On 18 February 2022, Mrs Justice Cockerill DBE handed down her judgment in Sharp Corp Ltd v Viterra BV  EWHC 354 (Comm) (February 18, 2022) dismissing the appeal brought by Sharp Corp Limited (“Buyers”) under section 69 of the Arbitration Act 1996 concerning two arbitration awards made by the Gafta Board of Appeal in arbitration proceedings between the Buyers and Viterra B.V. (“Sellers”) under which the Buyers were ordered to pay default damages to the Sellers.
In their section 69 application, the Buyers argued that the Board of Appeal had erred in its approach to the default clause of Gafta Contract No 24 (the “Default Clause”) when assessing the default damages owed by the Buyers to the Sellers. In particular, the Court was asked to decide whether “the actual or estimated value of the goods, on the date of default” under sub-clause (c) of the Default Clause was to be assessed by reference to the market value of the goods at the discharge port where they were located on the date of default or the theoretical cost of buying those goods on Free on Board (“FOB”) terms at the original port of shipment plus the market freight rate for transporting the goods from that port to the discharge port free out.1
In essence, the question was whether “goods” in the context of sub-clause (c) of the Default Clause meant “goods of the description sold on the terms on which they were sold” or “goods at the market where these goods could have been sold”.2
The Court confirmed that for the purposes of assessing default damages under the Default Clause the correct approach to valuing goods on the date of default was to value the goods based on the same terms and conditions as those of the original contract under which there was a dispute between parties (i.e. a “like for like” sale).
Reed Smith and Michael Collett QC of Twenty Essex represented the successful Sellers. It remains to be seen whether Mrs Justice Cockerill DBE will grant the Buyers permission to appeal to the Court of Appeal.