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Marine Trades V. Pioneer Freight Notes

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MARINE TRADES V. PIONEER FREIGHT FACTS The Claimant and the First Defendant entered 14 Forward Freight Agreements ("FFAs") between May 2007 and September 2008. The 2007 Terms of the Forward Freight Agreement Brokers Association ("FFABA") operated so as to constitute between the parties as of 16 April 2008 a Master Agreement on the terms of the 1992 International Swap Dealers Association (Multi-Currency-Cross Border) Master Agreement ("the Master Agreement") as supplemented and amended by clause 9 of the FFABA 2007 Terms, under which each of the FFAs was and is a Transaction. Because of the dramatic downturn in the freight market in the fourth quarter of 2008, there was a significant difference between the Contract Rates fixed under the FFAs at a time when the market was more buoyant and the Settlement Rates fixed by reference to Baltic Exchange indices. In consequence, each of the FFAs between these parties has been substantially "in the money" for whichever party is "the Seller" under the particular FFA. By the end of January 2009, Marine Trade had taken the view that Pioneer was affected by an Event of Default within the meaning of the Master Agreement, so that, on the construction of the Master Agreement for which Marine Trade contends, Pioneer was not entitled to set off the sums payable to it by Marine Trade against the sums payable by it to Marine Trade. Pioneer on the other hand invoiced Marine Trade by an invoice dated 1 February 2009 for the net balance of just over US$5 million. When Marine Trade did not settle the net balance on that date, on 9 February 2009 Pioneer served a Notice under Section 5(a)(i) of the Master Agreement i.e. a Notice of failure to pay which would constitute an Event of Default by Marine Trade.... If found liable, in the state of the market as it then was, this would have meant that a very substantial sum was payable by Marine Trade to Pioneer by way of wash out of all the contracts... In circumstances which will require more detailed analysis hereafter, Marine Trade then paid the net balance of just over US$5 million under protest on 13 February 2009. ISSUE Is Marine Trade entitled to restitution of the net aggregate Settlement Sums in respect of the January 2009 Contract Month paid to Pioneer by Marine Trade under protest?
HOLDING In a case where it is alleged that money has been paid by mistake, two matters must be established, in relation to both of which the

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