Laysun Service Co Limited v Del Monte International GmbH  EWHC 699 (Comm)
The Claimant Owners (“Laysun”) sought to appeal an arbitration award in favour of the Defendant Charterers (“Del Monte”) under section 69 of the Arbitration Act 1996, on the basis that the Tribunal had erred in its findings on issues of law.
The appeal was dismissed as the Court found that in substance Owners were seeking to attack the arbitrators’ findings of fact.
The background facts
On 29 December 2017 Laysun and Del Monte entered into a Contract of Affreightment (COA) for the carriage of refrigerated bananas from the Philippines to Iran during 2018 calendar year. The COA provided for 36 voyages.
The cargo was sold on by Del Monte to its UAE sister company, who sold it on to two further companies who in turn sold it on to Cargo Receivers in Iran. After 17 shipments, Del Monte ceased providing bananas for shipment relying on the force majeure in the COA. Owners sought to recover their losses for the outstanding shipments.
Reliance was placed on the relevant clause 8 on the following two grounds:
US sanctions on Iran, enforced in May 2018, made it impossible to make payments from Iran; thus, payments could not be made up the chain from Cargo Receivers to Charterers (“Payments Issue”) and
It was impossible to import bananas into Iran due to the imposition by the Iranian Government, between April 2018 and at least June 2018, of various restrictions on import permits (“Import Permits Issue”).
On the Payments Issue, the Tribunal found as a matter of fact that Charterers sister company registered in the UAE was unable to receive payments from those down the chain based in Iran, as no bank in the UAE would accept Iranian payments. Thus, Charterers in turn could not be paid.
On the Import Permits Issue, the Tribunal found as a matter of fact that it became impossible for Charterers to deliver bananas during 2018 down the chain to their customers on account of the Iranian Government ceasing to issue new import permits. Further that Charterers could not find alternative customers in time to perform all the agreed shipments under the COA.
Clause 8 of the COA reads (so far as material):
"8.1. A force majeure event means, in relation to either party, any circumstances beyond the reasonable control of that party that prevents such party, practically or legally, from performing any or all of its obligations under this Agreement, including, without prejudice to the generality of the foregoing:-
8.1.1.any act or change thereof, law, regulation, order or policy of any governmental or supranational authority, governmental interruptions of any applicable country including trade or import/export restrictions or the revocation or non-renewal of trading licenses;
…8.2 Neither party will be in breach of this Agreement due to a force majeure event provided that such event is not due to the fault or negligence of such party and the effect of which could not have been avoided by taking appropriate and reasonable measures and such party has promptly notify the other party of such event.
8.3 Party affected by a force majeure event will use all endeavours to mitigate the effect of the force majeure event to carry out its obligations under this Agreement in any way that is reasonably practicable and to resume the performance of its obligations as soon as reasonably possible.
8.4 In the event of force majeure affecting either the Owner or the Charterer the Owner has the right to reduce the committed volume set forth in Clause 3 and/or the Charterer has the right to request a reduction in volume in proportion to the quantity of Fruit affected by the force majeure event."
The Tribunal found that clause 8 was engaged and that Charterers were unable to perform their obligations under the COA due to the two issues. In addition, it was impossible for Charterers to do anything reasonably practicable to mitigate their loss.
Laysun appealed under section 69 of the Arbitration Act 1996 on the basis that the Tribunal had made a mistake in law.
The Commercial Court decision
Owners were attempting to attack factual findings which could not be re-opened; their appeal was doomed to fail as it was constructed on a false factual premise and even then, impermissibly sought to challenge the Tribunal’s findings of fact.
Thus, no errors of law were established by Owners and the appeal was accordingly dismissed.
This judgment was no doubt a costly lesson for Owners and is a stark reminder that appeals based on findings of fact, propounded as issues of law, will not be permitted by our Courts.