Aston FFI (Suisse) SA v Louis Dreyfus Commodities Suisse SA

An FOB buyer ordinarily has separate rights to reject documents and goods. A contractual inspection or certification procedure does not exclude the buyer’s independent right to reject non-conforming goods unless the contract does so in clear and unambiguous terms. A certificate required for payment is not necessarily determinative of contractual quality or condition. Where the contract does not make it so, the buyer’s entitlement to reject may be determined by the totality of the evidence. Contractual incorporation of standard sampling rules is subject to inconsistent express terms in the contract or incorporated tender conditions.

Aston FFI (Suisse) SA appealed under section 69 of the Arbitration Act 1996 against a GAFTA Board of Appeal award in favour of Louis Dreyfus Commodities Suisse SA. The underlying contract concerned the purchase of Russian milling wheat on FOB terms, incorporating GASC tender conditions and relevant GAFTA provisions.

The Board held that the buyer’s nominated surveyor was not GAFTA-approved and that the inspection certificate was contractually deficient. It concluded that the buyer had no official analysis supporting rejection and was in repudiatory breach. The High Court considered whether rejection required reliance on a certificate complying with the payment-document requirements and whether the Board had wrongly disregarded the totality of the evidence.

1. The appeal was allowed. The Award was set aside and the matter was remitted to the Board of Appeal to determine whether the buyers were entitled to reject the cargo in light of the totality of the evidence.
2. The contract did not require the first surveyor nominated under the GASC tender conditions to be GAFTA-approved. The inspection clause expressly referred to GAFTA approval for the buyer’s surveyor and any third surveyor, but contained no such requirement for the first surveyor. The GASC tender conditions likewise imposed no GAFTA-approval requirement.
3. The GAFTA Sampling Rules No. 124 were incorporated only so far as they did not conflict with the contract or the incorporated GASC tender conditions. Accordingly, the requirement in Rule 1.2 that superintendents be appointed from the GAFTA register did not apply to the first surveyor. Rule 10 did not make the nomination of that surveyor a relevant non-compliance.
4. An FOB buyer may ordinarily have separate rights to reject documents and goods. The contractual requirement for a compliant inspection certificate meant that the certificate was necessary for the seller to obtain payment. It did not, without more, make the certificate determinative of the goods’ quality or exclude rejection for non-conformity.
5. Exclusion of the buyer’s ordinary common-law right to reject goods requires clear and unambiguous contractual language. The contract, GASC tender conditions and GAFTA Sampling Rules contained no such language. The buyers were therefore entitled to rely on the totality of the evidence concerning contractual conformity, despite the absence of a contractually compliant certificate.
6. The Board was wrong in law to disregard that evidence. The High Court declined to determine the ultimate liability issue itself because that assessment was properly for the Board, subject to any settlement by the parties.

• High Court (Commercial Court): The court allowed the section 69 appeal, set aside the GAFTA Board of Appeal award and remitted the matter for determination in accordance with the judgment.
• GAFTA Board of Appeal: The Board had reversed the First-Tier Tribunal’s decision and found in favour of the sellers, holding that the buyers’ rejection was unsupported by a contractually compliant certificate.