R G GRAIN TRADE LLP (UK) V FEED FACTORS INTERNATIONAL LTD

[2011] EWHC 1889 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Hamblen, 20 July 2011

Sale of goods - Buyers rejecting goods and documents - Whether certificates of quality and condition final and binding - Whether buyers entitled to reject documents - GAFTA terms - Error of law

By a contract dated 1 July 2008, the claimant sellers sold to the defendant buyers 1,500 mt +/- 10 per cent in buyers' option Ukrainian origin sunflower expeller FOB Nicolayev sea port. The buyer rejected the documents and the goods. The transaction went to arbitration and the GAFTA Appeal Board awarded the buyers US$360,374.52 and £13,071.92 by way of damages and dismissed the sellers' claim for the balance of the purchase price, overturning the award of the first tier arbitrators. This was the sellers' appeal against that decision following permission to appeal granted by Teare J on 18 January 2011. The questions of law in respect of which permission to appeal was given were: (1) whether on a true construction of the contract, the certificates of quality and condition issued by the superintendent chosen by the sellers were final and binding; and (2) whether the buyers were entitled to reject the documents and the goods despite the terms of clause 5 of GAFTA No 119.