This was an appeal, under s.69 of the Arbitration Act 1996, on two issues of law arising out of an award of the Technical Appeal Committee (“TAC”) of the International Cotton Association (“ICA”).
The underlying dispute arose out of a contract of sale pursuant to which the claimant, Libero, bought cotton from the defendant, Alexandre Augustin. A dispute arose about the price, which the parties agreed to refer to arbitration, on terms that if arbitration was not commenced by 30 October 2012 the claimant’s price would prevail. The defendant purported to commence arbitration on 30 October 2012 but did not pay the fee, as required under the ICA rules, and the question arose whether he had validly commenced arbitration in time. The TAC held that payment of the fee was not a condition precedent to the commencement of arbitration, and that the defendant had commenced the arbitration in time. The TAC went on to consider the substance of the dispute, and held that the defendant’s price prevailed.
On the appeal to the Commercial Court, two issues arose: first, whether the TAC was correct to hold that the arbitration was commenced in time notwithstanding the non-payment of the fee; and second, if so, whether the TAC was correct to hold that the defendant’s price prevailed. The latter issue turned on whether the defendant had validly “fixed” the price pursuant to the futures market (as he was entitled to do under the contract), and raised questions as to the operation of price fixation clauses in commodities contracts.
Sitting as a deputy judge of the Commercial Court, Christopher Butcher QC upheld the TAC’s award in relation to the first issue, applying the principle that time bar clauses should not be construed contra proferentem in the case of ambiguity: see Bunge SA v Deutsche Conti-Handels-Gesellschaft MBH (No 2)  1 Lloyd’s Rep 353. However, the appeal was allowed in relation to the second issue, the judge holding that the defendant had failed to make a valid call, and the result was that the price was to be ‘fixed’ by the claimant. The result was that the case was remitted to the TAC for further consideration of (a) whether the claimant had validly fixed the price, and (b) if not (such that the agreed contractual mechanism for fixing the price had broken down), what the consequences were.
Luke Pearce appeared on behalf of the successful appellant (instructed by Holman Fenwick Willan LLP).