Finagrain S.A. Geneva v P. Kruse Hamburg

JurisdictionEngland & Wales
JudgeLORD JUSTICE MEGAW,LORD JUSTICE ROSKILL,LORD JUSTICE BROWNE
Judgment Date29 July 1976
Judgment citation (vLex)[1976] EWCA Civ J0729-3
CourtCourt of Appeal (Civil Division)
Date29 July 1976

[1976] EWCA Civ J0729-3

In The Supreme Court of Judicature

Court of Appeal

(Civil Division)

(From: Mr. Justice Mocatta – Commercial Court)

(Revised)

Before:

Lord Justice Megaw

Lord Justice Roskill and

Lord Justice Browne

In the Matter of the Arbitration Act 1950 And In the Matter of an Arbitration

Between:
Finagrain S.A. Geneva
(Sellers)
-and-
P. Kruse Hamburg
(Buyers)

Mr. ANTHONY LLOYD, Q.C. and Mr. NICHOLAS LEGH-JONES (instructed by G Messrs. Richards Butler & Co.) appeared on behalf of the Appellants (Buyers).

Mr. CHRISTOPHER STAUGHTON, Q.C. and Mr. ANTHONY HALLGARTEN (instructed by Messrs. Thomas Cooper & Stibbard) appeared on behalf of the Respondents (Sellers).

LORD JUSTICE MEGAW
1

This appeal is from a judgment of Mr. Justice Mocatta of 12th April, 1976, answering questions of law in an Award, in the form of a Special Case, dated 9th December, 1975, stated by the Board of Appeal of the Grain and Feed Trade Association Limited.

2

On 22nd January, 1973, Finagrain S.A., a Geneva firm ("the sellers") agreed to sell to P. Kruse, a Hamburg firm ("the buyers") 1500 metric tons of United States soya bean meal. The contract was in the French language, but it expressly incorporated the general conditions, in the English language, of Contract No. 100 of the Grain and Feed Trade Association, described as "Contract for Shipment of Feeding Stuffs in Bulk Tale Quale C.I.F. Terms". The contract contemplated, I think, that the soya bean meal should be shipped from a United States port. It was C.I.F. Rotterdam. The price was U.S. $216.50 per ton. Shipment of the 1500 tons, according to the wording of paragraph 1 of the Award, was to be in quantities of 300 tons each in May, June, July, August and September, 1973. This means, as is clear from the words used in the French text of the contract, that each shipment of 300 tons was to be in pursuance of a bill or bills of lading dated between the first and the last days inclusive of the respective calendar months. This arbitration is concerned solely with the 300 tons which were to be shipped under June bills of lading. I shall come back later to the relevant provisions of Contract No. 100.

3

Neither the sellers nor the buyers were shippers or consumers of soya bean meal. They were traders in that commodity. The contract between them was a contract which was one in a string of contracts through the medium of which, if all the contracts in the string had been duly performed, the ownership and possession of the 1500 tons of soya bean meal covered by this contract would have beentransferred from the shipper, the original owner who would be responsible for the shipment of the goods at a U,S. Gulf Port, to the ultimate consumer who would become the owner of the goods and would take possession of them at Rotterdam for actual use.

4

The sellers intended to fulfil this contract by making appropriations from one or more of three contracts of purchase of a total of 5700 tons of soya bean meal from two firms, Alfred C. Toepfer and Lesieur Tourteaux S.a.r.l., who were both also traders in this commodity. The buyers, as is agreed between the parties, though it was not a fact actually found in the Award, intended to reappropriate to a firm called Sachs of Nuremberg the appropriations for the 300 tons which they were entitled to receive from the sellers in respect of the June shipment under the contract with which we are concerned, in order to fulfil a pre-existing contract between the buyers and Sachs for the sale of 300 tons to be shipped in June.

5

Things went wrong with this contract, as with a large number of other soya bean meal contracts due for fulfilment in the summer of 1973. We are told by counsel that some 1100 cases are currently being dealt with by the Grain and Feed Trade Association arbitration procedure, arising out of a United States governmental export embargo in respect of, inter alia, soya beau meal in the summer of 1973. Whether and to what extent the decision of any of the issues in this particular case are likely to be conclusive of or relevant to the decisions in the other cases, I am not clear. I should mention that in two previous cases which have already been decided in this Court, raising questions on contracts for the sale of U.S. soya bean meal in the summer of 1973, it has been said by the Court, on information put before it, that the cause of the troubles was the extensive floods in the Mississippi River in 1973. We are told in this case that that is an error and that the embargo wasthe result, not of the Mississippi floods, but of some United States price control measure which made it more profitable to export soya bean meal than to sell it internally for domestic consumption; and that the embargo was imposed in an attempt to combat an actual or potential domestic shortage of the commodity in the United States of America. The cause of the embargo, however, does not affect the decision of the issues.

6

The first and main question, we are told, with which this arbitration was initially thought to be concerned was as to whether and to what extent the sellers were, under the terms of the contract, excused, in whole or in part, for non-delivery, or short delivery, of the 300 tons due to be shipped in June under June bills of lading. Clause 21 of Contract 100 dealt with prohibition of export, and clause 22 dealt with force majeure, strikes etc. I need not set out those clauses since in the event it has been held by the Board of Appeal that these clauses do not, on the facts as found, provide a defence for the sellers in respect of their failure to perform in full as regards the June shipment. One of the issues with which, in certain events, we are asked to deal in this appeal arises out of a motion by the sellers for the Award to be remitted to the Board of Appeal for further findings of fact in respect of the sellers' reliance on those clauses, and in particular, I think, in relation to clause 21, prohibition of export. I shall come to that issue later. It does not involve a consideration of the terms of those clauses for the purposes of this appeal; and for the purposes of the other issues in this appeal it is to be assumed, as both parties accept, that those clauses do not provide a defence.

7

Before I summarise the relevant facts I shall indicate what are the four issues which were raised in this appeal in the order in which I propose to deal with them.

8

(1) Have the buyers waived their right, or are they estopped from asserting their right, to require bills of lading dated in June, 1973, for the shipment of 300 tons required by the contract terms to be made in June? On that issue the arbitrators of the Association, in their Award dated 29th March, 1974, decided this waiver issue in favour of the buyers. The Board of Appeal decided the issue in the same way. Mr. Justice Mocatta held, however, that the buyers did waive that right. Accordingly, he held that the buyers were not entitled to claim damages from the sellers for breach of the contract. The buyers appeal on that issue.

9

(2)The sellers by motion ask that the Award be remitted for further findings – that is the issue which I have already mentioned – in respect of the prohibition of export defence. Mr. Justice Mocatta did not find it necessary to decide that issue in view of his decision in favour of the sellers on the waiver issue. The sellers invite this Court, if it should hold in favour of the buyers on the waiver issue, to order that the Award be remitted.

10

(3)If there was default on the part of the sellers giving rise to a claim for damages by the buyers – that is, if the waiver issue is decided by this Court in favour of the buyers – is the date for the ascertainment of the resulting damages 10th July, 1973, or 11th July, 1973? That may be described as the date of default point. The relevance of that issue – and here at least I think there may well be an issue of principle the decision of which may affect other cases – is that on 10th July, 1973, the market price of the contract goods was U.S. $635: on 11th July, 1973, it was U.S. $585. So there is a difference in the amount of damages, if any are payable, of U.S. $50 per ton, according as the relevant date is 10th or 11th July. The arbitrators and the Board of Appeal held, in favour of the buyers, that the date was 10th July. Mr. Justice Mocatta, had it been necessary for him todecide this issue, indicated that he would have held that it was 11th July. The sellers contend before this Court that the judge's view is right and that the relevant date is 11th July. If the waiver issue is decided in favour of the buyers, this issue as to the date of default has to be decided.

11

(4) The sellers contended, at least before the Board of Appeal, that if they were wrong on the waiver issue, and thus were liable for damages, the tonnage in respect of which they were liable, whatever be the appropriate figure per ton for the amount of damages, was reduced by 59½ tons because of the applicability of clause 27 of the contract, called "the Circle Clause". The Board of Appeal held in favour of the sellers. Mr. Justice Mocatta held that if he had had to decide that issue (as he did not have to decide it, because of his decision on the waiver issue) he would have held that the Board of Appeal was wrong and that, the damages had to be assessed without deduction of the 59½ tons. The sellers during the hearing of this appeal were contending in this Court that the judge was wrong and that the Board of Appeal was right and that by reason of the Circle Clause the figure on which damages were to be assessed, if they fell to be assessed at all, was 144.573 tons: that is, 59.5 tons less than the 204.073 tons which the buyers contend is the tonnage on which damages are to be computed. On that issue, "the Circle point", as I shall have occasion to say hereafter, this Court does not now have to...

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1 books & journal articles
  • DEMYSTIFYING THE RIGHT OF ELECTION IN CONTRACT LAW
    • Singapore
    • Singapore Academy of Law Journal No. 2006, December 2006
    • 1 December 2006
    ...to damages vested in him at the time of the breach; The Democritos, supra n 30, at 398. 112 Finagrain SA Geneva v P Kruse Hamburg [1976] 2 Lloyd’s Rep 508 (“Finagrain v Kruse”): the Court of Appeal did not accept that the buyers had waived all rights to claim damages for the sellers’ non-co......

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