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Huyton V. Peter Cremer Notes

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HUYTON V. PETER CREMER FACTS In this action the plaintiff, Huyton S.A. ("Huyton"), seeks declaratory and injunctive relief to prevent the defendant, Peter Cremer G.m.b.H. & Co. ("Cremer"), from pursuing a claim which Cremer has referred to London arbitration by GAFTA. The claim which Cremer wishes to arbitrate seeks to establish that demurrage under a sale contract entered into with Huyton should have been measured at a rate of U.S.$6500 per day, rather than the U.S.$11,000 which Huyton insisted upon Cremer paying. The factual background starts with the sale contract dated Sept. 13, 1995 for the shipment and sale by Cremer as seller to Huyton as buyer of 30,000 tonnes Romanian milling wheat plus or minus 10 per cent. at buyer's option at U.S.$175 per tonne f.o.b. spout trimmed Constantza in September/October, 1995. Cremer is based in Hamburg. It had previously contracted to buy equivalent wheat from Romanian suppliers. Huyton is a Swiss company, owned I was told by Sudanese interests, but represented for most PUrpoSes by a London company, Agrimpex Co. Ltd. Huyton also had a pre-existing commitment, made Aug. 31, 1994, to sell to Sotisco Trading Co. Ltd. ("Sotisco") of Khartoum. The vessel arrived at Port Sudan on Dec. 22, 1995. Discharge took place and was completed by Jan. 2, 1996. On Jan. 4, 1996, Sotisco complained to Huyton about the gluten content of the wheat, while acknowledging that the contract contained no express term regarding gluten, and ended: Finally, pls be notified tht above cargo will be kept in silo at Port Sudan for your account own risk and expense till this quality dispute is finalized. Contrary to this message, by Jan. 4, 1996, the 7251 tonnes had in fact been removed inland. Huyton did not at this stage pass on Sotisco's complaint to Cremer. On the contrary, it responded to Sotisco on Jan. 3 and 4, rejecting the relevance of gluten content under the contract terms and further relying on the provisions making condition on shipment final. On Jan. 9, 1996 Cremer presented shipping documents to Huyton's bank, notifying Huyton that it had done so. At 15 29 hours on Jan. 12 Huyton informed Cremer that Huyton's buyer was claiming the wheat to be very dry and of poor quality and said that it would have no alternative but to pass on my claim for damages which it might receive. At 17 05 hours on Jan. 12, 1996 Huyton rejected the shipping documents for a number of alleged discrepancies.

By a message also prepared on the 15th, but not apparently transmitted until Jan. 17 Cremer responded to Huyton's rejection of the shipping documents. Cremer asserted that the cargo had been "accepted upon completion of discharge" on Jan. 2 and that Huyton had thereby "waived any right to reject the documents as presented to you on 10th. Agreement to not arbitrate between Huyton and Cremer On Feb. 6 Cremer said that it found Huyton's attitude "completely unreasonable", and that the simple facts were that ... you have obtained delivery of the contract goods and you are refusing to pay the full contract price. Despite of what you say we know that you are not in a position to place the goods at our disposal at the port of discharge. Part of the goods have already been removed by your sub-buyers and we know that further quantities are being removed every day. This last, erroneous statement was doubtless based on the erroneous information received by Cremer from its local agent on Jan. 30. Cremer went on: Due to your breach of contract we are left in an impossible position. We must accept that we have no real choice but to accept your terms for obtaining payment. Huyton on Feb. 6 re-presented the documents to the bank under the letter of credit opened by Sotisco, but on Feb. 7 asked Cremer for confirmation that regard presentation of the amended documents as the first proper presentation of documents and that you irrevocably withdraw your demand to arbitrate on demurrage and the guarantee charges. Cremer replied that it agreed these points with, for the reasons previously stated, "the greatest possible reluctance". Huyton instructed its bank to pay and it paid the net sum of U.S.
$4,502,813.94 on Feb. 9, 1996. Cremer's Claim: On Feb. 14, 1996, Cremer confirmed receipt of payment and said that it did not consider itself bound by the so called agreement to allow the deductions and give up the right to arbitrate about demurrage and guarantee expenses. It said that it had been forced to agree these terms by Huyton's breach of contract and threat to refuse to pay the price despite the fact that Huyton had delivered the goods to its sub-buyers who were removing them from the port of discharge. Cremer therefore confirmed its appointment of its arbitrator. Huyton rejected Cremer's stance and indicated that it would if necessary commence the present action to restrain pursuit of any such arbitration.

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