Kingspan Environmental Ltd & Ors v Borealis A/s & Anor

In an international sale of goods, the law chosen to govern the contract may also govern closely connected claims based on pre-contractual statements. The court will consider the commercial relationship as a whole and avoid allowing a tortious or statutory claim to circumvent contractual limitations.

Under the CISG, fitness for a particular purpose concerns the capability of the goods, including a raw material, to produce the required end product. It does not make the supplier responsible for matters controlled by the buyer, such as design, processing, pigmentation and quality control. A buyer alleging latent non-conformity must give notice identifying the premature failure and attributing it to a deficiency in the supplied goods.

The claimant companies manufactured oil-storage tanks from polymer supplied by the defendants. Many tanks later cracked and leaked. The claimants alleged breach of contract and misrepresentation, contending that the polymer lacked adequate ultraviolet resistance and was unsuitable for producing tanks lasting up to 10 years.

The contracts were made through invoices identifying Borealis A/S as seller and incorporating Borealis’s general terms. The principal issues were the identity of the contracting party, the governing law, the effect of contractual limitations, the application of the CISG, notice of non-conformity, and causation.

1. Contracting party and governing law. The invoices, the 2000 notification and the contractual terms objectively established Borealis A/S as seller. The contracts were governed by Danish law and were international supply contracts. The choice-of-law clause was incorporated and was not shown to have been imposed to evade the Unfair Contract Terms Act 1977.
2. Misrepresentation. The issue of liability for pre-contractual statements was sufficiently connected with the contracts that Danish law applied under sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995. Danish law afforded no independent claim in misrepresentation or negligent misstatement. Even if English law applied, the claim would fail: the relevant statements were either true, supported by reasonable grounds, insufficiently specific, not pleaded, or not shown to have caused the purchases.
3. CISG conformity. Article 35(2)(a) required Borecene to be suitable for making external oil tanks, which it was. Article 35(2)(b) required it to be capable, with reasonable adjustments, of producing suitably pigmented tanks lasting 10 years. That obligation did not guarantee every tank or transfer responsibility for design, wall thickness, pigment, processing or quality control to Borealis.
4. Causation and breach. Kingspan failed to prove that Borecene had an intrinsic or stabilisation defect causing the increased failures. The evidence instead pointed to a combination of angular designs, inadequate shot weights, failure to optimise processing, excessive wall-thickness variation, inadequate inspection and dry-blended pigment. The contractual claim therefore failed.
5. Notice and limitation. The court additionally held that a notice identifying premature tank cracking and attributing it to a deficiency in the raw material could satisfy CISG article 39. The October 2002 letter was sufficient for RM 8402; the January 2005 meeting was sufficient for RM 7402 deliveries after 19 January 2003. These findings were alternative because no non-conformity had been established.
6. Disposition. The claims failed. Any recoverable contractual liability would in any event have been limited to the invoiced price under clause 6.3.