QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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CEREAL INVESTMENTS COMPANY (C.I.C.) S.A. |
Claimant |
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- and - |
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ED&F MAN SUGAR LTD |
Defendant |
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Mr Andrew W Baker QC (instructed by Jackson Parton) for the defendant
Hearing date: 26 October 2007
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Crown Copyright ©
Mr Justice Walker :
Introduction
Payment: | Letter of Credit to be available at sight for 100% of invoice value against shipping documents. |
Letter of Credit to allow part shipments, negotiation of documents within 21 days after Bill of Lading date. | |
Letter of Credit for entire contractual tonnage to be opened in fully workable form in favour of seller within 5 working days of contract date | |
Shipment Period: |
One vessel only presenting October 2006 Shipment at Buyer's Option, with 10 days pre-advise of vessel arrival. |
Loading: | |
Lay days at the average rate of 1000 MT per day provided vessel can receive at this rate | |
At loading port in the event of congestion Master has the right to tender notice of readiness at the customary waiting place whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not. |
In cases of FAS, FOB and FOB Stowed contracts, the Seller shall have the sugar ready to be delivered to the Buyer at any time within the contract delivery period. The Buyer has the option of taking delivery of the contract quantity in one or more lots during the contract delivery period
The Buyer having given reasonable notice, shall be entitled to call for delivery of the sugar between the first and last working day inclusive of the contract delivery period. The Buyer must give notice to the Seller of the name/s of the vessel/s on which the sugar is to be shipped and the vessel/s expected time of arrival at the loadport and the tonnage to be loaded
If the vessel/s has presented herself in readiness to load within the contract delivery period, and loading has not been completed by the last day of the period, the Seller shall be bound to deliver and the Buyer bound to accept delivery of the balance of the cargo or parcel up to the contract quantity
The preliminary question
Where an FOB buyer is obliged to open a fully workable letter of credit and:
(a) the sale contract provides for a shipment period during which the vessel must present for loading;
(b) the RSA rules apply envisaging that, if two pre-conditions have been met, loading may continue until an uncertain date after the end of the contract delivery period.
what final bill of lading date and expiry date should be provided for in the buyer's letter of credit?
Contentions on the preliminary question
(1) The inclusion of "ready to load" in the Naxos clause adds nothing. First, these words obviously do not in themselves mean that loading has to be completed within a particular period. The House of Lords based their analysis on the wording of the whole clause, not these particular words. Secondly, the only way a vessel can be "presented" (certainly in this contract) is by tendering a notice of readiness. The whole purpose of an NOR is to state that the vessel is ready to load and a valid NOR cannot be given unless the vessel is so ready. A "presenting" vessel is therefore necessarily one which is "ready to load".
(2) Although the passages relied on by CIC may not have been in issue in that case, it is nevertheless significant that the House of Lords analysed the contract as containing a delivery period which could be extended in certain circumstances ([3/53]). They recognised that May/June was the "contract shipping period" (p1344A) and "delivery period" (p1348B), which Rule 14.4 could "extend" (p1348B and p1349D) in the event that it came into operation.
Analysis of the preliminary question
Conclusion