Bunge SA v Nibulon Trading BV

Under GAFTA rule 21(a), a tribunal may admit a time-barred claim in either of two alternative circumstances: where the circumstances were outside the parties’ reasonable contemplation and it would be just to extend time, or where one party’s conduct makes it unjust to enforce the time limit strictly. The alternatives are not cumulative.

A tribunal may exercise that discretion conditionally. Where its award, read reasonably and commercially, states that it would admit the claim if its construction of the time bar were wrong, that may amount to a valid exercise of discretion. The board of appeal cannot review a tribunal’s exercise of discretion to admit a claim where rule 21(a) makes that decision unappealable.

Bunge appealed under section 69 of the Arbitration Act 1996 from a GAFTA board of appeal award. The board had held that Bunge’s claim concerning a Ukrainian wheat contract had lapsed under GAFTA rule 4.10 because renewal notices were premature.

The tribunal had reached the opposite construction of rule 4.10 and had stated that, even if the sellers’ construction were correct, it would exercise its discretion under rule 21(a) to admit the claim. The board held that no discretion had been exercised and that, in any event, rule 21(a) permitted admission only where the circumstances were outside the parties’ reasonable contemplation.

The appeal concerned whether the tribunal had exercised its discretion and the proper construction of rule 21(a).

1. Appeal allowed and matter remitted. The board erred in law in concluding that the tribunal had not exercised its discretion under rule 21(a). The board was required to consider the merits of the sellers’ appeal from the tribunal’s award.
2. A conditional exercise of discretion is capable of being valid. Read in context, the tribunal’s statement that, if the sellers’ construction of rule 4.10 prevailed, it would in any event exercise its discretion to admit the claim was a decision to exercise that discretion conditionally. The final finding that the claim was admitted reinforced that conclusion.
3. The tribunal’s award had to be construed in a reasonable and commercial manner. The principles in MRI v Erdenet [2013] 1 Lloyd’s Rep 638 supported upholding an award where possible, but did not permit the court to give it a meaning which its authors plainly did not intend.
4. Rule 21(a) provided two alternative bases for admission. The board’s view that the only relevant basis was that the circumstances were outside the parties’ reasonable contemplation wrongly treated the alternatives as cumulative. The answer to Question (2) was therefore no.
5. Rule 21(a) provided that there was no appeal against a tribunal’s decision to exercise its discretion to admit a claim. Since the tribunal had exercised that discretion, the board could not reverse it. The board’s contrary conclusion was vitiated by errors concerning conditional decisions, the meaning of “would”, and the proper approach to construing the tribunal’s award.
6. The court declined to decide the proposed third question concerning the board’s own discretion or the possible consequences of an equivocal tribunal decision.

• High Court (Commercial Court): appeal under section 69 of the Arbitration Act 1996 allowed. The board’s award was set aside in substance and the matter was remitted for consideration of the merits of the sellers’ appeal.
• GAFTA board of appeal: allowed the sellers’ appeal from the tribunal and held that the buyers’ claim was time-barred under rule 4.10.
• GAFTA tribunal: held that the claim was admitted, including conditionally under rule 21(a) if the tribunal’s construction of rule 4.10 was wrong.