Lloyd's Maritime and Commercial Law Quarterly
ENGLISH SALE OF GOODS LAW
Djakhongir Saidov*
161. Bunge SA v Nidera BV 1
GAFTA 49—prohibition clause—temporary export prohibition—whether seller could invoke clause and cancel contract before time to which export prohibition applies—whether “restricting export” merely describes nature of event or requires that event must have effect of restricting export—whether Default clause governs measure of damages
By a contract made on 10 June 2010 incorporating the terms of GAFTA 49, the seller agreed to sell to the buyer 25,000mt (+/– 10% in buyer’s option) Russian milling wheat FOB Novorossyisk for delivery in August 2010. The shipment period was subsequently narrowed under the terms of the contract to 23–30 August 2010. GAFTA 49, cl.13 provides as follows:
“PROHIBITION—In the case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin of the goods, or of the country from which the goods are to be shipped, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfilment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled. Sellers shall advise Buyers without delay with the reasons therefor and, if required, Sellers must produce proof to justify the cancellation.”
On 5 August 2010, the buyer nominated the Royal to lift the goods, but on the same day the Russian Government announced the passing of Resolution 599, imposing a temporary prohibition on the export from Russian territory of various agricultural products, including milling wheat, between 15 August and 31 December 2010. On 9 August, the seller informed the buyer of the export ban, declaring the contract cancelled in accordance with cl.13. On 11 August, the buyer responded by treating the seller’s conduct as a repudiation of the contract, which the buyer accepted. On the following day, the seller offered to reinstate the contract on the original terms, but the buyers declined to do so. The buyer gave notice of arbitration, claiming damages, pursuant to
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