Bunge v Nidera  UKSC 43
This is an archived article, and some links may not work. Contact us if you have any questions.
The Supreme Court (Lords Sumption, Toulson, Neuberger, Clarke and Mance) has handed down judgment in Bunge v Nidera  UKSC 43, an important, unanimous, decision clarifying both the scope of Clause 20 in the GAFTA 49 Form (the Default Clause) and the decision of the House of Lords in The Golden Victory  AC 353.
The central question was as to the quantum of damages in circumstances where the Sellers wrongfully repudiated the contract, but the Russian prohibition on the export of wheat during the summer of 2010 would have provided them with a right of termination had the contract continued in effect. The issues to be determined were:
- On the assumption, in the Sellers’ favour, that The Golden Victory applies to the present case and that the Buyers on the facts of the present case would be entitled only to recover nominal damages for the Sellers’ breach absent the GAFTA Default Clause (“the assumption”), does that Clause entitle the Buyers to recover damages in the sum of US$3,062,500 as awarded by the GAFTA Appeal Board?
- If not, is the assumption valid (it being Buyers’ contention that is it not valid, but the Sellers’ contention that it is valid)?
Lords Sumption and Toulson, giving the two reasoned judgments, held that:
- The language of Clause 20 is neither wide nor clear enough to create a complete code on the quantification of damages. It does not preclude consideration of the fact that the Russian prohibition remained extant at the time of the contractual shipment period. Accordingly, notwithstanding the reference to assessing damages “on the date of default” and it being common ground that the relevant date was 11 August 2010, the Buyers were entitled to nominal damages only, having suffered no loss: had the contract not been terminated, the Sellers would have been entitled to avail themselves of their contractual right of cancellation.
- As to The Golden Victory  AC 353, that decision was correct, and the doubts and criticism levelled against it unjustified. Contrary to the suggestions of the GAFTA Board of Appeal and Hamblen J at first instance, the reasoning of the majority applies equally to cases where the contract provides for a single act of performance (in contrast to several successive acts).
The decision of the Court of Appeal ( 1 Lloyd’s Rep. 404, LJJs Moore-Bick, Floyd and Clarke) was reversed. The Buyers were awarded nominal damages in the sum of US$5.
Philip Edey QC and Leonora Sagan appeared for the Buyers (instructed by Hill Dickinson)