Novasen SA v Alimenta SA
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Mackie QC |
| Judgment Date | 19 January 2011 |
| Neutral Citation | [2011] EWHC 49 (Comm) |
| Docket Number | Case No: 2010 FOLIO 239 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 January 2011 |
[2011] EWHC 49 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Mackie QC
Case No: 2010 FOLIO 239
In the Matter of the Arbitration Act 1996 and an Arbitration
Mr Dominic Happé (instructed by Marine Law Solicitors) for the Claimant
Mr Lawrence Akka (instructed by Mr Tony Hall-Jones) for the Defendant
Hearing dates: 22, 23 and 25 November 2010
The Applicant ("Novasen") challenges a decision by Arbitrators that the Respondent (" Alimenta") was an undisclosed principal of Sogescol S. A. (" Sogescol") and was entitled to enter into a contract made between Sogescol and Novasen.The challenge is brought under section 67 of the Arbitration Act 1996 (" the Act") against an award on jurisdiction in a first tier FOSFA arbitration no. 4076 ("the Award"). It also raises an issue under section 7 of the Act.
The application takes the form of a rehearing of the issues before the Arbitrators and for that reason in addition to considering the papers I have had the benefit of live evidence from Mr Abdoulaye Diop, Chairman of the Board of Novasen, through an interpreter, Mr Giani Ceccato, a trader at Sogescol and Mr Hans Beniamin, a director of Alimenta.
Mr R W Rookes and Mr J S Smid were appointed arbitrators by the parties and having disagreed they in turn appointed Mr B Leach as Umpire. I return later to the award of Mr Leach, a solicitor with great experience in this area.
Background and facts not in dispute
Novasen is a company based in Senegal which trades in vegetable oils and, amongst other things exports crude groundnut oil. Alimenta is a large trader in groundnut and other vegetable oils based in Switzerland. In the past Alimenta purchased products from Novasen and the parties dealt directly and not through brokers. Alimenta was at one point a board member of Novasen but the parties fell out mainly it seems because Alimenta became unhappy about Novasen's financial viability. Novasen claims that as a result of this disagreement it decided to refuse to do further business with Alimenta. Alimenta disputes that.
Sogescol is a trader in vegetable oils, both of those it produces and also as an agent or broker for others. It has acted in the past as a broker for Novasen.
The Italian market is important to Novasen because, for regulatory reasons, groundnut oil from Senegal is acceptable but that of its main export competitor, Argentina is not. But by 2007 Italian buyers were reluctant to deal with Novasen. Mr Ceccato says that this was because Novasen had repeatedly defaulted on contracts. Mr Diop denies this but the reasons for what was clearly the reluctance of Italian buyers to deal with Novasen do not matter. In September 2007 Novasen was seeking to sell groundnut oil into the Italian market and since it could not do so easily in its own name Mr Ceccato suggested that Sogescol would be willing to take the product, two thousand metric tonnes ("mt") and sell it on. Sogescol does not ordinarily purchase for its own account and Mr Ceccato told Mr Diop that he would test out buyers in the Italian market. When these efforts proved unfruitful Mr Ceccato contacted Mr Beniamin of Alimenta with whom he had dealt for some years. Alimenta was willing to take the product at the right price but only if its identity was not disclosed. Arrangements were then entered into which are at the heart of this dispute.
Following telephone conversations on 21 September 2007 Mr Ceccato sent by fax a recap of the terms agreed between Novasen and Sogescol. The "seller" was Novasen the "buyer" was Sogescol.
The product was two thousand mt of groundnut oil. The price was US dollars 1.620 Cif Geneva with payment CAD (i.e. cash against documents), the contract form was to be FOSFA 201, other conditions were "usual" and "as per our agreement" we have provided that Sogescol will be able to receive a brokers fee of 0.5% on this contract". ( The fax like most of the other documents was in French and in this judgment I use the translations produced by the parties). Mr Diop agreed the contract but in a handwritten fax said that the commission should be deleted and the price changed to US dollars 1,612 per mt. This was accepted as appears from the short form contract then drawn up by Sogescol the same day which reflected the earlier terms except that presentation of cash against documents was to be in Brussels and the price was US dollars 1,612.
Meanwhile the discussions between Alimenta and Sogescol led to another short form contract in FOSFA 201 terms for the same quality and quantity of product. The seller was Novasen, the buyer was Alimenta and a third party, Sogescol was included as "Agent acting for Buyers' Account". The price was US Dollars 1.620 and the payment, cash against documents was to be made in Geneva, not Brussels. "Other conditions" included "special conditions: the buying agent, Sogescol S.A., is discharged by buyers Alimenta S.A. of any costs and consequences resulting from a failure of shippers/sellers Novasen S.A. in the execution of this contract, particularly short shipped weight, quality and late delivery." Sogescol signed the document as "Buyer's Agent". On the same day Sogescol sent two copies of that contract to Alimenta, but not to Novasen, adding "our commmissionas buying agent for your account: 1%". Like the Umpire I will call this end of the deal "the Alimenta contract".
The contract was not performed, no goods were shipped and as a result arbitration was started by Alimenta. In the arbitration process Alimenta used terms upon which Novasen places emphasis on this application.
The Notice of Arbitration was given to Sogescol who were asked to pass on the message to Novasen.The arbitration was started against both Sogescol and Novasen, holding them both in breach. On 7 May 2008 Alimenta appointed an arbitrator and called upon Sogescol and/or Novasen to appoint one also. By November 2008 Alimenta's case was that Sogescol acted as a buying agent for Alimenta and the arbitrators were asked to disregard Sogescol's responsibility. Alimenta has claimed in submissions on 24 November 2008 that all the correspondence went through Sogescol "thus acting in string".
In June 2009 Alimenta requested information about the change of price from dollars 1.620 to dollars 1.612. Sogescol replied:
" We confirm that we have verbally advised and informed Alimenta S.A. of this modification of price at a time of the transaction. This change was due to a request of Novasen S.A. (see Novasen S.A. handwritten fax on that subject) and which was proposed by Novasen S.A. as a way to settle long time outstanding debts that Novasen S.A. had to pay to Sogescol S.A.
We confirm also that it was agreed that, as agents acting for buyers (Alimenta S.A.) account, Sogescol S.A. would receive a commission of 1% as buyers agent as evidenced in our standard covering letter dated 21 September 2007…"
The Award
As the Umpire saw it three issues arose. First were the buyers' undisclosed principals of Sogescol? Secondly if yes, did the contract by its express and/or implied terms and/or by reason of its context preclude buyers from claiming under the contract? Thirdly if the answer to issue one were yes, but on issue two were no, are there any other facts or circumstances precluding the introduction of buyers to enforce the Contract. The Umpire knew that Novasen had not become aware of the existence of the contract with Alimenta until disclosure in the arbitration.
The Umpire saw the purpose of this contract as twofold. First it was an agreement between Sogescol and Alimenta by which Sogescol were to enter into the purchase of the goods on Alimenta's behalf but without disclosing that they were doing so as agents. Secondly the contract was to record the terms on which Sogescol was to contract with Alimenta ostensibly as principal but in fact as agent. After discussing the matter in some detail the Umpire concluded that the burden of proof lay on Alimenta but that it had established that it was the undisclosed principal of Sogescol and so a party to the contract. The Umpire saw his second issue as raising essentially the same point as the third issue. Having set out the law to which I refer in more detail below the Umpire concluded that the burden of proof was on Novasen to bring itself within an exception to the general rule that the undisclosed principal may enforce his agents contract in his own name. He concluded that Novasen had not proved that it would not have contracted with Alimenta as a principal. As a result he decided that Alimenta was a party to the contract and made the Award to that effect.
The Evidence
The factual disputes which need to be resolved to decide this case are narrow and I will refer only to the directly relevant evidence of each witness.
Mr Diop explained the difficulties that Novasen had experienced in the past with natural and commercial conditions outside his company's control and how this had affected Italian buyers.
Mr Diop had been content to accept Mr Ceccato's suggestion that Sogescol buy the product and sell onto Italian buyers. He claimed that Alimenta knew full well that Novasen would not sell cargo to them and that it was for that reason that they had retained Sogescol in the middle. Mr Diop said that the two companies had been in competition to sell five thousand mt of groundnut oil in The Gambia. A director of Alimenta had tried to discredit Novasen. Novasen had still obtained the contract but Mr Diop decided that cargo would not in future be sold to Alimenta. He believed that Alimenta certainly were of his decision but he did not suggest that Sogescol would have known that. Mr Diop had not...
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Undisclosed Principal And Agent - A Useful Reminder Of The Law
...S.A. v. Alimenta S.A. [2011] EWHC 49 (Comm) Background Novasen (the Seller) was a trading company based in Senegal. Alimenta (the Buyer) was a company based in Switzerland trading in groundnut and other vegetable oils. Alimenta had previously purchased products from Novasen. The parties dea......