SAIPOL SA v INERCO TRADE SA

[2014] EWHC 2211 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Field, 20 June 2014

Sale of goods - Damages - Consequential losses - Sale of Goods Act 1979, sections 53 and 54

Inerco had sold a shipment of sunflower seed oil for human consumption in bulk fob Ilyichevsk to Saipol, in a contract incorporating FOSFA 53 and consequently FOSFA arbitration. The oil had been commingled with other parcels of oil on board Selandra Swan. Mineral oil contamination had been detected, leading to recalls of foodstuffs containing Ukrainian sunflower seed oil and a prohibition of imports. A FOSFA arbitration tribunal upheld Saipol's claim that in respect of the 3,000 mt sold by Inerco, Inerco was in breach of sections 13 and 14 of the Sale of Goods Act 1979. There remained the question of damages. The buyers claimed for consequential losses resulting from financing and storage charges and also in respect of sums paid to sub-purchasers to whom contaminated oil had been sold. It was contended that the buyers could recover in respect of the entire cargo of 16,600 mt and not only in respect of the 3,000 mt sold by Inerco. The buyers' claim was advanced under section 53(2) and section 54 of the 1979 Act. The tribunal calculated damages under section 53(3) as the difference in value of the goods due to the breach of warranty, and costs of storage and financing as damages for consequential losses. Saipol considered that it should have damages for consequential losses in respect of the full 16,000 mt, given that Inerco had contributed to the 16,000 mt with its 3,000 mt. This was the appeal against the award of the FOSFA Board of Appeal.