KOLMAR GROUP AG V TRAXPO ENTERPRISES PVT LTD

[2010] EWHC 113 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Christopher Clarke, 01 February 2010

Sale of goods - Restitution - Economic duress - Intimidation - Laytime and demurrage - Letters of credit - Timing of obligation to provide a letter of credit - Waiver of buyer's obligation to open a letter of credit before the beginning of the shipment period

The buyer, K, claimed from the seller, T, various sums for: (i) restitution of monies extracted by economic duress; (ii) short delivery of cargo; (iii) demurrage; and (iv) shifting expenses, all arising from a transaction for the sale of some 15,000 mt of methanol FOB Kandla for shipment within September 2007. The methanol was to be of Qatari or Russian origin for sale to a US buyer which did not accept Chinese or Iranian methanol. Payment was to be at sight against an irrevocable documentary letter of credit payable against presentation of specified documents. Under the heading "Maritime Conditions" the contract provided that laytime was to commence six hours from tendering notice of readiness or when the vessel was all fast at berth whichever first occurred. Laytime allowance and demurrage rate were to be agreed upon vessel nomination, and otherwise as per Asbatankvoy. Fairchem Mustang was nominated by K and the nomination was accepted by T subject to reduced laytime. Upon inspection of T's available methanol, T found itself with insufficient methanol to cover the order at a time when the market price was rising steeply, so that it had to cover the order at a loss or somehow extract itself from the contract. On 10 September, K gave notice that Fairchem Mustang was going to arrive at Kandla on 19 or 20 September and be ready to load right away. Also on 10 September, T provided information so that the letter of credit could be set up. The next day, a draft letter of credit was sent to T for review. The letter of credit was modified several times before finalised. On 21 September, it was amended for the first time. On 27 September the vessel lost its turn in the berthing line because T had not supplied the cargo readiness documents; instead, it had on that day requested a further amendment to the letter of credit. The vessel finally berthed on 3 October. T informed K that it could not fulfil the contract at the original price and quantity. Loading began but was suspended at the orders of T. K was concerned not to incur deadfreight, and also that the ship might be turned away from its loading berth before loading had completed, and negotiated new terms for the letter of credit based on a much higher price for the methanol. On 16 October the letter of credit was amended for the seventh and final time to reflect the new price.