Woodhouse A.C. Israel Cocoa Ltd S.A. v Nigerian Produce Marketing Company Ltd

JurisdictionUK Non-devolved
JudgeThe Lord Chancellor,Viscount Dilhorne,Lord Pearson,Lord Cross of Chelsea,Lord Salmon
Judgment Date19 April 1972
Judgment citation (vLex)[1972] UKHL J0419-2
Date19 April 1972
CourtHouse of Lords
Woodhouse A.C. Israel Cocoa Limited S.A. and Others
Nigerian Produce Marketing Company Limited

[1972] UKHL J0419-2

Lord Chancellor

Viscount Dilhorne

Lord Pearson

Lord Cross of Chelsea

Lord Salmon

House of Lords

Upon Report from the Appellate Committee, to whom was referred the Cause Woodhouse A.C. Israel Cocoa Ltd. S.A. and others against Nigerian Produce Marketing Company Limited, that the Committee had heard Counsel as well on Monday the 21st, as on Tuesday the 22d and Wednesday the 23d, days of February last, upon the Petition and Appeal of Woodhouse A.C. Israel Cocoa Ltd. S.A., a Company incorporated in Panama and having its principal place of business at Bolam House, Prince and George Street, Nassau, Bahamas, and A.C. Israel Cocoa Inc., a Company incorporated in the State of Delaware, United States of America and having its principal place of business at 110 Wall Street, New York, United States of America, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 24th of November 1970, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Nigerian Produce Marketing Company Limited lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled That the said Order of Her Majesty's Court of Appeal, of the 24th day of November 1970, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

The Lord Chancellor

My Lords,


These proceedings arise out of an award by an umpire stated in the form of a special case and dated the 3rd April, 1969. The parties to the proceedings are the vendors (Respondents to this Appeal), and the purchasers (the Appellants) under 14 Contracts for the sale C.I.F. Liverpool of Nigerian cocoa. All these contracts were still open at the time of the devaluation of the £1 sterling on the 18th November, 1967. The sum involved in the dispute, in excess of £165,000, is considerable. But we were informed that a large number of other contracts, at least 75 in number, raised similar points and that the total amount at stake ran into millions of pounds sterling. The sole question for determination is which of the parties had to bear the loss consequent on devaluation. This depends on the currency in which, at the date when payment became due, the purchase price was to be measured (the "currency of account"), it being conceded that at the material time the mode of discharge permitted payment in pounds sterling (the "currency of payment"). The difference is crucial. Before devaluation the Nigerian pound and the pound sterling were exactly equal in value. After devaluation the £1 sterling was worth between 14 per cent. and 15 per cent. less than the Nigerian £1.


In the events which happened, the Appellants paid in sterling the sum which was demanded of them by the vendors, since otherwise they would not have obtained delivery of the cocoa. But they paid under protest, reserving their rights, and then proceeded to arbitration. The two arbitrators having disagreed, the matter fell to be determined by the umpire. At the hearing before the umpire he recorded that both parties asked for the award to be stated in the form of a case, and indicated "that they wished to be able to argue any point of law and therefore asked me to state a case in wide terms". He added that he had acceded to this request. The award in the form of a special case which emerged was defective in form in as much as it only provided for what was to happen if the umpire's opinion was right. But this was not a point on which anything turned. The question formulated in the case for the opinion of the Court was "whether, on the facts found, the claimants are entitled to the relief claimed or any part thereof". The relief claimed was the return of a sum of money equivalent to the amount paid under protest on the 14 contracts, being equal to the difference in sterling between the purchase price measured in Nigerian pounds and the same price measured in the same number of £s sterling.


There is no dispute, and the award specifically stated, that the purchase price in all the contracts was expressed to be in Nigerian pounds payable in cash in Lagos for 100 per cent. of the invoice amount against presentation and in exchange for shipping documents. The contracts were expressed to be C.I.F. Liverpool. Thus, if no change had been made in the contractual relationship between the parties after the conclusion of the contracts, the vendors claim to be paid in a sum to be measured in Nigerian currency would have been unassailable.


The case for the purchasers was, and has remained throughout, that such a change had taken place as the result of letters and cables exchanged in the period of fifteen months or so prior to devaluation, and in particular by an exchange of two documents numbered 29 and 30, and dated the 20th and 30th September, 1967. These two documents took the form of a request emanating from the agents of the Appellants, and a conditional acceptance by the Respondents as to the "payment terms" of contracts then open. The Appellants contended, and the umpire accepted, that the effect of these documents was such as to lead them reasonably to suppose that the purchase price of these contracts was to be measured as if it had been expressed in sterling of the same nominal amount, and not, as was in fact the case, in Nigerian pounds. They claimed that, relying on this construction, they acted to their detriment, since, believing as they did, that they had nothing any longer to fear from devaluation, they did not, as they would otherwise have done, make an attempt, in the words of the award "to hedge" their contractual commitments or to "attempt to obtain insurance cover so as to protect [them] against their exchange exposure under their contracts with their Respondents". All the relevant documents, including the earlier correspondence and the two vital letters, were attached to the award and form part of it.


Before the umpire, the Appellants argued (i) that the exchange of correspondence amounted to a variation in the contractual terms, and (ii) that in any event the Respondents were precluded by way of estoppel from disavowing an obligation to accept payment as if the price had been expressed in sterling of the same nominal amount.


The umpire in fact decided that "by letter of the 30th September, 1967, the Respondents represented that in respect of the contracts then open, which included the 14 in dispute, they were prepared to accept payment as if the price in the contracts had been expressed in sterling of the same nominal amount," that the Appellants agents "thereafter reasonably regarded all open contracts as though the price was expressed in sterling of the same nominal amount", and that they had acted accordingly to the Appellants' detriment in the sense I have described, and came to the conclusion that in consequence the Appellants were entitled to the relief claimed.


In addition to what he claimed to be what I might call the substantial merits of his case, these points of decision led counsel for the Appellants to argue that the Respondents were effectively stated out of court since, according to this contention, the umpire had made findings of fact which were not open to dispute in any Court proceedings founded on the award, and findings of fact by the umpire were sacrosanct unless, which it was argued was not the case here, the umpire had distinctly raised the question whether there was evidence or material on which he could found them. Accordingly, even if the umpire were wholly wrong, the contention for the Appellants was that it was beyond the power of the Court to put him right. In making this submission, Counsel for the Appellants drew our attention to Gillespie v. Thompson [1922] 13 Ll. L. Rep. 519 and especially to the remarks of Atkin, L.J. at p.524 and to Tersons Ltd. v. Stevenage Development Corporation [1965] 1 Q.B. 37 and especially to the passage there quoted at p.45 from the judgment of Devlin, J. in Nello Simoni v. A/S M/S Stranm [1949] 83 L1. L. Rep. 157, 161.


Roskill, J. came to the conclusion that the umpire's award must stand if only on this last, and somewhat technical ground. The Court of Appeal (Denning M.R., Phillimore L.J., and Cairns L.J.) unanimously came to the conclusion that it could not be upheld. The umpire, they considered, had been guilty of an error of law which appeared clearly on the face of the award, and nothing which he wrote in language more appropriate to a finding of fact could cure this error, or convert an erroneous decision of law into one of fact by which the court was bound.


Although the three questions raised on behalf of the Appellants are logically distinct, they are very closely related. To answer any of them it is necessary first to consider the effect of the award itself, including the documents which the umpire attached to the award and made part of it.


At one stage of his argument Counsel appeared to be suggesting that, though the umpire had been at great pains to state the facts in his award, and to incorporate as part of his award all the relevant...

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3 books & journal articles
  • Proprietary Estoppel and Responsibility for Omissions
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    • The Modern Law Review No. 78-1, January 2015
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    ...“may need to be reviewed and reduced to a coherent body of doctrine by the courts”.177 177Woodhouse AC Israel Coco Ltd v Nigerian Produce [1972] AC 741 at 758. Clarification may still be some way off: see Baird Textile Holdings v Marks & Spencer Plc [2002] 1 All ER (Comm) 737 at [49]. In ma......
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