Intertradex S.A. v Lesieur-Tourteaux S.A.R.L.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE GOFF |
| Judgment Date | 19 April 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0419-2 |
| Date | 19 April 1978 |
| Court | Court of Appeal (Civil Division) |
[1978] EWCA Civ J0419-2
In The Supreme Court of Judicature
Court of Appeal
(Civil Division)
(On appeal from the Queen's Bench Division, Commercial Court - Mr. Justice Donaldson)
The Master of the Rolls
(Lord Denning)
Lord Justice Goff
and
Lord Justice Cumming - Bruce
In the Matter of the Arbitration Act 1950
and
In the Matter of an Arbitration
MR. DAVID JOHNSON, Q.C. and MR. R. WOOD (instructed by Messrs. Middleton Potts & Co appeared on behalf of the Appellants.
MR. A. HALLGARTEN, Q.C. and MR. B. McCLURE (instructed by Messrs. Thomas Cooper It Stibbard) appeared on behalf of the Respondents.
(As approved by the Judges)
THE MATER OF THE ROLLS: Mali is a former French territory, south of the Sahara, mostly desert, with no access to the sea. One of its most important products is groundnuts. The industry is run by a nationalized undertaking called the Societal d'Exploitation des Produits Oleagineaux du Mali (in short SEPON) who have a monopoly. They have a factory near the headwaters of the Niger at place called Koulikoro. It is the only factory which produces Mali groundout expellers. The groundnuts are the raw material. They are sent by rail from up-country to Koulikoro. They are processed these groundnut expellers. They are exported to foreign countries. There are only two ways of exporting them. One is by sending them to the south by rail to the port of Abidjan on the Ivory Coast. That takes ten days. The other way is to send them to the west by rail to the port of Dakar in Senegal. That takes three or four days.
Having set the scene, I turn to the contracts in this case. France and Mali have close contacts with one another. In France there is a large firm of French importers, called Intertradex S.A. On the 18th May, 1972, they made a contract with SEPON of Mali by which Intertradex agreed to buy 1,000 tons of Mali groundnut expellers from SEPON at F. Fr. 48 per 100 kilos, goods in bulk, f.o.b. (free on board) stowed Abidjan. The delivery date was nine months ahead. It was to be in March 1973. Payment was to be by letter of credit to reach the Mali Bank by 15th February, 1973.
Any dispute was to be settled by the arbitration chamber of Paris. There were no special conditions in that contract. It was not on GAFTA Form 100. It was no doubt governed by French law. French law, we are told, allows a defence of force majoure to protect the seller in cases of unforeseen impediments preventing or hindering delivery.
Having got their hands on the source of supply, Intertradex S.A., three months later, in August, 1972, made two sub-contracts. They agreed to sell two lots to a French firm in Eoulogne called Lesiour-Tourteaux of Boulogne. Each of these sub-contracts was for the sale of 400 tons of Mali groundnut expellers at a price of Fr. Fr.57.50, c.i.f. free out Rouen; packed in bulk; shipment, March 1973; payment net cash against shipping documents. Then comes the important provision,which is the only reason why this case gets into this court at all: "All other conditions of GAFTA Contract No.100." That is a form which we have had so many times in this court through the London Corn and Commodity Exchanges. The conditions of that form were incorporated into the two sub-contracts between two French concerns. Under those two sub-contracts the buyers were not concerned with the port of shipment. Those contracts were for delivery at Bouen, payment having been Bade beforehand on c.i.f terms.
In point of fact, none of those contracts was fulfilled. SEPON, the Mali nationalised industry, made two or three shipments of Kali groundnut expellers in March and April, 1973. These were to fulfill earlier contracts Bade by SEPOM before this one. One of those shipments was from Abidjan and two were from Dakar, but no more. Those shipments exhausted all the groundnut expellers produced in Mali at the time. No more were available. By March 1973 the price had increased-greatly.
In view of the failure of Intertradex to fulfill these extracts, the Boulogne firm bought groundnuts elsewhere. The nearest equivalent was Argentinian groundnut expellers. In June, 1973, they bought them at $343 per ton. Having bought them elsewhere from Argentina, they made a claim here against their suppliers, Intertradex, for non-delivery. The sellers, Intertradex, relied on the defence of force majeure as given in the GAFTA Form No 100. We have had it Many times before us. I will not read it again: it has eight sentences which have to be gone through in every case to see whether the defence of force majeure is available.
I will first state the events which were said in the first place to lead to this defence of force majeure. There was a breakdown at the factory at Koulikoro where the groundnut expellers were being manufactured. The relevant dates are as follows. On 2nd February, 1973, there was a breakdown of the electrical distribution panel. That disrupted production. It looked like lasting some time, because replacement parts had to be got from Germany. So four days later, on the 6th February, 1973, SEPOM, the nationalised industry and shippers, telephoned Interim trades. They told them, "There has been a breakdown at the crushing plant which has stopped production". On that self-same day, 6th February, 1973, Intertradex passed on this telephone message to the brokers acting for the second buyers. Theysent a telex saying: "We invoke force majeure under GAFTA Form No.100 as a result of the breakdown of machinery at the crushing plant." Rote that. That was the occurrence on which they relied as force majeure. It was the breakdown of machinery at the crushing plant. It was the only occurrence which was stated. That massage was the warning notice which is required by sentence 2 of clause 22: "If delay in shipment is likely to occur for any of the above reasons, shippers shall give notice to their buyers." The shippers SEPOM, gave the notice. It was passed on immediately by the sellers, Intertradex, to the buyers, the Boulogne firm.
On the very next day, 7th February, 1973, the buyers telexed claiming Arbitration. The sellers Intertradex then telexed: "We are only passing on the notice of force majeure as received from the shippers. We hope the normal production will be resumed shortly. The period of delivery under our two contracts will probably not be affected,"
Unfortunately, however, the factory did not succeed in getting production going for a long time. It appears from further evidence that not only was there a breakdown of the machinery, but there was also difficulty in getting the groundnuts the raw material, from up-country to the factory. There was trouble on the railway, and this caused interruptions in the supply of raw materials by rail to the factory. That say have contributed - we do not know how such-to the loss of production, in addition to the breakdown at the factory.
It will be remembered that the shipment date and delivery dates were 'March 1973'. Towards the end of March Intertradex wanted to know the position. Under clause 22 of the GAFTA Form, after the warning notice has been given, if the shippers want further time they have got to give an extension notice under sentence No. This extension notice has to be given "not later than two business days after the last day of the contract period of shipment stating the port or ports of loading from which the goods were intended to be shipped." Realising the need for an extension notice, on 26th March, 1973, Intertradex enquired of SEPOM as to when they could expect delivery. On 27th March SEPOM telexed: "Loading for groundnut expellers expected about 15th May." That estimate meant than an extension was needed. Accordingly, on 28th March, Intertradex telexed to the brokers, saying:"
We call for an extension of shipment date in accordance with Clause 22of the GAFTA Form 100 and we declare Dakar and/or Abidjan as ports of shipment."
So it is quite clear that Intertradex were themselves calling for an extension under clause 22 of the GAFTA Form. No doubt they hoped that within the two months' extension (that is, by the end of May 1973) they would be able to supply the groundnuts and fulfil the contracts.
It is important to notice that the buyers did not take any exception at all to that request for the extension. They did not exercise the option to cancel which is given by sentence 5 of Clause 22. So it looked as if there was a two months' extension to the end of May.
Towards the end of May 1973 the buyers in Boulogne were anxious to get the goods, especially as the price was rising. On 23rd May they telexed to the brokers saying: "Please tell us within 24 hours the date on which you intend to ship the goods, failing which we shall consider you in default and will request arbitration in London."
There were two or three telexes passing at that tine, in which the buyers demanded to know the date of delivery. Eventually, on 1st June, 1973, the sellers rejected the demands. They maintained that the position was one of force majeure.
By that time the two months' extension given by Clause 22 had ran out. The sellers had not supplied the goods. The buyers claimed damages for non-delivery. The dispute went to arbitration.
There was much discussion before us as to the cause of the non-delivery. Was it due to the breakdown of machinery at the factory? or was it also due to the trouble in getting the raw materials down to the factory? The only cause given in the warning notice was the breakdown of machinery at the crushing plant. Assuming that was the effective cause of the non-delivery during March, April and May, 1973, the question was argued before us as to whether the sellers could rely on the defence of force majeure given by Clause 22.
Mr. Hallgarten...
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