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GAFTA Prohibition Clause – Sellers held not entitled to rely on clause based on the law and the facts.

The Facts

The sale was for 3,000 metric tons, 10% more or less at sellers’ option, of feed wheat of Ukrainian or Russian origin, C & F,  Free out, one safe port, one safe berth, Haifa or Ashdod.

The contract incorporated the Gafta 48 Contract Form which included the Gafta Prohibition Clause.  The Prohibition Clause read as follows:

“PROHIBITION – in case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the government of the country of origin or of the territory of the port or ports of shipment named herein is/are situate, restricting export, whether partially or otherwise, any such restrictions shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfillment whether by shipment or by other means whatsoever or to that extent this contract or any unfulfilled portion thereof shall be cancelled.  Seller shall advise buyers without delay with reasons therefore, and if required, sellers must produce proof to justify the cancellation.”

Prior to the contract, State Customs Control had begun taking samples of export cargos during loading. 

After the contract but before the laycan period, a directive was issued appointing a single forensic laboratory to test all samples taken.  This created delay but did not prevent the export of feed wheat.

Sellers contended that the directive entitled them to cancel without more.


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