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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Soufflet Negoce SA v Fedcominvest Europe Sarl [2014] EWHC 2405 (Comm) (18 July 2014) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2014/2405.html Cite as: [2014] EWHC 2405 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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SOUFFLET NEGOCE SA |
Claimant |
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- and - |
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FEDCOMINVEST EUROPE SARL |
Defendant |
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Mr Malcolm Jarvis (instructed by Hill Dickinson LLP) for the Defendant
Hearing date: 13 June 2014
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Crown Copyright ©
Mr Justice Eder:
Introduction
"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 Award
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].
"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
"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
Sellers' submissions
"(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).
No commercial reason ?
Uncertainty ?
i) The stated uncertainty does not matter much if line 141 (i.e. the second limb of the deemed notice provision) is construed separately from line 140 (i.e. the first limb). The obligation in line 140 that notices shall be served "without delay" is properly construed as an innominate term, not a condition, and so it would be a rare case in which a breach could lead to a termination of the contract and thus an important contemporaneous decision. Therefore, uncertainty as to whether the case was one of "resales/repurchases" would only very rarely be critical. By contrast it is obviously highly unsatisfactory that the validity of an extension notice should turn on whether it is a case of "resales/repurchases" with the result that the recipient of a notice may simply not know whether or not he is obliged to perform the contract. The Board's construction may, in many cases, put the recipient of such a notice in a highly unfair and prejudicial position.
ii) There is no scope for uncertainty if the deemed service provision applies in all cases as the Sellers contend.
iii) A construction which gives rise to dangerous commercial uncertainty in relation to a fundamental term is a very unreasonable one. As per Lord Reid in Wickman, such a construction should only be adopted if the language of the clause makes it "abundantly clear" that that was what was intended. That is not the case here.
iv) The uncertainty created by the Buyers' construction is not limited to notices given pursuant to clause 8. The uncertainty would, for example, apply equally to notices claiming an extension in the event of strikes under clause 18, and to notices closing out the contract in the event of insolvency pursuant to clause 23.
v) Further, the party giving notice may be afflicted by the uncertainty, as well as the recipient, given the difficulties set out above.
vi) Moreover the party giving the notice could be caught out, quite unfairly. Suppose the Sellers in this case had, unbeknownst to the Buyers, themselves bought in the goods on essentially back to back terms from another contracting party, before selling on to the Buyers on different terms. If that constituted a case of resale/repurchase the Buyers would be caught by the deeming provision without realising it. If the Buyers' construction is right, buyers may well have no way of knowing whether or not a notice has to be served by 1600.
Analysis
Business common sense
Conclusion