Soufflet Negoce SA -v- Fedcominvest Europe SARL [2014]
Important ruling on time of receipt of notices given under GAFTA Notices Clause
In December 2010 a dispute arose between the parties as to the interpretation of the Notices Clause in the GAFTA 64 Form. The relevant wording of the Clause was:
'In case of resales/repurchases all notices shall be served without delay by sellers on their respective buyers or vice versa, and any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following.'
The original delivery period under the contract was 10 November to 10 December 2010. The last day was a Friday and it was common ground that the next business day following the last day of the delivery period on which any notice claiming extension under Clause 8 had to be served was Monday 13 December. Buyers Fedcominvest tendered a notice claiming extension at 17:09 on 13 December.
Sellers Soufflet argued that because of the above provision of the Notices Clause, Fedcominvest's notice, tendered after 16:00 hours on 13 December, was deemed received on 14 December. It had therefore been tendered too late to claim extension.
Fedcominvest maintained that the 16:00 hour cut-off applied only in the case of resales/repurchases. Fedcominvest were buying FOB and selling CIF: this was therefore not a case of resale or repurchase and, accordingly, Fedcominvest had until midnight on 13 December to claim extension.
The First Tier Tribunal and the Board of Appeal agreed with Fedcominvest. Soufflet appealed to the High Court on a point of law, asking:
'In clause 19 of GAFTA 64, do the words "any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following" apply to all contracts or only in case of resales/repurchases.'
In his judgment of 18 July 2014, Mr Justice Eder found that these words 'do not apply to all contracts but only in case of resales/repurchases'. He therefore upheld the Board of Appeal's award in favour of Fedcominvest.
Soufflet have decided not to appeal the judgment.
This judgment will be of interest to the trade, given the widespread use of the GAFTA Notices Clause in trade contracts. Any parties who do not wish this judgment to apply, will now need to ensure that specific wording in their contracts addresses the issue of when a notice is deemed to have been received.
A brief note on the evolution of the GAFTA Notices Clause
The interpretation of the Notices Clause by the GAFTA tribunals and the judge may come as a surprise to those who have been using GAFTA contracts since before 2003. A radical change in the Notices Clause took place in that year. In 2000, for example, the relevant part of the Notices Clause had read:
'Any notice received after 16:00 hours on a business day shall be deemed to have been received on the business day following. In case of resales all notices shall be passed on without delay by Buyers to their respective Sellers or vice versa.'
However, in 2003, the wording changed fundamentally to the wording set out at the start of this article. It was Fedcominvest's view that the pre-2003 wording had reflected Soufflet's interpretation of the clause, but that in 2003 there had been a conscious and deliberate change, and that the new wording reflected Fedcominvest's interpretation.
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