Soufflet Negoce SA v Fedcominvest Europe Sarl
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 18 July 2014 |
| Neutral Citation | [2014] EWHC 2405 (Comm) |
| Date | 18 July 2014 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2013 Folio 1192 |
[2014] EWHC 2405 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Eder
Case No: 2013 Folio 1192
Mr John Russell QC (instructed by Gateley LLP) for the Claimant
Mr Malcolm Jarvis (instructed by Hill Dickinson LLP) for the Defendant
Hearing date: 13 June 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is an appeal by the claimants (the "Sellers") against Appeal Award No 4328 (the "Award") issued by the GAFTA Board of Appeal (the "Board") on 8 August 2013. The appeal is brought pursuant to s69 of the Arbitration Act 1996 and permission was granted by Teare J. It concerns a short point of construction of a "Notices" clause which appears in numerous GAFTA standard forms. At the outset, I should express my thanks to both Counsel for their helpful written skeleton arguments which I have, where appropriate, used in this Judgment in summarising the points raised and expressing my conclusions.
The relevant facts appear from the Award and can be summarised as follows. By a contract dated 4 October 2010 (the "Contract") the Sellers agreed to sell 38,000MT of French feed barley to the Defendants (the "Buyers") on FOB terms. The terms of GAFTA 64 were incorporated and provided in material part as follows:
" 6. PERIOD OF DELIVERY
…
In case of re-sales all notices shall be passed on without delay, where possible, by telephone and confirmed on the same day in accordance with the Notices Clause.
…
8. EXTENSION OF DELIVERY
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. …
19. NOTICES
All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legible form. Methods of rapid communication for the purposes of this clause are defined and mutually recognised as: — either telex, or letter if delivered by hand on the date of writing, or telefax, or E-mail, or other electronic means, always subject to the proviso that if receipt of any notice is contested, the burden of proof of transmission shall be on the sender who shall, in the case of a dispute, establish, to the satisfaction of the arbitrator(s) or board of appeal appointed pursuant to the Arbitration Clause, that the notice was actually transmitted to the addressee. In case of resales/repurchases all notices shall be served without delay by sellers on their respective buyers or vice versa, and any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following. A notice to the Brokers or Agent shall be deemed a notice under this contract." (Emphasis added.)
For the sake of convenience, I will refer to the words underlined in bold in Clause 19 (which appear at line 141 of the standard form) as the "deemed notice provision".
The original agreed delivery period was 10 November – 10 December 2010 at the Buyers' option. The 10 December 2010 was a Friday and it is common ground therefore that " the next business day following the last day of the delivery period" on which any notice claiming extension under Clause 8 had to be served was Monday 13 December 2010. In the event, the Buyers' nominated vessel was delayed and the Buyers tendered a notice claiming extension at 1709 on 13 December 2010. However, given that the notice was served after 1600 on that day, the Sellers took the position that pursuant to the deemed notice provision, the notice was deemed to have been received the following day i.e. Tuesday 14 December 2010; and that it was thus out of time. Accordingly, the Sellers refused to perform. The Buyers disputed that the deemed notice provision was applicable on the basis that it was concerned only with cases of " resales/repurchases" which was not the present case; and claimed damages against the Sellers for non-performance in the amount of US$1,003,891.00.
As appears from the Award, the Sellers advanced two main counter-arguments before the Board. First, the Sellers submitted that the deemed notice provision fell into two separate parts which were separated in the middle by a comma immediately followed by the word " and"; and that therefore the 1600 deadline in the latter part applied generally and was not limited to cases of " resales/repurchases". Second, the Sellers submitted in the alternative that on the facts of the case, the Buyers were reselling the goods to Saudi receivers; that the present case was therefore one of "resale" within the meaning of the first part of the deemed notice provision; and that the 1600 deadline therefore applied.
The Award
In relevant respect, the Board concluded that the deemed notice provision in clause 19 did not apply; that under Clause 8, the Buyers had until midnight on 13 December 2010 to serve the notice claiming the extension; that therefore the notice served by the Buyers at 1709 on 13 December 2010 was valid; that the Sellers had wrongfully repudiated the Contract; and that the Buyers' claim for damages succeeded in the sum of US$570,000 plus interest and 80% of the Buyers' costs. In summary, the Board's reasons were as follows:
i) The deemed notice provision applies only to resales/repurchases and not to any other notices which may be required under the Contract [Award §7.7].
ii) On the facts of this case, the goods were not resold on back to back terms and therefore the deemed notice provision was inapplicable [Award §7.10].
As to the latter conclusion, the Board held at §7.9 as follows:
" The commercial reality was that the provision "resales/repurchases" could only apply in cases where the goods had been resold on similar terms, and this is well understood by the Trade. If Buyers had resold the goods to Saudi Arabian receivers on FOB terms then they would, on the facts of this case, have been in a position where they would have been passing on a Notice of Extension received from their buyers. However, the goods were sold on to the Saudi receivers on CIF terms and it was Buyers themselves who were responsible for presenting a vessel to load within the delivery period, or calling for an extension. The contemporaneous exchanges show that the Sellers were well aware that the goods had not been resold by Buyers on back to back terms and that it was Buyers themselves who were responsible for putting in a vessel to lift the goods."
The question of law
The question of law identified in the Claim Form, in respect of which permission to appeal was granted, is:
" In clause 19 of GAFTA 64, do the words in line 141, namely, "any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following" apply to all contracts or only in case of resales/repurchases?""
Respondents' (Buyers') Notice
By a Respondents' Notice, the Buyers indicated their intention to contend that the Award should be upheld in any event for a reason not expressed (or not fully expressed) in the Award, namely that the words " in case of resales/repurchases" in Clause 19 of GAFTA Contract No. 64 mean in case of contracts that are themselves resales/repurchases; and that since the Contract between the Sellers and the Buyers was not itself a resale/repurchase, the deemed notice provision did not apply.
Sellers' submissions
Mr Russell QC on behalf of the Sellers submitted that what seems to have happened here is that the Board simply looked at Clause 19 as a matter of first impression without conducting any proper analysis of the structure and wording of the clause and the possible commercial consequences of the rival submissions. However, he accepted that as a matter of grammar and syntax the construction favoured by the Board is a possible or an available construction. Notwithstanding, he submitted that the Sellers' construction is also an available construction. In particular, he submitted that the sentence can be read (with numbering added for clarity) as either:
" (1) In case of resales/repurchases all notices shall be served without delay by sellers on their respective buyers or vice versa, and (2) any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following (the Sellers' construction); or
In case of resales/repurchases (1) all notices shall be served without delay by sellers on their respective buyers or vice versa, and (2) any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following" (the Buyers' construction).
In summary, Mr Russell submitted that the Board was wrong in its conclusion and that the Sellers' construction was right both (i) as a matter of the structure and wording of the sentence and (ii) as a matter of business common sense.
As to the structure and wording of the sentence, Mr Russell advanced three main points. First, he emphasised that the two parts of the deemed notice provision are separated by the comma immediately before the word "and"; that if it had been the draftsman's intention that the words " in case of resales/ repurchases" were to govern both parts, the comma could and should have been omitted; and that the Board gave no weight to the comma, when they should have done. Second, he drew attention to the fact that different wording is used to identify which notices are being referred to in each part of the sentence;...
To continue reading
Request your trial
-
Court Construes 'Notices' Provision In GAFTA 64 Contract
...Negoce SA v. Fedcominvest Europe SARL [2014] EWHC 2405 (Comm) The decision in this case provides helpful guidance on the construction of the "Notices" provision in GAFTA 64 (General Contract for grain in bulk FOB terms). The Court upheld the GAFTA Board of Appeal award which found that the ......