High Court clarifies GAFTA force majeure notice rules in ADM v Inerco Trade

The Commercial Court has partly upheld and partly remitted a GAFTA Board of Appeal award concerning a failed shipment of Ukrainian corn, in a judgement that clarifies how force majeure and extension clauses operate under GAFTA's standard trading terms.

In ADM Industries Centers Ltd (trading as ADM Israel) v Inerco Trade SA [2026] EWHC 1873 (Comm), Paul Stanley KC, sitting as a deputy High Court judge, heard a section 69 appeal from an arbitration award that had granted the sellers, Inerco Trade, damages of USD 3.12 million after the buyers rejected reliance on the force majeure provisions of GAFTA Form 48. The dispute arose after Russian inspectors operating under the Black Sea Grain Initiative suspended inspections of inbound vessels between roughly 7 and 18 May 2023, preventing the nominated vessel from loading within the contractual shipment window.

Andrew Baker J had granted leave to appeal on three points of construction concerning clause 20, the prevention of shipment provision, and its interaction with clause 10, the extension of shipment provision. The first concerned the meaning of "unforeseeable" impediments to navigation under clause 20's force majeure definition. The judge upheld the board's approach, finding that the term does not require an event to be so improbable as to beggar belief, but rather one whose probability of affecting performance is negligible when assessed against the contract's commercial context. He rejected the buyers' argument, drawn from Overseas Tankship (UK) Ltd v Miller Steamship Co Pty Ltd (The Wagon Mound) (No 2), that foreseeability in tort law set the relevant threshold, noting that the concept takes its colour from context and that a force majeure clause exists precisely to allocate risks too remote to warrant specific provision. The board had been entitled to conclude that while brief inspection delays were foreseeable, a stoppage lasting more than two days was not.

On the second issue, the judge disagreed with the board's conclusion that timely notice under clause 20 was not a condition precedent to reliance on the clause. He held that the phrase "provided that" in the clause unmistakeably imported a condition precedent, and that the board's substituted test of "commercial logic and natural justice" in the absence of proven prejudice lacked any workable legal yardstick. Because the board had not made a clear factual finding as to precisely when the relevant force majeure event began, whether 7 May or 9 May 2023, the judge was unable to determine whether the sellers' notice, given on 16 May, had been served within the required period. That aspect of the award was remitted to the tribunal for a fresh factual finding.

On the third issue, concerning whether sellers could invoke the separate clause 10 extension on top of any clause 20 extension, the judge agreed with the board that they could. He found that the phrase "originally stipulated period" in clause 10 refers to the shipment period as it stood immediately before any clause 10 extension is claimed, including any prior extension already effected under clause 20, a reading he considered commercially coherent given the anomalies that would otherwise arise in calculating price allowances and damages.

The judge accordingly remitted the award to the board to determine whether the force majeure event began before 9 May 2023, a finding that will determine whether the sellers validly invoked clause 20 at all.