Facts: In November 2021, Olam Global Agri Pte Ltd (Olam) agreed to sell a cargo of yellow corn to Holbud Ltd. on FOB terms, incorporating GAFTA Contract No 49. Olam had the option to source the corn from either Ukraine or Romania, with delivery scheduled between March 1 and March 15, 2022. On February 24, 2022—just before the Black Sea ports were shut down due to the Russian invasion—Olam declared the corn would be of Ukrainian origin. Olam subsequently declared Force Majeure due to the port closures and the conflict. In response to Olam’s inability to supply, Holbud requested that Olam nominate a Romanian port instead, which was permitted under the contract. Olam refused, failed to make an alternative nomination, and failed to deliver the corn. Holbud treated Olam’s actions as a repudiatory breach of the contract and claimed substantial damages. Both the GAFTA First Tier Tribunal and the GAFTA Board of Appeal ruled in Holbud’s favor. They determined Olam’s Force Majeure declaration was invalid and awarded Holbud roughly EUR 4.8 million in damages. Olam appealed the decision to the High Court under section 69 of the Arbitration Act 1996, focusing exclusively on the damages owed. Olam argued that, to claim substantial damages, Holbud should prove that it was ready and able to perform its own contractual obligations—such as having an available vessel.
Held: Olam was successful. Even when a counterparty wrongly declares force majeure (and is thereby in repudiatory breach), the innocent party cannot claim substantial damages if they fail to prove they were actually ready and able to perform themselves. This is known as the compensatory principle. Accordingly, by redeploying its vessel to other work, Holbud was no longer in a position to perform its obligations under the contract, meaning its substantial damages claim failed.
As a second line of argument, Holbud argued that Olam was estopped from applying the compensatory principle on the basis that, through the force majeure declaration, it had represented that it would not require a vessel to take delivery of the corn. Holbud’s attempt to use “estoppel” or argue they could have substituted a new vessel failed, as they had not pleaded these points properly during the arbitration. Since Holbud had failed to raise the waiver by estoppel argument before the arbitral tribunals, and those tribunals had not therefore made the necessary factual findings to support an estoppel, there was no basis for the Court to find for Holbud on that point. Trower J. said: “Although it is a basic principle that any party must have a fair opportunity to deal with arguments which affect its legal rights, I recognise that it may have been open to the [GAFTA Board of Appeal] to conclude that it would not be unfair to make a finding of estoppel if the point was in play or in the arena in the proceedings…even if not articulated in conventional legal language.
Olam Global Agri Pte Ltd v Holbud Ltd [2025] EWHC 3187 (Comm)
