Etablissements Soules et Cie. v Intertradex S.A.

JurisdictionEngland & Wales
Judgment Date08 November 1990
Judgment citation (vLex)[1990] EWCA Civ J1108-8
CourtCourt of Appeal (Civil Division)
Docket Number90/1081
Date08 November 1990

[1990] EWCA Civ J1108-8







Royal Courts of Justice


Lord Justice Neill

Lord Justice Stocker


Lord Justice Staughton


1989 Folio 894

In The Matter of the Arbitration Acts 1950–1979


In The Matter of An Arbitration

Etablissements Soules Et Cie
Plaintiffs/ Buyers (Respondents)
Intertradex SA
Defendants/ Sellers (Appellants)

MR. M. HAVELOCK-ALLAN (instructed by Messrs. Middleton Potts, Solicitors, London EC1A 7LD) appeared on behalf of the Defendants (Appellants).

MR. D. MATTHEWS (instructed by Messrs. Holmes Hardingham Walser Johnson Winter, Solicitors, London EC3R 5AQ) appeared on behalf of the Plaintiffs (Respondents).


The m.v. HANDY MARINER arrived at the port of Lorient in France on 30th September 1987. She had to wait for a berth until 13th October, owing to congestion in the port, before the cargo could be discharged. The question in this appeal relates to the financial loss resulting from that delay. Had the problem arisen in the context of a charterparty, there would have been a great deal of learning in the books to provide an answer. But here it arises under a sale contract, where the question is a novel one. It comes down to this: should one attribute to the buyers and sellers in their sale contract an intention to use words in the technical sense which they bear in charterparties, or in some different sense?


The contract was concluded on 25th June 1987, between two French companies, for the sale and purchase of 5,000 tons of Chinese sweet potatoes. The sellers were Intertradex S.A., claimants in the arbitration and appellants in this court; the buyers were Etablissements Soules et Cie, who were respondents in the arbitration and are respondents now. There were two contract notes, one issued by the sellers and the other by the brokers. Both are written in French. It is agreed that the only material terms can be translated as follows:

"C.i.f. free out Lorient Discharge 400 metric tonnes per hold/weather working day Sundays and holidays excepted unless used with maximum 2,000 metric tonnes per day. Demurrage US $3,500 per day pro rata with half despatch."


The contract also provided that other terms should be in accordance with form 100 of GAFTA. Clause 16 of that form provides:

"DISCHARGE. Discharge shall be as fast as the vessel can deliver in accordance with the custom of the port but in the event of shipment being made under liner Bill(s) of Lading, discharge shall be as fast as the vessel can deliver in accordance with the terms of the Bill(s) of Lading. The cost of discharge from hold to ship's rail shall be for Sellers' account, from ship's rail overboard for Buyers' account. If documents are tendered which do not provide for discharging as above, or contain contrary stipulations, Sellers shall be responsible to Buyers for extra expenses incurred thereby. Discharge by grab(s) shall be permitted unless specifically excluded at the time of contract. If shipment is effected by Lash Barge, then the last day of discharge shall be the day of discharging the last Lash Barge at the Port of Destination."


The goods were in fact stowed in four holds only, and the parties later agreed that the total discharge rate should be taken as 1,600 metric tons per day.


The state of accounts is that, apart from the question of demurrage, there was a balance of $38.325 owed by the sellers to the buyers under this contract. The sellers had paid $11,186.63, and the buyers sought to recover the difference, that is to say $27,138.37. Against that they admitted liability for demurrage in the sum of $1,074.30. Hence their claim was for the net amount of $26,064.07. The sellers, on the other hand, initially invoiced the buyers for demurrage in the sum of $27,138.37. If that was right, they had paid all that they owed to the buyers. In the circumstances it is a little surprising that in the arbitration the sellers were claimants; it may be that they sought merely a declaration that the buyers had been paid all that was due to them.


The figures demonstrate that neither the sellers nor the buyers calculate demurrage at $3,500 a day for every day that the time allowed was exceeded. The explanation is that there was another parcel of 5,000 tons of similar cargo on board the vessel, destined for other receivers at Lorient. She was still not fully laden, as other cargo had been discharged previously, at Ravenna. The two parcels formed one undivided bulk and were discharged simultaneously. Accordingly the buyers in their time sheet attributed half the time taken in discharging to their own parcel, and half to that of the other receivers. So did the sellers in their time sheet; and they in addition attributed half the waiting time to the buyers, and half to the other receivers. Whether that result ensues from the words "pro rata" in the contract, or from some implication, it has not been challenged in these proceedings.


The case for the sellers was that time started to count either when the vessel arrived in the port of Lorient, or at latest with the next working period after the vessel had arrived in the port and tendered notice of readiness—that is, on 1st October 1987. So the waiting time until 13th October counted, and also the time taken in discharging, which lasted until 23rd October.


The buyers, on the other hand, contended that time could not start to count until the vessel berthed on 13th October.


The first-tier arbitrators of the Grain & Feed Trade Association (Mr. A.G. Scott, Mr. R.J. Short and Mr. R.A. Standcumbe) decided in favour of the sellers. However, they made a small reduction in the amount of demurrage claimed by the sellers, so that it came to $24,887.67. That left a balance of $2,250.70 due to the Buyers. Their award was upheld by the Board of Appeal of GAFTA. So both trade tribunals took the view that time started to count on 1st October.


On appeal to the High Court with leave, Hobhouse J. took a different view. He upheld the buyers' contention that time could not start to run until the vessel reached a berth, and substituted an award in favour of the buyers for $26,064.07, which was the full amount of their claim. The sellers now appeal to this court.


If the contract to be construed had been a charterparty, there could be no doubt of the answer. A contract to proceed to Lorient has the effect that the carrying stage of the voyage ends when the vessel reaches the port. It is for the charterer then to discharge her, and delay in obtaining a berth counts against his discharging time. If on the other hand the contract is to proceed to one safe berth Lorient, for example, time does not start until the berth is reached. There are well known acronyms (such as WIBON -whether in berth or not) which can be used to vary the effect of describing the destination as a berth.


The question, as I have said, is whether the parties to this sale contract must be taken to have used the words (c.i.f. free out Lorient" (or rather their French equivalent) in the charter-party sense. But before one comes to that question there is a point which might have been, but in the event was not, of some importance. That is whether by the terms of the contract notes the buyers assumed any obligation at all to the sellers to discharge the cargo in a given time, or to pay demurrage if they did not do so.


In Congimex v. Tradax Export SA [1981] 2 LL.R 687 [1983] 1 Ll.R 250, the question arose whether a c.i.f. contract was frustrated by a prohibition on import at the port of destination. The contract contained a term which was the ancestor of, and in all material respects the same as, clause 16 in form 100 of GAFTA. At first instance I held that the clause did not impose any obligation, as between buyers and sellers, relating to the discharge of goods; it merely made provision as to what obligation relating to discharge might be contained in a bill of lading tendered by the sellers to the buyers, so as to become binding as between the buyers and the shipowners. My decision was upheld by the Court of Appeal.


In this case it has hitherto been common ground that the term as to discharge in the contract notes is of a different character. It regulates discharge as between the buyers and the sellers. Whether it creates a primary obligation to discharge within the time allowed and a secondary obligation to pay demurrage if that is not done, or only an obligation to pay demurrage, is of academic interest but no practical relevance.


In his written outline argument for the buyers Mr. Matthews sought to depart from the concession; but in argument before us he did not pursue the point. Without expressing any final opinion, I can see good grounds for arguing that the concession was correct. The term as to discharging time and demurrage in the contract notes is a plausible indication that there was a charterparty governing this voyage. Whether there was in fact a charterparty, and whether the sellers were parties to it as charterers, is not found by the Board of Appeal or disclosed in the papers before us. But if there was, and if the sellers were the charterers, they would naturally wish to have a right to recover demurrage from the buyers if any was incurred; the buyers might well not be liable to the shipowners directly for demurrage under the terms of the bill of lading. Alternatively the sellers, although not themselves charterers, might have contracted to buy the goods from others who were charterers, on terms similar to those in...

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