Camilla Cotton Oil Company v Granadex S.A.
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE GEOFFREY LANE |
| Judgment Date | 17 January 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0117-4 |
| Date | 17 January 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J0117-4
The Master Of The Rolls (Lord Denning),
Lord Justice Stephenson and
Lord Justice Geoffrey Lane.
In The Supreme Court of Judicature
Court of Appeal
(Revised)
Appeal by plaintiffs from orders of Mr. Justice Ackner, Commercial Judge in chambers, on 15th May 1974.
Mr. MICHAEL MUSTILL, Q. C., Mr. R. C. SOUTHWELL and Mr. RAYMOND JACK (instructed by Messrs. Allen and Overy) appeared on behalf of the Appellant Plaintiffs.
Mr. J. S. HOBHOUSE, Q. C., and Mr. ANDREW LONGMORE (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Defendants.
In current slang peanuts are things of little worth. Not in this case. Here we have to deal with tons of peanuts worth millions of dollars. The facts are complicated. First, a word about the parties. The "suppliers of peanuts" are two American companies, One is the Camilla Cotton Oil Co. (Camilla) incorporated in the State of Georgia. The other is Shawnee Processors Inc., (Shawnee), incorporated in the State of Oklahoma. The "buyers of peanuts" are two Swiss companies. One is Granadex Societe Anonyme. The other is Tracomin Societe Anonyme. In between the American suppliers and the Swiss buyers there was an Intermediate purchaser. It is a Canadian marketing company called C. & S. International Limited., incorporated in Toronto. It is closely associated with the American suppliers. Its name, C. & S., is taken from the initials of Camilla and Shawnee. Its directors are also directors of the American suppliers.
Next, the story. During 1971 and the first half of 1972 the Canadian marketing company made many contracts of sale to the Swiss buyers. They are hereafter called the "old contracts". By those "old contracts" the Canadian marketing company in its own name as principals sold many tons of peanuts to the Swiss buyers. They were shipped from the United States South Atlantic ports to Rotterdam and paid for by cash against documents. The contracts were subject to the conditions of sale of the Federation of Oil Seeds & Fat Association - which contained this term:-
14. This contract shall be deemed to have been made in England and the construction, validity and performance thereof shall be governed in all respects by English law. Any dispute arising out of it in connection therewith shall be submitted to arbitration in accordance with the rules of the Federation."15. Any dispute arising out of this contract to be settled by arbitration in London in accordance with the Rules and Regulations endorsed on this contract."
Those old contracts in 1971 and 1972 were honoured for many months. The peanuts were sold and delivered and the price paid. But in the middle of 1972 the price of peanuts rose sharply. After this rise the Canadian marketing company did not fulfil its contracts to deliver peanuts to the Swiss buyers. It was guilty of breaches of the "old contracts", and liable in damages. In the first half of 1973 the Swiss buyers nominated arbitrators in London. I will not go to the end of the story of these "old contracts". In November of 1973 the arbitrators in London made an award in favour of the Swiss buyers against the Canadian marketing company for nearly 3 million U. S. dollars. Those "old contracts" were between the Canadian marketing company and the Swiss buyers. Now in the beginning of 1973 the Swiss buyers (not having got delivery under the "old contracts") wanted peanuts. So they made "new contracts". The Swiss buyers made a series of "new contracts", not with the Canadian marketing company, but with the American suppliers, Camilla and Shawnee direct. They made these "new contracts" through new brokers called Nutco Limited., who were only agents and do not come into the case. These "new contracts" were written contracts between Camilla or Shawnee - that is the American suppliers of peanuts - as principals, on the one hand, and the Swiss buyers, one or other of them, on the other hand. The shipment was to be from Savannah, Georgia, to Rotterdam. The buyers were to establish confirmed Irrevocable letters of credit in favour of the sellers through C. and S. National Bank, Savannah. The conditions were to be the Federation conditions just as the old contracts. So the new contracts were governed by English law and disputes to be settled by arbitrationin London.
If those "new contracts" had been fulfilled according to their terms, there would have been no trouble. The Swiss buyers would have provided the money under the letter of credit. In return they would get the shipping documents, and the American suppliers, Camilla and Shawnee, would get the price - of course, through the banks.
But the new contracts did not go through in the way anticipated. Whilst the goods under the new contracts were on board those ships on the way from America to Rotterdam, the Swiss buyers made a plan To stop the money for them from getting to the American suppliers. The Swiss buyers thought that under the "old contracts" they had a good claim to damages against the Canadian marketing company - as indeed they had, and they determined to help themselves to the damages by taking them out of the price payable under the "new contracts". While the goods for the "new contracts" were still afloat, the Swiss buyers got an opinion from a United States lawyer of New York, a Mr. Steibel. On 30 April 1973 he advised that negotiating the "old contracts", the Canadian marketing company was in fact the agent for the American suppliers, Camilla and Shawnee, and that the American suppliers as principals were bound by all the terms of the "old contracts", and were liable to the Swiss buyers for the damages. On 2nd May 1973, whilst the goods were still afloat, the Swiss buyers went to the Swiss Courts. They made an application under Swiss law to sequestrate the moneys which were going to pay for the peanuts under the "new contracts". It was plain, of course, that the Swiss buyers, in order to get the documents of title to the goods, had to pay the price of the "new contracts" against documents. In order to get a sequestration order the Swiss buyers produced to the Swiss Court theopinion of the American lawyer and said:-
"It appears therefrom that & S International" - that is the Canadian marketing company - "was only an agent and that the joint liability of the principals, Camilla and Shawnee, remains intact."
On the basis of that statement, the Swiss Courts made an order for seizure - for sequestration of the moneys payable under the "new contracts". The effect was that, as soon as the Swiss buyers paid over the sum to the bank so as to get the goods under the "new contracts", they at the same time withdrew that money back by getting an order upon it for seizure - to satisfy this claim under the "old contracts".
This assertion of agency was never made until after the goods were shipped. It was made for the first time after the goods were afloat. On 2nd and 3rd. May 1973 the Swiss buyers wrote to the American sellers, asserting for the first time that the Canadian marketing company were agents - under the "old contracts"- for the American suppliers. In a letter of 2nd May the Swiss buyers wrote to Shawnee: "We refer to the contracts concluded through your export sales agent, & S International Limited… We hold you responsible for the non-execution of the above contracts and reserve all our rights to claim damages." They wrote in similar terms to Camilla. Those letters did not arrive till long after the goods had been shipped.
As soon as the American suppliers found that this moneys had been seized, they reacted strongly. They said that it was a breach of the "new contracts" under which the peanuts had been shipped. The Swiss buyers had not paid for the goods as they ought to have done. They had handed over the money with the one hand (so as to get the documents) and straightway taken it back with the other. Telexes were sent. Lawyers were consulted.
The American sellers said that the seizure of the money was a repudiation of the "new contracts". There were meetings to try and sort things out. At those meetings the parties discussed another consignment under the "new contracts". It was for shipments which were already on a third ship called the Bilderdijh which was on its way to Rotterdam. The Swiss buyers threatened to ruin the American suppliers. They said they would only pay for the Bilderdijh shipments under the "new contracts" if the American suppliers would recognise their liability for damages under the said contracts": but if the American sellers did not accept liability, they would not pay for the Bilderdijh shipment. The American suppliers did not agree. Thereupon the Swiss buyers took steps to seize the goods on the Bilderdijh. They applied on 17th or 13th May 1973 to the Dutch Courts to seize the goods on board the Bilderdijh. In that application they made a statement which is now acknowledge to be incorrect. They said quite wrongly that they had paid for the documents but had not got the goods. The Dutch Courts accented that statement as correct. They ordered the goods to be held and the bailiff put in charge of them. When the American suppliers heard about this seizure, they said that it was a further repudiation; because the goods in the Bilderdijh had been seized and no money paid for them.
On 18th May this telex was sent by the representatives of the American suppliers to the representatives of the Swiss buyers:-
"Your conduct in relation to the shipments already made on the Munchen, Hanover and Bilderdijh and the monies...
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