Moeve Trading SAU v Mael Trading FZ LLC

1. On 4th April 2024, the Claimant as seller (“ the Seller ”) and the Defendant as buyer (“ the Buyer ”) entered into a contract (“ the Sale Contract ”) for the sale of 9,000-9,500 metric tons of gasoline and 5,000 metric tons plus 5% of gasoil, both quantities in the Buyer’s option (“ the Cargo ”), for delivery FOB Algeciras, Spain.

2. By 12th July 2024, the Cargo was shipped on board the vessel the Harbour Progress (“ the Vessel ”). Bills of lading were issued for the Cargo.

3. One week later, the Vessel arrived at Freetown, Sierra Leone, and tendered a notice of readiness. The Cargo was discharged and received by or to the order of the Buyer, save for a portion of the Cargo which had been effectively liened by the shipowner.

4. Under the terms of the Sale Contract, the Buyer acquired property in the Cargo upon shipment.

5. The Sale Contract provided that the purchase price, which was calculated to be US$13,031,741.54, was to be paid upon presentation of the shipping documents, including the issued bills of lading. Furthermore, the Sale Contract provided for the issue of letters of credit.

6. On 21st June 2024, JP Morgan Chase Bank NA (“ the Confirming Bank ”) confirmed the issue of two letters of credit (“ the Letters of Credit ”) in favour of the Seller by the Bank of Africa United Kingdom plc (“ the Issuing Bank ”).

7. In September-October 2024, the Seller presented documents for payment under the Letters of Credit. The Issuing Bank refused to pay under the Letters of Credit. There is no evidence before the Court as to whether the Issuing Bank was or was not entitled to refuse to pay under the Letters of Credit.

8. In these circumstances, where the Buyer has acquired title to the Cargo, the Seller sues for the price pursuant to section 49(1) of the Sale of Goods Act 1979 . The Buyer admits that it has not paid the purchase price and, during the hearing, confirmed that “ In this case title has passed ”.

9. The Seller applies for summary judgment, pursuant to CPR rule 24.3, on its claim for the price. The Buyer resists the application on the grounds that it had discharged its payment obligations under the Sale Contract by arranging the issue of the Letters of Credit and that, in any case, it is not liable for the purchase price because the relevant shipping documents have not yet been handed over to the Buyer.

10. Originally, the Buyer also resisted the claim for the price on the additional ground that it had its own claim for demurrage and damages for delay at the loadport, and that that claim could be set-off against the Seller’s claim for the price, but the Buyer now accepts that such a set-off is not available by reason of the terms of the Sale Contract. Nevertheless, an issue as to the legal entitlement of the Buyer to claim such demurrage and damages arose during the hearing of the application for summary judgment. The Sale Contract

11. The Sale Contract contained the following provisions: “…

3. Price and payment : As per section 33 of the Cepsa Trading 2021 GT&C’s … 3.2. Payment terms: The Buyer shall, at its expense, pay the agreed price in U.S. Dollars in immediately available funds in full (without any deduction, set-off, counterclaim, withholding of taxes or duties and/or any discount associated with the transfer of funds or any other charges) to the bank account designated by the Seller, by electronic transfer latest SIXTY (60) CALENDAR DAYS AFTER BILL OF LADING (B/L DATE = 0). 3.3. Credit terms: Buyer to open an irrevocable (and confirmed, if necessary, at Seller’s sole discretion) Documentary Letter of Credit based on Seller’s wording to cover the total cargo amount through a first-class international bank acceptable to Seller. The irrevocable Documentary Letter of Credit shall be received from the confirming and/or advising bank, and accepted by the Seller, in order to be considered valid latest five (5) working days before the first day of loading laycan. Each of the issuing bank and the advising bank, as well as the confirming bank (if necessary), must be acceptable to Seller …

4. Delivery : As per sections 2, 9, 14, and 21 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm). 4.1. Applicable Incoterm: FOB 4.2. Loading Port: ALGECIRAS (SPAIN) 4.3. Loading Port Laydays: 16TH APRIL 2024 / 17TH APRIL 2024 (both dates included) 4.4. The Product sent under this Sales Contract will not be delivered to Russia/Belarus.

5. Vessel, Laytime & Demurrage : 5.1. Vessel’s Nomination: As per sections 5, 12 and 19 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm). 5.2. Laytime: As per sections 7, 15 and 22 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm). 5.3. Demurrage rate: As per Charter Party’s rate. 5.4. Demurrage other terms, conditions and exceptions: - Terms, exceptions and conditions as per GTC´S. - In case of T/C vessel, demurrage rate to be agreed upon vessel nomination as per market conditions …

6. Quality and Warranty of title: … 6.2. Risk and title shall be transferred as defined per the agreed Incoterm/Delivery term and always in accordance with sections 3, 10, 17 and 25 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm) …

7. Documentation: 7.1. The Seller to provide to the Buyer the documents specified herein below in Clause 7.2 and, if not, the documents provided for under section 33 of the Cepsa Trading 2021 GT&C’s. 7.2. Other specific documents: None …

9. Liability, Limitations and Exclusions of Liability: As per section 39 of the Cepsa Trading 2021 GT&C’s. 9.2. In the event of any liability by the Seller whether arising from breach of contract or from statutes it is agreed that the maximum amount of damages recoverable shall be limited to the difference between the Sales Contract agreed price and the market price for the affected Product. The Seller shall not be liable for loss of profit and/or wasted overheads resulting from the shut-down or reduction of production in refinery or process plant …”

12. The Cepsa Trading 2021 General Terms and Conditions (“ the GT&Cs ”), referred to in the Sale Contract, contain the following provisions: “ PART ONE: FOB SALES …

2. DELIVERY 2.1. The Product shall be delivered by the Seller to the Buyer in bulk Free on Board (FOB) to the Vessel to be provided or procured by the Buyer at the Loading Port designated by the Seller …

3. RISK AND TITLE 3.1. Risk and Title: Notwithstanding any right of the Seller to retain documents until payment is effectively made, title in the Product, and all risks and all liabilities with respect thereto shall pass to the Buyer when the Product passes the flange connection between the delivery hose of the Loading Port and the permanent hose connection of the Vessel at the Loading Terminal, at which point of delivery the Seller´s responsibility with respect to the Product shall cease and the Buyer shall assume all risk of loss or damage to, including but not limited to, deterioration or evaporation of the Product so delivered …

6. ARRIVAL OF VESSELS, LOADING BERTHING AND OTHERS … 6.2. Loading: Provided that the Vessel has arrived in accordance with section 6.1 and tendered a valid NOR, and unless otherwise agreed in writing by the Seller, the Seller shall be under no obligation to commence loading hereunder prior to 06:00 hours (local time) or the first operation hour of the Loading Terminal according to its own regulations or any other specifically agreed hour (whichever first occurs) on the first day of the Laydays …

7. LAYTIME AND DEMURRAGE … 7.2. Time allowed to the Seller for loading a full or part cargo shall be thirty-six (36) running hours, weather permitting, Sundays and holidays included unless loading on the Sunday or holiday in question is prohibited by Law or Regulation at the Loading Port … 7.14. Notwithstanding the foregoing provisions, the Seller shall not be liable for Demurrage hereunder unless the Seller is notified in writing of the claim within forty-five (45) calendar days from the date of the Bill of Lading and the fully documented claim is received by the Seller within ninety (90) calendar days from the date of the Bill of Lading. If the Buyer fails to comply with the above, all claims regarding Demurrage shall be deemed to have been waived by the Buyer and they shall be absolutely and finally time barred as a result and no claim may be brought in respect of them … 7.17. The Seller shall not be liable (other than for Demurrage, as specified herein) for any loss or damage, direct or indirect, which the Buyer may suffer as a result of the shipment not being loaded within the time allowed. The sole remedy for delay of the Vessel available to the Buyer will be Demurrage according to this section 7, and damages for detention are expressly excluded … PART FIVE - GENERAL PROVISIONS APPLICABLE TO ALL SALES …

27. DEFINITIONS The following words shall have the following meaning except when the context otherwise requires: … (j) Charter Party: means the contract of affreightment of the Vessel … (t) Laytime and Demurrage: mean, respectively, the time agreed between the Parties or set forth in these Cepsa Trading 2021 GT&C’s during which the Vessel will be available for loading or discharging without payment of demurrage, and the agreed amount payable to the Vessel in respect of non-permitted or excepted delay beyond the Laytime …

33. PAYMENT 33.1. Unless otherwise agreed to by the Seller and the Buyer in the Sales Contract, payment shall be made by means of an irrevocable Documentary Letter of Credit or Stand-by Letter of Credit opened or confirmed by a First-class international bank approved by the Seller, in the form set out, as applicable, in Annex A or Annex B. 33.3. Payment shall be made in full in US Dollars, or in any other agreed currency, without discount, deduction, withholding, offset or counterclaim against presentation, at or before the payment date defined in each Sales Contract, of the commercial invoice together with documents referred to in Annex A or Annex B, or, in their absence, together with the Seller´s Letter of Indemnity (LOI) set out in Annex C. For both, the Seller’s digital commercial invoice and digital LOI shall be acceptable. … 33.6. The Letter of Credit shall take effect in accordance with its terms, but such terms shall not alter, add or in any way affect the terms of the Agreement, or any of them. If the Buyer does not provide the Letter of Credit on or before the third (3rd) Business Day prior to the first day of the agreed Laydays, or, in the case of CIF / CFR with Indicative Discharge Dates, on the third (3rd) Business Day prior to loading, the Seller may immediately terminate the Sales Contract forthwith without prejudice to any rights and/or remedies that the Seller may have. In no event shall the Seller be obliged to commence or complete loading until six (6) hours after the said Letter of Credit is opened and notified in writing to Seller by the opening or advising bank, as applicable, including the complete wording in a form acceptable to Seller, such acceptance shall not be unreasonably withheld. Any delay, costs and damages whatsoever arising from the failure of the Buyer to open the Letter of Credit as provided for shall be for the Buyer´s account. 33.7. If for any reason the Buyer does not comply with the terms of payment contained in this section 33 or any other payment provisions substituted for this section 33 duly agreed by the Parties, then, and without prejudice to the rights of the Seller to receive payment under this section 33 or otherwise, title, but not risk to the Product shall remain vested in the Buyer, and the Seller shall have a right of lien to the Product delivered until the Buyer has fulfilled its obligations hereunder. In the event that the Product has been commingled with other Products on board the Vessel, the Seller shall have the right of lien to such part of commingled Product as corresponds to the Quantity and Quality of the Product delivered under the Sales Contract. In addition the Buyer undertakes at its own cost to order the discharge of the Vessel exclusively to a party notified by the Seller to the Buyer; and in all cases, the Seller may at any time by notice to the Buyer, without prejudice to any other legal remedies the Seller may have and without any liability whatsoever for any cost, loss or damage (including liabilities to third parties) incurred by the Buyer, forthwith cancel delivery of all or any shipments or withhold delivery of the Product under the Agreement and/or release of shipping documents or LOI. 33.8. If for any reason whatsoever the Buyer fails to make any payment due to the Seller under this Agreement on or before the due date for payment, then, without limiting the Seller’s remedies under any termination right or clause, interest shall accrue on the overdue amount at the rate of 3% per annum above one month LIBOR (the London Interbank Offered Rate Administered by Ice Benchmark Administration Limited (or any other person which takes over the administration of that rate)) currency and period displayed on pages Libor01 or Libor02 of the Reuters screen (or any replacement Reuters page which displays that rate)) from time to time. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount to the Seller, whether before or after judgment, and will be immediately payable by the Buyer on demand by the Seller. If such rate or page ceases to be available, the Seller will notify the Buyer of the applicable rate or page as per market standard practice. 33.9. Payment Documents: Save otherwise agreed in the Sales Contract the Seller will only be obliged to produce the following documents to receive payment: 33.9.1. In the case of FOB, CFR or CIF deliveries by Vessel: (a) the Seller’s digital copy of the commercial invoice; and (b) three (3) original Bills of Lading issued or endorsed to the order of the Buyer; and (c) original or digital copy, as available, of the certificate/s of Quantity, Quality and origin (or equivalent documents issued at the Loading Terminal). In case that the documents defined in (b) and (c) are not available for presentation to the Buyer on or before the payment due date, the Buyer agrees to pay the Seller upon presentation to the Buyer of a LOI as per Annex C …

39. LIABILITY AND LIMITATIONS AND EXCLUSIONS OF LIABILITY … 39.3. The Seller shall not be liable for consequential, indirect or special losses/damages of any kind arising out of or in any way connected with the conclusion, the performance, the failure to perform or the termination of the Sales Contract. In particular and without limiting the generality of the foregoing, the Seller shall in no circumstances be liable for more than the difference between the market price and the contract price with respect to the relevant Quantity of Product, nor be liable for any loss of profit, cost of overheads thrown away or loss resulting from shutdown of any plant of the Buyer due to the lack of Product … ANNEX A – DOCUMENTARY LETTER OF CREDIT FORMAT Format of Irrevocable Documentary Letter of Credit as required: Please urgently advise [FULL NAME OF SELLER], [ADDRESS], that we [BANK] hereby issue our irrevocable documentary letter of credit number [LC NUMBER], in their favour for account of [FULL NAME OF BUYER], [ADDRESS] for an amount of USD [US DOLLAR AMOUNT] (say [US DOLLAR AMOUNT IN WORDS]) +/-XX% available at our counters [DAYS] days [FROM/AFTER] [PAYMENT TERMS] against presentation of the following documents in one original and [NUMBER OF] copies unless otherwise stated:

1. One or more signed commercial (Provisional/Final) invoices.

2. [in the case of FOB/CFR/CIF delivery] one or more full sets of 3/3 original clean on-board ocean bills of lading issued or endorsed to the order of THE APPLICANT.

3. [in the case of Ex Tank, Into Tank, In Situ delivery] copy of the transfer certificate.

4. [in the case of FOB/CFR/CIF and Ex Tank, Into Tank, In Situ delivery] certificates of quality.

5. [in the case of FOB/CFR/CIF delivery] certificates of quantity.

6. certificates of origin

7. [in the case of CIF delivery]: insurance certificate covering 110% of the cargo value

8. [in the case of DES/DAP/DAT/DPU] original or digital copy, as available, of the certificates of quantity and quality. [In the case of delivery FOB/CFR/CIF only]: In the event that the above documents are unavailable at the time of presentation, payment will be made against document number one above (the Invoice) and a Letter of Indemnity issued by beneficiary as per Annex C …”

13. The purchase price for the Cargo, as calculated in accordance with the Sale Contract, was US$13,031,741.54. The Facts

14. On 7th June 2024, the Buyer chartered the Vessel from an associated company, Mael Shipmanagement Co (“ Mael SM ”), who in turn chartered the Vessel from IceChem Tankers Ltd (“ IceChem ”), for the voyage from Algeciras to Freetown.

15. The charterparty dated 7th June 2024 between Mael SM as charterer and IceChem as owner, and between the Buyer as charterer and Mael SM as owner, included the following demurrage provisions: “ DEMURRAGE PAYABLE EVERY 7 DAYS AS INCURRED, AGAINST ELECTRONIC INVOICE AND ALWAYS BBB - ALL LOADPORT DEMURRAGE PAYABLE TOGETHER WITH FREIGHT BBB … DEMURRAGE: USD 24,000 PDPR LAYTIME: 48HRS LOAD PORT / 96HRS DISCH PORT SHINC REV …”

16. On 7th June 2024, Mael SM sent an email to the Seller purporting to provide “ Documentary Instructions ” as follows: “ FULL SET OF CLEAN ON-BOARD DELIVERING VESSEL BILLS OF LADING IN 03 ORIGINALS AND 03 NON-NEGOTIABLE COPIES ISSUED OR ENDORSED TO THE ORDER OF SIERRA LEONE COMMERCIAL BANK LTD MARKED FREIGHT PAYABLE AS PER CHARTER PARTY 3 ORIGINAL SIGNED & STAMPED CERTIFICATES OF QUANTITY WRITTEN IN ENGLISH ISSUED BY INDEPENDENT INSPECTORS (SGS) 3 ORIGINAL SIGNED & STAMPED CERTIFICATES OF QUALITY WRITTEN IN ENGLISH, THESE CERTIFICATES MUST BE NAMED AS “CERTIFICATE OF QUALITY”, NOT “CERTIFICATE OF ANALYSIS” ETC. ISSUED BY INDEPENDENT INSPECTORS (SGS) ”

17. On 21st June 2024, the Confirming Bank confirmed the issue of two Letters of Credit in favour of the Seller by the Issuing Bank, one letter of credit numbered TF2415869883 in respect of 5,000 metric tons of gasoil and 5,000 metric tons of gasoline and the other numbered TF2415903808 in respect of 4,000 to 4,500 metric tons of gasoline.

18. The Letters of Credit required the following documents to be presented thereunder: (1) commercial invoices; (2) three sets of original and copy bills of lading; (3) certificates of quality; and (4) certificates of quantity.

19. However, in the event that the bills of lading and certificates of quality and quantity were not available, a letter of indemnity in a prescribed form was acceptable.

20. By 12th July 2024, the Cargo was shipped on board the Vessel.

21. Five sets of bills of lading all dated 12th July 2024 were issued and consigned to the order of the Seller (“ the Bills of Lading ”). At present, the Bills of Lading have not been endorsed and they remain in the possession of the Seller.

22. On 19th July 2024, the Vessel tendered a Notice of Readiness at the discharge port of Freetown, Sierra Leone. That day, 1,000 metric tons of gasoline were discharged to the Buyer or its order without production of the original Bills of Lading and pursuant to a letter of indemnity issued by Mael SM addressed to IceChem and others.

23. On 23rd July 2024, IceChem commenced an admiralty action in rem in the High Court of Sierra Leone against Mael SM and “ the charterers, agents and/or persons interested in ” the Cargo claiming unpaid freight, load port demurrage and discharge port demurrage. A warrant for the arrest of the Cargo was issued the following day .

24. On 29th July 2024, f urther letters of indemnity were issued by Mael SM to IceChem and others in respect of the discharge of the remainder of the Cargo without production of original Bills of Lading.

25. On 31st July 2024, the Seller issued five invoices in respect of the Cargo.

26. On 8th August 2024, 4,256.624 metric tons of gasoil and 5,535.175 metric tons of gasoline were discharged to the Buyer or its order pursuant to an order of the Sierra Leone High Court.

27. According to the Buyer, the Cargo was discharged into the possession of its sub-buyer, Malador Associates (SL) Ltd (“ Malador ”).

28. The purchase price fell due for payment 60 days after the dates of the Bills of Lading, i.e. on 10th September 2024.

29. On 13th September 2024, IceChem by their solicitors gave notice of the exercise of a lien over the Cargo to the Buyer and Mael SM.

30. In September-October 2024, the Seller presented documents under the Letters of Credit but the Issuing Bank did not pay the purchase price to the Seller. The reasons for the non-payment are not known. It is possible that the Issuing Bank failed to pay the purchase price upon tender of the correct documents and it is also possible that the Seller did not present the documents required under the Letters of Credit. I was not asked to determine whether the Issuing Bank’s refusal to pay was justified.

31. In early November 2024, the Buyer commenced an admiralty action in rem in the High Court of Sierra Leone and arrested the Vessel.

32. On 13th November 2024, the High Court of Sierra Leone made an order that the cargo remaining on board, namely 3,953.696 metric tons of gasoline (“ the Remaining Cargo ”), be sold if security were not provided within 7 days.

33. On 2nd December 2024, the Seller commenced an admiralty action in rem in the High Court of Sierra Leone claiming damages for misdelivery of the Cargo and arrested the Vessel.

34. On 17th December 2024, the High Court of Sierra Leone varied its order of 13th November 2024 to provide that the proceeds from the sale of the Remaining Cargo be paid into escrow pending the outcome of the Voyage Charter Arbitration between IceChem and Mael SM.

35. On 23rd December 2024, the Remaining Cargo was sold to a third party, Leonoil Co Ltd, by a judicial officer pursuant to an order of the High Court of Sierra Leone dated 13th November 2024.

36. On 3rd January 2025, an escrow agreement was entered into by an officer of the High Court of Sierra Leone, IceChem and an escrow agent providing, inter alia , that the proceeds of the sale of the Remaining Cargo remain in escrow pending the outcome of the Voyage Charter Arbitration.

37. On 11th January 2025, the discharge of the Remaining Cargo was completed.

38. On 7th March 2025, the Seller re-tendered the documents stipulated by clause 33.9.1 of the GT&Cs to the Buyer. The Claim and the Defence

39. In these proceedings, the Seller claims the payment of the price under the Sale Contract pursuant to section 49 of the Sale of Goods Act 1979 .

40. The Buyer resists the claim, and also the application for summary judgment, on the following grounds: (1) The Buyer has discharged its obligation to pay the purchase price absolutely or conditionally by the mere issuance of the Letters of Credit, and if conditionally, it was not open to the Seller to by-pass the Letters of Credit and seek payment from the Buyer. This is an unpleaded defence, although a draft amendment was before the Court during the hearing of the application for summary judgment. The Court’s permission is required to advance this defence, not only because it involves an amendment to a statement of case, but also because such an amendment, at least arguably, involves the withdrawal of an admission. The Seller contended that I should refuse such permission. I address that issue below. (2) There is no obligation on the Buyer to pay the purchase price unless and until the Seller first hands over the requisite documents, including the Bills of Lading, before the Buyer’s obligation to pay crystallises. This is a pleaded defence at para. 13.5 of the Amended Defence and Counterclaim.

41. The Buyer has advanced a claim against the Seller in respect of demurrage and damages arising from alleged delay at the loadport.

42. The Buyer had earlier contended that it was entitled to set-off that claim for demurrage and damages against the price claimed by the Seller. However, the Buyer no longer advances that defence. I note in that regard that the Sale Contract provided that the price was to be paid “ without any deduction, set-off [or] counterclaim ” (clause 3.2 of the Sale Contract and clause 33.3 of the GT&Cs). The application for summary judgment

43. The Seller applies for summary judgment in respect of its claim for the price on the basis that there is no real prospect of the Buyer’s defence to this claim succeeding.

44. The Buyer resists the application on the grounds that either there has been no actionable failure to pay the price on its part or at the very least the Buyer has a real prospect of defending the claim, in particular because: (1) The Buyer discharged its obligation of paying the purchase price for the Cargo by arranging for the issue of confirmed Letters of Credit, either because the issue of the Letters of Credit constitute absolute payment or because they constituted conditional payment and, as such, they cannot be by-passed. (2) There has been no tender of the requisite documents by the Seller and so no liability to pay the price for the Cargo on the part of the Buyer has yet arisen.

45. The former defence requires an amendment to the Buyer’s Defence and, arguably, the withdrawal of an admission. The Seller was not content to consent to the amendment. Accordingly, the Buyer had to apply for permission to amend. I indicated during the hearing that I would hear both the application for permission to amend (and to withdraw an admission) and, assuming that such permission is granted, determine the application for summary judgment having regard to the latter defence.

46. As mentioned above, the Buyer had also sought to meet the application for summary judgment on the ground that it was entitled to set-off against the price claimed by the Seller, the Buyer’s own counterclaim for demurrage and damages for delay. However, the Buyer no longer contends that there is a right of set-off given the terms of the Sale Contract. Accordingly, the counterclaim is no longer relevant to the application for summary judgment on the action for the price. However, the parties were still content for me to consider whether the Buyer’s counterclaim is sustainable as a matter of law, on a summary basis, even though it was no longer an answer to the Seller’s action for the price.

47. If I conclude that the Seller is entitled to summary judgment for the price of the Cargo, the Buyer applies for a stay of the execution of the judgment.

48. Accordingly, I propose to deal with the following issues arising at the hearing: (1) Is the Buyer entitled to amend the Defence and withdraw an admission in order to advance the defence that its payment obligations were fully discharged by the issue of the confirmed Letters of Credit? (2) On the assumption that the Court is prepared to permit the application for amendment and the withdrawal of the admission, were the Buyer’s payment obligations under the Sale Contract fully discharged by the issue of the confirmed Letters of Credit or is there a real prospect of this defence succeeding? (3) Is the Buyer not liable for the price unless and until the documents required to be provided by the Seller under the Sale Contract are in fact transferred to the Buyer or does the defence on this basis have a real prospect of succeeding? (4) If the Court were prepared to grant summary judgment for the price, should the Buyer be granted a stay? (5) Is the Buyer’s counterclaim for demurrage or damages for delay legally sustainable or is there a real prospect of the counterclaim succeeding? The approach to summary judgment applications

49. CPR rule 24.3 provides that: “ The court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if - (a) it considers that the party has no real prospect of succeeding on the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial .”

50. The approach to disposing of an application for summary judgment pursuant to CPR rule 24.3 is well known and was not the subject of argument by the parties.

51. As regards the relevant principles, I have had regard to the decisions in Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch) , para. 15, TFL Management Services Limited v Lloyds TSB Bank Plc [2013] EWCA Civ 1415 ; [2014] 1 WLR 2006 , para. 26-27, and Global Assets Capital Inc v Aabar Block SARL [2017] EWCA Civ 37 ; [2017] 4 WLR 163 , para. 27. The following principles derived from the authorities, and adapted to the present application, govern the disposal of a summary judgment application: (1) The Court must consider whether the Buyer has a realistic, as opposed to a fanciful prospect, of succeeding in its defence or in its counterclaim. The defence or counterclaim must be more than merely arguable and must carry with it a sufficient degree of conviction. (2) The Court should not engage in a mini-trial and should avoid being drawn into an attempt to resolve conflicts of fact which are normally resolved by the trial process. However, at the same time, the Court need not take any evidence at face value. If a witness statement or document is clearly at odds with the truth, because it is contradicted by other evidence or because it is self-evidently lacking in substance, the Court is free to treat the witness statement or document as not credible. In carrying out an evaluation of any evidence in this respect, the Court should have regard to the evidence adduced for the purposes of the application for summary judgment and also any evidence which might reasonably be expected to be available at trial. (3) The Court should hesitate about granting summary judgment, where reasonable grounds exist for the concluding that an investigation into the facts and the production of further evidence would affect the outcome of a case. (4) If the summary judgment application can be determined on a short point of law or construction, which itself is not in a state of development, and the Court has all that it needs to determine that point, it should feel unconstrained to do so. This is because if the Buyer’s defence or counterclaim is unsustainable as a matter of law, there will be no real prospect of that defence or counterclaim succeeding at trial. Similarly, if the legal position adopted by the Seller is legally unsustainable, it is beneficial to the parties to have the issue determined summarily. (5) There may be circumstances where the Court is satisfied that the defence has no real prospect of success, but there is yet a compelling reason for a trial. The application for permission to amend and withdraw an admission

52. At para. 20-22 of the Amended Particulars of Claim, the Seller pleaded that the Issuing Bank and the Confirming Bank declined to pay the purchase price under the Letters of Credit, upon the Seller’s presentation of documents, alleging lateness in presentation of documents and/or discrepancies in the documents presented; that, in breach of the Sale Contract, the Buyer did not pay the purchase price by the due date of 10th September 2024 or at all; and that as property in the Cargo had passed to the Buyer, the Seller is entitled to the purchase price, being US$13,031,741.54, pursuant to section 49 of the Sale of Goods Act 1979 .

53. At para. 13 of the Re-Amended Defence and Counterclaim, the Buyer pleaded that: (1) It is admitted that the Buyer has not paid any part of the purchase price. (2) It is denied that its obligation to pay the purchase price arose at any point prior to the production by the Seller of the original Bills of Lading (which has still not happened). (3) It is admitted that, upon production of the original Bills of Lading for the Cargo, and other documents as stated in the Letters of Credit issued by the Buyer to the Seller, the Buyer would be obliged to pay for the Cargo (para. 13.5).

54. On 24th November 2025, the day before the hearing of this application, the Buyer circulated a draft amendment to para. 12 and 13 of the Re-Amended Defence and Counterclaim. The draft amendments were not accompanied by an application notice or supporting witness statement.

55. The draft amendments sought to re-cast the Buyer’s case with the following additional pleas (the draft amendments are not quoted verbatim; the substantive amendments sought to be introduced are under-lined): (1) It is admitted that the terms of the Sale Contract provided for payment of the Purchase Price within 60 days from the date of the Bills of Lading. On the true construction of the Sale Contract, the exclusive means of payment was via irrevocable letter or letters of credit acceptable to, and in fact accepted by, the Seller (para. 12.2). (2) The Buyer is unable to admit or deny the reasons for the Confirming Bank declining to pay under the Letters of Credit. If the reason why the purchase price was not claimed (paid) under the Letters of Credit was entirely due to the fault of the Seller by failing to present valid documents prior to the expiry of the Letters of Credit, it is not open to Seller to demand payment of the purchase price whether by presenting or offering to present those documents to the Buyer or otherwise (para. 12.3). (3) If, contrary to the above, it is permissible for the Seller to seek payment from the Buyer direct whether because there has been a credit failure under the Letters of Credit or otherwise, clause 33.9.1 of the GT&Cs requires that the original Bills of Lading must be produced by the Seller in order to receive payment from the Buyer (para. 12.4). (4) It is denied that its obligation to pay the Purchase Price arose at any point outside of or other than via the exclusive letter of credit mechanism, alternatively, not prior to the production by the Buyer of the original Bills of Lading (which has still not happened) (para. 13.2). (5) If, contrary to the case pleaded above, it is permissible for the Seller to seek payment from Buyer direct whether because there has been a credit failure under the Letters of Credit or otherwise, it is admitted that, upon production of the original Bills of Lading for the Cargo, and other documents as stated in the Letters of Credit issued by the Buyer to the Seller, the Buyer would be obliged to pay for the Cargo (para. 13.5). (6) Pursuant to the Letter of Credit issued by the Issuing Bank to the Seller as the Beneficiary, payment by the Issuing Bank under the Letters of Credit would only be made on presentation of the documents set out the Letters of Credit. The Seller failed to present those documents within the life of either of the Letters of Credit (para. 13.6).

56. During the oral hearing, I noted that the amendment to para. 13.6 that the Seller failed to present the documents required to be presented under the Letters of Credit, whereas para. 12.3 does not plead the alleged fact absolutely, but only conditionally. Mr John A Kimbell KC, who appeared on behalf of the Buyer, stated that the intention was to plead the allegation absolutely, not conditionally. I also asked Mr Kimbell KC whether any particulars are relied on in support of the assertion that the Seller failed to present the requisite documents under the Letters of Credit in time. Mr Kimbell KC replied that he was relying only on the first witness statement of Mr William Gidman of HFW, the Seller’s solicitors, dated 24th June 2025, at para. 45, where is it said that the Issuing Bank and the Confirming Bank declined to pay under the Letters of Credit, alleging lateness in presentation of documents and/or discrepancies in the documents presented. Mr Gidman added that the Buyer does not admit or deny the reasons why the Banks declined to pay.

57. The Seller objected to the proposed amendments, principally because it involved the withdrawal of an admission.

58. CPR rule 14.5 provides that: “ In deciding whether to give permission for an admission to be withdrawn, the court shall consider all the circumstances of the case, including - (a) the grounds for seeking to withdraw the admission; (b) whether there is new evidence that was not available when the admission was made; (c) the conduct of the parties; (d) any prejudice to any person if the admission is withdrawn or not permitted to be withdrawn; (e) what stage the proceedings have reached; in particular, whether a date or period has been fixed for the trial; (f) the prospects of success of the claim or of the part of it to which the admission relates; and (g) the interests of the administration of justice .”

59. CPR rule 14.5 was considered by Master Marsh in Cedar Securities Ltd v Phillips [2025] EWHC 2760 (Ch) , by means of a review of two Court of Appeal decisions. At para. 67-71, Master Marsh first referred to CPR rule 14.5, stating that: “67. This is a non-exclusive list of the criteria the court must take into account when considering whether to grant permission. The range of issues set out in the list in CPR rule 14.5 indicate that the decision whether or not to grant permission needs to be a carefully balanced with appropriate weight being given to each criteria depending upon all the circumstances. The prospects of success have to be reviewed and inevitably this has to be done at a relatively high level. A compelling case may encourage the court to grant permission whereas a claim that barely reaches the real prospects hurdle is likely to point in the other direction.

68. In J v A South Wales Local Authority [2021] 2 FLR 1441 Lewison LJ considered the importance of admissions and referred with approval to two passages in Zuckerman on Civil Procedure: Principles and Practice 4th ed. at para 6.10 and 6.11 and went on to cite with approval two paragraphs from the judgment of Nugee J (as he then was) in Lufthansa Technik AG v Astronics Advanced Electronic Systems [2020] FSR 18 : “[22] … I agree with Mr Cuddigan that the purpose of what the CPR says about admissions is that, if an admission is made, the opponent can proceed on the basis that that will not be something in issue. Whether it is an admission of fact or an admission of law, it will not be necessary to devote any resources or energy or thoughts to that part of a case, because it is not one of the matters that will be in issue. That, of course, is subject to the powers of the court to allow the admission to be withdrawn in rule 14.1(5), and everybody who faces an admission knows that there is always a possibility that an admission may be withdrawn. [23] However, I agree with Mr Cuddigan that litigation should be capable of being conducted on the basis that admissions mean what they say and that, if a party whose case has been admitted by the other side is facing an application to withdraw the admission, it is relevant to consider whether they will now be put in a worse position - not in a worse position than they would have been had the admission not been made in the first place, but in a worse position than they are with the admission.”

69. The Court of Appeal also considered the withdrawal of an admission in Clarkson v Future Resources FZE [2022] EWCA Civ 230 . The circumstances in that case bear some similarity with this claim because the party seeking to amend did not make an application under CPR rule 14 when applying for permission to amend. The admissions were of a liability to repay loans and it was only when an application was made for summary judgement by the claimant that an attempt was made to withdraw the admissions by seeking permission to amend.

70. In giving the leading judgment, Simler LJ provided the following principles: 70.1 The court has a wide discretion to allow withdrawal; [42] 70.2 “The factors set out in what is now CPR rule 14.5 are all factors to be considered in accordance with the overriding objective, and no one factor carries greater weight than any other: see Woodland v Stopford [2011] EWCA Civ 226 at [26]. The weight to be attached to each factor will inevitably vary according to the particular circumstances of the case." [43] 70.3 “… it is fundamental to an application of this kind that the judge is given a full and frank explanation of how things have gone wrong, and the basis on which the admission is to be withdrawn. This should include how the admission came to be made in the first place and the grounds upon which the applicant seeks to withdraw the admission, including whether or not new evidence has come to light which was not available at the time of the admission.” [45] 70.4 The full and frank explanation should be provided in a witness statement with a statement of truth. A letter will not suffice where there has been adequate time to provide a witness statement. [47]

71. Simler LJ commenced paragraph [45] of her judgment with the words “Leaving aside the absence of an application under CPR 14.1(5)” (as the rule then was). She appears to have contemplated that seeking the court’s permission to withdraw an admission should be made by application notice albeit that the rule itself does not specify that this is needed; but the absence of an application was not treated as being fatal .”

60. Miss Claire Blanchard KC, who appeared on behalf of the Seller with Mr Sebastian Mellab, submitted that permission should not be granted to the Buyer to withdraw the admission contained in paragraph 13.5 (which I understood also extended to the advancement of a case that the issue of the Letters of Credit discharged the Buyer’s obligation to pay the purchase price under the Sale Contract) for the following reasons: (1) The Seller would be prejudiced by the withdrawal of the admission. (2) No explanation, supported by a witness statement and a statement of truth, has been provided by the Buyer as to the reasons for the withdrawal of the admission. (3) The delay on the part of the Buyer has been substantial and “ extraordinary ”. The statements of case closed in March 2025, but there was no indication by the Buyer that it intended to amend its case until the skeleton argument for the present application was served four days before the hearing. (4) The legal defence sought to be introduced by the amendments is not sustainable as a matter of law.

61. Mr Kimbell KC submitted on behalf of the Buyer that the amendments should be permitted because: (1) The Court has a broad discretion in considering whether to allow the amendment. (2) There is in reality no withdrawal of an admission, merely a qualification of an admission. (3) Although it is late, it introduces a relatively small, neat legal argument. That said, it is not a very late amendment, because although the proceedings were commenced in 2024, there has not yet been a case management conference. (4) Although there is no evidence explaining the reasons for the amendments, the Court could take judicial notice of the fact that it would not be the first time that when you have a pleading produced by a solicitor, who then comes to counsel, there is a review of the case and a point occurs to counsel. (5) If the defence introduced by the amendments have a real prospect of success, that should weigh very heavily in the Court’s discretion. (6) In his first witness statement dated 25th July 2025, at para. 23, Mr Fahad Sher Hussain, the Buyer’s business manager, stated that the Buyer complied with its payment obligations under the Sale Contract by providing two Letters of Credit. So, the Seller has been on notice since July 2025 that this point was going to be taken by the Buyer and has had plenty of time to prepare for it, and indeed has been able to prepare to address this issue during the hearing of its application for summary judgment. (7) Although there would be prejudice to the Seller if the amendments are allowed, the relative prejudice to the Buyer if the amendments are not permitted is greater. The prejudice to the Seller can be compensated by a costs order; the prejudice to the Buyer is being deprived of a defence, if legally justified.

62. In my judgment, bearing in mind the breadth of the discretion to be exercised and taking into account the matters referred to in CPR rule 14.5, the application for permission to amend should be allowed and, insofar as the amendment involves the withdrawal of an admission (which I think it does), the permission to withdraw that admission should also be allowed for the reasons given by Mr Kimbell KC, in particular: (1) Although the draft amendments were provided only shortly before the hearing, the possibility of the defence being raised was signalled in July 2025. The Seller has been able to deal with this point at the present hearing. (2) Although the proceedings have been on foot for some time, the action itself is still at a relatively early stage. No disclosure or evidence has been exchanged or served. (3) Although there is some prejudice to the Seller in allowing the application, the prejudice is relatively minor in the sense that it introduces a new issue which had not currently been in dispute, and the prejudice to the Buyer would be very much greater if the application were refused. (4) The legal issue introduced by the amendments is an arguable issue (and it is one which I consider below). (5) Although there is no witness statement served by the Buyer explaining why the issue is being raised only now, especially as it was first identified in a witness statement in July 2025, it is difficult to conceive of any realistic explanation which is likely to alter how I have decided to exercise this discretion. Was the obligation to pay the price discharged by the issue of the letters of credit? The parties’ submissions

63. The parties are agreed - or at least I consider that it is plain on the evidence - that: (1) The Cargo was delivered to the Buyer on an FOB basis when the Cargo was shipped on board the Vessel on 12th July 2024 when the Bills of Lading were issued (clause 4 of the Sale Contract, clause 2.1 of the GT&Cs and section 32(1) of the Sale of Goods Act 1979 ). (2) Title to the Cargo passed to the Buyer upon shipment (clauses 3.1 and 33.7 of the GT&Cs). (3) The Seller has not yet received the purchase price for the Cargo.

64. The dispute between the parties is whether the Letters of Credit represent conditional payment or absolute payment for the Cargo, and if the former, whether there is a triable issue as to the reasons for the non-payment under the Letters of Credit.

65. Miss Blanchard KC on behalf of the Seller submitted that: (1) The opening of a banker’s commercial credit is presumed to be only conditional payment of the price ( WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , 210, 220; Re Charge Card Services Ltd [1987] Ch 150 , 167-169; [1989] Ch 497 , 511, 516-517). (2) The presumption reflects “ the extreme unlikelihood that a seller will agree to forfeit the protection otherwise afforded an unpaid seller ”, as well as the fact that “ [g]iven that the purpose of a documentary credit is to facilitate the underlying transaction by providing the seller with assurance of payment, it would be paradoxical if failure of that mechanism could place the seller in a worse position than it would be in had no credit been established in the first place ” ( Benjamin’s Sale of Goods (12th ed., 2023), para. 23-310). (3) In the absence of unequivocal wording, the presumption is difficult to displace. To displace the presumption, it is not enough that the parties agreed on the identity of the bank ( ED&F Man Ltd v Nigerian Sweets & Confectionery Co Ltd [1977] 2 Lloyd’s Rep 50 , 56). (4) Where the opening of a banker’s commercial credit is only conditional payment, and payment thereunder fails, the seller’s remedy is a claim for the price against the buyer ( Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 234-236; ED&F Man Ltd v Nigerian Sweets & Confectionery Co Ltd [1977] 2 Lloyd’s Rep 50 , 56; Benjamin’s Sale of Goods (12th ed., 2023), para. 23-310). (5) The express language and structure of the Sale Contract reinforce the application of the usual presumption in this case (see clauses 3.2, 3.3). (6) It is plain that if a bank wrongly fails to pay out under a letter of credit, for example because it has become insolvent (which was the position in the Nigerian Sweets case), the seller can look to the buyer for payment. It should make no difference if the seller is at fault. A buyer who has not rejected goods, or to whom property in goods has passed, remains liable for their price notwithstanding any failure of the credit and regardless of whether that failure was caused by the seller’s presentation of non-compliant documents ( Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 234-236; Benjamin’s Sale of Goods (12th ed., 2023), para. 23-263). (7) The passing of property on shipment was sufficient to entitle the Seller to bring an action for the price under section 49(1) of the Sale of Goods Act 1979 ( Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 234-236). (8) The Seller’s position accords with business common sense. It cannot be that someone in the position of the Buyer who (as is common ground) did not reject the Cargo and procured discharge of a substantial part of it to itself or its order can decline to pay the price ( Saffron v Société Minière Cafrika (1958) 100 CLR 231, 243-244). This applies equally to the Remaining Cargo, to which about a quarter of the purchase price is attributable, because title in the Remaining Cargo passed to the Buyer, satisfying the condition that property in the goods must have passed to the buyer under section 49(1) and because the assumption of possession of the Cargo is not a prerequisite to the Buyer’s obligation to pay for it. The Buyer never purported to reject the Cargo or any part of it. The Cargo was delivered to the Buyer when it was loaded on board the Vessel (clause 2.1 of the GT&Cs; section 32(1) of the Sale of Goods Act 1979 ). The only reason the Buyer did not take possession of the Remaining Cargo was because Mael SM failed to pay the demurrage demanded of it, leading to the arrest and subsequent sale of the Cargo. On no view is the Seller responsible for that state of affairs. It cannot be right that the Seller’s prima facie entitlement to claim the price for the Remaining Cargo can be defeated by the actions of third parties which are nothing whatever to do with it. In short, the Seller fully performed its contractual obligations with respect to the Remaining Cargo and is entitled to be paid for the same. (9) There are two decisions which might be relied on by the Buyer, namely Ficom SA v Sociedad Cadex Limitada [1980] 2 Lloyd's Rep 118 and Shamsher Jute Mills Ltd v Sethia (London) Ltd [1987] 1 Lloyd's Rep 388. The former decision was actually about whether, by agreeing to a letter of credit in particular terms, the parties had agreed to vary the underlying sale contract (which they had) and consequently whether the buyer was entitled to reject to goods. In the latter case, the buyer had made it plain that it was rejecting the documents tendered (and, by necessary implication, with them, the goods). The evidence in the case did not establish what eventually happened to the goods, beyond that it seems they were sold at the discharge port; neither buyer nor seller derived any benefit from the same. There was no discussion in the case on the question of whether property had passed to the buyer. Neither decision is authority for the proposition that where a sale contract is fully executed, title in the goods has passed to the buyer and the buyer has actually taken possession of the goods, it is entitled to them for free.

66. Mr Kimbell KC on behalf of the Buyer submitted that: (1) The Seller cannot by-pass a compliant banker’s credit. Once the Buyer has procured the opening of a documentary credit in accordance with the terms of the Sale Contract, the Seller is not entitled to by-pass the credit and seek payment directly from the Buyer. A documentary credit affords the Seller the reassurance of being able to look to one or more banks as, it assumes, reliable and solvent paymasters. In return, the Buyer is relieved from having to stand ready to pay the Seller upon tender of documents and instead can rely on agreed reimbursement arrangements with the Issuing Bank suitable to the Seller’s financial position. The Seller’s right to look to the Issuing Bank is not a mere option or an alternative right to elect to present documents directly to, and call for payment from, the Buyer ( Benjamin’s Sale of Goods (12th ed., 2023), para. 23-064; Soprama SpA v Marine & Animal By-Products Corp [1966] 1 Lloyd’s Rep 367 , 385-386). (2) If the Letters of Credit represent conditional payment, and if there has been a “ credit failure ”, meaning that the issued letter of credit does not function properly, for example because the issuing bank is insolvent or unreasonably refuses to pay, the Seller can present the documents to the Buyer for the purposes of obtaining payment. If, however, the Letters of Credit represent absolute payment, the Seller accepts its rights under the credit in discharge of the Buyer’s payment obligations under the Sale Contract. The Seller agrees to look to the banks to the exclusion of the Buyer ( Benjamin’s Sale of Goods (12th ed., 2023), para. 23-310). (3) If, in the context of conditional payment, the failure of the Letters of Credit to pay is entirely the fault of the Seller presenting obviously non-compliant documents, the no by-pass rule is engaged. In other words, if the credit-failure is self-induced, the Seller cannot require payment from the Buyer by tendering the documents to the Buyer direct. (4) The evidence in this case strongly suggests that the reason why the Seller did not collect the purchase price may have been because it presented non-compliant documents (Mr Gidman’s first witness statement, para. 43-45). The Bills of Lading were consigned to the order of the Seller and not to the Sierra Leone Commercial Bank Ltd in accordance with Mael SM’s “ documentary instructions” dated 7th June 2024 (Mr Hussain’s first witness statement, para. 20). (5) The traditional approach to the issue of credit failure is to ask whether the opening of the LC was a conditional payment or an absolute payment. This is a matter of construction ( Benjamin’s Sale of Goods (12th ed., 2023), para. 23-310). (6) Here, there are a number of factors which are capable of supporting an absolute payment interpretation: clause 3 of the Sale Contract and section 33 of the GT&Cs. The Sale Contract does not contain a provision for payment to be made against tender of documents ( Saffron v Société Minière Cafrika (1958) 100 CLR 231, 243-244). (7) The Buyer has a defence with a real prospect of success because the Letters of Credit were absolute payment, as the Buyer contends, or because if the Letters of Credit were conditional payment, the reason for the non-payment under the Letters of Credit was the Seller’s failure to present the correct documents and within time. (8) Even though title to the Goods has passed to the Buyer, the Seller’s remedy is not by an action for the price, but instead by means of a claim for unjust enrichment or by means of an argument based on a waiver by the Buyer. The authorities

67. During the hearing, I was taken to a number of authorities. Given the nature of the issue, I consider I should review the authorities with a view to deciding the principles which apply to the facts at hand. They are decisions which require careful consideration.

68. In Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 234-236, the plaintiffs claimed against the defendants the balance of the price of goods (a diesel generator set) sold and delivered FOB shipped on board the vessel Tahsinia at Newport for shipment to India. The sale contract required the establishment of a banker’s guarantee or letter of credit. The banker’s letter of credit was established and was sent to the plaintiffs and required the plaintiffs to present a guarantee “ for satisfactory performance of plant ”. The documents presented by the plaintiffs under the letter of credit were rejected by defendants’ bank on the ground that the plaintiff had failed to provide the required guarantee. The defendants contended that there was no binding contract, but if there was such a contract, it was a term that payment to the plaintiffs was to be made by letter of credit established in the plaintiffs’ favour; there was no agreement that the defendants should themselves make payment. The defendants contended that they were not concerned whether the plaintiffs had acted so as to entitle them effectively to operate the letter of credit or, alternatively, the plaintiffs did not present under the letter of credit before its expiry. There was a similar dispute between the defendants and third party sub-buyers.

69. Sellers J held that there was a binding contract of sale between the plaintiffs and the defendants and that that contract did not require the presentation by the plaintiffs of a guarantee as alleged by the defendants. At page 234, Sellers J said that: “ Now, should the bank have paid? It may be they were justified in not paying, and the answer to that question is “probably not,” although I do not think it is certain they should not; but both buyers should, in my judgment, without hesitation have had the matter put right. The plaintiffs had fulfilled their obligations, and that was quite clear to the minds of the defendants, and they should have made it quite clear to the minds of the third parties who were buying from them, and the third parties themselves should have appreciated their true position. ”

70. Sellers J thus considered that even though a letter of credit had been established in accordance with the requirements of the sale contract, and even though the plaintiffs presented documents seeking payment under the letter of credit, the issuing bank was probably entitled to refuse payment in accordance with the terms of the letter of credit. That said, the judge also considered that this was a matter which the buyers could have rectified.

71. Sellers J then proceeded to consider the question of passing of property under an FOB sale contract at pages 234-235: The plaintiffs (the sellers) claim the price. They claim under Sect. 49 (1) of the Sale of Goods Act, 1893, and the question arises whether the property passed on shipment so that their claim can be enforced in that way. This is an f.o.b. contract … There were two contracts, plaintiffs to defendants and defendants to third parties, and if any other factor is necessary in this matter, the original intention when the bargain was made was that payment should be made 25 per cent. on entering into the contract and the balance before despatch, and then afterwards it was changed to a banker’s guarantee. The banker’s guarantee was part of the contractual bargain, but the plaintiffs waived that and accepted the letter of credit. Those seem to me to be the material facts on those issues and, on those facts, I find that the property did pass on shipment. Sect. 32 (1) of the Sale of Goods Act was referred to, but I doubt very much whether that section, which was relied upon, applies to this case. The facts seem to me to make applicable the views in a dissenting judgment of Lord Justice Hamilton (as he then was) in Wimble Sons & Co. v. Rosenberg & Sons, [1913] 3 K.B. 743 . The issue in that case was not an issue which arose in this case at all and the facts were different, and I make no apology for reading from the dissenting judgment of Lord Justice Hamilton in that case as a statement of the general law. I will turn to two passages dealing with Sect. 32 of the Act . At p. 756 he said: It is well settled that, on an ordinary f.o.b. contract, when “free on board” does not merely condition the constituent elements in the price but expresses the seller’s obligations additional to the bare bargain of purchase and sale, the seller does not “in pursuance of the contract of sale” or as seller send forward or start the goods to the buyer at all except in the sense that he puts the goods safely on board, pays the charge of doing so, and for the buyer’s protection but not under a mandate to send, gives up possession of them to the ship only upon the terms of a reasonable and ordinary bill of lading or other contract of carriage. There his contractual liability as seller ceases, and delivery to the buyer is complete as far as he is concerned. In such a case the goods are not “sent by the seller to the buyer,” though they then begin a journey which will end in the buyer's hands. In law, as between buyer and seller, they are then and there delivered by the seller to the buyer, and thereafter it is by the buyer and his agent, the carrier, and not by the seller, that the goods are “sent” to their destination. It is in this sense that I understand the words of Mr. Justice Bailhache, “what one generally understands by an f.o.b. contract is that the goods are not sent by sea by the vendor but are delivered by him at the rail of the ship and are then taken over by the shipowner nominated by the buyer and conveyed by him across the sea.” So understood, I agree with them .”

72. Applying these principles, the judge held that on the facts of the case before him property in the goods had passed to the defendants on shipment. At page 236, Sellers J continued: “ … I think the conclusion which must be reached in this case is that the property passed, and I therefore find that the plaintiffs are entitled to claim the price on the basis that the property passed. That gives rise to a consideration of a further point which was taken and which is, perhaps, the most difficult point in the case. The action is against the buyer, not against the bank, and the question of importance is whether the seller must look only to the bank who issued the letter of credit; that is, whether the method of payment agreed releases the buyer from direct liability for payment under the contract of sale. There does not seem to be any definite authority on the matter. Where it has been agreed that payment is to be by a bill of exchange, the payment would normally be a conditional payment and it would require very clear terms to make it an absolute payment. Here, payment was to be by a draft drawn on the bank issuing the credit and it was, therefore, to be made by a negotiable instrument. Originally the payment of the price was to be guaranteed by a bank and the letter of credit was only taken subsequently in substitution at the request of the defendants and with the agreement of the plaintiffs. I do not think there is any evidence to establish, or any inference to be drawn, that the draft under the letter of credit was to be taken in absolute payment. I see no reason why the plaintiffs, in the circumstances which have so unfortunately and unnecessarily arisen, should not look to the defendants, as buyers, for payment .”

73. On appeal, the Court of Appeal reversed the judge’s decision that the plaintiffs were entitled to the price on the ground that there was no concluded contract for sale ([1957] 1 Lloyd's Rep 211). The above issue was not addressed by the Court of Appeal.

74. In Saffron v Société Minière Cafrika (1958) 100 CLR 231, a decision of the High Court of Australia, Kinsho Trading Co Ltd (Kinsho) agreed to buy 2,000 long tons of manganese ore from Nielson & Maxwell Ltd (Nielsen) and chartered a vessel to carry this cargo from New Caledonia to Japan. To meet its obligations under this contract, Nielson agreed to buy 2,000 tons of manganese ore from Peter Turnbull & Co Pty Ltd (Turnbull). Subsequently, it seemed likely that 2,000 tons of manganese ore would not be available for loading into the chartered vessel and to mitigate its position and that of Turnbull, Nielson pressed Kinsho to buy 700 tons of chrome ore to be carried on the same vessel from Noumea. This was eventually arranged and the Nippon Kangyo Bank Ltd, upon the instructions of Kinsho, opened through the Commonwealth Trading Bank of Australia an irrevocable and assignable letter of credit in favour of Turnbull covering 80 per cent of the provisional invoice cost of 700 dry long tons of chrome ores in bulk FOB Noumea. This letter of credit provided for sight drafts on Banque de l’Indochine, accompanied by specified documents. There was an instruction that accompanied the letter of credit which contained the following provision: “ Final payment of any balance under this credit due and allowable to seller after final determination of weight and analysis to be available by seller’s final invoice and a cable from buyer confirming the amount of final paymen t”. The defendant negotiated a contract with the plaintiff for the purchase of 700 tons of chrome ore. The defendant wrote to Turnbull confirming an offer of 700 tons of chrome ore and at least 500 tons of manganese ore and saying that both offers were subject to suitable letters of credit. Turnbull assigned to the defendant the issued letter of credit. Notification of this assignment was given to the Commonwealth Trading Bank of Australia and to Banque de l’Indochine. The defendant informed the plaintiff that he would forward to it a letter requesting Banque de l’Indochine, to pay the plaintiff 80% of the value amount represented by the tonnage of chrome ore shipped and 20% of the value amount represented by the tonnage of ore upon receipt and verification which must take place before the expiry of the letter of credit. The plaintiff presented the documents under the letter of credit but the bank “ very properly refused to pay ”.

75. The issues requiring determination were: (1) Did the plaintiff agree with the defendant that unless payment came from the letter of credit for the ore, the plaintiff was not to be entitled to any payment at all? (2) If question (1) was answered yes, do the causes of the unavailability of the letter of credit afford an excuse to the defendant for non-payment? At first instance, the trial judge answered the first question “no”.

76. On appeal, the High Court of Australia held in respect of these issues, at pages 243-245: “ The general question whether a seller who stipulates for or agrees to payment by letter of credit can enforce payment directly against the buyer in the event of payment not being received out of the letter of credit is one which has been raised but not decided. In a book by Dr. A.G. Davis, The Law Relating to Commercial Letters of Credit, 2nd ed. (1954), p. 42, the question is stated in these terms: “A question of much greater importance so far as the relationship between the buyer and the seller is concerned is whether the seller, by demanding ‘payment by bankers’ credit’, agrees thereby to release the buyer from liability for payment under the sales contract; whether, in other words, the seller agrees to take the letter of credit as absolute payment or whether it constitutes conditional payment only.” This question is discussed and such authority as exists is cited and the author concludes by saying that although dicta favour the conclusion that the seller does not take a draft drawn under a letter of credit in absolute payment of the buyer’s obligation to pay for the merchandise “until the point is raised in an action between buyer and seller, it cannot be said to be settled definitely.” The question could only arise in special circumstances, e.g. if the bank responsible for the credit were to become insolvent or, as here, where notwithstanding that the documents tendered were not in conformity with the letter of credit, the seller had lost control of the goods to the buyer. As such contingencies are not likely to have been within the contemplation of either the seller or the buyer when they made their contract, the inquiry as to what they intended in such circumstances must inevitably be somewhat artificial. It would in any event be wrong to consider the question without regard to the kind of letter of credit for which the contract provides. A provision for payment by revocable letter of credit could hardly be regarded in any circumstances as negativing payment in the event of revocation. At the other end of the scale a provision for payment by irrevocable and confirmed letter of credit which in words taken from Guteridge & Megrah, on The Law of Bankers’ Commercial Credits, (1955) p. 13, is “an absolute undertaking by the banker to honour all drafts complying with the terms of the instrument creating the credit, subject only to limitations as to the amount and the period of time for which it is to be available”, might perhaps not unreasonably be regarded as a stipulation for the liability of the confirming bank in place of that of the buyer. Where the stipulation is for an irrevocable but not confirmed credit there would be less reason for regarding the provision of the credit as being all that is required by the buyer in any circumstances. This is not, however, the place to determine the general question propounded by Dr. Davis and it is undesirable to go beyond what is necessary for the determination of this case. (at p244) The contract here is to be found in the cables of 12th and 13th August and the letter dated 28th July, all of which so far as they are relevant have been set out previously. The stipulation contained in the words “payment by opening a letter of credit with the Banque de l’Indochine = 80% on shipment; 20% on delivery”, which was assumed to require an irrevocable but not a confirmed credit, does not go beyond requiring the establishment of a letter of credit as the primary but not the exclusive source of payment … It is not reasonable to suppose that the parties here intended that in the unlikely circumstance that the buyer got the chrome but payment therefor against the letter of credit was refused, the seller should not be paid. The trial judge reached the conclusion that the letter of credit was not intended to be the exclusive source of payment, with the assistance by way of analogy of the rules relating to the acceptance of negotiable instruments as conditional or absolute payment … The answer given by the trial judge to the first issue was clearly right and upon the basis on which the action was conducted that would in strictness seem to be the end of the matter. Had the issue been, however, whether the letter of credit was intended as the primary source of payment, the answer would have been that it was. In that event, the further question would have arisen whether the circumstances in which that primary source of payment failed excused the defendant from payment altogether. It would seem that the only possible ground upon which the seller could have been defeated in his claim for the price would have been that the seller was solely responsible for the failure of the primary source of payment …”

77. In Soprama SpA v Marine & Animal By-Products Corp [1966] 1 Lloyd’s Rep 367 , 385-386, there was a contract for the sale and purchase of 1,000 tons of Chilean fish fullmeal with minimum protein of 70%. The contract provided that “ PAYMENT: Against letter of credit, confirmed, irrevocable, with Marine Midland Trust Co of New York ”. A letter of credit was opened in respect of 600 tons and the seller presented documents thereunder for payment. One document presented to the bank indicated that the protein level of the goods was 67%. Accordingly, the buyer instructed the issuing bank to reject the documents presented. There were separate issues concerning the buyer’s liability for the wrongful rejection of the 600 tons and the buyer’s failure to open a letter of credit for the 400 tons. McNair J commented at pages 385-386: “ On behalf of the buyers it was submitted that the express term in the contract … defines the contractual method of payment by buyers and the contractual method of performance by the sellers by which initially payment is to be obtained subject, of course, to the buyers’ right to reject the goods themselves if not in conformity with the contract and that, whereas in a normal c.i.f. or c. & f. contract providing for payment cash against documents, the shipping documents must be tendered to the buyers, under this form of contract the tender of documents has to be made to the bank by whom the credit has been opened or, in the case of a confirmed credit, to the bank by whom the credit has been confirmed, and that such tender of documents is the only manner in which the sellers can obtain payment. Such a conclusion, as it seems to me, is of mutual advantage to both parties - of advantage to the seller in that by the terms of the contract he is given what has been called in the authorities a “reliable paymaster” generally in his own country whom he can sue, and of advantage to the buyer in that he can make arrangements with his bankers for the provision of the necessary funds, his banker retaining the drafts and the documents as his security for making payment to the seller and the buyer being freed from the necessity of having to keep funds available to make payment against presentation of documents to him at an uncertain time which is no further defined in the authorities than being at a reasonable time after shipment by the seller of documents covering goods which he has shipped or which are already afloat. Although in the classic statements as to the duties of the respective parties such as is to be found in Ireland and Others v. Livingston, (1872) L.R. 5 H.L. 395, and Biddell v. E. Clemens Horst Company, .” [1911] 1 K.B. 214 , reference is made to the duty of the sellers to tender to the buyers the shipping documents in exchange for payment by the buyers, in a case like the present, in which by the express terms of the contract payment is to be made against letters of credit, as it seems to me the general principle stated in those cases must be controlled by the express words of the contract. Under this form of contract, as it seems to me, the buyer performs his obligation as to payment if he provides for the sellers a reliable and solvent paymaster from whom he can obtain payment - if necessary by suit - although it may well be that if the banker fails to pay by reason of his insolvency the buyer would be liable; but in such a case, as at present advised, I think that the basis of the liability must in principle be his failure to provide a proper letter of credit which involves (inter alia) that the obligee under the letter of credit is financially solvent. (This point as to the buyers’ liability for the insolvency of the bank was not fully argued before me and I prefer to express no concluded opinion upon it as I understand that it may arise for decision in other cases pending in this Court.) It seems to me to be quite inconsistent with the express terms of a contract such as this to hold that the sellers have an alternative right to obtain payment from the buyers by presenting the documents direct to the buyers. Assuming that a letter of credit has been opened by the buyer for the opening of which the buyer would normally be required to provide the bank either with cash or some form of authority, could the seller at his option disregard the contractual letter of credit and present the documents direct to the buyer? As it seems to me, the answer must plainly be in the negative

78. In WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , by two contracts for sale, governed by English law, Kenyan sellers agreed to sell to Egyptian buyers two lots of 250 tons of coffee FOB Mombasa. The payment clause in the contracts provided: “ by confirmed irrevocable letter of credit to be opened at sight one month prior to shipment ...”. The buyers re-sold the coffee to sub-buyers who opened an irrevocable letter of credit in Madrid in sterling. The buyers procured the transfer of the letter of credit in favour of the sellers to a bank at Dar es Salaam which confirmed the credit to the sellers. The letter of credit was expressed in terms of payment in sterling and did not conform with the contracts in a number of respects; but the sellers accepted the confirmation in those terms and began to operate the credit, and presented documents and were paid thereunder. After the second shipment of goods, the sellers presented documents not for payment in sterling, but in Kenyan currency, because sterling had in the meantime been de-valued. The issuing bank refused the documents on this basis and so when the corrected documents were presented, and payment was made under the letter of credit, the sellers contended that they had not received full payment under the sale contract for the goods and sued the buyers for the difference. The buyers claimed that their obligation had been discharged because the currency of account of the original contracts was sterling, and that even if it was Kenyan currency, the sellers had by their conduct in relation to the letter of credit agreed to vary or had waived the payment term by accepting sterling.

79. At pages 209-212, Lord Denning MR provided an extensive overview of the role of the letter of credit in a sale transaction. This requires therefore an extensive quotation from the Master of the Rolls’ judgment: “ … before the Kenyan sellers presented the documents for the second shipment to the confirming bank sterling was devalued. The Kenyan sellers then presented the documents to the confirming bank and obtained payment in sterling in accordance with the credit. Now they claim to be entitled to more. They say that they were and are entitled to have the price measured in Kenyan currency: that the proceeds of the credit go in reduction of that price: but do not discharge it altogether: and that they are entitled to the balance. The effect of a letter of credit When an irrevocable letter of credit is issued by one bank and confirmed by another, it may be a “conforming” credit; that is, one which conforms exactly to the contract of sale: or it may be a “non-conforming” credit; that is, one which does not conform exactly to the contract of sale, but is afterwards modified or accepted as being satisfactory to all concerned. It then becomes equivalent to a “conforming credit.” In any such case the question arises whether the credit is to be regarded as absolute payment of the price, or as conditional payment of it, or as no payment at all but only a means by which payment may be obtained; that is, as collateral security. This must be a matter of the true construction of the contract: but, in order to construe it, it is important to bear in mind what the consequences are in each case. Absolute payment If the letter of credit is absolute payment of the price, the consequences are these: the seller can only look to the banker for payment. He can in no circumstances look to the buyer. The seller must present the documents to the banker and get payment from him in cash or get him to accept sight or time drafts. If the banker does not take up the documents, the seller will retain them, resell and sue the banker for damages. If the banker takes up the documents in exchange for time drafts, and the banker afterwards becomes insolvent, the seller must prove in the liquidation. He cannot sue the buyer. There is an observation in the High Court of Australia which suggests that a confirmed irrevocable letter of credit may amount to absolute payment. In Saffron v. Société Minière Cafrika (1958) 100 C.L.R. 231, 243, 244, the High Court said: “a provision for payment by irrevocable and confirmed letter of credit ... might perhaps not unreasonably be regarded as a stipulation for the liability of the confirming bank in place of that of the buyer.” and in Soproma S.p.A. v. Marine & Animal By-Products Corporation [1966] 1 Lloyd's Rep. 367, 385, McNair J. said: “Under this form of contract, as it seems to me, the buyer performs his obligation as to payment if he provides for the sellers a reliable and solvent paymaster. ...” McNair J. did not, however, have all the arguments before him. In my opinion a letter of credit is not to be regarded as absolute payment, unless the seller stipulates, expressly or impliedly, that it should be so. He may do it impliedly if he stipulates for the credit to be issued by a particular banker in such circumstances that it is to be inferred that the seller looks to that particular banker to the exclusion of the buyer … Conditional payment If the letter of credit is conditional payment of the price, the consequences are these: the seller looks in the first instance to the banker for payment: but, if the banker does not meet his obligations when the time comes for him to do so, the seller can have recourse to the buyer. The seller must present the documents to the banker. One of two things may then happen: (1) the banker may fail or refuse to pay or accept drafts in exchange for the documents. The seller then, of course, does not hand over the documents. He retains dominion over the goods. He can resell them and claim damages from the buyer. He can also sue the banker for not honouring the credit: see Urquhart Lindsay & Co. Ltd. v. Eastern Bank Ltd. [1922] 1 K.B. 318 . But he cannot, of course, get damages twice over. (2) The bank may accept time drafts in exchange for the documents, but may fail to honour the drafts when the time comes. In that case the banker will have the documents and will usually have passed them on to the buyer, who will have paid the bank for them. The seller can then sue the banker on the drafts: or if the banker fails or is insolvent, the seller can sue the buyer. The banker’s drafts are like any ordinary payment for goods by a bill of exchange. They are conditional payment, but not absolute payment. It may mean that the buyer (if he has already paid the bank) will have to pay twice over. So be it. He ought to have made sure that he employed a “reliable and solvent paymaster.” There are several cases which show that in the ordinary way a letter of credit is conditional and not absolute payment. But, as Mr. Tapp properly observed, they are all concerned with time drafts. Thus in New Zealand in Hindley & Co. v. Tothill, Watson & Co. (1894) 13 N.Z.L.R. 13, 23, the Court of Appeal said that the seller had the liability “of the bank in the first instance and on the bank’s default that of the defendants (the buyers).” In the United States in Greenough v. Munroe (1931) 53 Fed.Rep. 2d 262, 365, the United States Court of Appeals for the second circuit (New York) said: “the authorities favour the view that there is no presumption that the seller takes a draft drawn under a letter of credit in absolute payment of the buyer's obligation to pay for the merchandise; hence upon default by the bank upon its draft the seller may look to the buyer.” Finally in England in Newman Industries Ltd. v. Indo-British Industries (Govindram Bros. Ltd., Third Parties) [1956] 2 Lloyd's Rep. 219, 236, Sellers J. said in regard to a time draft: “I do not think there is any evidence to establish, or any inference to be drawn, that the draft under the letter of credit was to be taken in absolute payment. I see no reason why the plaintiffs ... should not look to the defendants, as buyers, for payment.” Many of the textbooks treat a letter of credit as conditional payment. Thus Professor Davis in 1954 said: “such authority as there is tends to support the view that the letter of credit constitutes conditional, and not absolute, payment. Therefore, should the issuing banker fail to honour the seller’s drafts, drawn in conformity with the terms of the credit, the rights of the seller against the buyer will revive”: see The Law Relating to Commercial Letters of Credit, 2nd ed. (1954), p. 46; 3rd ed. (1963), p. 49, Megrah in H. C. Gutteridge’s Law of Bankers’ Commercial Credits, 4th ed. (1968), pp. 29-33 and Paget on The Laws of Banking, 7th ed. (1966), pp. 620-622 is to the same effect. No payment at all If the letter of credit is no payment at all, but only a means by which payment may be obtained, i.e., if it is only collateral security, the consequences are these: the seller ought to present the documents to the banker. If the seller does not do so, he will be guilty of laches in enforcing his security and the buyer will be discharged: see Peacock v. Pursell (1863) 14 C.B.N.S. 728. But if on the presentation the banker fails or refuses to take up the documents, then (if the letter of credit is only collateral security) the seller will be entitled to take the documents round to the buyer (or send them to him) and demand that he takes them up and pay the price. This situation finds no place in any of the authorities. There is a statement in an old case in Pennsylvania, Bell v. Moss (1839) 5 Whart. 189, 203, when it was said: “A credit with a banker is not payment, but a means of payment, more or less secure according to the solidity of the depositary; and the greater or less certainty of the security cannot affect the question of its character: it is but a security still.” That statement was quoted with approval by Finkelstein in 1930, in Commercial Letters of Credit, p. 156, who says that the seller “desires additional security without the surrender of any rights that he may have against the buyer.” But the complete answer was given by McNair J. in Soproma S.p.A. v. Marine & Animal By-Products Corporation [1966] 1 Lloyd's Rep. 367, 386: “It seems to me to be quite inconsistent with the express terms of a contract such as this to hold that the sellers have an alternative right to obtain payment from the buyers by presenting the documents direct to the buyers. Assuming that a letter of credit has been opened by the buyer for the opening of which the buyer would normally be required to provide the bank either with cash or some form of authority, could the seller at his option disregard the contractual letter of credit and present the documents direct to the buyer? As it seems to me, the answer be plainly in the negative.” Conclusion as to payment As a result of this analysis, I am of the opinion that in the ordinary way, when the contract of sale stipulates for payment to be made by confirmed irrevocable letter of credit, then, when the letter of credit is issued and accepted by the seller, it operates as conditional payment of the price. It does not operate as absolute payment. It is analogous to the case where, under a contract of sale, the buyer gives a bill of exchange or a cheque for the price. It is presumed to be given, not as absolute payment, nor as collateral security, but as conditional payment. If the letter of credit is honoured by the bank when the documents are presented to it, the debt is discharged. If it is not honoured, the debt is not discharged: and the seller has a remedy in damages against both banker and buyer. ”

80. Lord Denning MR concluded that the buyers were entitled to succeed because the sellers had waived their right to have payment by means of a letter of credit in Kenyan currency and accepted instead a letter of credit in sterling. At page 214, the Master of the Rolls said that the letter of credit “ was, when given, conditional payment, with the result that, on being duly honoured (as it was), the payment was no longer conditional. It became absolute, and dated back to the time when the letter of credit was given and acted upon ”.

81. Megaw LJ agreed with Lord Denning MR’s conclusion (with respect to waiver), but did not comment on the point in issue in the present case. Stephenson LJ also agreed with the conclusion of the Master of the Rolls and added at pages 220-221: “ The contract of sale provided for payment by “confirmed, irrevocable letter of credit to be opened at sight one month prior to shipment as stipulated in this contract.” There was no other provision for payment in the contract. If the sellers had rejected the letter of credit it may be that the buyers would have been under an implied contractual obligation to pay the agreed price themselves and the sellers to present to the buyers the agreed documents so as to obtain payment. The bare provision of a letter of credit in conformity with the contract might not have discharged that primary liability under this contract. But the payment by the bank of the agreed price under a conforming letter of credit would have discharged the buyers’ liability to pay, because there was no other obligation to pay provided by this contract. Where, as here, the letter of credit by which the buyers’ liability to pay was to be discharged did not conform to the contract, it only became binding on the sellers if they accepted or agreed to it … If the confirming bank had defaulted, the sellers might not have been prevented by having agreed to the letter of credit and to payment of the price by the bank from looking to the buyers either for the price agreed in the contract of sale or for damages for breach of their contractual promise to pay by letter of credit. For the buyers promised to pay by letter of credit, not to provide by a letter of credit a source of payment which did not pay. As the sellers would have agreed to payment in sterling by the bank, not by the buyers, they would perhaps have been entitled to be paid by the buyers in Kenya shillings. But that question does not arise in this case and I agree that Kenyan currency went out of this contract in the events that happened, whatever might have been the effect on it of an event which did not happen … I agree also with the views expressed by Lord Denning M.R. on the first point that this confirmed irrevocable letter of credit operated as a conditional payment of the price which, when honoured, discharged the buyers’ debt to the sellers. And I agree further that this would in the ordinary way be the effect of such a letter of credit being issued and accepted by the seller in performance of a contract of sale which does not stipulate expressly or impliedly that its issue and acceptance should have a different effect … ”

82. In ED&F Man Ltd v Nigerian Sweets & Confectionery Co Ltd [1977] 2 Lloyd’s Rep 50 , the buyers agreed to buy 1,100 metric tonnes of white crystal sugar from the sellers, payment to be made in cash against documents first presented in London. However, the sale contracts were varied so that payment would be made by 90-day drafts drawn on the buyers’ bank, Merchant Swiss Ltd (MSL), under irrevocable letters of credit. MSL opened three letters of credit in favour of the sellers, which were acceptable to and accepted by, the sellers. The contracts were performed and the sellers, at various dates, tendered the shipping documents together with the 90-day drafts to MSL. The sellers notified the buyers that they had not received payment from MSL. Then, a resolution for a creditors’ voluntary winding-up of MSL was passed. The sellers informed the buyers that as MSL had not honoured the drafts they would, if no payment was obtained from MSL, seek payment direct from the buyers, notwithstanding that the buyers had already paid the amount to MSL.

83. The dispute was referred to arbitration. The arbitral tribunal found that the sellers did not either expressly or impliedly stipulate that the drafts or the letters of credit were to be regarded as absolute payment. On appeal, the buyers argued that there was an implied term in the sale contracts that the drafts or letters of credit were to be treated as absolute payment. Ackner J rejected this submission at page 56: “ Mr. Evans sought to submit as a proposition of law, that where the identity of the bank is agreed between the parties, and not left to the choice of the buyers, it must follow that the sellers impliedly agree that the liability of the issuing bank has been accepted by them in place of that of the buyers. I do not think that this is correct. The fact that the sellers have agreed on the identity of the issuing bank is but one of the factors to be taken into account when considering whether there are circumstances from which it can be properly inferred that the sellers look to that particular bank to the exclusion of the buyer. It is in no way conclusive. In this case, unlike the United States case of Ornstein v. Hickerson referred to by Lord Denning, M. R. [in WJ Alan & Co v El Nasr Export], which was the basis of Mr. Evans’s submission, there were other circumstances which clearly supported the presumption that the letters of credit were not given as absolute payment but as conditional payment. It follows from the finding that the letters of credit were given only as conditional payment, that if they were not honoured, the respondents’ [the buyers’] debt has not been discharged. This is because the buyers promised to pay by letter of credit, not to provide by a letter of credit the source of payment which did not pay. See W.J. Alan & Co. v. [El] Nasr Export, [1972] 1 Lloyd's Rep. 313 per Lord Justice Stephenson at p.329. The sellers’ remedy in such circumstances is to claim from the buyers either the price agreed in the contract of sale or damages for breach of their contractual promise to pay by letter of credit … In order to support his submission that the conduct of the claimants and Merchant Swiss Ltd., referred to above, resulted in a discharge of the respondents’ obligation to pay the price of the goods, Mr. Evans was obliged to rely heavily upon the proposition that the respondents were in the position of guarantors of Merchant Swiss’s limited liability and that the letters of credit had the essential characteristics of a bill of exchange and were to be treated as such. On this basis he invoked the well-known lines of authority relating to the discharge of the guarantor's liability when indulgence is shown to the principal debtor and the need to give notice of dishonour prior to enforcing a bill of exchange. There is in my judgment no justification for so treating the respondents or the letters of credit. The respondents’ liability to the sellers was a primary liability. This liability was suspended during the period available to the issuing bank to honour the drafts and was activated when the issuing bank failed. The respondents were in no respect guarantors of Merchant Swiss Ltd. Further, the suggestion that the letters of credit should be treated as possessing all the main characteristics of a bill of exchange, seems to be derived from the fact that its position was described in the W.J. Alan & Co. v. [El]. Nasr case as being analogous to a bill of exchange, which is presumed when given under a contract of sale, to be given not as absolute payment but conditional payment. The existence of this analogy does not to my mind provide any warrant for treating letters of credit in the manner suggested. I therefore see no justification either in law or in fact for holding that the conduct of the claimants and Merchant Swiss Ltd. discharged the buyers' primary liability to pay the purchase price of the goods .”

84. In Re Charge Services Ltd [1989] Ch 497 , a company operated a charge card scheme under franchise agreements with participating garages whereby the garages accepted its fuel credit cards and charged the company the price of petrol and other fuels supplied to cardholders; the company undertook that on receipt of vouchers signed by the cardholders when obtaining petrol with its cards it would pay the garages the price of the fuel less commission; under subscriber agreements the company issued its cards to account holders for use by them and their authorised signatories and the account holders authorised the company to pay for fuel supplied by the franchisee garages and to debit them accordingly. This scheme was constituted by two bilateral contracts, one between the company and the garage and the other between the company and the cardholder.

85. Sir Nicholas Browne-Wilkinson V-C considered a number of issues, one of which was formulated as follows: “ Is there a general principle of law that whenever a method of payment is adopted which involves a risk of non-payment by a third party there is a presumption that the acceptance of payment through a third party is conditional on the third party making the payment, and that if he does not pay the original obligation of the purchaser remains? ”. At pages 511-512, the Vice-Chancellor addressed this issue as follows: “4. Is there a general presumption of conditional payment? Mr. Potts’ argument is founded on the law applicable to cheques, bills of exchange and letters of credit. It is common ground that where a debt is “paid” by cheque or bill of exchange, there is a presumption that such payment is conditional on the cheque or bill being honoured. If it is not honoured, the condition is not satisfied and the liability of the purchaser to pay the price remains. Such presumption can be rebutted by showing an express or implied intention that the cheque or bill is taken in total satisfaction of the liability: see Chitty on Contracts, 25th ed. (1983), vol. 1, pp. 800-802, paras. 1436 et seq.; Sayer v. Wagstaff (1844) 14 L.J.Ch. 116; In re London, Birmingham and South Staffordshire Banking Co. Ltd. (1865) 34 Beav. 332; In re Romer & Haslam [1893] 2 Q.B. 286 ; Allen v. Royal Bank of Canada (1925) 95 L.J.P.C. 17 and Bolt & Nut Co. (Tipton) Ltd. v. Rowlands Nicholls & Co. Ltd. [1964] 2 Q.B. 10 . There is a similar presumption applicable to payments made by means of letters of credit. If the seller does not receive payment under the letter of credit, it is presumed that the buyer is still liable to pay the price although this presumption can be rebutted by express or implied agreement to the contrary: see W. J. Alan & Co. Ltd. v. El Nasr Export and Import Co. [1972] 2 Q.B. 189 , 212B, per Lord Denning M.R. and, at p. 221E, per Stephenson L.J.; Maran Road Saw Mill v. Austin Taylor & Co. Ltd. [1975] 1 Lloyd's Rep. 156 and E. D. & F. Man Ltd. v. Nigerian Sweets & Confectionery Co. Ltd. [1977] 2 Lloyd's Rep. 50 . Like the judge (see [1987] Ch. 150 , 166A), I cannot detect from the authorities any such general principle as Mr. Potts suggests which is applicable to all cases where payment is to be effected through a third party. The cases on cheques and bills of exchange do not contain any reference to such a principle. They are all cases where there was an obligation to pay a sum of money which predated the tendering of the cheque. The principle applied is that the obligation to discharge the pre-existing debt has not been satisfied unless the creditor has expressly or impliedly agreed to accept the cheque or bill in final satisfaction. When a similar rule was applied to letters of credit in W. J. Alan & Co. Ltd. v. El Nasr Export and Import Co. [1972] 2 Q.B. 189 , Lord Denning M.R., with whom Stephenson L.J. agreed, did not treat the matter as decided by any existing general principle of law. He described the question as one of construction to be determined in the light of the consequences: see p. 209D. He then considered the consequences of treating a letter of credit as being an absolute or a conditional payment in the light of the circumstances affecting the type of commercial transaction in which letters of credit are used. He reached the conclusion that in those circumstances payment by letters of credit should be treated as conditional. Although he referred to the position as being analogous to that applicable to cheques and bills of exchange, he did not treat those cases as establishing any such general principle as Mr. Potts relies on. In my judgment, there is no such general principle. Each method of payment has to be considered in the light of the consequences and other circumstances attending that type of payment. When, as with credit cards, a new form of payment is introduced applicable to new sets of circumstances, it is necessary to consider whether such payment should be treated as absolute or conditional in the light of the consequences and circumstances of such new type of payment, not according to any general principle .”

86. The editors of Benjamin’s Sale of Goods (12th ed., 2023) summarised their understanding of the law based on the authorities, at para. 23-064: “ Once the buyer has procured the opening of a documentary credit in accordance with the terms of the underlying contract, the seller is not entitled to bypass the credit and seek payment directly from the buyer. A documentary credit affords the seller the reassurance of being able to look to one or more banks as, it assumes, reliable and solvent paymasters. In return, the buyer is relieved from having to stand ready to pay the seller upon tender of documents and instead can agree reimbursement arrangements with the issuing bank suitable to the seller’s financial position. The seller’s right to look to the banks is not, therefore, a mere option: an alternative right to elect to present documents directly to, and call for payment from, the buyer would deny the buyer its correlative right to organise its financial affairs with the issuing bank to its own convenience .”

87. At para. 23-310, the editors of Benjamin state that, by reference to para. 23-064, “ The opening of a credit in accordance with the terms of the underlying contract precludes the seller from by-passing the credit and seeking payment directly from the buyer ” and then proceed to discuss the consequences of a “ credit failure ”, which is defined (at para. 23-300) to include the situation where “ the beneficiary makes a complying presentation but the bank, for whatever reason, fails to honour the credit or the bank, in advance of any presentation, anticipatorily repudiates its obligations under the credit …”. The editors continue in para. 23-310 as follows: “ In the event of credit failure, the seller’s position against the buyer then depends on the underlying contract. The opening of the credit may constitute “conditional payment”, in the sense that the seller agrees to look to the credit for payment on condition that it functions properly. Credit failure then permits the seller to tender the documents to, and require payment from, the buyer. Alternatively, the opening of the credit may amount to “absolute payment”, meaning that the seller accepts its rights under the credit in discharge of the buyer’s payment obligations under the underlying contract. The seller agrees to look to the banks to the exclusion of the buyer; it accepts that, in the event of credit failure, its remedies will lie against the banks alone, and it thereby assumes the risk of bank insolvency. The precise role of the opening of a credit in the effecting of payment on the underlying contract is ultimately a matter of interpretation of that contract. Nevertheless, reflecting the extreme unlikelihood that a seller will agree to forfeit the protection otherwise afforded an unpaid seller and accept the risk of having to deliver goods in return for an unsecured claim against an insolvent bank, there is a presumption in favour of interpretation as conditional payment. Given that the purpose of a documentary credit is to facilitate the underlying transaction by providing the seller with assurance of payment, it would indeed be paradoxical if credit failure could place the seller in a worse position than it would be in had no credit been established in the first place. The courts have, accordingly, construed a requirement in an international sales contract for “payment” by documentary credit as importing a promise indeed to effect payment by means of a documentary credit and not simply a promise to establish a possible source of payment that may or may not pay. Moreover, it remains unclear, in the absence of unequivocal wording, under what circumstances, if any, the underlying contract would ever be construed as requiring merely the establishing of a documentary credit. Stipulation by the seller for a particular issuing or confirming bank might be an indicative factor, but the better view is that it is insufficient of itself. Other factors must demonstrate not merely a preference on the part of the seller for a particular bank but an intention of the parties that the seller be required to look for payment to that particular bank “to the exclusion of the buyer”. It is suggested that evidence of such intention will not readily be found. Assuming that the credit constitutes conditional payment, its failure will constitute a repudiatory breach of the underlying contract. The seller may either waive the right to treat the contract as discharged, tender the documents to the buyer and claim the price, or instead treat the contract as discharged and claim damages against the buyer for breach in accordance with normal principle. Should the buyer have already paid the issuing bank, such payment will afford no defence to the seller’s claim; the buyer will carry the risk of being unable to recover the payment .”

88. The editors added in a footnote that “ A suggestion in the High Court of Australia (Saffron v Société Minière Cafrika (1958) 100 C.L.R. 231 at 243–244) that stipulation for payment by an irrevocable confirmed credit might suffice of itself is erroneous and clearly does not represent English law ”.

89. At para. 23-263, the editors of Benjamin summarise the position as set out above as follows: “ Failure to make a complying presentation constitutes a repudiatory breach of the underlying sale contract. Where a contract provides for payment by documentary credit, the opening of the required credit almost invariably constitutes only conditional payment but the condition relates to the operation of the credit according to its terms, not to the receipt by the seller of payment despite a failure to comply with the credit’s terms and conditions. A seller that fails to make a complying presentation has no right to require payment instead from the buyer. The consequence is to characterise every instance of non-compliance under a documentary credit, subject to re-presentation, as a repudiatory breach of the underlying contract, irrespective of whether the tender of such documents to the buyer would constitute a repudiatory breach in the absence of any documentary credit .”

90. In support of the statement that “ A seller that fails to make a complying presentation has no right to require payment instead from the buyer ”, the editors cite two decisions. One decision was Ficom SA v Sociedad Cadex Limitada [1980] 2 Lloyd's Rep 118, but that decision appears to have been concerned with the variation of the requirements of the sale contract by reason of the seller’s acceptance of a letter of credit.

91. The other decision is that of Bingham J in Shamsher Jute Mills Ltd v Sethia (London) Ltd [1987] 1 Lloyd's Rep 388. In that case, the plaintiff sellers sold to the defendant buyers 200 tonnes of jute yarn of a specified quality at US$800 per tonne FOB. Payment was to be by irrevocable and confirmed letter of credit at sight. Oriental Credit Ltd opened an irrevocable letter of credit in favour of the sellers. It did not appear that this was confirmed. The sellers submitted the documents under the letter of credit. Oriental Credit Ltd informed the buyers of the discrepancies and were advised by the buyers that the documents were unacceptable. The buyers refused to accept the documents and the sellers brought proceedings claiming to recover the contract price or damages for non-acceptance. At page 391, the judge noted that the evidence did not clearly establish what happened to the goods in respect of the disputed consignments: “ It appears that they were delivered to Antwerp and there eventually sold, perhaps in satisfaction of freight or warehousing claims. Neither buyers nor sellers derived any benefit. There remained a balance of 18 tonnes which was never shipped under the contract at all ”.

92. Bingham J begins his judgment as follows at page 389: “ This case raises a novel problem. If an f.o.b. seller who has contracted for payment under a letter of credit to be opened by the buyer ships the goods but fails to obtain payment under the credit because of a failure on his part to comply with its terms, may he recover the contract price or damages for non-acceptance against the buyer? The bank which opened the relevant credit is not a party to the action and no claim is made against it. The plaintiffs accept that the documents which they presented under the credit contained discrepancies and that the bank was entitled to refuse payment .”

93. At pages 391-392, Bingham determined this issue as follows: “ The sellers’ central contention is that a letter of credit is conditional payment only. If, therefore, a seller duly ships the goods and fails to obtain payment under the letter of credit he is entitled to recover the price directly from the buyer, at any rate once the letter of credit has expired … Reliance was placed on W. J. Alan & Co Ltd v. El Nasr Export and Import Co., [1972] 1 Lloyd’s Rep. 313 ; [1972] 2 Q.B. 189 , particularly on the judgment of Lord Denning M.R., and on E. D. & F. Man Ltd v Nigerian Sweets & Confectionery Co Ltd., [1977] 2 Lloyd’s Rep. 50 . The buyers agree that a letter of credit is conditional payment only, but contend that it is under the parties’ contract the sole method of payment agreed. While it may well be open to a seller to claim against the buyer if the agreed method of payment fails through no fault of the seller, this is not so where the failure to obtain payment results from the seller’s failure to operate the prescribed machinery in the agreed manner … Reliance was also placed on the Alan case, particularly on the judgment of Lord Justice Megaw, and on Ficom S.A. v Sociedad Cadex Limitada, [1980] 2 Lloyd’s Rep 118 . On the facts as I have summarized them the authorities in my judgment lead to the following conclusions: …

5. The parties are right to agree in the present case that the letter of credit is, on Lord Denning’s classification in Alan, conditional payment. The sellers never agreed that they would only look to Oriental Credit for payment whatever happened. Nor is the credit to be regarded as no payment at all but only a means by which payment may be obtained, a form of collateral security. But to speak of a letter of credit as conditional payment of the price does not perhaps make very clear what the condition is or how it works. If the buyer establishes a credit which conforms or is to be treated as conforming with the sale contract, he has performed his part of the bargain so far. If the credit is honoured according to its terms, the buyer is discharged even though the credit terms differ from the contract terms: that was the Alan case. If the credit is not honoured according to its terms because the bank fails to pay, the buyer is not discharged because the condition has not been fulfilled: that was the Nigerian Sweets case. This makes good sense: … For the buyers promised to pay by letter of credit, not to provide by a letter of credit a source of payment which did not pay [as Lord Justice Stephenson put it in the Alan case at pp. 329 and 220G.] If the seller fails to obtain payment because he does not and cannot present the documents which the terms of the credit, supplementing the terms of the contract, require, the buyer is discharged: that was the Ficom case. In the ordinary case, therefore, of which the present is an example, the due establishment of the letter of credit fulfils the buyer’s payment obligation unless the bank which opens the credit fails for any reason to make payment in accordance with the credit terms against documents duly presented. I know of no case where a seller who has failed to obtain payment under a credit because of failure on his part to comply with its terms has succeeded in recovering against a buyer personally. If this were an available road to recovery, many of the familiar arguments about discrepancies in documents would be unnecessary. Bearing in mind the likelihood that buyers will (as here) sell on to sub-buyers, such a result would, I think, throw the course of international trade into some confusion. It must in my view follow that the sellers here, not having complied with the credit terms, cannot recover against the buyers personally .”

94. As Miss Blanchard KC observed during her oral submissions, Bingham J was not concerned with a case where the buyer in fact received the goods and obtained title to them. Discussion

95. The Seller’s claim against the Buyer is for the price. Section 49(1) of the Sale of Goods Act 1979 provides that: “ Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods .”

96. There are two requirements for a successful claim under a contract of sale pursuant to section 49(1) , namely property in the goods has passed to the buyer, and the buyer has wrongfully failed to pay in accordance with the terms of the contract of sale.

97. By the terms of the Sale Contract, title in the Cargo passed on shipment.

98. The Sale Contract included the following provisions relating to payment of the price:

3. Price and payment : As per section 33 of the Cepsa Trading 2021 GT&C’s … 3.2. Payment terms: The Buyer shall, at its expense, pay the agreed price in U.S. Dollars in immediately available funds in full (without any deduction, set-off, counterclaim, withholding of taxes or duties and/or any discount associated with the transfer of funds or any other charges) to the bank account designated by the Seller, by electronic transfer latest SIXTY (60) CALENDAR DAYS AFTER BILL OF LADING (B/L DATE = 0). 3.3. Credit terms: Buyer to open an irrevocable (and confirmed, if necessary, at Seller’s sole discretion) Documentary Letter of Credit based on Seller’s wording to cover the total cargo amount through a first-class international bank acceptable to Seller. The irrevocable Documentary Letter of Credit shall be received from the confirming and/or advising bank, and accepted by the Seller, in order to be considered valid latest five (5) working days before the first day of loading laycan. Each of the issuing bank and the advising bank, as well as the confirming bank (if necessary), must be acceptable to Seller … ”

99. The GT&Cs provided in clause 33 (which are incorporated by clause 3 of the Sale Contract) that: 33.1. Unless otherwise agreed to by the Seller and the Buyer in the Sales Contract, payment shall be made by means of an irrevocable Documentary Letter of Credit or Stand-by Letter of Credit opened or confirmed by a First-class international bank approved by the Seller, in the form set out, as applicable, in Annex A or Annex B. 33.3. Payment shall be made in full in US Dollars, or in any other agreed currency, without discount, deduction, withholding, offset or counterclaim against presentation, at or before the payment date defined in each Sales Contract, of the commercial invoice together with documents referred to in Annex A or Annex B, or, in their absence, together with the Seller´s Letter of Indemnity (LOI) set out in Annex C. For both, the Seller’s digital commercial invoice and digital LOI shall be acceptable … 33.6. The Letter of Credit shall take effect in accordance with its terms, but such terms shall not alter, add or in any way affect the terms of the Agreement, or any of them … 33.9. Payment Documents: Save otherwise agreed in the Sales Contract the Seller will only be obliged to produce the following documents to receive payment: 33.9.1. In the case of FOB, CFR or CIF deliveries by Vessel: (a) the Seller’s digital copy of the commercial invoice; and (b) three (3) original Bills of Lading issued or endorsed to the order of the Buyer; and (c) original or digital copy, as available, of the certificate/s of Quantity, Quality and origin (or equivalent documents issued at the Loading Terminal). In case that the documents defined in (b) and (c) are not available for presentation to the Buyer on or before the payment due date, the Buyer agrees to pay the Seller upon presentation to the Buyer of a LOI as per Annex C … ”

100. Thus, the parties agreed as follows: (1) By clause 3.2 of the Sale Contract, there was an obligation on the Buyer to pay the purchase price within 60 days. (2) By clause 3.3 of the Sale Contract, the Buyer was to arrange for the issue of letters of credit “ to cover the total cargo amount through a first-class international bank acceptable to Seller ”. (3) By clause 33.1 of the GT&Cs, “ Unless otherwise agreed to by the Seller and the Buyer in the Sales Contract, payment shall be made by means of an irrevocable Documentary Letter of Credit … ”. (4) By clause 33.9 of the GT&Cs, unless otherwise agreed, the Seller will be obliged to produce the specified documents to receive payment, including “ original Bills of Lading issued or endorsed to the order of the Buyer ”, or if the Bills of Lading are not available for presentation, an LOI, upon presentation of which “ the Buyer agrees to pay the Seller upon presentation to the Buyer of a LOI ”.

101. Without regard to authority, these provisions - in particular clause 3.2 of the Sale Contract - indicate that the parties intended that the Buyer be primarily responsible for the payment of the purchase price, upon presentation of the specified documents, although the Buyer is obliged to arrange for the issue of letters of credit to “ cover ” such payment (clause 3.3). Clause 33.1 of the GT&Cs states that “ Unless otherwise agreed to by the Seller and the Buyer in the Sales Contract, payment shall be made by means of an irrevocable Documentary Letter of Credit ”. In my judgment, this does not alter the Buyer’s obligation under clause 3.2 of the Sale Contract, but if it is at odds with clause 3.2 of the Sale Contract, the latter is an agreement otherwise.

102. The authorities reviewed above establish the following principles in circumstances where a sale contract provides for payment by an irrevocable letter of credit: (1) The letter of credit will normally operate as a conditional payment, rather than as an absolute payment (or no payment at all). The contractual requirement that payment be made by letter of credit would operate as an absolute payment only if the contractual terms - whether the express terms or those arising by necessary implication - were clear in having that effect ( Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 236). However, there is no presumption in play; whether or not the letter of credit is intended as a conditional or absolute payment is a matter of contractual construction ( Re Charge Services Ltd [1989] Ch 497 , 511-512). (2) Where a letter of credit operates as an absolute payment, the buyer’s obligation to pay the purchase price is discharged once the requisite letter of credit is issued, because the letter of credit becomes the exclusive source of payment ( WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , 209-210). (3) Where a letter of credit operates as a conditional payment, there are a variety of scenarios which might arise where the issuing bank refuses to pay upon the seller’s presentation of documents to the bank. Three obvious scenarios are: (a) the seller does not present documents for payment at all under the letter of credit during the lifetime of the letter of credit; (b) the seller does not present compliant documents under the letter of credit; and (c) the seller presents compliant documents under the letter of credit in time. (4) If the letter of credit operates as a conditional payment, and the reason for the issuing bank’s failure or refusal to pay is unrelated to the seller’s own fault or responsibility, then the seller in those circumstances is entitled to proceed against the buyer for payment of the price or for damages for non-acceptance ( WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , 209-212, 220-221; Shamsher Jute Mills Ltd v Sethia (London) Ltd [1987] 1 Lloyd's Rep 388, 391-392). (5) If the letter of credit operates as a conditional payment, and the seller is responsible for the issuing bank’s failure or refusal to pay, for example by not presenting the documents in time or by failing to present compliant documents, the seller has no recourse against the buyer for the price, if title to the goods has not passed to the buyer and the buyer is entitled to, and does, reject the documents and goods. See Soprama SpA v Marine & Animal By-Products Corp [1966] 1 Lloyd’s Rep 367 , 385-386; Shamsher Jute Mills Ltd v Sethia (London) Ltd [1987] 1 Lloyd's Rep 388, 392; Benjamin’s Sale of Goods (12th ed., 2023), para. 23-310. This also appears to be the basis of the analysis of a conditional payment by Lord Denning MR in WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , 210, when stating that “ If the letter of credit is conditional payment of the price, the consequences are these: the seller looks in the first instance to the banker for payment: but, if the banker does not meet his obligations when the time comes for him to do so, the seller can have recourse to the buyer ”; however, one reason given for this conclusion is that the seller “ retains dominion over the goods ”. (6) If, however, the letter of credit operates as a conditional payment and the seller is responsible for the issuing bank’s failure or refusal to pay, for example by not presenting the documents in time or by failing to present compliant documents, but if the buyer nonetheless has accepted the goods and the title to the goods has passed to the buyer, the seller is entitled to be paid the price of the goods by the buyer. The same conclusion is reached even if the seller is not responsible for the issuing bank’s failure or refusal to pay, and if the buyer has accepted the goods and title to the goods has passed to the buyer. These were the facts supporting the decision of Sellers J in Newman Industries Ltd v Indo-British Industries Ltd [1956] 2 Lloyd’s Rep 219 , 236 when the judge said that “ I think the conclusion which must be reached in this case is that the property passed, and I therefore find that the plaintiffs are entitled to claim the price on the basis that the property passed ”. In that case, it is not clear whether the seller and/or the buyer were at fault in the issuing bank not paying, but the determining factor as far as Sellers J was concerned was the passing of property in the goods to the buyer. Similarly, the High Court of Australia in Saffron v Société Minière Cafrika (1958) 100 CLR 231, 244, stated that “ It is not reasonable to suppose that the parties here intended that in the unlikely circumstance that the buyer got the chrome but payment therefor against the letter of credit was refused, the seller should not be paid ” and that the trial judge was “ clearly right ” in holding that “ the letter of credit was not intended to be the exclusive source of payment ”. (It is unclear how the Vice-Chancellor viewed the matter in Re Charge Services Ltd [1989] Ch 497 when stating that “ If the seller does not receive payment under the letter of credit, it is presumed that the buyer is still liable to pay the price ”.)

103. I should explain what I perceive to be the rationale for this last-stated proposition, namely the seller is entitled to be paid the price by the buyer, where the parties agree that payment by a letter of credit is conditional payment, payment is not made under the letter of credit, and the buyer nonetheless takes title to the goods: (1) The notion of a conditional payment is that it is conditional on the letter of credit paying the seller; if the letter of credit does not pay, then the condition is not satisfied; if, however, the seller is paid under the letter of credit, the payment becomes absolute and discharges the liability of the buyer ( WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189 , 214, 220-221). (2) It is the passing of property in the goods for which the buyer has contracted in exchange for the payment of the price which is the critical consideration. As section 2(1) of the Sale of Goods Act 1979 provides, “ A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price ”. (3) If the seller was at fault in not obtaining payment under the letter of credit, the buyer might be entitled to rely on that failure as a reason not to continue with its own contractual obligations, for example by rejecting the documents and the goods; in those circumstances, it is difficult to see why the seller should still be entitled to sue the buyer for the price. However, if the buyer nonetheless accepts the property in the goods, then a key requirement of an entitlement under section 49(1) of the Sale of Goods Act 1979 is satisfied ( FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2013] EWCA Civ 1232 ; [2014] 1 WLR 2365 , para. 41, 69). Further, the failure of the buyer to pay the price would then be wrongful. Of course, the buyer might yet have its own counterclaims against the seller.

104. Therefore, having regard to these principles and the terms of the Sale Contract, I have concluded that the Seller is entitled to payment of the purchase price directly by the Buyer (subject to the next issue which I am about to consider). In my judgment, therefore, the Seller is entitled to the price in accordance with section 49(1) of the Sale of Goods Act 1979 in this case, because title to the Cargo was transferred to the Buyer and the Buyer’s failure to pay the price is wrongful (subject to the next issue to be considered). This is so whether or not the Seller was at fault in not obtaining payment of the price under the Letters of Credit. Accordingly, the reasons for the non-payment, on this analysis, are irrelevant to the Seller’s entitlement to be paid the price by the Buyer.

105. As a result, the Buyer has no real prospect of arguing that it has discharged its payment obligations by arranging for the issue of the Letters of Credit, the Seller is entitled to summary judgment in respect of its claim for the price, subject to the outcome of the next issue concerned with the tender of documents. Has there been a tender of documents to give rise to a liability for the price? The parties’ submissions

106. Miss Blanchard KC on behalf of the Seller submitted that: (1) Clause 7 of the Sale Contract provides that the Seller is to provide the documents set out in clause 33.9.1 of the GT&Cs. (2) The question that arises is whether the Seller is obliged to hand over documents before the Buyer’s obligation to pay the purchase price can arise. That is a question of construction. There is nothing in the Sale Contract to support it. On the contrary, had the Sale Contract been performed as expected, and payment made by Letters of Credit, the Seller would have been put in funds before the documents came into the hands of the Buyer, as a function of the ordinary operation of the Letters of Credit. A buyer does not get documents, if the letter of credit fails to pay out. In that scenario, the documents return to the Seller. (3) As reflected in clause 3.1 of the GT&Cs, which provides that title and risk pass on loading “ [n]otwithstanding any right of the Seller to retain documents until payment is effectively made ”, commercial parties do not conduct business on the basis that key security documents are to be handed over to the counterparty before payment is made. (4) It is inherent in the primary payment mechanism contemplated by the Sale Contract ( i.e. payment by letter of credit) that the Seller is not to surrender documents to the Buyer before payment is made. As Millett J explained in Re Charge Card Services Ltd [1987] Ch 150 , 168, “ the sole purpose of the letter of credit is to provide security to the seller to replace that represented by the shipping documents which he gives up in exchange for the credit ”. To construe the contract as requiring the Seller, once the letter of credit mechanism has failed, first to deliver up the documents representing its security and only thereafter to look to the Buyer for payment would subvert its commercial logic. It would also produce the result that the Buyer would be in a better position if the Letters of Credit failed to pay out than if they did. That cannot be right. (5) By clause 33.7 of the GT&Cs, if for any reason the Buyer does not comply with the terms of payment, then, and without prejudice to the rights of the Seller to receive payment, title, but not risk, to the Product shall remain vested in the Buyer, and the Seller shall have a right of lien to the Product delivered until the Buyer has fulfilled its obligations hereunder, and, in addition, the Seller may at any time by notice to the Buyer, without prejudice to any other legal remedies the Seller may have and without any liability whatsoever, forthwith cancel delivery of all or any shipments or withhold delivery of the Cargo and/or release of shipping documents or the letter of indemnity. The Seller thus has a contractual right to withhold shipping documents in the event of non-payment, exactly as might be expected. (6) The scheme of the Sale Contract is the provision of documents in return for payment (clause 33.3 of the GT&Cs). That the primary payment mechanism has failed is no reason to re-write the contractual bargain so as to require documents to be handed over before payment is made; that would be to stand the Sale Contract on its head. (7) The Seller has manifested its readiness and willingness to deliver the documents by actually tendering ( i.e. offering to provide) the same in return for payment (Amended Particulars of Claim, para. 18.2). That being so, to the extent that the Seller’s documentary obligations remain outstanding, in the sense that documents have not been physically handed over, that can provide no basis for the Buyer to resist making payment of the purchase price. (8) Title to the Goods has passed on shipment and the Buyer has wrongfully refused to pay. The Seller is entitled to maintain an action for the purchase price pursuant to section 49(1) of the Sale of Goods Act 1979 . (9) The obligation to pay the purchase price is concurrent with the obligation to tender the shipping documents. The Seller has done everything that it is necessary to do in order to satisfy its obligations. When obligations are concurrent, when one party is ready, willing and able to perform their side of the bargain, it has done enough.

107. Mr Kimbell KC submitted on behalf of the Buyer that: (1) Clause 33.9.1 of the GT&Cs requires that the original Bills of Lading must be produced by the Seller in order to receive payment from the Buyer. At no point has the Seller produced the original Bills of Lading to the Buyer and its indication at para. 18.2 of the Amended Particulars of Claim that it will do so in return for payment does not itself constitute the tendering of those documents (para. 12.4 of the Re-Amended Defence and Counterclaim). (2) No liability on the part of the Buyer to pay the purchase price arose at any point prior to the production by the Seller of the original Bills of Lading (which has still not happened) (para. 13.2 of the Re-Amended Defence and Counterclaim). (3) Even if the Buyer would be obliged to pay the purchase price if the Bills of Lading and any other necessary documents were tendered, the Buyer’s case that no such documents have ever in fact been physically produced has reasonable prospects of success for the following reasons: (a) The word “ tender ” in the context of shipping documents usually means the physical presentation, delivery or handing over to the buyer, bank or another specified party. The buyer must pay the price “ upon tender ” not in advance of tender or in return for the promise of tender of documents. The buyer must be able to inspect the documents presented in order to decide whether to accept or reject the tender. Tender therefore requires a physical delivery or handing over so that inspection can take place before the price is payable. (b) The evidence on this issue is clear. The Seller has only ever offered to tender the Bills of Lading but has never actually produced them or delivered them to the Buyer. (4) The argument advanced by the Seller that the obligations of the parties are concurrent and simultaneous has not been pleaded by the Seller. Discussion

108. The dispute between the parties on this issue appears to be one of a stand-off (as Mr Kimbell KC described it). The Seller maintains that it is not obliged to hand over the requisite documents to the Buyer prior to its entitlement to be paid the purchase price crystallising; instead, it is sufficient if the Seller is ready, willing and able to hand over the documents to the Buyer in order to engage its right to be paid the purchase price. The Buyer maintains that there is no liability on its part to pay the purchase price until the Seller first hands over the requisite documents to the Buyer.

109. Clauses 3 and 4 of the Sale Contract do not appear to bear on this question in any meaningful way. Clauses 3 and 33 of the GT&Cs are, however, relevant in this respect: “3.1. Risk and Title: Notwithstanding any right of the Seller to retain documents until payment is effectively made, title in the Product, and all risks and all liabilities with respect thereto shall pass to the Buyer when the Product passes … 33.3. Payment shall be made in full in US Dollars, or in any other agreed currency, without discount, deduction, withholding, offset or counterclaim against presentation, at or before the payment date defined in each Sales Contract, of the commercial invoice together with documents referred to in Annex A or Annex B, or, in their absence, together with the Seller´s Letter of Indemnity (LOI) set out in Annex C. For both, the Seller’s digital commercial invoice and digital LOI shall be acceptable. … 33.9. Payment Documents: Save otherwise agreed in the Sales Contract the Seller will only be obliged to produce the following documents to receive payment: [there follows a description of the requisite documents] … ”

110. Clauses 33.3 and 33.9 contemplate that the Buyer’s obligation to pay the purchase price and the Seller’s obligation to provide documents are concurrent obligations and that the Buyer shall make payment of the purchase price “ against presentation ” of the requisite documents and that the Seller shall be obliged to “ produce the [requisite] documents to receive payment ” (see also clause 7 of the Sale Contract). I read these provisions as requiring both parties to stand ready, willing and able to provide what they have promised to provide, namely payment of the purchase price and the handing over of the documents, at the same time. This is normally produced by way of an exchange, but immediately prior to the exchange, the parties must be in a position to hand over what they have promised.

111. It is the “ presentation ” of the documents which is the relevant contractual requirement. In this context, a presentation contemplates offering the documents for acceptance (this is the first-stated meaning of “ presentation ” in the Oxford English Dictionary, meaning II.4.a, although it can also mean “ handing over, delivery ”). The parties in argument resorted to the notion that the requisite documents must be “ tendered ” in exchange for payment. The editors of Benjamin’s Sale of Goods (12th ed., 2023), at para. 20-123, state with respect to an FOB buyer’s duty as regards payment, that “ The duty to pay arises on tender of all the documents against which payment is, under the terms of the contract, to be made ”. A “ tender ” in this context refers to “ An offer of anything for acceptance ” (Oxford English Dictionary, noun 2, meaning 2). Such a meaning is consistent with the construction I have given to the contractual terms. Accordingly, I do not accept Mr Kimbell KC’s submission that a “ tender ” of documents means the handing over of the documents to the Buyer.

112. Clause 3.1 of the GT&Cs might suggest that payment is to be made by the Buyer before documents are provided by the Seller, but I consider that that provision should be understood as allowing the Seller to retain the documents unless and until the Buyer is to discharge its obligation to pay the purchase price concurrently with the Seller’s own obligation to provide the requisite documents.

113. The concurrent nature of these obligations is similar to, if not expressly catered for by, section 28 of the Sale of Goods Act 1979 , which provides that “ Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods ”. The delivery of the goods in case of a contract requiring payment against documents is therefore effected constructively.

114. In my judgment, the Buyer’s defence that no obligation to pay the purchase price because the Seller has not yet handed over the requisite documents to the Buyer is not legally sustainable. Provided that the Seller is ready, willing and able to provide the Buyer with the requisite documents at the same time as the Buyer is to make payment, the Seller is entitled to maintain its action for the price.

115. The Seller has stated in its Amended Particulars of Claim at para. 18.2.1 that “ The Seller hereby tenders (i.e. offers to provide) the balance of documents stipulated in clause 33.9.1 of the GT&C in return for payment ”. In reply to this pleaded position, the Buyer pleaded, at para. 12.4.1 of the Re-Amended Defence and Counterclaim, that “ at no point has the Claimant produced the original Bills of Lading to the Defendant and its indication at paragraph 18.2 that it will do so in return for payment does not itself constitute the tendering of those documents ”, and otherwise not admitted the paragraph. A non-admission does not mean that no tender has been made. A tender plainly has been made on the face of the pleading. Further, Mr Gidman in his first witness statement, at para. 8, stated that “ in any event, should it be required to do so as a condition of payment, the Seller has tendered and continues to tender documents in return for payment ”, and again at para. 62, “ The Seller has, in any event, tendered documents (whether required by the Sale Contract or the Letters of Credit) in the Particulars of Claim and continues to do so ”. There has, in my judgment, been a tender of the requisite documents by the Seller. It follows that it is entitled to payment of the price for the Cargo, title to which the Buyer has acquired.

116. As to the Buyer’s submission that the notion of a simultaneous exchange of payment against documents has not been pleaded as constituting a valid tender, I think that is refuted by the tender advanced by the Seller in its Amended Particulars of Claim.

117. As a result, as the Buyer has no real prospect of defending the Seller’s claim for the price pursuant to section 49(1) of the Sale of Goods Act 1979 on this ground, the Seller is entitled to summary judgment on its claim.

118. The parties have agreed the quantum of the price, namely US$13,031,741.54. In my judgment, the Seller’s application should be granted for the entire amount, without any deduction made in respect of the Remaining Cargo. The Buyer submitted that the summary judgment should only be for the purchase price in respect of the Cargo other than the Remaining Cargo. However, in circumstances where the Buyer has acquired title to the entire Cargo and the reason for what was described as the shipowners’ lien being exercised over the Remaining Cargo was a debt said to have been owed by the Buyer’s associated company (and therefore not attributable to the conduct of the Seller), there is no reason to limit the summary judgment amount as the Buyer contends. Is the Buyer entitled to a stay?

119. As I have decided to grant summary judgment upon the Seller’s application, the Buyer has applied for a stay.

120. Mr Kimbell KC on behalf of the Buyer supported this application on the grounds that the events of the load port and the discharge port in Sierra Leone have given rise to a mass of litigation which the parties are claiming and cross-claiming against each other. The purpose of the stay would be to simply give the Seller judgment on the price, but to hold the ring to let the other claims play out so there is overall justice as to what has occurred.

121. CPR rule 3.1(2)(g) provides that the Court may “ stay the whole or part of any proceedings or judgment either generally or until a specified date or event ”.

122. CPR rule 83.7(4) provides: “ If the court is satisfied that— (a) there are special circumstances which render it inexpedient to enforce the judgment or order; or (b) the applicant is unable from any reason to pay the money, then, notwithstanding anything in paragraph (5) or (6), the court may by order stay the execution of the judgment or order, either absolutely or for such period and subject to such conditions as the court thinks fit .”

123. Even though the heading of the rule refers to “ Writs of control and warrants ”, the power in CPR rule 83.7(4) is not confined to cases where a writ of control or other warrant has been issued (White Book (2025), para. 83.7.1; Michael Wilson & Partners Ltd v Sinclair (No. 2) [2017] EWCA Civ 55 ; [2017] 1 WLR 3069 , para. 15).

124. Miss Blanchard KC submitted on behalf of the Seller that: (1) Although the Court has a general case management power to stay a judgment under CPR rule 3.1(2)(g), the White Book (2025) at para. 3.1.8 states that CPR rule 3.1(2)(g) “ does not apply to applications to stay a money judgment since they are governed by r.83.7 ”. (2) In the circumstances, the applicable test is that in CPR rule 83.7(4), namely whether there are “ special circumstances which render it inexpedient to enforce the judgment ”. (3) In addition, given the presence of a contractual “no set-off” clause in the Sale Contract, a further test of “ exceptional circumstances ” applies ( Gemcorp Commodities Trading SA v Zeefacto Oil & Gas Company [2018] EWHC 3938 (Comm) , para. 37-38). It is common ground between the parties that this test applies.

125. In Gemcorp Commodities Trading SA v Zeefacto Oil & Gas Company [2018] EWHC 3938 (Comm) , para. 37-38, Popplewell J said that: “37. The purpose of a no set-off or no counterclaim clause is to ensure immediate payment without having to wait for potentially protracted litigation on any cross claim of any kind …

38. That leaves, finally, the question of whether the matters that are asserted in the counterclaim might form grounds for a stay of execution, or, as it might be put, whether they fall within the second limb of part 24.2 as providing a compelling reason why the matter should be allowed to go [to] trial. In my view, they do not form any basis of a stay of execution and do not form a compelling reason for requiring the claimant’s claim to go to trial, for reasons made clear in a number of cases … The court will usually give effect to the bargain made by the parties and enforce a no set off clause, without permitting a stay of execution, although the court retains a discretion to grant a stay. A strong reason for doing so needs to be shown because it involves overriding the parties’ bargain, and this is likely to require proof of exceptional circumstances. There are no such exceptional circumstances in this case .”

126. In my judgment, there are no exceptional circumstances, or indeed any circumstances, which justify the grant of a stay of execution of the judgment. The connection between the Seller’s entitlement to the price and the Buyer’s claim for demurrage is not of itself a reason for postponing the execution of the judgment in favour of the Seller’s claim for the price. Neither of the circumstances referred to in CPR rule 83.7(4) are established. In those circumstances, the application for a stay is dismissed. Is the Buyer’s counterclaim for demurrage or damages for delay legally sustainable? The parties’ submissions

127. The Buyer has pleaded its counterclaim for demurrage or damages at para. 11A-11F and 17-25 of the Re-Amended Defence and Counterclaim as follows: (1) In breach of clause 4.1 of the Sale Contract and clauses 2.1, 6.2 and 7.2 of the GT&Cs, the Seller delayed in loading the Vessel between 11th June 2024 and 11th July 2024. The Seller did not commence loading of the Vessel as soon as reasonably practicable after, or within a reasonable period of time from, the Vessel tendered tendering NOR. The Vessel tendered NOR on 11th June 2024 and the Claimant did not commence loading until 11th July 2024. The Seller did not commence loading of the Vessel within thirty-six hours of the Vessel tendering NOR. Accordingly, the Seller’s delay resulted in a delay of thirty days less thirty-six hours. (2) The Buyer has thereby suffered loss and damage as follows: the Seller’s delays in loading the Vessel caused: (a) IceChem’s demand for demurrage sums from Mael SM and in turn to Mael SM’s demand that the Buyer pay to it the said demurrage sums. (b) The Buyer to lose the profit on its contract with its buyers, Malador and Conex Energy Sierra Leone Limited (“ Conex ”). (3) The damages claimed by the Buyer are: (a) Damages for the loss of the contract with Malador: US$2,606,792. (b) Damages for the loss of the contract with Conex: US$328,000. (c) Sums due in respect of demurrage, being the sum demanded by Mael SM of the Buyer in respect of Mael SM’s own liability to IceChem: US$5,253,689.59. (d) The Buyer’s legal costs claimed in respect of demurrage: £129,684.35.

128. The Buyer, however, now accepts that the claims for loss of profit with respect to the Malador and Conex contracts have no prospect of success, because such claims are excluded by clause 9.2 of the Sale Contract and clause 39.3 of the GT&Cs.

129. Mr Kimbell KC submitted on behalf of the Buyer submitted that: (1) It would appear to be common ground that the Buyer’s counterclaim for demurrage is not caught by the exclusion in clauses 7.17 and 39.3. Indeed, liability for demurrage is expressly provided for in clause 7 of the GT&Cs. (2) It is accepted that clause 7 provides the framework for any demurrage claim by the Buyer. The Buyer is not therefore seeking to bypass the conditions in clause 7 of the GT&Cs. (3) There are factual issues relating to this claim arising from the application of clause 7.9(k) and clause 7.9(b) (which are relied on by the Seller in its Amended Reply and Defence to Counterclaim), as well as general causation, all of which cannot be resolved in a summary judgment application. These issues on the counterclaim must go to trial.

130. Miss Blanchard KC on behalf of the Seller submitted that: (1) The Sale Contract contains its own laytime and demurrage regime (clause 7 of the GT&Cs). The Buyer has never sought to advance a claim for demurrage under clause 7, which would arise in liquidated, not unliquidated, damages. Save for any demurrage which may accrue under clause 7, liability for any loss and damage which may arise consequent upon late shipment is excluded, demurrage under clause 7 being the “ sole remedy ” for the same (clause 7.17). The Buyer’s attempt to pass on load port demurrage which is being claimed against it is thus excluded. (2) Any liability which might accrue to the Seller is precluded by clauses 7.17 and/or 39.3 of the GT&Cs. (3) The Buyer’s counterclaim is, in essence, framed as an allegation that the Seller failed to load the Cargo within a reasonable period, setting out the duties said to be breached. That is nothing more than an assertion that loading took longer than the contract allows. Accordingly, it falls to be remedied exclusively by Demurrage (defined in the Sale Contract as “ the agreed amount payable to the Vessel in respect of non-permitted or excepted delay beyond the Laytime ”: clause 27(t) of the GT&Cs), with all other claims excluded. No claim under clause 7 has ever been advanced. (4) The proper characterisation of the counterclaim arising from the demand made by Mael SM is that it is a claim in the nature of an indemnity; indeed, that part said to continue accruing is expressly described as such by the Buyer. The counterclaim is not a claim for Demurrage under the Sale Contract. Any such claim would be subject to strict contractual pre-conditions, including time limits for the notification of claims (which have long since expired: clause 7.14 of the GT&Cs). The counterclaim impermissibly seeks to bypass the independent code governing when and how the Buyer may recover demurrage from the Seller by bringing a claim excluded by clause 7.17. (5) Only about US$700,000 (US$$690,166.50) of the “ demurrage ” claim relates to load port demurrage: the balance accrued at the discharge port. The basis on which it is said that the Seller could be liable for the latter is a mystery; likewise the claim for legal costs.

131. During oral argument, as noted above, the Seller relied on clause 7.14 of the GT&Cs, but as Mr Kimbell KC pointed out, the Seller has not pleaded reliance on clause 7.14 in answer to the demurrage claim. As a result, I do not propose to consider it in respect of the current application. Discussion

132. Clause 5 of the Sale Contract provides that: “5. Vessel, Laytime & Demurrage : … Laytime: As per sections 7, 15 and 22 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm). 5.3. Demurrage rate: As per Charter Party’s rate. 5.4. Demurrage other terms, conditions and exceptions: - Terms, exceptions and conditions as per GTC´S. - In case of T/C vessel, demurrage rate to be agreed upon vessel nomination as per market conditions … ”

133. The GT&Cs contained the following provisions:

7. LAYTIME AND DEMURRAGE … 7.17. The Seller shall not be liable (other than for Demurrage, as specified herein) for any loss or damage, direct or indirect, which the Buyer may suffer as a result of the shipment not being loaded within the time allowed. The sole remedy for delay of the Vessel available to the Buyer will be Demurrage according to this section 7, and damages for detention are expressly excluded …

27. DEFINITIONS The following words shall have the following meaning except when the context otherwise requires: … (j) Charter Party: means the contract of affreightment of the Vessel … (t) Laytime and Demurrage: mean, respectively, the time agreed between the Parties or set forth in these Cepsa Trading 2021 GT&C’s during which the Vessel will be available for loading or discharging without payment of demurrage, and the agreed amount payable to the Vessel in respect of non-permitted or excepted delay beyond the Laytime …

39. LIABILITY AND LIMITATIONS AND EXCLUSIONS OF LIABILITY … 39.3. The Seller shall not be liable for consequential, indirect or special losses/damages of any kind arising out of or in any way connected with the conclusion, the performance, the failure to perform or the termination of the Sales Contract. In particular and without limiting the generality of the foregoing, the Seller shall in no circumstances be liable for more than the difference between the market price and the contract price with respect to the relevant Quantity of Product, nor be liable for any loss of profit, cost of overheads thrown away or loss resulting from shutdown of any plant of the Buyer due to the lack of Product … ”

134. As I understand the Buyer’s claim for “ demurrage ”, it relates to the demurrage claimed by IceChem against Mael SM and by Mael SM against the Buyer, in the sum of US$5,253,689.59. I also understand that US$690,166.50 relates to loadport demurrage. However, I do not fully understand on what basis the balance of the demurrage claim is made.

135. The Sale Contract permits a demurrage claim to be made and, moreover, the demurrage claim might well relate to “ demurrage ” arising under the “ Charter Party ”, as defined. It may well be that the Buyer’s claim is supportable having regard to the terms of the Sale Contract. Accordingly, I am not satisfied that the Buyer has no real prospect of succeeding in its claim for demurrage (other than the claims for lost profit).

136. In the circumstances, I am not prepared to grant summary judgment which involves the dismissal of the Buyer’s demurrage claim, with the exception of the “ loss of profit ” claims relating to the Malador and Conex heads of loss, which the Buyer accepts have no real prospect of success. Conclusion

137. For the reasons explained above, (1) I grant the Seller’s application for summary judgment on its claim for the purchase price for the Cargo against the Buyer, in the sum of US$13,031,741.54. The Buyer’s application for a stay of this judgment is dismissed. (2) I grant the Seller’s application for summary judgment dismissing the Buyer’s claim for loss of profit on the Malador and Conex contracts. (3) I dismiss the Seller’s application for summary judgment for the balance of the Buyer’s demurrage claim.

138. I am grateful for both counsel for their helpful and excellent written and oral submissions.