Key Facts
- •Arbitration claim arising from a GAFTA Board of Appeal award concerning a contract for the sale of rape meal and soybean meal.
- •Claimant (buyer) alleged repudiatory breach of contract by the Defendant (seller).
- •Board awarded damages to the Defendant but this was extinguished by a prepayment.
- •Claimant appealed on two questions of law: (a) the 'date of default' and (b) the refundability of the advance payment.
- •Advance payment was described as an 'advance payment/guarantee'.
Legal Principles
Section 69 of the Arbitration Act 1996 governs appeals on questions of law from arbitration awards.
Arbitration Act 1996, Section 69
Courts strive to uphold arbitration awards, reading them reasonably and commercially.
Zermalt Holdings SA v. Nu-Life Upholstery Repair Ltd [1985] 275 EGLR 1134; MRI Trading v. Erdenet [2013] 1 Lloyd’s Rep. 638
For mixed findings of fact and law, there is an error of law only if the tribunal misdirected itself or no properly instructed tribunal could have reached the conclusion.
Russell on Arbitration, 24th ed. 2015 at [8-139]; CTI Group Inc v. Transclear SA [2007] EWHC 2340 (Comm)
Contractual interpretation aims to identify the parties' intention using the language's objective meaning considering the factual matrix and commercial common sense.
Arnold v Britton [2015] 1 AC 1619; Chartbrook v Persimmon [2009] AC 1101; Wood v Capita Insurance Services [2017] UKSC 24
In cases of anticipatory breach, the date of default is the date of the breach, not the acceptance of the breach.
Toprak v Finagrain Compagnie Commerciale [1979] 2 Lloyd’s Rep 98; Thai Maparn Trading Co Ltd v Louis Dreyfus Commodities Asia Pte Ltd [2011] 2 Lloyd’s Rep 704
A question of contract construction is a question of law.
Cottonex v Patriot Spinning Mills Ltd [2014] 1 Lloyd’s Rep 615
Deposits are forfeited upon breach, while advance payments are recoverable unless otherwise stated.
Beatson, Discharge for Breach: The Position of Instalments, Deposits and Other Payments Due Before Completion, (1981) 97 LQR 389
Outcomes
Appeal allowed in part.
The Board erred in determining the date of default as the date of acceptance of repudiation rather than the date of repudiation itself (27 April 2018). The Board also erred in finding the advance payment non-refundable.
Date of default corrected to 27 April 2018.
Following Thai Maparn, the date of default in a GAFTA clause is the date of breach, even if anticipatory.
Advance payment of US$494,500 is repayable to the Claimant.
The contract did not clearly state the advance payment was non-refundable; the use of 'advance payment/guarantee' didn't imply non-refundability in the absence of seller loss.
Remission to the Board for determination of the Defendant's loss.
The court could not confidently assess the Defendant's loss at the corrected date of default (27 April 2018).