Papas Olio JSC v Grains & Fourrages SA & Anor [2009] EWCA Civ 1401

[2009] EWCA Civ 1401Case No A3/2009/1367
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION COMMERCIAL COURT
Gross J
2008 Folio 754
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 18/12/2009
Before
LORD JUSTICE MUMMERYLORD JUSTICE RICHARDSLORD JUSTICE TOULSON
Between
PAPAS OLIO JSCAppellant(1) GRAINS & FOURRAGES SARespondents(2) FEDERATION OF OILS SEEDS AND FATS ASSOCIATIONS LIMITEDRespondent(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)Steven Thompson (instructed by Michael Robinson) for AppellantJohn Russell (instructed by Hill Dickinson LLP) for First RespondentsHearing Hearing date: 16 December 2009
Judgment

Introduction

[1]This appeal arises from a first tier FOSFA arbitration award made in favour of the first respondent, G & F, against the appellant, Papas. Papas sought to appeal to FOSFA’s Appeal Panel, but its notice of appeal was rejected by FOSFA as being out of time. Papas applied to the Commercial Court for a direction under s18 of the Arbitration Act 1996 that FOSFA should appoint an appeal tribunal to hear its proposed appeal. FOSFA took no part on the hearing of the application and is taking no part in the hearing of this appeal, its position being that it is content to abide by the order of the court. Gross J agreed with FOSFA’s view that the proposed appeal was out of time and dismissed Papas’ application. Papas appeals against that decision. FOSFA Rules of Arbitration and Appeal[2]The relevant provisions are as follows:
“6. PROCEDURE FOR ARBITRATION AWARDS (b) When an award has been signed it shall be the duty of the arbitrators…to lodge the original and one copy with the Federation who shall date them and give notice to the parties named in the award that the award is at their disposal upon payment of the fees and expenses of the arbitration. Such payment must be received by the Federation within 42 days of the date of the award or the parties shall forfeit their right to appeal against the award under Rule 7. On receipt of payment, the Federation shall immediately send the original award to the party who has paid and send a copy of the other party… 7. PROCEDURE FOR CLAIMING APPEAL AND TIME LIMITS (a) Any party to an award of arbitration shall have the right to appeal to the Appeal Panel of the Federation provided that payment of the fees and expenses of the arbitration was made to the Federation within 42 days of the date of the award as per Rule 6(b) and that notice of appeal is received by the Federation not later than 12.00 hours on the 28th consecutive day after the date on which the award is sent to the parties, in accordance with Rule 6(b). … (e) Should it not be possible to perform any of the foregoing acts within the time limits stipulated, application may be made to the Federation for an extension of the time limit, which extension may be granted at the absolute discretion of the Federation. 11. GENERAL (b) Any notice may be delivered personally or left at the place where the party to whom it is to be delivered is carrying on business or (by reason of the provisions of the contract) is to be considered to be carrying on business. A copy shall be delivered to the Federation. ”

THE ARBITRATORS’ AWARD

[3]The dispute concerned the existence of a contract for the purchase of Bulgarian sunflower seeds by G & F from Papas.[4]The arbitrators found that in early October 2006 brokers, Vicorus SA, on behalf of G & F contacted potential sellers and brokers in Bulgaria, including Papas. In the ensuing negotiations Papas was represented by its broker, Mr Nikolay Kostov. On 8 November 2006 at a meeting between Mr Kostov and G & F’s executive director it was orally agreed that G & F would purchase 1000 metric tonnes for delivery in November 2006 and 2000 metric tonnes for delivery in December 2006 at a price of US $258 per metric tonne (excluding $1 per metric tonne commission to Mr Kostov).[5]The arbitrators stated in their award:
“1.6 On the basis of this Agreement Vicorus issued a Contract Confirmation dated 9 November 2006 with a Contract Reference of VCH-81116-61206.”
[6]The arbitrators further found:
“5.3 On the basis of the evidence before us WE FIND THAT the Contract was entered into on the following material terms: SELLER Papas Olio JSC of Sofia Bulgaria BUYER Grains and Fourrages SA of Geneva Switzerland COMMODITY Bulgarian Black Sunflower seeds suitable for extraction crop 2008 QUANTITY/DELIVERY 1000 MT 5% more or less at Sellers’ option and at contract price – November 2006 2000 MT 5% more or less at Sellers’ option and at contract price – December 2006 PRICE US $258.00 per metric tonne delivered at Frontier Svilengrad (Bulgarian/Turkish border) by rail cars GENERAL TERMS All other terms and conditions as per FOSFA 4A when not in contradiction with the above ARBITRATION In London in accordance with the FOSFA Rules of Arbitration and Appeal 5.4 By virtue of the incorporation of the FOSFA Rules of Arbitration and Appeal the juridical seat of the Arbitration is London 5.5 Whilst the above written contract was established at US $258.00 we are satisfied that this did not include the US $1.00 payable by Sellers to the Vicorus and therefore the contract price was US $259.00”
SELLER Papas Olio JSC of Sofia Bulgaria BUYER Grains and Fourrages SA of Geneva Switzerland COMMODITY Bulgarian Black Sunflower seeds suitable for extraction crop 2008 QUANTITY/DELIVERY PRICE US $258.00 per metric tonne delivered at Frontier Svilengrad (Bulgarian/Turkish border) by rail cars ARBITRATION In London in accordance with the

FOSFA Rules of Arbitration and Appeal

[7]The terms set out in paragraph 5.3 of the arbitrators award were taken verbatim from the contract confirmation, but omitted matters obviously not considered by the arbitrators to bear on the issues which they had to decide. The full document included addresses of the parties. The seller was described as “Papas Olio JSC, 23 Sitnjakovo Blvd. 1606 Sofia Bulgaria”.[8]Papas took no part in the arbitration. Its position in correspondence, first articulated in a letter dated 1 December 2006, had been that the negotiations had never resulted in the conclusion of the contract. The arbitrators found that this letter was a repudiatory breach and awarded G & F the sum of US $195,000, representing the difference between the contract price and the market price on the date at which Papas’ repudiation had been accepted by G & F as terminating the contract.

Procedural history

[9]The explanation for the address shown for Papas on the contract confirmation was that this had been Papas’ address at the time of a previous contract between the same parties made in early 2005, but from post-award correspondence between Papas and FOSFA it appears that Papas moved from that address in April 2005.[10]The award was dated 7 September 2007. On the same day FOSFA wrote to the parties notifying them that the award was now available and reminding them of the rules about appeal. The letter to Papas was sent by mail to its previous address and also by fax. Gross J noted that there was no dispute that the faxed version of the letter was received by Papas. Papas did not alert FOSFA to the fact that its address had changed. It ignored the communication altogether.[11]G & F paid the fees for the award and on 12 September 2007 FOSFA posted copies to both parties. The copy for Papas was sent to its previous address, and Gross J accepted that he must conclude on the evidence before him that it was not received.[12]It is G & F’s case that 12 September 2007 was the date on which the award was sent to the parties within the meaning of rules 6(b) and 7(a), causing the time for appeal to start to run, and that it is nothing to the point that the document was not received by Papas, although that would have been relevant to an application for an extension of time under rule 7(e). It is Papas’ case that its time for appeal did not start to run until it received a copy of the award, which was not until 16 November 2007.[13]On 8 October 2007 solicitors for G & F sent a fax to Papas, drawing attention to the outcome of the arbitration and calling for payment of the sums found due to G & F. The fax was ignored by Papas.[14]On 16 October 2007 G & F’s solicitors wrote to FOSFA asking it to post Papas on its blacklist. The letter was copied to Papas by fax.[15]On 15 November 2007 Papas sent a fax to FOSFA stating disingenuously that it was a “shocking surprise for us to be informed by participants in the oil-bearing seeds market that the Arbitration Court at FOSFA has issued against our company Arbitration Award Number 3994DD07Sept2007 ruling us to pay a default for damages arising from a contract that we have neither concluded nor signed at all”.[16]On the following day FOSFA replied to Papas by fax sending a copy of the award and noting the difference between the address as shown on the heading to Papas’ letter and the address to which FOSFA had previously been corresponding.[17]On 7 December 2007 Papas issued a notice of appeal. FOSFA ruled that the notice was out of time. The issue before Gross J and this court is whether it was right to do so.

Gross J’s judgment

[18]Gross J said that, without deciding the point, he was content to proceed on the assumption that it was incumbent on FOSFA, when sending the award to the parties pursuant to Rule 6(b), to send it to one of the places specified in Rule 11(b), and that unless and until it did so time for appeal did not start to run under Rule 7(a). On the facts, the requirements of Rule 11(b) could only be satisfied if Papas’ previous address was a place where “by reason of the provisions of the contract” it was “to be considered to be carrying on business”.[19]Gross J was also prepared to assume, without deciding, that the sale contract was an oral contract. But he held that the wording of Rule 11(b) is apt to embrace a document which either contains or evidences the terms of the contract in question. He also concluded that the information about Papas’ address was provided by the contract. As he put it, “the information as to the address is derived from, or appears by reason of, the provisions of the contract”.[20]The judge went further and considered an argument advanced by Mr Thompson for Papas that Rule 11(b) should be interpreted as incorporating a requirement of reasonableness. Mr Thompson formulated the test as being whether the previous address was “a place which a reasonable person, considering the provisions of the contract in question, would consider on 12 September 2007 was a place from where Papas was carrying on business”. Gross J said that assuming, without deciding, that the reformulation was warranted, he had no hesitation in answering the question in the affirmative.

Grounds of appeal

[21]Mr Thompson submitted that the expression “provisions of the contract” meant terms of the contract and that the judge was wrong to give it a wider meaning. The arbitrators did not find that the parties’ addresses were terms of the contract. Moreover, as a matter of general principle, the identity of a party to a contract is fundamental but its address is not. The address may be an aid to identification but is no more than that. The arbitrators adequately described the identity of Papas in their award as “Papas Olio JSC of Sofia, Bulgaria”.[22]Mr Russell submitted that the provisions of Rule 11(b) about delivery of notices are permissive, rather than mandatory, and should in any case not be read over into the provisions of Rule 6(b) about the sending out of an award. If, however, the award had to be sent to a place which would fall within Rule 11(b), he submitted that the judge was right to conclude that Papas’ previous address was a place where it was “by reason of the provisions of the contract… to be considered to be carrying on business”. In his submission the contract confirmation was a contractual document. The arbitrators referred to the contract as a written contract. Furthermore, the Arbitration Act under which Papas’ application to the court was made applies only where the arbitration agreement is in writing or evidenced in writing (s 5). In this case the arbitrators found that the parties entered into an oral contract about the essential matters (i.e. subject matter, quantity, price and delivery), but the provision about arbitration was to be found solely in the contract confirmation. It followed that FOSFA’s understanding about Papas’ address was derived from the contract.

Discussion

[23]I agree with Mr Russell’s submission that Rule 11(b) is not aimed at the provision of Rule 6(b) about FOSFA sending copies of the award to the parties. The rules contain a number of provisions about one party giving notice of something to another and time limits for doing so, there being different time limits for notifying different types of claim. The first sentence of Rule 11(b) is permissive - “Any notice may be delivered…” - and allows different means of delivery to “the party to whom it is to be delivered”; the second sentence is mandatory and requires delivery of a copy of the notice to FOSFA. Read as a whole, it does not make sense to try to apply the paragraph to FOSFA itself. It would not make sense to require FOSFA, when delivering a notice to a party to an arbitration, to deliver also a copy to itself.[24]By contrast, the relevant part of Rule 6(b) is not concerned with the delivery of a notice under the rules but with the sending out of an award. Sending is different from delivery and an award is different from a notice under the rules. The provisions have different objects.[25]I would accept that it is implicit in the obligation of FOSFA under Rule 6(b) to “send the original award to the party who has paid and send a copy to the other party” that the award or copy should be sent to an address which FOSFA reasonably believes to be appropriate for the party concerned. In this case FOSFA did so. Not only was the address as shown in the contract confirmation, but FOSFA’s letter of 7 September 2007 notifying Papas that the award was available had been faxed to it as well as sent to the previous address and the faxing had been successful. FOSFA was reasonably entitled to suppose that if the address was inaccurate Papas would inform it.[26]It is therefore unnecessary in my view to address the question whether at the time of the sending of the award Papas was reasonably to be considered to be carrying on business at its previous address by reason of the provisions of the contract. It was enough that FOSFA reasonably considered the address to be Papas’ address.[27]However, if it had been necessary, I would agree with the judge’s conclusion that Papas was to be considered as carrying on business at that address by reason of the provisions of the contract. According to the arbitrators’ award, the contract incorporated all the terms and conditions of FOSFA 4A (when not in contradiction with the express terms of the contract confirmation) and the FOSFA Rules of Arbitration and Appeal. A contract which incorporates written terms is by definition not a purely oral contract. The contract was therefore either a written contract or partly oral and partly written.[28]It is commonplace in commercial life, particularly in markets where the use of standard forms of contract is common, for parties to agree on all the essential terms necessary to bring about the conclusion of an oral contract and for the oral contract then to be followed by a written document, often described as a confirmation or recap, which will not only set out the essential terms but other terms common in the market. If there is no comeback from the other party, it may be easy to infer assent. The situation would be very different if there was no prior oral contract. Where the oral contract is followed by a written confirmation setting out fuller terms to which the other party is judged by the fact finder to have assented, it is of no practical importance whether the situation is analysed as the parties as having entered into a partly oral and partly written contract or as having entered into a written contract. Probably the better analysis is that the written document fulfils a dual function; it both confirms evidentially the making of the oral agreement but also supersedes the oral agreement in that it provides a document to which the parties thereafter look as the expression of their bargain. That is how the arbitrators appear to have viewed the present case, for having set out the oral agreement reached on 8 November 2006 they went on to refer to the parties having a written contract.[29]However, whether the contract confirmation was a contractual document (as I consider it to have been) or was a written expression of the parties’ agreement (as the judge was prepared to accept for the purposes of argument), it identified Papas’ previous address as its address and I agree with the judge that it is ultra-legalistic to argue that it was not reasonable to consider that this was Papas’ address from the provisions, i.e. contents, of the contract. A contract may recite matters which are not obligations but are by way of preamble or description. In the context of the rules with which we are concerned, I would interpret the “provisions of the contract” as including the information about the parties’ addresses because it is sensible to do so. It is unlikely to be a requirement of the contract for the purchase of oilseeds that the buyer or seller is to carry on business at a particular address, but the contract is very likely to contain a statement of each party’s address. It makes sense that FOSFA should be entitled to take each party’s address from the contract documents when sending out the award.[30]At the end of his judgment Gross J recorded that he had reached his conclusion without regard to any questions of so-called prejudice, unfairness or merits, but he added that he did not regard the outcome as in anyway unfair. I agree and would go further. If this appeal were to be allowed, it would be a victory for the narrowest formalism over sensible commercial interpretation of rules intended to provide a swift, fair and businesslike means of resolving disputes in the oilseeds market.[31]I would dismiss the appeal.[32]I agree.[33]I also agree.

Cited in 1 later judgment