Trans Trade RK SA v State Food and Grain Corporation of Ukraine

Hearing date: 1 July 2025

Approved Judgment

This judgment was handed down remotely at 9.30 am on 17 July 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This judgment concerns three appeals under s.69 of the Arbitration Act 1996 between the same parties. Each appeal concerns a GAFTA Appeal Award dated 31 July 2024 against which Henshaw J gave leave to appeal on 11 February 2025. The appeal in Claim No. CL-2024-000457 is an appeal against Appeal Award No. 4673A; Claim Nos. CL-2024-000458 and 000459 concern Appeal Awards Nos. 4674A and 4675A, respectively.

By each Award, the Board of Appeal inter alia upheld a claim by the defendant seller for the contract price of cargo shipped pursuant to a contract for the sale by the seller to the claimant buyer of Ukrainian Feed Corn, 2020 crop, f.o.b. Chernomorsk. The unpaid prices awarded by the Board were:

(i) by Award No. 4673A, US$8,061,292.40, in respect of a contract dated 14 June 2021 which, as subsequently amended by the parties, provided for the sale of 60,000 m.t. +/- 10% in buyer's option, delivery 15 June to 31 August 2021, together with compound interest at 4.5% per annum (quarterly rests) from 2 September 2021;

(ii) by Award No. 4674A, US$3,650,000.00, in respect of a contract dated 12 May 2021 which, as subsequently amended by the parties, provided for the sale of 33,000 m.t. +/- 5% in buyer's option, delivery 15 May to 10 July 2021, together with compound interest at 4.5% per annum (quarterly rests) from 2 September 2021; and

(iii) by Award No. 4675A, US$11,049,500.00, in respect of a contract dated 2 June 2021 which, as subsequently amended by the parties, provided for the sale of 35,000 m.t. +/- 10% in buyer's option, delivery 3 June to 15 July 2021, together with compound interest at 4.5% per annum (quarterly rests) from 2 September 2021.

There were also awards in favour of the seller on claims that are not the subject of appeal, so that the relief sought by the appeal in each case relates only to parts of the relevant Award. The additional awards were:

(i) under Award No. 4673A, agreed compensation for delay in payment of US$41,696.34, dispatch of US$9,729.93 and US$769.00 in respect of shipments under the contract, and default damages of US$1,001,581.86 in respect of a balance of the contract quantity for which the buyer did not nominate a ship, in each case plus an award of compound interest on the principal sum awarded;

(ii) under Award No. 4674A, agreed payment delay compensation of US$18,750.00, and dispatch of US$1,480.65 and US$2,114.84, in each case plus compound interest;

(iii) under Award No. 4675A, agreed payment delay compensation of US$57,570.00, dispatch of US$6,341.93, and compound interest.

Finally, the Board of Appeal awarded in each case that the buyer was to pay the costs, fees and expenses of the First Tier Arbitration and of the Appeal Arbitration, reimbursing the seller if necessary. The proceedings before the Board of Appeal were conducted on paper, without a hearing, and no award of legal costs was sought by or granted to either side.

Facts and Issues

Each sale contract was subject generally to the terms of GAFTA Form 49 for the delivery of goods in Central and Eastern Europe in bulk or in bags on f.o.b. terms.

Cargo was shipped pursuant to the contracts as follows:

(i) as regards Award No. 4673A, a total of 32,930.22 m.t., comprising:

(a) 27,797.56 m.t. loaded onto the m.v. Islander S, completing on 19 July 2021, on which date the seller sent the buyer an invoice followed later by scanned copies of shipping documents, a process completed by 3 August 2021;

(b) 5,132.66 m.t. loaded onto the m.v. AK Denisa, completing on 16 August 2021.

(ii) as regards Award No. 4674A, a total of 32,673.82 m.t., comprising:

(a) 20,173.82 m.t. loaded onto the m.v. Gozo; and

(b) 12,500 m.t., part of a cargo of 51,000 m.t. loaded on board the m.v. Eider S with loading completed on 10 July 2021, scanned copies of all shipping documents as called for by the contract in respect of the 12,500 m.t. part cargo then being duly tendered by the seller to the buyer;

(iii) as regards Award No. 4675A, 38,500 m.t., the balance of the 51,000 m.t. Eider S cargo, in respect of which a full set of scanned copies of shipping documents including the seller's commercial invoice were sent to the buyer over 12–13 July 2021.

The buyer paid the price invoiced by the seller for the AK Denisa and Gozo cargoes, but did not pay for the Islander S and Eider S cargoes. In each arbitration, it pleaded a defence of frustration which failed, but it also denied in any event that the seller was entitled to maintain a claim for the price not paid and that is the subject of the appeal.

That denial came in the buyer's reply submissions before the Board of Appeal. According to the Awards, and so far as material, the procedural sequence before the Board in each case was that:

(i) in support of its appeal against a First Tier Award upholding the seller's claim for the price, the buyer argued “ that they were not responsible for the payment of the purchase price as the Contract had become frustrated, or, alternatively, that Sellers had failed to discharge the burden of mitigation”;

(ii) in response, the seller argued that the price had fallen due according to the terms of the contract and was wrongfully not paid, the contract was not frustrated, and mitigation was irrelevant because the seller was claiming the price, not damages;

(iii) in reply, the buyer relied on the retention of title clause in the contract (set out in paragraph 11 below) and Caterpillar (NI) Ltd (formerly known as FG Wilson (Engineering) Ltd) v John Holt & Co (Liverpool) Ltd [2013] EWCA Civ 1232, [2014] 1 WLR 2365, for an argument that since “ Sellers always kept the cargo documents, the property in the goods shipped has not passed to Buyers and Sellers' action for the price must therefore fail”;

(iv) the seller rejoined, denying that the retention of title clause defeated the claim to the price, on the ground that “ Sellers' action is based on s.49(2) of the Sale of Goods Act 1979 and the [amended payment clause in the contract] … . Buyers were obliged to pay 100% of the value of the goods by [the date stated in that clause] and Sellers were fully entitled to maintain their action. Lack of title transfer for the shipped goods does not have any relevance. Buyers' reference to Caterpillar is irrelevant as this case involves completely different facts and terms in the underlying contract. Still, Caterpillar supports Sellers' position by explaining s.49(2) of the Sale of Goods Act 1979”;

(v) by a surrejoinder, the buyer reiterated reliance on Caterpillar, insisting that s.49 did not apply and that the seller therefore could not maintain a claim for the price. Implicitly, the buyer thus joined issue with the seller's contention that the amended payment clause in the contract satisfied s.49(2).

It is not apparent from the Awards that the argument as to whether s.49(2) was satisfied was developed before the Board of Appeal much, if at all, beyond the seller's simple assertion that the amended payment clause fell within the sub-section (and that Caterpillar supported that view) and the buyer's implicit assertion that it did not. It is apparent, however, that (a) the only claim put forward by the seller was a claim for the price and not a claim for damages (in contrast to the position relating to the quantity not shipped under the contract in Award No. 4673A, for which the seller pursued and established a claim for default damages), and (b) the only basis put forward by the seller for its claim for the price was s.49(2), its case being that the amended payment clause brought the claim within the subsection.

The Awards also record that in each case the seller alleged before the Board of Appeal, but not so as to put forward any different or additional cause of action, that the goods in question were discharged without production of original bills of lading, at the buyer's instance, acting dishonestly; and the buyer said in response that there was no evidence to support that claim. The Board of Appeal decided that the seller had not proved that allegation, and the Awards make no findings of fact concerning what happened to the goods for which the buyer did not pay.

The retention of title clause to which I referred above, Clause 4.4 of each contract, was in these terms:

“ 4.4 Title to the Goods shall remain vested in the Seller and shall not pass to the Buyer until 100% of the value of the Goods has been paid and received by the Seller. Until title to the Goods passes:

4.4.1 The Seller is entitled to retake, sell or otherwise deal with and/or dispose of all or any part of the Goods;

4.4.2 The Seller and its agents and employees are entitled at any time and without the need to give notice to enter upon any private property upon which the Goods or any part of them are stored, or upon which the Seller reasonably believes them to be kept;

4.4.3 The Buyer shall store and/or mark the Goods in a manner reasonably sufficient, so that the Goods can at any time be distinguished and separated from goods of third parties.”

The terms of the contracts concerning delivery, price and payment, as...