25/03/2015

Public Company Rise v Nibulon S.A.

On 24 March 2015 Hamblen J handed down judgment in a case concerning the ambit of the GAFTA prohibition clause. 

The Claimant Sellers had sold 158,000 tons of Ukrainian Feed Corn to the Defendant Buyers. The Ukranian Government subsequently introduced Grain Export Quota Restrictions because of a poor harvest and the need to preserve sufficient grain for consumption in the home market. Despite their best endeavours Sellers were not granted the relevant export licences and purported to cancel the contracts on the basis of the prohibition clause. 

A GAFTA Appeal Board found that Sellers were liable to Buyers in the sum of US$17,536,000. Sellers appealed pursuant to section 69 contending that the Appeal Board had made a number of errors of law relating to the ambit of the prohibition clause. Buyers contended that the Award could be upheld on 2 grounds not expressed in the Award.

The Court held that the Appeal Board had erred in finding that the prohibition clause was engaged only in the case of a total ban, and rejected both Buyers arguments that the Award should be upheld on other grounds. However the Court further held that the Appeal Board had not specifically addressed the critical issue of causation (Bunge SA v Nidera BV  [2014] 1 Lloyd’s Rep. 404) and so remitted the Award to the Appeal Board for further consideration of that issue. Buyers were ordered to pay Seller’s costs of the appeal.

Christopher Hancock QC and Christopher Newman appeared on behalf of the Claimant (instructed by Clyde & Co).