There can be little doubt that Lord Donaldson’s advice to arbitrators, given in this judgment, is the most splendid common-sense.
Forty years on, it still repays study if Awards are not to become over-stuffed treatises on legal theory.
In the Matter of the Arbitration Act 1950 and in the Matter of an Appeal Arbitration
Westzücker GmbH v Bunge GmbH
Bremer Handelsgesellschaft GmbH v Westzücker GmbH
In the Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen’s Bench Division
Commercial Court
SJ/330/79
Lord Justice Stephenson Lord Justice Shaw and Lord Justice Donaldson
Friday 15th May 1981
Representation
MR. ROGER J. BUCKLEY, QC and MR. GORDON BISHOP (instructed by Messrs William A. Crump & Son, solicitors, London) appeared on behalf of the Appellants (Buyers).(No. 1).
MR. NICHOLAS LEGH-JONES (instructed by Messrs Thomas Cooper & Stibbard, solicitors, London) appeared on behalf of the Respondents (Sellers) (No. 1): and Appellants (Buyers) (No. 2).
MR. MARTIN J. MOORE-BICK (instructed by Messrs Richards, Butler & Company, solicitors, London) appeared on behalf of the Respondents (Sellers) (No.2).
JUDGMENT (Reserved)
LORD JUSTICE STEPHENSON: I will ask Lord Justice Donaldson to give the first judgment.
LORD JUSTICE DONALDSON: The study of the legal niceties of the Grain and Feed Trade and, in particular, those which have been spawned by GAFTA contract Form 100 constitutes a minority cultural interest. However, all who are concerned or interested in the subject are fully aware of the disastrous consequences of the United States embargo on the export of soyabean meal in June 1973 and of the torrent of arbitration awards which has ensued. I need not therefore set the scene.
The present appeals concern two further awards in the series. Bremer Handelsgesellschaft GmbH sold 200 metric tons of US soyabean meal to Westzücker GmbH for delivery c.i.f. Bremen June 1973 shipment. Westzücker sold a like quantity to Bunge GmbH on similar terms, save as to price. It was a strong contract situation and in each case there was a failure to ship 60% of the contract quantity. The balance was shipped under the export licensing system which was then introduced.
The subsequent chronology makes sorry reading. In June 1974 trade arbitrators found in favour of the Buyers. The Sellers appealed to the Board of Appeal and the appeals were heard in March 1977. However, the awards, dismissing the appeals, only emerged in September 1979, 2½ years after the conclusion of the argument. They were in the form of Special Cases and were heard together by Mr. Justice Robert Goff in March 1980. In each case he reversed the decision of the Board of Appeal holding that on the facts found by the Board the Sellers were protected by clause 21, the Prohibition Clause. The Buyers now appeal to this Court.
The delays may be no one’s fault. The spate of disputes concerning June 1973 soyabean meal contracts was unprecedented and overwhelming. Moreover, they had to be dealt with under the old Special Case procedure, which happily has now been abolished by the Arbitration Act, 1979 . It was a procedure calculated to produce the maximum delay. The practice of the parties submitting draft findings after the conclusion of the hearing was one of the most pernicious features. These findings often related to matters which the arbitrators did not consider relevant since otherwise the arbitrators could have been left to find the facts unassisted. In consequence there was a tendency for arbitrators to regard them as of secondary importance and perhaps sometimes to accept them too readily. The purpose for which the findings were used subsequently would on occasion have astonished them. In fact, this was part of the object of submitting the draft findings, particularly in the case of the party whose arguments had not appeared to appeal to the arbitrators. And this process of evolving draft findings and submitting them seemed to take an inordinate amount of time during which the arbitrators’ recollection of the evidence and of the arguments began to fade.
Yet another feature of the old Special Case procedure which made for delay was the form of the award. This was necessarily stylised, being divided into four parts – preamble, findings of fact, submissions of the parties and conclusions. It was not something which most arbitrators felt that they could draft without professional assistance and those who provided such assistance had other clients and commitments to consider. This produced still further delay.
It is of the greatest importance that trade arbitrators working under the 1979 Act should realise that their whole approach should now be different. At the end of the hearing they will be in a position to give a decision and the reasons for that decision. They should do so at the earliest possible moment. The parties will have made their submissions as to what actually happened and what is the result in terms of their respective rights and liabilities. All this will be fresh in the arbitrators’ minds and there will be no need for further written submissions by the parties. No particular form of award is required. Certainly no one wants a formal “Special Case” . All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. This is all that is meant by a “reasoned award” .
For example, it may be convenient to begin by explaining briefly how the arbitration came about – “X sold to Y 200 tons of soyabean meal on the terms of GAFTA Contract 100 at US.$Z per ton c.i.f. Bremen. X claimed damages for non-delivery and we were appointed arbitrators” . The award could then briefly tell the factual story as the arbitrators saw it. Much would be common ground and would need no elaboration. But when the award comes to matters in controversy, it would be helpful if the arbitrators not only gave their view of what occurred, but also made it clear that they have considered any alternative version and have rejected it, e.g. “The shippers claimed that they shipped 100 tons at the end of June. We are not satisfied that this is so” , or as the case may be, “We are satisfied that this was not the case” . The arbitrators should end with their conclusion as to the resulting rights and liabilities of the parties. There is nothing about this which is remotely technical, difficult or time consuming.
It is sometimes said that this involves arbitrators in delivering judgments and that this is something which requires legal skills. This is something of a half truth. Much of the art of giving a judgment lies in telling a story logically, coherently and accurately. This is something which requires skill, but it is not a legal skill and it is not necessarily advanced by legal training. It is certainly a judicial skill, but arbitrators for this purpose are judges and will have no difficulty in acquiring it. Where a 1979 Act award differs from a judgment is in the fact that the arbitrators will not be expected to analyse the law and the authorities. It will be quite sufficient that they should explain how they reached their conclusion, e.g. “We regarded the conduct of the buyers, as we have described it, as constituting a repudiation of their obligations under the contract and the subsequent conduct of the sellers, also as described, as amounting to an acceptance of that repudiatory conduct putting an end to the contract”. It can be left to others to argue that this is wrong in law and to a professional judge, if leave to appeal is given, to analyse the authorities. This is not to say that where arbitrators are content to set out their reasoning on questions of law in the same way as judges, this will be unwelcome to the Courts. Far from it. The point which I am seeking to make is that a reasoned award, in accordance with the 1979 Act, is wholly different from an award in the form of a Special Case. It is not technical, it is not difficult to draw and above all it is something which can and should be produced promptly and quickly at the conclusion of the hearing. That is the time when it is easiest to produce an award with all the issues in mind.
For my part, I have every confidence that if any similar disaster were to befall the trade a proper use of the 1979 Act approach and improved trade arbitration procedures would ensure that similar delays did not occur.
As is not unusual in these cases, the issues have been refined with the passage of time and I think that it will suffice if I deal only with those which have survived to the present stage. The appeal by Bunge, as buyers from Westzücker, has been fully argued, but it appeared that if this failed the other appeal by Westzücker, as buyers from Bremer Handelsgesellschaft, would be ineffective. As we were of the preliminary view that the appeal of Bunge did fail, we adjourned the hearing of the Westzücker appeal in the interest of saving time and costs.
Clause 21 of GAFTA Form 100 is in the following terms:
“21 PROHIBITION – In 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 or of the territory where the port or ports of shipment named herein is/are situate, preventing fulfilment, this Contract or any unfulfilled portion thereof so affected shall be cancelled. In the event of shipment proving impossible during the contract period by reason of any of the causes enumerated herein, Sellers shall advise Buyers without delay with the reasons therefor. If required, Sellers must produce proof to justify their claim for cancellation”.
Mr. Buckley, who appeared for Bunge, put forward a primary argument which was somewhat startling. He submitted that the learned and vastly experienced Commercial Judge had dealt in detail with a number of interesting points but, for some unaccountable reason, had failed to notice or deal with a finding of fact by the arbitrators which was conclusive in favour of Buyers and rendered all other points academic. That finding is recited in paragraph 23(vi) of the award at page 20:
“(vi) That neither Toepfer Hamburg nor the Sellers were prevented from fulfilling their respective Contracts by reason of the United States embargo contained in the bulletin issued on the 27th June 1973”.
Mr. Buckley’s submission is that since Clause 21 by its terms only applies if certain events “prevent fulfilment” of the contract, it can have no application in the face of this finding. He also submits that the finding is one of pure fact and so binds all courts conclusively. This probably overstates the position, but the finding clearly has a large substratum of fact.
The basis of the finding is reasonably clear from the rest of the award. The Board found that Westzücker as Sellers intended to perform their contract by means of a string of contracts which stretched back to Alfred C. Toepfer of Hamburg who would be the actual shippers. The Board has also found that Toepfers were relying solely upon the m.v. “Belval” for the shipment of soyabean meal to meet their June 1973 commitments and that this vessel was delayed and only tendered notice of readiness at 0830 hrs. on 30th June, 1973. Furthermore, she did not reach a loading berth until 5th July. It follows that, in the absence of an extension of time for shipment, which was never sought or given, Toepfers as shippers and consequently Westzückers as Sellers to Bunge would not have been able to avoid being in breach of contract by non-delivery irrespective of any difficulties created by the embargo.
This is superficially an impressive argument. However, it ignores clarifications, developments or perhaps, dare one say it, changes in this rather esoteric corner of the law which occurred between the hearing before the Board of Appeal and that before Mr. Justice Robert Goff. We were told that in March 1977 when these appeals were argued before the Board of Appeal, the state of the art in relation to clause 21 was that a shipper or Seller who wished to be protected by its provisions had to show that “but for” the occurrence of the embargo, he could and possibly would have performed his contract. Only in such a case could it be said that the embargo “prevented fulfilment” . If Toepfers were the source from which this contract was to be fulfilled and Toepfers could never have shipped within the contract period, this was not a “but for” case. No doubt it was with this in mind that the finding was made and the Seller’s appeal dismissed.
The evolution of the law to which I have referred is the result of the progress of a single case through the hierarchy of the courts – Bremer Handelsgesellschaft GmbH v. Vanden Avenne-Izegem P.V.B.A. (1977) 1 LL.L.Rep.133 (Mocatta J.); (1977) 2 Ll.L.Rep. 330 (C.A.) and (1978) 2 Ll.L.Rep. 109 (H.L.) . Mr. Legh Jones, for Westzücker, submits that as a result the “but for” approach is now generally accepted as being incorrect. He further says that he has no recollection that the contrary was ever argued before the learned judge. However, Mr. Bishop, who appeared for Bunge below, assures us that he did take the “but for” argument before Mr. Justice Robert Goff.
I have no difficulty in accepting that Mr. Bishop did take the point, notwithstanding that Mr. Legh-Jones has no recollection of its being taken. Such experience as I have of GAFTA cases at first instance suggests that they are characterised by a multiplicity of inter-related and interacting points of such revolting complexity that it is almost impossible for counsel to remember all the points made for the other party and that it is all too easy for the judge to dismiss from his mind and fail to mention a point which he has considered but which he had become satisfied was without merit. This I have no doubt is what happened in this case. However, this does not make it any the less necessary for us now to consider whether the “but for” approach remains valid, and, if so, to what extent. The key to this problem is, as I have said, to be found in the Vanden Avenne decisions. That case came before Mr. Justice Mocatta in June 1976 and his judgment is reported at (1977) 1 LL.L.Rep. 133. At that stage the validity of the “but for” argument was tacitly accepted by counsel on both sides. It was also probably accepted by the learned judge, who certainly found that “but for” the embargo the shippers would have shipped the contract quantity of soyabean meal within the extended shipment period to which they would have become entitled if they had served notice claiming it (see p.152, col.2). Accordingly the argument revolved around whether the “but for” issue had to be looked at as at 30th June when the original shipment period expired or as at the end of the extended period which the shippers could have claimed. Mr. Justice Mocatta held that the law did not require the shippers to indulge in the futile exercise of claiming an extension in the shipment period and that the issue had to be looked at as if the extension had been claimed. On this basis quite clearly the embargo had prevented the shippers from fulfilling their contract. This judgment, which preceded the argument before the Board of Appeal in the present case, in my view cast no doubt upon the validity of the “but for” approach.
The appeal to this court is reported at (1977) 2LL.L. Rep.329. As usual the argument had become more refined. The “but for” argument was looked at in the context of an absolute obligation to ship by 30th June (Point 1) and also in the context of a right to have the shipment period extended which would have been exercised if the embargo had not been imposed and was not exercised because it was imposed (Point 2). Lord Justice Megaw at pp.336,337 totally rejected the “but for” argument on the hypothesis of an absolute obligation to ship by 30th June (Point 1). The second point did not therefore arise, but he indicated, at p.337 Col. 2, that on this basis he would have affirmed Mr. Justice Mocatta. Lord Justice Browne agreed with Lord Justice Megaw at p.342 col. 1 as did Lord Justice Geoffrey Lane at p.342 col. 2.
Mr. Buckley tried to derive some comfort from remarks by Lord Justice Megaw at p.336 col. 2 and p.337 col. 1 to the effect that the burden of proof of inability to ship irrespective of the embargo lay on the Buyers. He submitted that the Court of Appeal was not rejecting the “but for” approach, but merely declaring that the clause shifted the burden of proof from the Sellers to the Buyers. I do not think that this is correct. As I read it, this was a fall back position which only applied if Lord Justice Megaw’s primary opinion was rejected. That primary opinion was that the “but for” approach, as previously applied, was wholly wrong.
The appeal to the House of Lords is reported at (1978) 2 LL.L.Rep. 109. Lord Wilberforce, with whom Lord Keith of Kinkel agreed, dealt with the matter clearly and succinctly at p.114 as follows:
“2. Causation
The clause applies ‘in case of prohibition of export … preventing fulfilment’ – so that a question may arise of causation. Was it the prohibition that prevented fulfilment or something else? This question may be phrased more specifically by asking whether the seller must prove that he had the goods ready to ship within the contract period, and a ship to carry them. The answer to it, in my clear opinion, is in the negative. The occurrence of a ‘frustrating’ event – in this case the prohibition of export – immediately and automatically cancels the contract, or the portion of it affected by the prohibition.
This, in general, is the effect of the authorities. In Ross T. Smyth v. Lindsay (1953) 2 Lloyds Rep. 378; (1953) 1 WLR 1280 at pp.381 and 1284 , Mr. Justice Devlin said:
‘The result of the prohibition of export, had it been instantaneous … would have been the effective cause of [the sellers’] inability to ship.’
And in Tradax v. Andre (1976) 1 Lloyd’s Rep. 416, 426 , Lord Justice Browne said:
‘… If there was an absolute prohibition, the sellers need not in my view prove that they had goods ready to ship.’
I do not think that a contrary view is to be implied from the judgment of Lord Denning, M.R. in Tradax v. Andre (1.c. p.423) , but if it were, I would prefer the opinions I have already cited. The latter were accepted by Lord Justice Megaw in the present case (1977) 2 Lloyd’s Rep. 337 – in my respectful opinion correctly.
3. The extension clause Under cl.9 of form 100 a shipper may extend the contract period for shipment by up to eight days
if he gives notice claiming extension sent not later than the next business day following the last day of the originally stipulated period. The sellers in fact did not avail themselves of this clause: their last day for doing so was July 2, 1973, at which time the embargo was operative. Thus the sellers’ omission to claim an extension was part of the new situation created by the embargo. It was found (or deemed to be found) by the arbitrators that –
‘… it was the sellers’ intention to ship within June whatever quantity was possible and as to the balance to seek to and to effect shipment under extensions in accordance with clause 9 [award paragraph 8A].’
It was precisely this that was interfered with by the export prohibition, so that the non-exercise in fact of the option of extension was irrelevant. The Court of Appeal so decided and I agree with them.”
I read the speech of Lord Russell of Killowen at p.130 col. 2 as being to the same effect. Lord Salmon at p.128 treats clause 21 as being a contractual frustration clause and since, if the contract had been frustrated, the “but for” argument would not have been available in the absence of an anticipatory breach of contract accepted by the buyers before the frustration occurred, I take him to be agreeing with the majority. Only Lord Dilhorne at p.121 col. 2 espoused the “but for” approach and then subject to his view that the clause reversed the burden of proof. In other words, he accepted Lord Justice Megaw’s fall back position.
It might be thought, and I once did think, that the result of the House of Lords decision was, in effect, to re-write clause 21 so as to eliminate the words “preventing fulfilment” and “so affected” . But this is not so. If shippers or other sellers wish to take the benefit of the clause, they must still prove that the embargo would have prevented fulfilment of the contract on the assumption that they would otherwise have been in a position to fulfil it. The practical consequence of this is that they will still have to prove that the embargo was all embracing so far as they were concerned and that neither of the “loop-holes” applied to them. They will also have to prove that they had no goods afloat, and thus beyond the reach of the embargo, which were available to fulfil the contract.
I now turn to Mr. Buckley’s secondary argument. Accepting for this purpose that it matters not whether “but for” the embargo Toepfers could or would have shipped and thus enabled Westzücker to have fulfilled this contract, he submits that Westzücker, as Sellers, still had to show that the embargo was fully effective in preventing fulfilment of the contract.
Mr. Buckley accepts, as in the light of paragraph 10 of the award he must, that Toepfers had no soyabean meal in port, in transit or in lighters and that therefore they were unable to take advantage of the so-called “loopholes” in the embargo permitting shipment on or after 27th June 1973. But he submits that this is not sufficient to enable Westzücker to escape liability, unless they can also show that:
(a) Toepfers had no June goods already afloat with which they could have fulfilled their contract commitments and thus enabled Westzücker to fulfil their commitments to Bunge, and,
(b) Westzücker’s own trading position was such that, in the absence of a post-embargo shipment of soyabean meal, they could not fulfil their commitments to Bunge.
In Mr. Buckley’s submission, Westzücker have failed to establish either fact.
I have no difficulty in rejecting the first limb of this argument, for the reasons given by Mr. Justice Robert Goff. In paragraph 12 of the Award the Board found that Toepfers intended that their June commitments for Weser/Bremen, and in particular the June instalment of their contract with Schwarze (one of the links in the string leading to Westzücker), would be shipped on board the m.v. “Belval” . In paragraph 7 of the Award, the Board found that the Weser/Bremen contracts amounted to only 2000 tons. When, against this background, the Board in paragraph 9 found that “there was no evidence before us of any other ship having been fixed by or for the Toepfer Companies to load June shipment s.b.m. or actually arriving to load June s.b.m. at any time” and “There was no evidence accordingly that any of the Toepfer companies’ June shipment s.b.m. had been shipped before the embargo came down on 27th June 1973” , I have no doubt that the Board was intending to convey the meaning that “We were satisfied that no such shipment took place” . Soyabean meal shipments are not matters which are or can be secret in the trade and it does a disservice to trade arbitration to construe a trade award as strictly as Mr. Buckley seeks to do. Saying that there is no evidence of a fact may be taken literally or it may be construed colloquially. I have no doubt that the latter construction should be applied.
The second argument raises a more serious problem. The relevance of a Seller’s own trading position outside the intended string was considered by Mr. Justice Robert Goff in Continental Grain v. STM, (1979) 2 LL.L.Rep. 460 at pp.472-3 . He held, I think rightly, that if Sellers had goods afloat which could have been used to fulfil their commitment to the Buyers, even if that had not been the original intention, they could not rely upon clause 21. Mr. Buckley points to the absence of a finding that Westzücker had no such goods.
The same point arose below, but as the Bremer Handelsgesellschaft/Westzücker award was argued first and the judgment relates primarily to that award, it is dealt with as a point being taken by Westzückers in relation to the absence of evidence of Bremer Handelsgesellschaft’s own trading position. Mr. Legh-Jones appeared for Westzücker in relation to both awards. Mr. Moore-Bick appeared for Bremer Handelsgesellschaft. The learned judge dealt with the point as follows:
“Next Mr. Legh-Jones turned to the absence of any finding about the Sellers own trading position; and as to this he challenged the proposition, advanced by Mr. Moore-Bick, that it was not open to the Buyers to take this point on the hearing of the Special Case. He advanced three submissions:
(1) As a general principle, parties who litigate take the risk that the relevant law may be declared to be different from what it was thought to be when the proceedings were started.
(2) When a change in the law has the effect of rendering facts found in the award inadequate to support one party’s affirmative case, the other party is entitled –
(a) to demonstrate the inadequacy to the court, and
(b) to rely upon it in rebutting the first party’s case;
(3) The fact that the party disadvantaged by the change in the law might then want a remission is irrelevant to the rights of the other party.
Now the difficulty in the way of these submissions is that they are contrary to established authority. First, it is established that the Sellers could not, if they wished, seek a remission to obtain findings of fact on this point (viz. their own trading position), which is a point on which the facts could have been, but were not, investigated before the arbitration tribunal: see The Lily Prima [1976] 2 Lloyd’s Rep. 487, especially at pp. 500 – 501 , per Mr. Justice Kerr. The position then is that the Buyers are now saying that the Sellers should fail on the basis of an argument of law on which, had it been argued below, additional facts might have been found by the arbitration tribunal which could affect the decision on the point. I am satisfied that the Buyers are not permitted to rely upon such an argument: The Lily Prima at p. 505 , per Lord Justice Cairns, and p. 506 per Lord Justice Stephenson. These principles were applied by myself in Tradax Export S.A. v. Cook Industries Inc. (1979) (unreported)” (now reported (1981) 1 LL.L. 236, 247
When the learned judge came to deal with the instant award, he simply said that similar considerations applied.
The main body of the judgment deals with other matters and I think that if the learned judge had appreciated the importance which would be attached to this part of his judgment and the fact that the two awards might be dealt with in a different order in this court, he might have expanded what he had to say. For my part I accept that the parties who litigate or arbitrate take the risk that the relevant law may be declared to be different from what it was thought to be when the proceedings were started. This risk is greatly increased if proceedings are as protracted as these have been and this is an additional reason for urging expedition and for the 1979 Act change in procedure designed to achieve this result. I also accept that it is the duty of the parties to obtain all findings of fact necessary to support their positions and that a party may accordingly rely upon any absence of relevant findings. However, my acceptance of these propositions is subject to three very important qualifications.
First, a distinction has to be drawn between arbitrators failing to find a fact in the sense that they did not apply their minds to it and failing to find a fact in the sense that they were not satisfied that the fact was proved. Arbitrators themselves can assist here by expressing a view on all facts alleged by either party to be relevant and saying whether they find these proved, disproved or simply not proven. Parties can certainly rely upon any failure to find a relevant fact if the arbitrators have considered the point and are not satisfied that it was proved. But if the arbitrators did not consider the point at all, different considerations will apply.
Second, where the absence of a finding of fact stems from its irrelevance to the arguments as advanced before the arbitrators, neither party can thereafter rely upon that absence if it is a gap which might have been filled if the argument had taken a different course.
Third, the court has very wide power to remit an award to arbitrators for reconsideration under section 22 of the Arbitration Act 1950 , and will do so if the justice of the case so requires. A change in the law may in some circumstances require such a remission.
So far as I can see, and this was the learned judge’s view, there was no investigation of Westzücker’s or Bremer Handelsgesellschaft’s own trading positions as Sellers. Why not? Mr. Buckley submits that it was relevant, the burden of proof was on them and they should have, but did not, place evidence before the Board of Appeal. In my judgment, this is an oversimplification which is particularly dangerous in the context of a trade arbitration. Such arbitrations, like proceedings in the Commercial Court itself, concentrate on what are the real issues between the parties and it would be deplorable if time had to be spent deploying evidence on matters extraneous to the issues being canvassed between the parties simply in order to avoid subsequent disputes based upon some omission to find a fact which was tacitly accepted or mutually treated as outside the scope of the reference.
Plainly the trading positions of the Sellers in these two arbitrations could have been relevant, whatever the state of the law in relation to the “but for” argument. Equally plainly the burden of proof lay on the Sellers. Why then was it not investigated? I think that the answer is because neither party treated it as being a live issue. Why not must be a matter for speculation, but it is not beyond the bounds of possibility that whilst there may have been doubt about Toepfer’s trading position, which was accordingly investigated, no one had any doubt about the fact that neither Bremer Handelsgesellschaft nor Westzücker had surplus goods afloat which could have been appropriated to these contracts.
Mr. Buckley seeks to meet this approach by once again drawing attention to paragraph 23(vi) of the award and suggesting that perhaps one reason why the Board held that the Sellers were not prevented from fulfilling their contract by the embargo was that they had goods afloat available for this purpose. I do not accept this suggestion. The finding covers both the positions of Toepfers and Westzücker without any suggestion that the basis was different in the two cases, yet we know that Toepfers had no goods afloat. It is much more likely to have reference to the “but for” approach which applied to both Toepfers and Westzücker in the same way.
Clearly it is now much too late to remit the matter to the Board of Appeal to find the facts in relation to Westzücker’s own trading position and no application for an order of remission has been made. On the award as it stands, I agree with the learned judge that Bunge, as Buyers, are now saying that Westzücker as Sellers should fail on the basis of an argument of law on which, had it been argued below, additional facts might have been found. I also agree with him that this is not permissible. If authority for this proposition is required it is to be found in The Lily Prima (1976) 2 LL.L. Rep. 487 per Lord Justice Cairns at p.505 and per Lord Justice Stephenson at p.506.
For these reasons I would dismiss the appeal by Bunge.
LORD JUSTICE SHAW: For the reasons given by Lord Justice Donaldson, I, too, would dismiss Bunge’s appeal.
LORD JUSTICE STEPHENSON: I agree with the judgment of Lord Justice Donaldson and would dismiss the appeal.
Both appeals dismissed. Appeals treated as being consolidated. Leave to appeal in both cases refused.
MR. MALES: (for Mr. Legh-Jones) I would ask that the appeal in the Bunge v. Westzücker action be dismissed, so as to uphold the order of the learned judge.
LORD JUSTICE STEPHENSON: The Bunge appeal will be dismissed. What about the other appeal?
MR. MALES: My Lord, that also should be dismissed, in my submission. I am content that that should be done.
LORD JUSTICE STEPHENSON: The result of the second appeal follows the first.
MR. MALES: Yes, my Lord.
LORD JUSTICE STEPHENSON: Is that common ground?
MR. MOORE-BICK: I am content with that order, my Lord. I would ask for my costs.
LORD JUSTICE STEPHENSON: Each appeal will be dismissed with costs.
MR. MALES: My Lord, may I say on the question of costs that my clients would never have brought this appeal from Mr. Justice Goff had not Bunge themselves appealed on the award against us. I would ask therefore that Bunge should be ordered to pay my costs of the appeal which I brought against Bremer Handel, including the costs which I am going to have to pay to my learned friend, Mr. Moore-Bick’s clients. That in fact was the order which your Lordships’ court, including Lord Justice Stephenson, made on an application in March which dealt with the procedure which should be followed on this appeal.
LORD JUSTICE STEPHENSON: Have we got that order with our papers? I do not think we have.
LORD JUSTICE DONALDSON: You might find it easier to suggest that Bunge pay the costs of the other two parties? It amounts to the same thing.
MR. MALES: Yes, it does indeed amount to the same thing.
LORD JUSTICE STEPHENSON: The order we made was that Westzücker do pay the costs of Bremerhandelgesellschaft and Bunge pay Westzücker’s costs in the other appeal and Bunge do indemnify Westzücker against the costs they have to pay Bremerhandel-gesellschaft. It is the same thing.
I do not know how clearly I understood what I was doing. I was probably sitting with those who understood it more clearly than I, but I should think for taxation purposes it is better to make the order for costs in the form in which we gave it on the previous occasion.
MR. BISHOP: My Lords, may I say something on that matter? I cannot resist an order for costs against Bunge in the appeal that they brought against Westzücker, but I can and do strongly resist any order that they should pay any part of the costs involved in the appeal that Westzücker brings against Bremer Handel. My Lords, I say that for this reason. These are separate actions, separate appeals altogether, and in those circumstances it is not like a case where one has a plaintiff/defendant/third party and they go to appeal, these are totally separate.
LORD JUSTICE STEPHENSON: A gallant attempt was made to keep them separate on a previous application to this court, but that application was turned down because it was thought that, at any rate, they have some connection and I should have thought the further we heard these appeals and the longer you listened to Lord Justice Donaldson’s judgment the clearer it was that one probably depended on the other.
MR. BISHOP. My Lord, certainly I accept on the judgment that they do clearly depend on each other and contracts are in string, but in the same way, in certain cases for example in the House of Lords, their Lordships decide to hear two appeals together because the same principle of law is involved. But in those circumstances, as far as I am aware, it has never been suggested that one of the appellants should then pay the costs of all the other parties involved if the decision goes against those appellants.
LORD JUSTICE DONALDSON: I am sure that in the working out of this contract you were persistently sending telexes or receiving telexes, which you then sent on, saying, “please take as coming from us” .
MR. BISHOP: My Lord, yes, as far as the telexes are concerned, that is right. If one looks in the stated case it is clear they were passed down the line but that, in my submission, is no reason whatsoever why the costs should be passed down the line. We are not in any sense the insurers of Westzücker. It is for them to decide, when an appeal is brought against them, whether they wish to protect themselves by appealing against Bremer Handel. That is a decision which they must make. It really is not for Bunge in this case to be the insurers of all the parties. I do make the point that in the order made in March the order is that the motion be allowed and the said appeals be listed together, but they remain, as appeared from Lord Justice Donaldson’s judgment, separate appeals and indeed one is listed today to be heard after the judgment in the other case because they do remain separate appeals. It is not – and I do stress this – one appeal where all three parties are present together, appearing together and arguing together. They are separate appeals. It is true that, in the history of these particular cases, they have been dealt with together as a matter of convenience but, save in respect to the motions which came before this court earlier in March of this year, at no other stage up to now has it been suggested that the losing party of the three should pay all the costs of the other parties. The position has been throughout that the winning party obtains its costs from the middle party and then the middle party obtains its costs from the losing party. My Lords, this is the first time that the argument has been in this case that one party who loses should pay all the costs. In my submission it is clearly an incorrect argument because these are totally separate appeals and it really is for Westzücker to decide when the appeal was brought by Bunge against it, whether they wished to protect themselves by also bringing an appeal at the same time against Bremer Handel.
LORD JUSTICE STEPHENSON: Did you argue this against the order that we made on 2nd April?
MR. BISHOP: My Lord, I did not. Mr. Buckley appeared. I was present but I did not argue it.
LORD JUSTICE STEPHENSON: We did order that Westzücker pay Bremer Handel’s costs and you have got to pay their costs in your appeal and then there is the order that you indemnify Westzücker against the costs they have to pay Bremer Handel. Do you say that that order ought not to have been made, or ought not to have been repeated?
MR. BISHOP: It certainly should not be repeated. I do not wish to go into arguments as to whether it should have been made at that time. Perhaps one can distinguish it on the basis that at that stage both parties came before the court to say “let us hear this together” . I cannot remember the exact form of the motions now.
LORD JUSTICE SHAW: What you are really saying is, as between the other two parties it was for them to make up their minds whether the one would appeal and the other would resist the appeal. They were in no different position from yourselves?
MR. BISHOP: My Lord, that is right.
LORD JUSTICE SHAW: It so happens that they have had the advantage of seeing what has happened to you and they can make their application for costs or determine the cause of action for themselves.
MR. BISHOP: My Lord, precisely. We have saved them the costs of arguing it for themselves.
LORD JUSTICE SHAW: You made the further litigation between them unnecessary.
MR. BISHOP: My Lord, precisely. The original arbitrations were done separately. It was just decided that, for the sake of convenience, the two appeals to the arbitration Board of Appeal should be dealt with together.
LORD JUSTICE SHAW: It is not the sort of case where a common order used to be made because A blamed B?
LORD JUSTICE STEPHENSON: A Bullock order, or a Sanderson order.
MR. BISHOP: Yes, my Lord, that is the sort of order that can be made when there is a third party.
LORD JUSTICE DONALDSON: What is worrying me about all this is that anybody who is facing both ways in a string must protect themselves. They have to appeal. There is not any choice in the matter. That being so, really this is part of the damages being suffered by the buyers…
MR. BISHOP: In which case it becomes almost part of the cause of action …
LORD JUSTICE DONALDSON: I agree and it seems to me that there was perhaps an argument that the arbitrators Board of Appeal should deal with this, but you cannot send it back at this stage. You would not have any grounds for resisting it.
MR. BISHOP: My Lord, as far as the hearing before Mr. Justice Goff was concerned, I think the matter was remitted.
LORD JUSTICE DONALDSON: That is what started me off on this. I noticed that it was remitted.
MR. BISHOP: It was remitted in relation to costs, unless they could be agreed between the parties. My Lord, the same point there, as far as the order made before Mr. Justice Goff was concerned, was that Bunge should pay the costs of Westzücker of the case stated being referred to the learned judge and then Westzücker should pay the costs of Bremer Handels.
LORD JUSTICE STEPHENSON: You say that is the order we ought to make – that each appeal should be dismissed with costs?
MR. BISHOP: Yes, my Lord.
LORD JUSTICE DONALDSON: Is there anything in the contract about it?
MR. BISHOP: I have not looked, my Lord.
LORD JUSTICE DONALDSON: There probably is not.
MR. BISHOP: My Lord, I think not. I anticipate it may only be dealt with in the sense of the circle clause. If the string is completed then one can invoke the circle clause. My case is simply that it is up to them to decide. It really is for them to decide, looking at the case as if it is a totally separate case. Should we appeal, what is the correct order here? What will their Lordships decide? Should we appeal or should we not? One can, of course, understand their desire to protect themselves by putting in an appeal. That may be a very sensible cautionary action to take, but if they are going to insure themselves in that way they must pay the premium and it is not for Bunge to pay it by indemnifying them in respect of their costs.
LORD JUSTICE SHAW: The issues of the argument are exactly the same, are they not?
MR. BISHOP: My Lord, apart from the question of that one finding in our case.
LORD JUSTICE SHAW: I was just wondering whether it would have been possible for the two appeals to have been heard together, in which case there would be no difficulty because you would share the costs, whichever way it went; but that did not happen.
MR. BISHOP: My Lord, it did not happen, no.
LORD JUSTICE STEPHENSON: They were listed together and we ordered that the appeal of Bunge was to be heard first. That seems, as it turned out, to be a wise and sensible course.
LORD JUSTICE DONALDSON: You have saved costs, whoever has to pay them.
MR. BISHOP: Yes, and of course it has been done in the same way below before the Board of Appeal and before the commercial judge.
LORD JUSTICE STEPHENSON: Mr. Moore-Bick, how interested are you in any of this?
MR. MOORE-BICK: My Lord, I am not really interested.
LORD JUSTICE STEPHENSON: You do not care who pays them, provided they pay?
MR. MOORE-BICK: I do not mind which of my friends’ clients pay them. I do not think, between the two of them, we mind who is responsible for them.
LORD JUSTICE STEPHENSON: Were you to detach yourself from your role as advocate, is there anything you would like to say to us about the correct order to make?
MR. MOORE-BICK: Well, my Lord, one sees the force of what Mr. Bishop says, obviously, but, on the other hand, in these string arbitration cases it is quite fair to say that the chap in the middle, when you have got a three-party position as we have here, is very much influenced by what happens below or above him, as the case may be, in the string, so it is a case of passing on what comes from me. This has been an appeal and a hearing before the learned judge where Mr. Legh-Jones has been facing both ways and has tended to pass on the arguments coming up and down. I opened in the court below and, although he took a particular view on the question about being entitled to argue a new point he virtually passed my case on to Mr. Bishop, he replied and I took advantage of his reply.
LORD JUSTICE STEPHENSON: That was so below, yet Mr. Justice Goff made the order that he would have made if they had been quite separate appeals.
MR. MOORE-BICK: My Lord, I was having a look to see if I had a note of that order. I did not have a note of it because it did not concern me personally.
LORD JUSTICE STEPHENSON: Have we got a copy of the order which he did make? I expect it appears in the judgment.
MR. MOORE-BICK: I regret to say I do not have a note of that. I had a look at the Gafta contract to see if that helped. The only clause that occurred to me was the default clause. What that says is that damages are to be assessed on the market differences and the Board has a discretion to go further than that if they feel it appropriate, so I do not think it particularly assists your Lordships.
LORD JUSTICE DONALDSON: It does not seem to deal with costs at all.
MR. MOORE-BICK: No, it does not in terms, my Lord. Your Lordship will of course see 26. It does not really deal with this point at all. It establishes a prima facie measure of damage, which is the difference between the market …
LORD JUSTICE DONALDSON: I am looking at the formal order of the learned judge. It does not appear to deal with costs.
LORD JUSTICE STEPHENSON: This is the Bremer Handel and Westzücker order. It is the same. The buyers pay the sellers costs of the arguments before the learned judge and the costs of setting down a special case for argument. That is in the Bremer Handel one. That is in our bundle. Now what about in the other one?
MR. MOORE-BICK: My Lord, it is the same in the Westzücker.
LORD JUSTICE STEPHENSON: In other words he did make the ordinary order and treated it as the same order he would have made if they had had no string connection between them.
MR. MOORE-BICK: My Lord, yes, they are drawn up as separate orders.
LORD JUSTICE SHAW: For my part, I find it a little difficult to see how this court can make an order for costs against a party that was not a party to the litigation.
MR. MOORE-BICK: Yes.
LORD JUSTICE STEPHENSON: I think that may be right. I am not sure if the jurisdictional point is not involved. Unless there is consent – and I do not think there was last time – I should not think there was any power to make the order that we did, landing an indemnity on you.
LORD JUSTICE SHAW: I suppose it would be different if the appeals had been consolidated.
LORD JUSTICE STEPHENSON: It would, I think. But as they are listed to be heard one after the other, I rather doubt whether there was any power to make our previous order and you may be right – we should not repeat the error if error it was.
MR. MOORE-BICK: My Lord, I do not feel that I should argue strongly either way on this point because it does not concern me, but the position on the previous occasion of the application to your Lordships’ court was that there were two separate Notices of Motion issued by Mr. Legh-Jones’ client, one in each appeal, each asking for the same relief, namely, that the appeal should be heard with the other appeal. We were all present, of course, and on that application I supported Mr. Legh-Jones’ application as far as it concerned my appeal and it was very much dealt with as a consolidated application. Of course, the order made was that these appeals should be listed consecutively, with the Bunge appeal being heard first, and I was not asked to address the court on the points that were raised by Mr. Buckley. But in a sense it was treated rather as it was treated by the learned judge, namely that we were all here.
LORD JUSTICE STEPHENSON: It was almost a consent order, after a little argument. The parties really agreed what we should do.
MR. MOORE-BICK: As far as I was concerned it seemed to me that there was little to choose between being listed consecutively and being heard contemporaneously.
LORD JUSTICE STEPHENSON: I do not recollect any argument about this indemnity and I am rather surprised to see it in the order.
MR. MOORE-BICK: I do not recall the specific details of the argument.
LORD JUSTICE STEPHENSON: It must have been almost by agreement?
MR. MOORE-BICK: I think it was. I think it went almost by agreement. It is the sort of order that I have known to be made by other similar types of hearings, certainly in one case in which I was involved where we had four string parties with four separate awards being heard at the same time before the learned judge, and an order was made as to costs which resulted in a sharing of the costs. In that case there was one successful party, in effect, and those who argued against him shared the costs.
LORD JUSTICE SHAW: But all those parties were before the court at the same time.
MR. MOORE-BICK: Yes, they were. I think in that case they were listed for the same time rather than being formally listed consecutively. I cannot remember precisely.
LORD JUSTICE STEPHENSON: It might be said that we should not be misled by the fact that you have been here all the time while we have heard one appeal which, technically speaking, had got nothing whatever to do with you. I do not want to embarrass you on any question of taxation of your fee, but in fact it had not. You were really in the position of holding a watching brief.
MR. MOORE-BICK: I think that is technically correct.
LORD JUSTICE STEPHENSON: That might be misleading us, but for Mr. Bishop’s submission, into thinking we can deal with you as if you were all parties to both appeals.
LORD JUSTICE DONALDSON: But you were here – and perhaps this is important to taxation – and I apprehend that, had we called upon you in the second appeal, every member of this court would have been extremely cross if you had not rehearsed all the arguments to which we have already listened and we would have expected to have taken that as spoken.
LORD JUSTICE STEPHENSON: When you are clearing one action after the other the whole point of that is that you can treat the evidence given in the first action, even without an order. I think that usually is included in the Master’s order, “as given in both actions” .
MR. MOORE-BICK: Certainly as a matter of common sense it seems to me there was no distinction for material purposes between listing them together and listing them one after the other because I would be asked, in effect, to reply to what Mr. Buckley said in opening on the points that concern me and Mr. Legh-Jones would not have rehearsed those arguments again, unless he felt he could improve on them.
LORD JUSTICE STEPHENSON: At least the court would have had jurisdiction. If the appeals were heard the other way round it would have been highly inconvenient and the impact of costs would be entirely worse.
MR. MOORE-BICK: There was a matter to which Mr. Buckley was hoping that Mr. Legh-Jones would open the remainder of his case against me and get the benefit of that.
LORD JUSTICE STEPHENSON: Thank you. Do you want to add anything, Mr. Males?
MR. MALES (For Mr. Legh-Jones): I would submit to your Lordships that certainly the reality of this case is that the two appeals were dealt with together. I apprehend that if your Lordships do not have jurisdiction to grant me an indemnity …
LORD JUSTICE STEPHENSON: Well, if we take a coward course we do not have to decide whether we have jurisdiction or not, Mr. Males. It is always a temptation, I am afraid, to take that course. Can you make any further submissions which would make us resist that temptation?
MR. MALES: I would apprehend that in the event that I do not get those costs on the jurisdiction point from Bunge, then it would follow logically that I would not have to pay Mr. Moore-Bick’s costs of attendance if he was here on a watching brief and that would be an unrealistic and, in my submission, an undesirable approach.
LORD JUSTICE SHAW: That might be something to be said on taxation.
MR. MALES: There might well be arguments on taxation but, on the question of jurisdiction, I would say that costs are a discretionary matter and your Lordships have certainly got jurisdiction to make the order which is fair in the realistic circumstances of this case.
LORD JUSTICE DONALDSON: Why do you not add that, if we have not got jurisdiction, it is never too late for you to apply to consolidate the two appeals now and then undoubtedly we have jurisdiction?
LORD JUSTICE SHAW: You cannot make an order against anybody on a whim. Somebody has got to be within the ambit of the immediate litigation.
MR. MALES: Your Lordships are making an order against Bunge, who are certainly parties to the litigation. Your Lordships have ordered that they pay certain costs which I have incurred in dealing with a case which has been heard and decided by your Lordships. We have made it quite plain from the time of the learned judge’s judgment that we would not appeal against Bremer Handel if Bunge did not appeal against us. We were content to accept the learned judge’s judgment. Indeed, as Bunge were not similarly content, we had to protect our position in the way which is absolutely basic, both to string trading and string litigation, in my submission, so I would say that I am entitled to my costs in the terms of the order which I ask for. Alternatively perhaps I would make the application which my Lord, Lord Justice Donaldson suggested.
LORD JUSTICE STEPHENSON: Mr. Bishop, we now have before us an application to consolidate these appeals. I think Mr. Moore-Bick would take a neutral line. Do you?
MR. BISHOP: My Lord, I do not take a neutral line. As far as the appeal between Bunge and Westzücker is concerned, it has been dismissed by the court, and in those circumstances I would submit it is then rather late in the day to apply to consolidate.
LORD JUSTICE DONALDSON: The order has not been drawn up.
MR. BISHOP: I accept that it has not been drawn up, but nevertheless in everything but dotting the ‘I’s’ and drawing lines on the ‘t’s’ …
LORD JUSTICE SHAW: It is a little more than doing that, or we would not be hearing all this argument. It is all important question.
MR. BISHOP: My Lord, yes, but I am dealing purely at the moment with the question of consolidation.
LORD JUSTICE STEPHENSON: The position of the reality of the matter is that we have treated,almost by consent, the appeals as consolidated. We have been treating them really as consolidated throughout the hearing. Indeed, I have been reminded by Lord Justice Donaldson, that we asked Mr. Moore-Bick a question or two in the course of the appeal for our assistance. I do not know in what capacity he was answering unless he was answering as a party to something that was already before us. Both appeals were listed every day, although we knew that the second appeal would not come on because the argument was going to take all day, and there is an element of unreality in then not going the whole hog and making the order which we could make if they had been one and the same appeal under consolidation.
MR. BISHOP: My Lord, as far as listing was concerned, there was some difficulty about that. On one day one of the appeals was listed at 12 o’clock and one at 10.30.
LORD JUSTICE STEPHENSON: Did that happen on more than one day?
MR. BISHOP: I think it was the first day.
LORD JUSTICE DONALDSON: I have sometimes been listed in courts where I am not sitting. Solicitors do take a hand in this sort of thing.
MR. BISHOP: The point is this. As far as Bunge are concerned they agreed to have these appeals before the Board of Appeal treated together to start with because it was thought it would make things easier. If they had thought at that stage that at a later stage they would be held liable for paying the costs of all parties as a result …
LORD JUSTICE STEPHENSON: Must they not have realised they were on that risk after seeing the order we made on the previous application. You have got an unappealed order to indemnify the costs of the motion, have you not?
MR. BISHOP: My Lord, yes. As your Lordship said, and my learned friend said, I think that was done almost without any argument in respect of it.
LORD JUSTICE STEPHENSON: By consent? I am not sure.
MR. BISHOP: I do not think it was exactly by consent but I think that it was thought it could not be seriously resisted at that point. My submission is that, however they have been listed in order to help the court and help the parties save costs as far as the second appeal was concerned if the first one was dismissed, the point still remains that they are separate appeals. The appeal of Bunge and Westzücker has been disposed of as far as the question of whether the appeal succeeds or not, and they must, in my submission, remain separate appeals.
LORD JUSTICE STEPHENSON: What we propose to do is to consolidate the appeals, if it is necessary, in order that the first appeal should be dismissed with costs. The second appeal should be dismissed with costs and Bunge, the unsuccessful appellants in the first appeal, should indemnify the respondents to the first appeal and unsuccessful appellants in the second appeal, Westzücker, against the costs they have to pay the successful respondent to the second appeal, Bremer Handelsgessellschaft, and their own costs. In other words we make the same order as was made on the motion. If it is necessary for taxation purposes that we should consolidate the appeals in order for there to be a valid order, we so consolidate them.
MR. MOORE-BICK: Might I address your Lordship briefly on the question of consolidation? As I was listening to the argument I became conscious of the fact that my position on the first morning might not be one of a party but one of an officious bystander. I am a little unhappy that that might have an effect on the taxation.
LORD JUSTICE STEPHENSON: Does not what I have said avoid that risk?
MR. MOORE-BICK: There was a suggestion from Lord Justice Shaw that there might be something said by other parties who are liable to bear the cost of my attendance that there was no real reason for my being here on the first morning.
LORD JUSTICE STEPHENSON: Well, there was real reason.
MR. MOORE-BICK: I would so submit. It may be that if the appeals are consolidated in any event there would be no question. I would then have been a party from the first moment. LORD JUSTICE STEPHENSON: As I say, if it is necessary to consolidate we will treat the appeals as having been consolidated from the moment when the first appeal was called on.
MR. MOORE-BICK: I am much obliged, my Lord.
MR. BISHOP: My Lord, I am asked in those circumstances for an order that Bunge may attend on the taxation of the costs between Westzücker …
LORD JUSTICE STEPHENSON: That must be right. I do not think you need an order but if you do you shall have one.
MR. BISHOP: My Lord, the only other matter is that I would ask for leave to appeal to the House of Lords?
LORD JUSTICE STEPHENSON: We do not think that we ought to give you that leave in view of the previous decision of the House of Lords, but that does not prevent you from pursuing the matter elsewhere if so advised.
MR. MALES: May I detain your Lordships for a moment further in order to formally protect my position should my friend decide to petition.
LORD JUSTICE STEPHENSON: Leave to appeal in both cases refused.
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