BUNGE SA V NIDERA BV

[2015] UKSC 43, Supreme Court, Lord Neuberger, President, Lord Mance, Lord Clarke, Lord Sumption and Lord Toulson, 1 July 2015

Sale of goods - Wrongful repudiation - GAFTA clauses - Scope of GAFTA Default Clause - Parties agreeing by sale contract to export wheat from Russia - Ban of export of wheat - Whether GAFTA clause excluded common law principles, notably the principle of mitigation and the compensation principle - Whether overriding compensatory principle limited to instalment contracts - Anticipatory repudiatory breach - Liability - Quantum of damages

On 5 August 2010, the same day that a vessel was nominated to take delivery of the quantity of wheat that the parties had agreed to export from Russia, the Russian government published a decision to ban the export of wheat. The sellers renounced the contract considering it thereby automatically cancelled according to the GAFTA Prohibition Clause. The buyers disputed this, arguing that sellers were in repudiatory breach. The sellers offered to reinstate the contract, which buyers rejected, opening themselves to accusations of failing to mitigate. The first-tier GAFTA arbitrator found for the sellers but declined to award substantial damages as the contract would later have been cancelled in any case. The GAFTA Appeals Board agreed with the buyers that the export ban did not give rise to automatic cancellation and that it might have been lifted before the expiry of the delivery period, enabling performance. Upon the sellers' appeal, Hamblen J agreed with the buyers that a causal connection was required. The Court of Appeal dismissed the appeal. The sellers appealed to the Supreme Court.