Warinco A.G. v Fritz Mauthner (Leda)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MEGAW,LORD JUSTICE BRIDGE,LORD JUSTICE WALLER |
| Judgment Date | 19 October 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J1019-5 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 October 1977 |
[1977] EWCA Civ J1019-5
In The Supreme Court of Judicature
The Court of Appeal
(Civil Division)
(On appeal from Order of Mr. Justice Donaldson - Commercial Court - London)
(Revised)
Lord Justice Megaw
Lord Justice Bridge and
Lord Justice Waller
In the Matter of the Arbitration Act 1950
and In the Matter of an Arbitration
Mr. ANTHONY HALLGARTEN (instructed by Messrs. Thomas Cooper & stibbard) appeared on behalf of the Appellant (Buyer).
Mr. R. NEVILLE THOMAS, Q.C. and Mr. P. RICHARDS-CARPENTER (instructed by Messrs. William A. Crump & Son) appeared on behalf of the Respondents (Sellers).
(without calling upon Counsel for the Appellant to reply)
On 30th May, 1973, the Sellers, Warinco A.G. of Zurich, end the Buyers, Fritz Manthner of Vienna, made a contract for the sale of 1,000 tons, 10 per cent, more or less, of U.S.A. soyabean meal for shipment between 29th May and 15th June, 1973, ex Mediterranean Port, C.I.F. Weser. The contract was subject to the conditions of the Grain and Feed Trade Association (to which I shall refer as "GAFTA") Contract Ro. 100, as far as applicable. The nonperformance of the contract has given rise to arbitration, and this appeal stems from an Award in the form of a Special Case in that arbitration.
The Sellers had 6 days earlier, that is on 22jth May, 1973, bought from a company Provimi Hellas S.A. of Athens, 2,000 tons of U.S.A. soyabean meal F.O.B. Piraeus, for shipment up to 15th June, 1973. It was out of this purchase that the Sellers intended to fulfil their contract for 1,000 tons 10 per cent, more or less with the Buyers. Under Greek law a licence was required for the export of soyabean meal. Provimi Hellas were granted such a licence on 25th May. The Sellers appear also to have obtained a similar licence; but the findings in the Award about this are not altogether clear. I do not think it matters. On 7th June, 1973, the m. v. "Leda", chartered by the Sellers for the purpose of their F.O.B. contract, with Provimi Hellas, was in Piraeus harbour about to load 1,100 tons of soyabean meal, no doubt provided by Provimi Hellas under their contract with the Sellers. Before loading began, the export license was suspended by the Greek authorities. On 15th June the Sellers told the Buyers. The Sellers claimed to be excused from performance of the contract because of clause 21 of the Conditions of GAFTA 100. No notice of appropriation was ever given, nor were any documents or goods tendered by the Sellers tothe Buyers. The Buyers claimed that the Sellers were in default, and that clause 21 did not avail them.
Clause 21 reads as follows: "21. PROHIBITION - In case of prohibition of export blockade or hostilities or in ease of any executive or legislative act done by or on behalf of the Government of the country of origin or of the territory where the port or ports of Shipment named herein is/are situate, preventing fulfillment, this Contract or any unfulfilled portion thereof so affected shall be cancelled. In the event of shipment proving impossible during the contract period by reason of any of the causes enumerated herein, Sellers shall advise Buyers without delay with the reasons therefore. If required, Sellers must produce proof to justify their claim for cancellation".
The Sellers did not exercise (I quote from the Award) "best endeavours to procure goods of the contract description ex other Mediterranean ports in order to fulfil their obligations to the Buyers". Further, the Sellers did not show that, if they had exercised such endeavours those endeavours would have been "foredoomed to failure". (Those facts are in Questions and Answers 14 and 15 appearing in paragraph 26 of the Award). In other words, the Sellers have not proved that they tried to fulfil the contract by shipping from another Mediterranean port: nor have they proved, if this be relevant, that, had they tried, they would have failed. These are unchallengeable findings of fact.
That Is the totality of the facts which it is necessary to record in this essentially simple story.
The dispute went to arbitration under the GAFTA Arbitration Rules. An Umpire decided in favour of the Buyers, awarding them 141,000 dollars damages. The Sellers appealed. The Board of Appeal or GAFTA as the result of an order made by Mr. Justice Ackner, stated their Award in the form of a Special Case for the decision ofthe Court. The question of low, set out in paragraph 13 of the Award, is: "Whether upon the facts found and a true construction of the Contract the Sellers were entitled to rely open clause 21 of the Contract as excusing them for its non-performance". The Board of Appeal held, as the Umpire had done, that the Buyers were entitled to damages. They increased the amount of the damages to 161,000 dollars. Their negative answer to the question of law, and their consequential award of damages and of costs to the Buyers, is set out in paragraph 27 of the Award. The Board set out their alternative award in paragraph 28: that is, if the Court should answer the question of law in the affirmative, the Umpire's Award is to he set aside and the Sellers are to have costs.
Mr. Justice Donaldson, on 15th November, 1976, answered the question of law in the affirmative, that is in favour of the Sellers, holding that clause 21 of GAFTA 100 protects the Sellers, since the suspension of the licence amounted to a prohibition of export and prevented fulfilment of the contract in the way in which the Sellers had arranged to fulfil it.
The Buyers appeal to this Court. Various issues have been raised by them. The main issue, as Mr. Justice Donaldson thought, and as I also think, is this. A seller has sold goods C.I.P. Under the contract the goods to be supplied, by the tender of appropriate documents, have to be shipped from one or other of a range of ports (here, any Mediterranean port). The seller has made arrangements to fulfil the contract by goods to be shipped from a particular port. He is then prevented frost tendering goods, or documents in respect of goods, shipped from that port by reason of an event which, for present purposes I assume, is within clause 21. He therefore cannot fulfil the contract in that particular way, as he had intended. He does sot show that he has made any effort, or any sufficient effort (we are not concerned In this case with thestandard of sufficiency for that purpose), to fulfil the contract by tendering goods, or documents in respect of goods, shipped from one of the other ports in the range. Does clause 21 provide his with a defense for non-shipment?
It is clear law, based on many decided oases, that, in general, where the roller has undertaken to supply goods shipped from one or other of a number of ports, he cannot rely on an event included in an exception clause, if that event happens but affects only one of the ports: unless, at any rate, he can show, the burden being on him, that, despite reasonable efforts (and again I do not stay to consider what is the standard of effort required), he could not have shipped goods complying with the contract description, and within the permitted time for shipment, from any one of the other ports. It is the same principle as was so clearly laid down by Mr. Justice Devlin in Ross T. Smyth & Co. Ltd. v. W. N. Lindsay Ltd. (1953) 1 Weekly Law Reports 1280. That case related to an event within an exception clause which had the effect of reducing the period within which the shipment could be made. It is, in general, no answer for the seller merely to say, and to prove, that he had intended, and had made arrangements, to perform the contract in a particular way or at a particular time, and that he could not longer as a result of the event, carry it out in that way or at that time. In order to escape...
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