CTI Group Inc. v Transclear SA (The Mary Nour (No. 2))
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE FIELD,Mr Justice Field |
| Judgment Date | 17 October 2007 |
| Neutral Citation | [2007] EWHC 2340 (Comm) |
| Docket Number | 2006 Folio 1389 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 October 2007 |
[2007] EWHC 2340 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Mr Justice Field
2006 Folio 1389
In an Arbitration Claim Between
Julian Kenny (instructed by Hill Dickinson LLP) for the Claimant/Buyers
Michael Nolan (instructed by Salans) for the Defendant/Sellers
Hearing dates: 9 th October 2007
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.
Following upon my earlier judgement 1 holding that the two f.o.b. contracts at the centre of the buyers' claim were not frustrated, the sellers, as respondents to the buyers appeal under s. 69 (1) to (3) of the Arbitration Act 1996 (“the Act”), now apply to have the tribunal's award that there is nothing due from the sellers to the buyers upheld for reasons not expressed or not fully expressed in the award.
The contracts in question were sales of 27,000 mt of cement f.o.b. the Mary Nour. The sellers failed to deliver under either of the contracts within the stipulated loading windows because their contemplated suppliers declined to deliver the cargos. The suppliers adopted this course because they had learned that the cargo was destined for Mexico where the buyers intended to use it to break the cartel which a company called Cemex was operating in the Mexican cement market.
The first contract specified delivery in Padang, Indonesia. The second, that replaced the first without prejudice to a claim for non-delivery, specified delivery in Taiwan. By the time the sellers' Taiwanese supplier pulled out, the buyers' plans to break Cemex's monopoly were known throughout Asia and the sellers found it impossible to find an alternative source of supply anywhere in these areas. This meant that the Mary Nour had to steam from SE Asia to Novorossiysk, Russia, where delivery was taken of an alternative cargo at a price which was $3.00 per mt more than the price under the contracts made with the sellers. The buyers claimed damages in the arbitration under six heads: (i) the difference between the original price and the price actually paid; (ii) the cost of the additional steaming time resulting from the fact that the substitute cargo had been loaded in Novorossiysk; (iii) additional bunkers consumed on the longer voyage; (iv) additional voyage disbursements, including Suez Canal tolls; (v) the difference between the estimated loading costs at Padang and the actual loading costs at Novorossiysk; and (vi) the costs thrown away of bags into which the bulk cargo was to be sold into Mexico, the markings on which stated that the contents were of Indonesian origin.
Section 51 of the Sale of Goods Act 1979 (“the SGA”) provides:
(1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.
(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract.
(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or (if no time was fixed) at the time of the refusal to deliver.
The sellers contended in the arbitration that even if the contracts were not frustrated, the buyers had suffered no loss because there was an available market for cement in Padang at the same price as the contract price. They further submitted that they had not undertaken to supply cement that was capable of being imported into Mexico and the losses claimed by the buyers were not losses directly and naturally resulting from a failure to supply cement f.o.b. Indonesia. Rather, they were all losses flowing from the buyers' desire to obtain a cargo capable of being exported to Mexico and the need, in the events that happened, of shipping a cargo other than from Indonesia.
Although it was strictly unnecessary to do so, the tribunal dealt with these contentions in paragraph 60 of their Partial Final Award as follows:
In our view Counsel for the Buyers provided the complete answer to this objection [no recoverable damages had been suffered because there was an available market in Padang at the same price as the contract price] with his submission that the Sellers' breach was not simply a failure to supply cement FOB Indonesia but was a failure to supply cement “FOB “the Mary Nour”” in Indonesia. As we have already noted, the identity of the carrying vessel was inextricably linked with the FOB sale contract. Given that it seemed to be clear beyond doubt that there was no available source of supply for the contractual cement cargo to be shipped on the “MARY NOUR” in Indonesia or elsewhere in Asia, it...
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