Soufflet Negoce SA v Fedcominvest Europe Sarl

In construing a commercial contract, the court must begin with the wording of the document, read in the context of the contract as a whole. Grammar, punctuation and internal structure remain important. Business common sense may assist where wording is genuinely open to competing interpretations, but it is not an overriding criterion which displaces the proper construction. Under the GAFTA 64 Notices clause, the deeming provision for notices received after 1600 hours applies only in cases of resales or repurchases. It does not apply generally to every contractual notice.

The Sellers appealed under section 69 of the Arbitration Act 1996 against Appeal Award No 4328 of the GAFTA Board of Appeal. The underlying contract concerned the sale of French feed barley on FOB terms under GAFTA 64.

The Buyers served a notice claiming an extension of the delivery period at 1709 on the next business day after the contractual delivery period. The Sellers argued that the notice was deemed received on the following business day under clause 19 and was therefore out of time. The Board rejected that construction, held the notice valid, and awarded damages to the Buyers. The central issue was whether the clause 19 deeming provision applied generally or only in cases of resales or repurchases.

1. The appeal was dismissed and the GAFTA Board of Appeal’s award was upheld.
2. The starting point in contractual construction is the wording of the document. The clause must be read in the context of the relevant provision and the contract as a whole. The wording, punctuation and internal structure of clause 19 supported the Buyers’ construction.
3. The opening words of the third sentence of clause 19, referring to cases of resales or repurchases, governed the whole sentence. The reference to “any notice” in the deeming provision referred back to the notices described in the first part of that sentence. The comma before “and” did not divide the sentence into two independent provisions.
4. The wider structure of GAFTA 64 confirmed that notices in a chain of resales or repurchases had to be passed on without delay and, where necessary, within business hours. The 1600 deeming provision formed part of that scheme.
5. Business common sense and uncertainty did not justify a different construction. There is no overriding rule that the interpretation making greater commercial sense must prevail. Those considerations could not displace the proper construction reached from the language and structure of the contract.
6. The question of law was answered by holding that the words deeming a notice received after 1600 hours to have been received on the following business day applied only in cases of resales or repurchases. The Buyers’ alternative argument therefore did not require determination.

• High Court (Commercial Court): appeal under section 69 of the Arbitration Act 1996 dismissed; Appeal Award No 4328 of the GAFTA Board of Appeal upheld.
• GAFTA Board of Appeal: held that the clause 19 deeming provision applied only to resales or repurchases, that the Buyers’ notice was valid, and awarded damages, interest and costs.