renewed any counterclaim is also deemed to be renewed.
Rules 10 and 12 can be taken together:
10. Right of Appeal
10.1 Save as provided in Rules 6.4, 8.1(b), 8.2, 19 and 21, either party may appeal against an award to a board of appeal provided that the following conditions are complied with:
…
12.4 An appeal involves a new hearing of the dispute and the board of appeal may confirm, vary, amend or set-aside the award of the tribunal. In particular (but not by way of restriction), the board of appeal may;
(a) vary an award by increasing or reducing the liability of either party,
(b) correct any errors in the award or otherwise alter or amend it,
(c) award the payment of interest,
(d) award the payment of costs, fees and expenses of and incidental to the hearing of the arbitration and the appeal. Such costs, fees and expenses will normally follow the event.
Rule 21 is complex. I have found it helpful to identify separate provisions in the rule by using numbers in square brackets. Broken down in this way, the rule provides:
21. NON-COMPLIANCE WITH TIME LIMITS AND RULES
[1] If any time limit or provisions imposed by these Rules are not complied with, and when such...
To continue reading
Request your trial
-
Halcrow Group Ltd v Blackpool Borough Council and Another
...will so far as possible construe the award in such a way as to make it valid rather than invalid. In Bunge SA v Nibulon Trading BV [2013] EWHC 3936 (Comm) Walker J described these guiding principles were being of 'fundamental importance' (albeit, for the purposes of that case, they did not ......
-
Alegrow S.A. v Yayla Agro Gida San Ve Nak A.S.
...to be informed by what this Court has termed three “ guiding principles of fundamental importance” ( Bunge SA v. Nibulon Trading BV [2013] EWHC 3936 (Comm); [2014] 1 Lloyd's Rep 393, §§ 35–36 per Walker J, referring to statements of the Court of Appeal in MRI Trading AG v Erdenet Mining C......
-
John Sisk & Son Ltd v Carmel Building Services Ltd ((in Administration))
...in cases of uncertainty it will so far as possible construe the award in such a way as to make it valid rather than invalid. In Bunge SA v Nibulon Trading BV [2013] EWHC 3936 (Comm) Walker J described these guiding principles were being of " fundamental importance" (albeit, for the purposes......
-
R Sabrina Jan v The Commissioner of Police for the Metropolis
...recently a claim such as this was considered by Stephen Morris QC sitting as a deputy High Court judge in R. v IPCC exp parte Ramsden [2013] EWHC 3936. He summarised the court's role on review and the commission's role (albeit under its old name) on appeal from the local decision thus: “21.......
-
Did GAFTA Tribunal Exercise Its Discretion To Admit An Otherwise Lapsed Claim?
...SA v. Nibulon Trading [2013] EWHC 3936 (Comm) The GAFTA Arbitration Rules (Form No. 125) provide for the lapse of claims in circumstances where there has been a failure of the parties to submit any documentary evidence or submissions within one year of the date of the notice claiming arbitr......