CTI Group Inc v Transclear SA

On a section 69 appeal, a respondent seeking to uphold an arbitral award on grounds not expressed, or not fully expressed, in the award must rely on a point of law. Where the tribunal has determined the relevant issue, the court must not conduct a de novo rehearing of mixed questions of fact and law. It may intervene only where the tribunal erred in law, misdirected itself, or reached a conclusion that no properly instructed tribunal could reach. In a sale-of-goods claim, the statutory measure of damages under Sale of Goods Act 1979, section 51 is not enlarged by a separate requirement that the seller owed a duty in respect of the kind of loss suffered.

The buyers claimed damages after sellers failed to deliver cement under two f.o.b. contracts. The sellers’ suppliers withdrew because the cargo was intended to enter the Mexican cement market and challenge Cemex’s cartel. The buyers obtained substitute cargo in Russia at additional cost.

An arbitral tribunal had awarded that nothing was due, having concluded that the contracts were frustrated. In an earlier judgment, the court held that the contracts were not frustrated: [2007] EWHC 2070 (Comm). The sellers then applied, in the buyers’ section 69 appeal, to uphold the award on alternative grounds of absence of duty, causation and remoteness. The central issues were the scope of the court’s jurisdiction and whether the claimed losses were recoverable.

1. Application dismissed. The sellers failed to establish that the tribunal had erred in law in concluding that the buyers’ losses would have been recoverable if the contracts had not been frustrated.
2. Lord Hoffmann’s analysis in Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 concerned cases involving a duty of care. It did not impose an additional requirement, beyond section 51 of the Sale of Goods Act 1979, that a seller owe a duty in respect of the kind of loss claimed.
3. Where a respondent relies on grounds not determined by the tribunal, the court reaches its own conclusions, but those grounds must be points of law. Where the tribunal has rejected the grounds, the respondent must show an error of law. Mixed findings of fact and law are reviewable only if the tribunal misdirected itself or no properly instructed tribunal could have reached the result, applying the Edwards v Bairstow [1956] AC 14 test.
4. The reference to Vitol SA v Norelf Ltd [1996] AC 800 did not justify a broader right to advance grounds that were not points of law.
5. The tribunal’s findings that the sellers’ breach was an effective cause and that the losses were not too remote were within the permissible range. A further effective cause did not prevent the sellers’ breach from also being an effective cause: County Limited v Girozentrale Securities [1996] 3 All ER 834.

The judgment records an earlier decision concerning the same arbitration claim, holding that the contracts were not frustrated: [2007] EWHC 2070 (Comm). The present application sought to uphold the tribunal’s award on alternative grounds under section 69 of the Arbitration Act 1996. The application was dismissed.