AMS Ameropa Marketing Sales AG & Anor v Ocean Unity Navigation Inc
[2023] EWHC 3264 (Comm)
Sharp Corp Ltd v Viterra BV (previously known as Glencore Agriculture BV)
8 May 2024
[2024] UKSC 14
Supreme Court
A buyer didn't pay for lentils and peas they bought. The seller got the goods back and resold them, but a dispute arose over how much the buyer owed. The courts decided the buyer should pay based on the value of the goods where they were when the buyer defaulted, not where they originally came from, because their value had increased significantly due to new import taxes.
Key Facts
- •Buyers defaulted on contracts for lentils and peas sold C&F free out.
- •Goods arrived at Mundra port, India; import tariffs increased their value.
- •Sellers regained possession and resold goods to an associated company.
- •Arbitration awarded damages based on FOB Vancouver price + freight to Mundra.
- •Appeal challenged the damages assessment methodology.
Legal Principles
Damages for buyer's default in C&F contracts should reflect the goods' realizable value at the discharge port on the default date.
Jacobs J's order granting permission to appeal
In assessing damages under the GAFTA Default Clause, the court must proceed on the basis of the findings of fact in the award.
Section 69 of the Act
The compensatory principle aims to put the injured party in the same position as if the breach had not occurred.
Common law principles of damages
The principle of mitigation requires the injured party to take all reasonable steps to avoid the consequences of a wrong.
Common law principles of damages
Sections 50(3) and 51(3) of the Sale of Goods Act 1979, and the GAFTA Default Clause, reflect the principle of mitigation and the compensatory principle.
Sale of Goods Act 1979 and interpretation of GAFTA clause
Outcomes
Court of Appeal erred in finding the contracts were varied and in making findings of fact not made by the Appeal Board.
The Court of Appeal decided a question of law not before the Appeal Board and made findings of fact without basis in the Award.
Damages should be assessed based on a notional sale of goods ex warehouse Mundra on the default date, reflecting their increased value due to import tariffs.
This approach is consistent with the principles of mitigation and compensation, considering where the goods were located and their market value at that time.
The appeal is allowed; the cross-appeal is also allowed and the case remitted to the Appeal Board for reconsideration.
The Court of Appeal's decision was based on an erroneous interpretation of the contracts and an impermissible creation of new findings of fact. The correct approach considers the ex-warehouse Mundra market value of the goods.
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