CL-2024-000457, 000458, 000459 - [2025] EWHC 1803 (Comm)

Fecha: 17-Jul-2025

Facts and Issues

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.

10.

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.

11.

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.”

12.

The terms of the contracts concerning delivery, price and payment, as ultimately amended so as to be the terms applicable to the seller’s claims, were materially identical. For Award No. 4673A, they were as follows:

“4.
DELIVERY TERMS:
4.1
The Goods shall be delivered on FOB (free on board) INCOTERMS 2020 basis stowed/trimmed/fumigated/cleared basis, 1 (one) safe berth and 1 (one) safe anchorage if required of 1(one) safe port, Chernomorsk, Ukraine.
…
5.
PRICE OF THE GOODS, CONTRACT VALUE:
5.1
The price of the Goods is 290.00 US Dollar per 1 (one) metric ton, for delivery with FOB (Free on Board) delivery basis …
6.
PAYMENT:
6.1
100% of the value of the part of the Goods delivered to fulfilment of the Contract … to the mv :ISLANDER S” according to Bills of Lading No.No 1-6 dd. 19.07.2021 in total amount 27797.56 mt shall be paid by the Buyer via bank transfer on CAD (cash against documents) basis, in full accordance with a commercial invoice from the Seller and by the 1^st September 2021 (inclusively) against scan-copies of cargo documents mentioned in Clause 6.2 of the Contract … provided to Buyer’s email, but in any case before breaking bulk.
Time of payment is of essence.
6.2
The Seller shall present to the Buyer following scan-copies of documents for payment:
- Commercial invoice original;
- 3 original + 3 non-negotiable copies clean on board Bill of Lading, marked “TO ORDER” and “FREIGHT PAYABLE AS PER CHARTERPARTY” and blank endorsed;
- CERTIFICATE OF ORIGIN …;
- PHYTOSANITARY CERTIFICATE …;
- FUMIGATION CERTIFICATE …;
- WEIGHT, QUALITY and CONDITION CERTIFICATE …;
- NON-RADIOACTIVITY CERTIFICATE …;
- HOLDS CLEANLINNESS [sic.] CERTIFICATE …;
- NON-GMO CERTIFICATE …;
- CROP YEAR CERTIFICATE …;
- VETERINARY CERTIFICATE if required, to be at buyer’s account.”
(For Award No. 4674A the contract price was US$292 per m.t. and under Award No. 4675A it was U$287 per m.t.; the final date for payment was 1 September 2021 in each case.)

13.

Clause 6.1, as quoted above, was the amended payment clause upon which the seller relied for its case that its unpaid price claims fell within s.49(2) of the 1979 Act. As reflected by its terms, it was agreed, so as to become the operative payment provision for the relevant goods, after shipment pursuant to Clause 4.1 and presentation of scanned copies of shipping documents under Clause 6.2.

14.

By paragraphs 10.8 and 10.9 in each Award, then, the Board of Appeal gave the following brief reasons for concluding that the seller’s claim for the unpaid price succeeded:

“10.8
Whilst we could not establish on the evidence before us, if the goods … had been discharged with fraudulent bills of lading, as Sellers claimed, Buyers had ultimately acknowledged that they had not paid for the goods. Buyers contested Sellers’ reliance on their action for payment of the price under s.49(2) of the Sale of Goods Act and relied on Caterpillar. However, the duty to mitigate is, to quote Benjamin (16-065) “is a foundation of the normal rule for the measure of damages” which relates to breach and not to payment of the price or liquidated damages.
10.9
Sellers had retained possession of the original bills of lading, as the Contract provided, but Buyers had simply failed pay for the contractual goods. With that admittance, we do not consider that a retention of title clause or Caterpillar means that Sellers are withheld from seeking payment of the price and have a legitimate claim for [the relevant amount]. In support of our position, we quote s.49(2) of the Sale of Goods Act 1979: “[sub-section quoted].” As such, an action for the price can be advanced by the Sellers as Buyers have (a) not paid, as admitted, and (b) property has not passed.”

15.

The buyer was granted leave to appeal on the following questions of law said to arise in each case out of the Award:

(i)

Is a seller of goods f.o.b. entitled to maintain an action for the price pursuant to section 49(2) of the Sale of Goods Act 1979 where:

(a)

the contract provides that the price is payable against documents;

(b)

property in the goods has not passed;

(c)

the goods have been delivered on board a vessel but the price has not been paid;

(d)

the original cargo documents have not been provided to the buyer;

or is the seller’s remedy one only in damages?

(ii)

What is meant by the term “a day certain” in section 49(2)?

(iii)

On the facts found by the Board of Appeal, should the seller’s claim for the price of the corn shipped on board the relevant vessel have succeeded?

16.

The buyer’s case on appeal was that:

(i)

on the plain language of the statute, and in accordance with long-standing authority, the price under an f.o.b. contract requiring payment against shipping documents is not a price payable “irrespective of delivery”, within the meaning of s.49(2);

(ii)

a payment date that is not fixed by the contract in such a way that it can be determined independently of the action of either party or any third party is not a “day certain”, within the meaning of s.49(2);

(iii)

either way, there was no good claim for the price under s.49(2); and

(iv)

in each case the appeal should be allowed and the Award should be set aside as regards that claim, to be replaced by a dismissal of the claim.

17.

The seller did not engage with the appeal proceedings until after leave to appeal had been granted and the final hearing of the appeals had been fixed. On 19 May 2025, eight months out of time, the defendant acknowledged service. By an application notice dated 12 June 2025 in each appeal, the defendant sought an order permitting it to submit evidence and confirming that it would be able to participate at the appeal hearing. Those applications were dealt with on the papers by Foxton J. His orders dated 16 June 2025 did not grant permission for the defendant to submit evidence but did grant permission for it to participate at the hearing.

18.

The defendant filed for the hearing, for each appeal, a chronology and dramatis personae as well as counsel’s skeleton argument. The claimant objected that those documents included matters of fact not found in the Awards. I directed that I would not pay any attention to the documents, and I did not read them. I did so because they were not agreed documents and:

(i)

the facts had to be taken exclusively from the Awards, there being in this instance no dispute over whether the question of the entitlement of the seller to maintain a claim for the price was one which the Board of Appeal was asked to determine (cf CPR PD62, para 12.5), and

(ii)

those facts were not complex or extensive, so that

(iii)

to the extent that the defendant’s extra documents stated or summarised facts found in the Awards, they were unnecessary, and if and to the extent that they included points of fact not found in the Awards, as the claimant said they did, they were inadmissible.

19.

The defendant’s failure to engage with the proceedings at any earlier stage also meant that there was no respondent’s notice as would have been required by CPR PD62, para 12.6, if the seller had wished to oppose the application for leave to appeal. When it came to the argument of the appeal, the seller advanced three cases, namely that:

(i)

the buyer was complaining of an absence or insufficiency of reasons in the Awards to explain the result, which was “procedurally flawed”, the buyer’s proper remedy (if any) having been an application it did not make, to the Board of Appeal under s.57 of the 1996 Act or to the court under s.70(4)(b), to require the Board of Appeal to state (or state more fully) its reasons for upholding the seller’s claim for the price;

(ii)

in the alternative, the Board of Appeal did not err in law in upholding the seller’s claims under s.49(2) of the Sale of Goods Act 1979, because the contract price was “payable on a day certain irrespective of delivery” on a proper interpretation of the sub-section, for which the seller relied on and submitted that I should follow recent decisions of Martin Spencer J in Readie Construction Ltd v Geo Quarries Ltd [2021] EWHC 3030 (QB) and Paul Stanley KC (sitting as a judge of this court) in CE Energy DMCC v Bashar; CE Energy DMCC v Ultimate Oil & Gas DMCC [2025] EWHC 297 (Comm);

(iii)

in the further alternative, if the Board of Appeal erred in concluding that there were good claims to the prices under s.49(2), the facts they found, as set out in the Awards, justified an award of damages for non-payment of the price, to consider which the Awards should be remitted to the Board.