Trans Trade RK SA v State Food and Grain Corporation of Ukraine clarifies section 49(2) claims

On 17 July 2025, the High Court of England and Wales delivered its judgement in Trans Trade RK SA v State Food and Grain Corporation of Ukraine, resolving appeals concerning arbitration awards for unpaid Ukrainian feed corn shipments. The case provides crucial clarity on section 49(2) of the Sale of Goods Act 1979 and its application to international commodity contracts.

Background and dispute

Trans Trade RK SA contracted with the State Food and Grain Corporation of Ukraine for feed corn supplies, with payment due upon shipment. Despite receiving significant quantities, Trans Trade failed to pay for two shipments whilst disputing the defendant's pricing claims. The matter proceeded through three G.A.F.T.A. Board of Appeal arbitration awards dated 31 July 2024.

The claimant's arguments centred on frustration and mitigation, asserting that invoices failed to meet contractual standards. The Board of Appeal upheld the defendant's pricing claims and awarded costs, prompting the subsequent High Court appeal.

Legal framework and analysis

The central issue examined whether a seller could claim payment under section 49(2) when contractual conditions linked delivery and payment obligations. This statutory provision typically permits price claims irrespective of delivery completion, but its application to f.o.b. contracts required careful consideration.

Mr Justice Andrew Baker found that the Board of Appeal had misdirected itself regarding section 49(2)'s application. The judgement clarified that whilst sellers may maintain payment claims under this provision, such claims are invalid when payment terms require prior or concurrent delivery performance.

The contracts explicitly stipulated payment contingent upon delivery, rendering section 49(2) inapplicable. This interpretation emphasises the interconnected nature of delivery and payment obligations in commodity trading agreements.

Implications for commercial practice

The ruling significantly impacts international sales agreements by clarifying when sellers can legitimately pursue payment claims. The judgement establishes that section 49(2) cannot circumvent contractual provisions linking payment to delivery performance, regardless of ownership transfer considerations.

This interpretation affects commodity trading practices where f.o.b. terms commonly govern transactions. Sellers must ensure contractual terms align with intended payment mechanisms, particularly when seeking to maintain claims independent of delivery obligations.

The decision reinforces the primacy of contractual interpretation over statutory presumptions. Where parties explicitly link payment to delivery performance, courts will uphold such arrangements rather than applying general statutory provisions that might otherwise permit price claims.

Broader legal significance

The judgement contributes to the evolving jurisprudence surrounding international commodity contracts and payment disputes. It emphasises the importance of precise contractual drafting in establishing clear payment obligations that withstand legal scrutiny.

The ruling also highlights the interaction between arbitration awards and subsequent court proceedings, demonstrating how appellate courts will scrutinise arbitral tribunals' legal reasoning, particularly concerning statutory interpretation.

The case underscores the continuing relevance of the Sale of Goods Act 1979 in modern commercial disputes whilst confirming that statutory provisions must be applied within their proper scope. The judgement provides valuable guidance on reconciling statutory rights with contractual obligations in complex international trading relationships.

This decision will influence future commodity trading disputes and inform contractual drafting practices across international markets. The clarification of section 49(2)'s limitations ensures greater certainty in commercial relationships whilst reinforcing the fundamental principle that contractual terms govern parties' respective obligations.