Man (E. D. & F.) (Sugar) Ltd v Yani Haryanto (No. 2)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL,LORD JUSTICE BALCOMBE,LORD JUSTICE MANN |
| Judgment Date | 21 December 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J1221-9 |
| Docket Number | 90/1195 1989 FO. 289 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 1990 |
[1990] EWCA Civ J1221-9
Lord Justice Neill
Lord Justice Balcombe
and
Lord Justice Mann
90/1195
Q.B.F/0819/90
1989 FO. 289
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT (MR. JUSTICE STEYN)
Royal Courts of Justice,
MR. R. HACKER (instructed by Simmons & Simmons, EC2) appeared on behalf of the Plaintiff (Appellant).
MR. N. MERRIMAN QC and MR. A. MALEK (instructed by Rosling King, EC4) appeared on behalf of the Defendant (Respondent).
Before the court there is an appeal and a cross-appeal from the order of Steyn J dated 25th May 1990. The notice of appeal by the Plaintiffs, E D & F Man (Sugar) Limited ("Man"), is dated 28th June 1990. The notice of cross-appeal by the defendant, Mr. Yani Haryanto, which includes a respondent's notice, is dated July 1990.
By his order Steyn J:
(1) Granted a declaration that a settlement agreement between Man and Mr. Haryanto dated 7th July 1986, including the arbitration clause contained therein, was a valid agreement and enforceable by Man against Mr. Haryanto;
(2) Discharged injunctions made against Mr. Haryanto by Leggatt J on 9th May 1989 and by Webster J on 21st December 1989. I shall refer to the terms of these injunctions later. Man appeals against the discharge of the two injunctions.
The cross-appeal by Mr. Haryanto is against the grant of the declaration. It will be convenient to consider the cross-appeal by Mr. Haryanto first.
The Facts
The history of this matter is a little complicated.
Man are a leading company of international sugar traders based in London. Mr. Haryanto is a citizen of Indonesia and is ordinarily resident there where he lives in Jakarta. The judge described him as a man of wealth and influence in Indonesia.
In February and March 1982 Man, as sellers, and Mr. Haryanto, as buyer, entered into two contracts for the sale and purchase of sugar. The first contract (7458) was for the sale of 300,000 tonnes of refined white crystal sugar at US$530 per tonne C&F one major safe Indonesian port. Shipment was to be made during the months of October 1983 to March 1984 from any world port. The second contract (7527) was for the sale on the same terms of 100,000 tonnes at US$470 per tonne. Both contracts provided that they should be governed by English law and contained an arbitration clause making provision for any disputes to be submitted to arbitration under the Rules of the Refined Sugar Association in London.
After a time a dispute arose between Man and Mr. Haryanto about the two contracts. As did the judge, I shall refer to these contracts as "the disputed contracts". Mr. Haryanto contended that his obligation under the disputed contracts was to use his best endeavours to ensure that Badan Urusan Logistik of Jakarta ("Bulog") would enter into contracts to buy the same or approximately the same quantities of sugar but at a higher price than that stipulated in the disputed contracts. He claimed that if Bulog duly entered into such contracts he would be entitled to receive from Man the difference between the price received from Bulog and the prices set out in the disputed contracts but that he was under no further contractual obligation than to use his best endeavours. In particular he denied that there was a relationship of buyer and seller between himself and Man.
Man on the other hand contended that the disputed contracts meant what they said and that Mr. Haryanto was under a contractual obligation to buy the sugar, though they accepted that there was a further term that if Bulog subsequently agreed to buy from them the same quantity of sugar for delivery during the same period the disputed contracts would not be further performed and any difference in the total price received by Man would be credited or debited to Mr. Haryanto as the case might be.
In the event no contract for the sale of sugar came into existence between Man and Bulog. Man called on Mr. Haryanto to open letters of credit himself as stipulated in the disputed contracts. He failed to open such credits and Man then treated him as being in default.
On 1st June 1984 Man instituted arbitration proceedings against Mr. Haryanto in which they claimed $146m for damages for breaches of the disputed contracts.
A few weeks later, on 20th June 1984, Mr. Haryanto issued a writ in the Commercial Court (1984 H 2752) claiming, inter alia, a declaration that he was not bound by the disputed contracts and an injunction to restrain Man from proceeding with the arbitration before the Refined Sugar Association.
Mr. Haryanto's action came before Staughton J in March 1985. Pursuant to an interlocutory order made by Lloyd J on 25th July 1984 the trial, which lasted 11 days, covered only the issues raised by the claims for a declaration and an injunction. On 28th March 1985 Staughton J gave judgment dismissing these claims: see [1986] 2 Lloyd's Rep 44.
Mr. Haryanto then appealed to the Court of Appeal. The hearing of the appeal took place in February 1986 and lasted nearly six days. On 5th March 1986 the Court of Appeal dismissed the appeal: see ibid. At the conclusion of the hearing before the Court of Appeal, however, Man asked for and were given leave to serve a cross-notice asking for a declaration. A declaration was then made in the following terms;
"That [Mr. Haryanto] is bound by the contracts contained in or evidenced by contract documents 7458 (dated 12th February 1982) and 7527 (dated 23rd March 1982) including the provision therein that all disputes…. shall be referred to the Council of the Refined Sugar Association for settlement in accordance with the Rules of the Association relating to Arbitration."
The Court of Appeal gave Mr. Haryanto leave to apply within 14 days to vary the terms of this declaration.
Mr. Haryanto duly made an application to vary. The application was heard by the Court of Appeal on 26th March 1986.
It seems that two arguments were put forward on behalf of Mr. Haryanto.
(a) that the declaration was too wide and went beyond what the court had decided; and
(b) that the declaration might prevent Mr. Haryanto contending before the arbitration tribunal or before a court that the disputed contracts were void or unenforceable for illegality.
The second argument was no doubt linked with the fact that on 25th March 1986, the day before the Court of Appeal hearing, Mr. Haryanto had issued a second writ in the Commercial Court. By this writ he claimed a declaration "that [the disputed contracts] upon which [Man have] commenced arbitration proceedings before the Refined Sugar Association, are unenforceable and/or void as being illegal and/or contrary to English public policy."
The Court of Appeal, after hearing submissions, dismissed the application to vary. The Vice-chancellor announced the decision in these terms:
"We do not think it necessary to give judgment in this matter. We simply stand by the declaration as asked."
In the present case Steyn J was referred to the transcript of the hearing before the Court of Appeal on 26th March 1986. It is convenient to quote a short passage from his judgment where he mentioned what had happened.
"Mr. Haryanto duly applied for a variation of the wording to allow him to raise the issue of the illegality of the disputed contracts, by reason of a prohibition on importation of sugar into Indonesia.
..…Not surprisingly, a study of the exchanges in the Court of Appeal revealed that all three members of the Court of Appeal thought that such a plea was no longer open to Mr. Haryanto but they also took the view that they were not called to decide the issue."
On 1st May 1986 Man issued an originating summons in the Commercial Court (1986 E 1034). They sought three declarations including a declaration that Mr. Haryanto was estopped from contending in any proceedings against Man that the disputed contracts were unenforceable and/or void as being illegal and/or contrary to English public policy. The alleged estoppel was based on three specific grounds:
(a) that the issues were res judicata having been determined in action 1984 H 2752;
(b) that Mr. Haryanto had expressly abandoned these issues in action 1984 H 2752; and
(c) that he was estopped by reason of the rule in Henderson v. Henderson (1843) 3 Hare 100.
On 7th July 1986 Man and Mr. Haryanto entered into a written agreement to settle the outstanding proceedings between them including the arbitration proceedings which had been started by Man on 1st June 1984. By this agreement, in which details of the various proceedings were recited, it was provided, inter alia, that Mr. Haryanto would pay to Man the sum of US$27m by instalments of US$5m on 31st July 1987, US$9m on 31st July 1988 and US$13m on 31st July 1989. The agreement contained an accelerator clause entitling Man, in the event that Mr. Haryanto failed to comply with his obligations under the agreement, to declare any balance of the US$27m immediately due and payable. The agreement also contained an arbitration clause and a provision that it should be "governed and construed according to the laws of England".
Mr. Haryanto duly paid the first instalment of US$5m due on 31st July 1987. He also complied with other terms of the agreement relating to the provision of acknowledgements of debt and the provision of security. On 31st July 1988, however, Mr. Haryanto failed to pay the instalment due on that date of US$9m. Man's solicitors immediately invoked the accelerator clause and by a...
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