Nidera BV v Venus International Free Zone for Trading & Marine Services S.A.E
| Jurisdiction | England & Wales |
| Judge | Mr Justice Walker |
| Judgment Date | 19 June 2014 |
| Neutral Citation | [2014] EWHC 2013 (Comm) |
| Docket Number | Case No: 2013 Folio 895 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 June 2014 |
[2014] EWHC 2013 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Walker
Case No: 2013 Folio 895
Simon Rainey QC (instructed by Hill Dickinson LLP) for the Claimant
Sara Cockerill QC (instructed by Holman Fenwick Willan LLP) for the Defendant
Hearing dates: 24 January and 20 February 2014
Approved Judgment
A. Introduction
This is an appeal by Nidera BV ("sellers") from Arbitration Appeal Award No. 4314 ("the board award") dated 4 June 2013. The board award was made by a board of appeal of the Grain and Feed Trade Association ("GAFTA"). The board made a finding ("the extension finding") in favour of Venus International Free Zone for Trading and Marine Services SAE ("buyers") that they had validly extended the contract delivery period. Sellers had cancelled the contract in reliance upon a prohibition of export clause. The board held that the consequence of the extension finding was that sellers' cancellation of the contract was premature, constituting a repudiatory breach of contract which had been validly accepted by buyers.
In this regard the board reached the same conclusion as the original decision of GAFTA arbitrators ("the tribunal") in an award ("the tribunal award") dated 10 May 2012. The result was that buyers succeeded in their claim for default damages pursuant to a contract dated 23 June 2010, as amended on 12 July 2010, for thirty thousand metric tonnes of Ukrainian yellow corn, 2010 crop on terms FOB stowed and trimmed one safe Black Sea or Ukrainian port in sellers' option.
At the hearing before me I was greatly assisted by skeleton arguments and oral submissions from Mr Simon Rainey QC on behalf of sellers and Ms Sara Cockerill QC on behalf of buyers. The matters dealt with in this judgment are as follows:
A. Introduction 2
B. The questions on appeal 2
C. Relevant provisions in GAFTA 49 3
D. Delivery period and events in Oct/Nov 2010 5
E. The arbitration 7
F. The parties' submissions 9
G. Analysis 13
H. Conclusion 15
B. The questions on appeal
Permission to appeal was given by Cooke J on 8 November 2013 on two questions of law. Both concern clauses 6 (period of delivery) and 8 (extension of the contract period of delivery) of the GAFTA No. 49 contract for the delivery of goods from central and eastern Europe in bulk or bags FOB terms ("GAFTA 49"). The first was whether clause 8 may be invoked by buyers where they have presented a vessel with readiness to load within the delivery period under clause 6 of GAFTA 49. The second question was whether buyers' claim for an extension of the delivery period on 29 October 2010 was a valid claim under clause 8, with the consequence that the original period under clause 6 was thereby extended to 21 November 2010. It is common ground that the second question must be answered in the same way as the first. Thus the only issue arising on the present appeal concerns which of two rival constructions of clause 8 is correct. I shall refer to it as "the clause 8 construction issue."
C. Relevant provisions in GAFTA 49
The relevant provisions are set out below, using the line numbers which appear on the form as issued by GAFTA, and adding in square brackets the sentence number within each clause:
29 6. PERIOD OF DELIVERY
30 [6.1] Delivery during ……. at Buyers' call.
31 [6.2] Nomination of Vessel – Buyers shall serve not less than ………. consecutive day's notice of the name and probable readiness date of the vessel and the estimated tonnage required.
32 [6.3] The Sellers shall have the goods ready to be delivered to the Buyers at any time within the contract period of delivery.
33 [6.4] Buyers have the right to substitute the nominated vessel, but in any event the original delivery period and any extension shall not be affected thereby.
34 [6.5] Provided the vessel is presented at the loading port in readiness to load within the delivery period, Sellers shall if necessary complete loading after the delivery period, and carrying charges shall not apply.
35 [6.6] In case of re-sales a provisional notice shall be passed on without delay, where possible, by telephone and confirmed on the same day in accordance with the Notices 39 Clause.
36 7. LOADING – [7.1] Loading port……………
37 [7.2] If a range is given, Sellers to declare port/berth(s) ….. days prior to commencement of the delivery period.
38 [7.3] Vessel(s) to load in accordance with the custom of the port of loading unless otherwise stipulated.
39 [7.4] Bill of lading shall be considered proof of delivery in the absence of evidence to the contrary.
40 8. EXTENSION OF DELIVERY – [8.1] The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period.
41 [8.2] In this event Sellers shall carry the goods for Buyers' account and all charges for storage, interest, insurance and other such normal carrying expenses shall be for Buyers' account, unless the vessel presents in readiness to load within the contractual delivery period.
42 [8.3] Any differences in export duties, taxes, levies etc, between those applying during the original delivery period and those applying during the period of extension, shall be for the account of Buyers.
43 [8.4] If required by Buyers, Sellers shall produce evidence of the amounts paid.
44 [8.5] In such cases the Duties, Taxes and Levies Clause shall not apply.
45 [8.6] Should Buyers fail to present a vessel in readiness to load under the extension period, Sellers shall have the option of declaring Buyers to be in default, or shall be entitled to demand payment at the contract price plus such charges as stated above, less current FOB charges, against warehouse warrants and the tender of such warehouse warrants shall be considered complete delivery of the contract on the part of Sellers.
46 …
47 11. EXPORT LICENCE – [11.1] EC Export Licence if required, to be obtained by Buyers. For other countries export licence if required, to be obtained by Sellers.
48 12. DUTIES, TAXES AND LEVIES ON GOODS – [12.1] Any EC export duties, taxes, levies and refunds etc present or future in the country of origin, shall be for Buyers' account, otherwise national duties and taxes, present or future shall be for Sellers' account.
49 [12.2] For other countries any duties, taxes, levies, and refunds etc, present or future in the country of origin, shall be for Sellers' account.
50 13. PROHIBITION – [13.1] In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin of the goods, or of the country from which the goods are to be shipped, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled.
51 [13.2] Sellers shall advise Buyers without delay with the reasons therefor and, if required, Sellers must produce proof to justify the cancellation.
52 …
53 20. DEFAULT – In default of fulfilment of contract by either party, the following provisions shall apply:-
54 (a) The party other than the defaulter shall, at their discretion have the right, after serving notice on the defaulter, to sell or purchase, as the case may be, against the defaulter, and such sale or purchase shall establish the default price.
55 (b) If either party be dissatisfied with such default price or if the right at (a) above is not exercised and damages cannot be mutually agreed, then the assessment of damages shall be settled by arbitration.
56 (c) The damages payable shall be based on, but not limited to, the difference between the contract price and either the default price 156 established under (a) above or upon the actual or estimated value of the goods on the date of default established under (b) above.
57 (d) In all cases the damages shall, in addition, include any proven additional expenses which would directly and naturally result in the ordinary course of events from the defaulter's breach of contract, but shall in no case include loss of profit on any sub-contracts made by the party defaulted against or others unless the arbitrator(s) or board of appeal, having regard to special circumstances, shall in his/their sole and absolute discretion think fit.
58 (e) Damages, if any, shall be computed on the quantity called for, but if no such quantity has been declared then on the mean contract quantity and any option available to either party shall be deemed to have been exercised accordingly in favour of the mean contract quantity.
D. Delivery period and events in Oct/Nov 2010
Clause 6 of GAFTA 49 concerns the period of delivery. In sentence [6.1] on line 30 of the form, it envisages that immediately before the words "at Buyers' call" the parties will insert the period that they have agreed upon. In the present contract a separate document set out specifically agreed provisions, including matters which the form envisaged would be inserted. It is common ground that on this separate document, the delivery period was dealt with as part of a specifically agreed provision concerning shipment:
16–31 October 2010, in single deck bulk carrier in one or two vessels at Buyer's option. On or before October 1 st Buyer to declare one or two vessels.
Relevant events in October and November 2010 can be summarised:
(1) Sellers declared Yuzhny, Ukraine as...
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