Tradax Export S.A. v Andre & Cie. S.A.
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ORR,LORD JUSTICE BROWNE |
| Judgment Date | 25 November 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J1125-1 |
| Date | 25 November 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J1125-1
The Master of the Rolls
Lord Justice Orr
and
Lord Justice Browne
In The Supreme Court of Judicature
Court of Appeal
MR. K.S. ROKISON (instructed by Messrs. Richards Butler & Co., Solicitors, London) appeared on behalf of the Claimants (Respondents).
MR. C. STAUGHTON Q.C., MR. M. COLLINS, and MR. VEEDER (instructed by Messrs. Crawley & de Reya, Solicitors, London) appeared on behalf of the Respondents (Appellants).
In the United States the farmers grow large crops of soya beans. These are made into extracted soya-bean meal and exported to Europe, and elsewhere. They are there received by importers who use it to make up food for cattle. They are the subject of many contracts of sale before and during transit. The shippers in the United States agree to sell to traders, who re-sell from one to another down a long string of traders until there is a sale to the receivers in Europe. Nearly all the sales are made through brokers on the conditions of the Grain and Feed Trade Association in their Form No. 100. There are two of these conditions which come up for close consideration. One of these is Clause 21, which excuses a seller when there is a prohibition of export. If he is prevented by a Government prohibition from fulfilling his obligations, the contract is: cancelled. The other is Clause 22, which avails the seller in a case of force majeure. If the shipment is delayed by force majeure, the shippers can get an extension of one month - with a further month if the buyer does not object. But if the delay exceeds two months, the contract is considered void.
In the spring of 1973 there were great floods in the Mississippi, which played havoc with the export of soya-bean meal. The shippers could not get it down to the ports. The export was undoubtedly delayed by force majeure. The sellers claimed extension of time under Clause 22, but were unable to ship during the extended time. The shortage caused the market price to rise greatly. The buyers claimed damages. Many disputes arose as to the date at which the damages should be assessed. These reached this court last March. It was held that the sellers were liable in damages based on the market price on 10th July, 1973, the very highest point of the market - see Toepfer v. Cremer (1975) 2 Lloyds List 118.
Now we come to the next phase. On 27th June, 1973 the United States Government imposed an embargo on the export of soya-bean meal, but after a few days, on the 2nd July, 1973, they allowed exporters a quota by which they could export 40 per cent of their contracted obligations. The exporters at first claimed extension of time under Clause 22 on the ground that the embargo was force majeure: But they afterwards claimed cancellation under Clause 21 on the ground that the embargo was prohibition of export. At any rate 40 per cent was accepted by most of the buyers, who paid for it at the contract price. But they claimed damages for the failure of the seller to supply the remaining 60 per cent. The sellers rejected the claim relying on both Clauses 21 and 22. The dispute reached the Board of Appeal of the Grain and Feed Association. They found themselves faced with so many contentions of law that they stated a Consultative Case for the opinion of the Court. Mr. Justice Donaldson gave his opinion on 19th June, 1975. It now comes before us. We are told that over 500 arbitrations are awaiting the result; and that the trade hopes that we will give guidance on the many points that may arise.
The facts, in outline, are these. On the 1st June, 1972 Tradax Export S.A. of Panama agreed to sell to Andre & Cie S.A. of Lausanne 3960 metric tons of soya-bean meal at a price of $113,50 per metric ton c.i.f. Rotterdam. Delivery was to be monthly 660 metric tons during the six months of April, May, June, July, August and September, 1973. The contract was on the conditions of Form 100 of the Grain and Feed Trade Association. Each monthly portion was treated as a separate contract; and a separate contract note was issued for each month. The sellers (Tradax) did not intend to ship the soya-bean meal themselves. They intended to buy the goods from several sources, no doubt at much later dates.
We are only concerned here with the 660 tons to be delivered during June, 1973: and only with 220 tons of it. We are told that 220 tons is one large load. (Shipment had to be made in June - that is, by the 30th June, 1973). But before shipment became due, the United States Department of Commerce decided to put an embargo on the export of soya-beans. They issued bulletins to this effect.
On Monday, 13th June, 1973 the Department warned the trade that it might be necessary to impose export quotas. For this purpose they required each United States exporter to make a return showing the tonnage of orders on his books as at the close of business on 13th June, 1973; and they said that orders accepted after that date might be included in the export quotas.
On Wednesday, 27th June 1973 the Department imposed an embargo on the export of soya-beans. It said that from 5.00 p.m. onwards no soya-beans were to be exported without a licence. No licences would be issued until Monday, 2nd July, 1973, on which date the quota would be announced. But an exception was made for goods "already on lighter destined for an exporting vessel or for which loading on board an exporting vessel had actually commenced as of 5.00 p.m. on 27th June, 1973".
On Monday, 2nd July, 1973 the Department said that each exporter (who had made his proper return of the orders on his books at 13th June, 1973) would be issued with a licence permitting him to export 40 per cent of the unfilled balance of each contract. Before exporting his quota, each exporter had to get his foreign buyer to confirm in writing that he would accept this 40 per cent. If the foreign buyer refused to give this confirmation and cancelled the contract, the licence would be revoked.
On 4th July, 1973 the sellers, Tradax Export S.A., passed on to the buyers, Andre & Cie S.A., the terms of a telex which they hadreceived from their seller Bremer Handelsgesellahaft at 1528 hours on the 3rd July, 1973. It was to this effect: "Shippers expect to be granted an export quota of about 40 per cent. It is possible that the shipping period may be changed for this reason. Furthermore, for the monthly quantities for June we invoke the force majeure extension clause of the GAFTA contract 100, and we declare as the port for shipment the usual ports on the lakes, East Coast, Gulf".
On the 12th July, 1973. the buyers replied to the sellers: "Your invocation of force majeure for the June portion can only be accepted under reserve, and we draw your attention to the fact that a general nomination of ports is not contractual".
On the same day, 12th July, 1973, the sellers relied on the prohibition clause. They passed on a message received down a string and through Bremer Handels, which stated: "As you are aware, the United States Government declared a total ban of exports of soya-bean meal effective from Wednesday, 27th June. Consequently we hereby advise you that for any unfulfilled quantities ex above contract for June shipment, we are forced to invoke Clause 21 of the GAFTA 100 contract".
On the same day they sent a further message saying that they had "to cancel the portions of the contract, in accordance with Prohibition Clause 21, for which our sellers are unable to obtain an export licence".
No doubt the buyers all down the string were only too glad to get any supplies they could: and confirmed in writing that they would accept the 40 per cent quota. The shippers, no doubt, sent this confirmation to the Department.
On 17th July some shippers (having got a licence to export) loaded 89 metric tons on board the "Olivia Maersk" for Rotterdam, and received a Bill of Lading of that date. Those 69 tons were 40 per cent of 220 tens.
On 17th July the buyers, Andre & Cie S.A., declared the sellers in default and claimed damages or a contractual tender within seven days.
On 23rd July the sellers, Tradax Export S.A., tendered the 89 tons on the "Olivia Maersk". On 25th July the buyers accepted these 89 tons and said that they expected complete and normal execution of the June shipment and that they awaited the balance.
So the 89 tons were delivered and accepted, but the balance of 131 tons was never delivered.
Meantime, on 19th July, 1973, the United States Government issued a further bulletin which extended the licence facility. The shipper could exceed the 40 per cent if at 27th January, 1973 he had soya-bean oil cake "end route to port, or in port earmarked for loading on an exporting vessel". A licence could be granted for that oil-cake in excess of 40 per cent.
As I have said, however, the sellers remained in default in respect of the 131 tons. They never tried to buy goods afloat so as to meet this requirement. There was evidence that it would have been possible to buy on the market a parcel of 220 metric tons for June shipment. But the sellers did not try to buy.
On 21st September, 1973 the United States Government issued a final bulletin abolishing the export control as from 1st October, 1973.
The dispute about the 131 metric tons was referred to arbitration. On 21st December, 1973. the arbitrators made an award in favour of the buyers. They awarded the buyers $68,316.50 as damages, being the difference between the contract price of $113.50 and the market price on 10th July of $635.00. The sellers...
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