Claim No: CFI 052/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
EAST FISH PROCESSING LLC
Claimant
and
(1) ECOLOG INTERNATIONAL FZE
(2) ECOLOG INTERNATIONAL
Defendants
ORDER WITH REASONS OF JUSTICE WAYNE MARTIN
| Hearing : | 20 & 21 June 2022 |
|---|---|
| Counsel : | Mr. PV Dinesh instructed by Khalifa Bin Huwaidan Al Ketbi Advocates & Legal Consultants for the Claimant. Ms. Emma Walker instructed by DWF Middle East LLP for the Defendants. |
| Judgment : | 23 August 2022 |
UPON the Claimant’s Part 7 Claim dated 6 May 2021 (the“Claim”)
AND UPON the Defendants’ Defence with Counterclaim dated 25 July 2021
AND UPON the Claimant’s Reply to Defence dated 8 August 2021
AND UPON the Defendants’ Reply to the Claimant’s Reply to Defence dated 29 August 2021
AND UPON reviewing the relevant case files
AND UPON the Rules of the DIFC Courts(“RDC")
AND UPON hearing counsel for the Claimant and counsel for the Defendants are the Trial on 20 and 21 June 2022 (the“Trial”)
IT IS HEREBY ORDERED THAT:
1. The Claim is dismissed.
2. The counterclaim is allowed and judgment is entered in favour of the First Defendant in the amount of AED574,634.40 plus interest at the rate of 9% from 1 February 2020 until the date of the Judgment.
3. The Claimant is to pay the Defendants’ costs of the proceedings to be assessed by a Registrar unless agreed.
Issued by:
Nour Hineidi
Registrar
Date of issue: 23 August 2022
Time: 2pm
SCHEDULE OF REASONS
1. The Claimant, East Fish Processing LLC (“East Fish”), commenced proceedings in this Court claiming AED1,021,817.18 from the Defendants, Ecolog International FZE (“Ecolog”) and Ecolog International. East Fish asserts that the monies due constitute the balance of the purchase price due as the purchase price under contracts between East Fish and Ecolog for the sale and purchase of goods, being frozen seafood. Ecolog denies liability on the basis that the goods supplied by East Fish did not comply with the terms of the contracts of sale because:
(a) the percentage of glazing (ice) in the packages of frozen product supplied exceeded the percentage shown on the label of the package, thereby overstating the quantity of seafood within the package; and
(b) the fish supplied by East Fish:
(i) was not the fish ordered by Ecolog, or the fish shown on labels of the goods supplied, in that an inferior product, pacific pollock, was supplied in place of cod, plaice and haddock; and
(ii) the product supplied was mislabelled in that product labelled as red snapper and shown as originating in the Indian fishing region was a species of red snapper not found in Indian waters.
2. Ecolog asserts that by reason of these breaches of contract it was entitled to reject the goods supplied by East Fish, as a result of which it was obliged to obtain alternative supplies of seafood on the open market as a matter of some urgency. Ecolog counterclaims against East Fish for the additional cost of acquiring those alternative supplies of seafood, over and above the amounts that would have been paid to East Fish, together with the reimbursement of costs incurred subjecting the products supplied by East Fish to scientific testing and analysis and an allowance for the time spent by Ecolog’s staff dealing with the issues which arose by reason of the breaches of contract by East Fish.
3. For the reasons which follow East Fish has failed to prove that the goods which it supplied complied with the terms of the contracts for sale and purchase of those goods and Ecolog has established that it was entitled to reject the goods supplied by East Fish (which it did). It further follows that East Fish has failed to establish its entitlement to payment under the contracts and Ecolog has established its entitlement to damages for breach of those contracts, comprising the additional amounts paid to acquire supplies from alternative sources and costs incurred with respect to the scientific testing and analysis of the goods supplied by East Fish. There is no reason why East Fish should not pay the legal costs of both Defendants.
The Parties
4. East Fish is a company registered with the Ajman Economic Department which carries on business sourcing, processing and supplying seafood, meat and poultry products in the UAE.
5. Ecolog is a company registered with the Dubai Airport Free Zone which carries on business supplying integrated solutions, supply chain and logistics, technology, construction, facility management and environmental services. Ecolog holds contracts with the United Nations (UN) for the supply of various services to the UN in relation to peacekeeping missions across Africa. Relevantly to these proceedings, Ecolog supplied services to the UN in respect of Multidimensional Integrated Stabilisation Missions in Mali (MINUSMA) and the Central African Republic (MINUSCA). The seafood products which Ecolog ordered from East Fish, which are the subject of these proceedings were intended for consumption at those Missions.
6. Ecolog International is a company based in Bamako, Mali. It is not at all clear why Ecolog International was joined as a defendant to these proceedings. In the Particulars of Claim (PoC) filed by East Fish it is asserted that all relevant contracts were between East Fish and Ecolog. No cause of action against Ecolog International is disclosed by the PoC.
7. During the trial hearing, counsel for East Fish accepted that Ecolog International was not a party to any of the contracts the subject of these proceedings1. Counsel for East Fish was unable to identify any coherent reason or justification for the joinder of Ecolog International as a defendant2. He asserted that Ecolog International acted as the agent of Ecolog, but was unable to explain why, even if that was established, it would give rise to a cause of action in favour of East Fish as against Ecolog International. In legal principle if Ecolog International was the agent of Ecolog, its acts and omissions would bind Ecolog, in terms of its contractual relationship with East Fish, but not being a party to the contracts, Ecolog International would not be liable for those acts and omissions in the absence of some extraneous factor, such as breach of the warranty of authority. However, there is no hint of any allegation of that kind against Ecolog International.
8. The evidence did not establish any arguable basis for a claim against Ecolog International, and the claim against that company must be dismissed with costs.
The Pleadings
The Claim
9. The proceedings were commenced by a claim form filed on 6 May 2021. PoC were filed on 20 June 2021.
10. After referring to the parties to the proceedings it is asserted in the PoC that East Fish entered into an agreement with Ecolog for the shipment of food products from UAE to Bamako in Mali in accordance with Local Purchase Orders issued by Ecolog.
11. In the PoC it is asserted that:
“All the seafood products were processed and packed in the UAE by the Claimant completely.”
As will be seen, that assertion is incorrect.
12. The PoC contains particulars of the amounts due under various purchase orders, together with particulars of the amounts paid, leading to the assertion that on the balance of the account between East Fish and Ecolog, an amount of AED1,021,817.18, is due from Ecolog to East Fish. Copies of various purchase orders, invoices and statements of account issued by East Fish are attached to the PoC.
The Defence and Counterclaim
The Defence
13. The Defence and Counterclaim was filed on 18 July 2021. In the Defence it is asserted, correctly, that Ecolog International is not a proper party to these proceedings.
14. In the Defence it is admitted that East Fish and Ecolog entered into an agreement for the supply of products from UAE to Bamako in Mali, and that all products were intended exclusively for use at UN Missions. It is further asserted that it was a term of the agreement that East Fish would supply products in compliance with the Standard Product Specifications published by the UN (UN Specifications) in relation to each category of product and which were provided by Ecolog to East Fish.
15. In the Defence it is further asserted that goods were supplied in accordance with purchase orders issued by Ecolog, which incorporated Ecolog’s standard terms and conditions. Particulars of the purchase orders relevant to the issues in the proceedings are provided in the Defence.
16. In the Defence it is further asserted that East Fish was shown as the “packer” on the labels of the goods supplied to Ecolog, but in fact the goods were packed in East Asia and were simply repacked by East Fish in UAE3.
17. In the Defence it is asserted that random sample testing by the UN revealed that the goods supplied by East Fish did not comply with the requirements of the contract relating to their supply because:
(a) There was excessive glazing in the packages supplied, thereby reducing the quantity of product supplied; and
(b) The products were mislabelled, by stating the wrong species of seafood and place of origin4.
18. In the Defence it is further asserted that the UN rejected the goods supplied because of these non-compliances and placed all products supplied by East Fish “on hold” as from 14 February 20195.
19. In the Defence, it is further asserted that Ecolog provided products supplied by East Fish for testing by a scientific laboratory in Germany (Eurofins), which testing established that the products supplied by East Fish were incorrectly labelled and did not comply with the products ordered by Ecolog6. In the Defence, it is further asserted that East Fish admitted that the goods supplied did not conform to the UN Specifications7. In the Defence it is asserted that East Fish is not entitled to be paid for the goods supplied because those goods did not conform to the requirements of the contract of sale.
The Counterclaim
20. The allegations of breach of contract by East Fish are repeated in the Counterclaim8. In the Counterclaim it is asserted that by reason of those breaches Ecolog incurred loss and damage in the form of:
(a) Additional costs incurred acquiring equivalent goods from third parties in order to meet the needs of the UN Missions, in the amount of USD130,689 (AED480,046.83);
(b) Fees paid to Eurofins for the testing of product in the amount of EUR21,861 (AED94,587.57);
(c) Costs incurred by reason of its personnel spending time addressing and resolving the issues caused by East Fish’s breach of contract in the amount of EUR42,291.51 (AED183,020.54).9
21. Ecolog’s Counterclaim is for damages in these amounts, together with interest.
The Reply and Defence to Counterclaim
22. The Reply and Defence to counterclaim were filed on 8 August 2021. In the Reply East Fish asserts, somewhat inconsistently, that although the UN Specifications had not been provided to it “at any point of time”, nevertheless, East Fish “had at all times complied with the UN STD specifications”10.
23. In the Reply East Fish asserts that as Ecolog inspected the goods prior to their export to Mali, and found no non-conformity during those inspections, Ecolog cannot now assert that the goods supplied did not conform to the UN Specifications.
24. In the Reply East Fish asserts that reports from the UN to the effect that the goods supplied by East Fish were non-compliant relay a “false and frivolous claim” and further asserts that Ecolog:
“…had ulterior motive and has colluded with personals (sic) in Eurofins to obtain a false report by testing some other product which is not supplied by the Claimant and trying to evade the legitimate due payments to the Claimant11. ”
I digress to observe that this is a very serious allegation, tantamount to fraud. East Fish has not adduced a scintilla of evidence to support this assertion, which should never have been made.
25. In the Reply East Fish denies that it admitted that the goods supplied did not comply with UN Specifications.
26. In the Reply East Fish further asserts that although it had taken all requisite effort to facilitate the return of the rejected product to the UAE, Ecolog failed to facilitate that return “resulting in huge loss and damage” to East Fish12.
27. In the Defence to the Counterclaim East Fish asserts:
“The contentions and allegations raised against the Claimant are false and frivolous and concocted without even an iota of evidence for reaping illegal benefit.13”
As will be seen, Ecolog has adduced ample evidence to sustain the components of the Counterclaim which are allowable.
28. In the Defence to Counterclaim East Fish also asserts that Ecolog “has never intimated (sic to) the Claimant that the agreement is being terminated14”. As will be seen, this assertion is also incorrect.
29. In the Defence to Counterclaim East Fish further asserts that goods were delivered as per the purchase order at 20% glaze (ie. ice)15. However, as will be seen, Ecolog has adduced evidence to establish otherwise, and that evidence is uncontradicted.
The Reply to the Defence to Counterclaim
30. Ecolog filed a Reply to the Defence to Counterclaim of East Fish on 29 August 2021. In the Reply Ecolog joins issue with essentially all the assertions made by East Fish in its Defence to Ecolog’s Counterclaim. Ecolog further asserts that the non-compliant products supplied by East Fish were initially stored at a UN warehouse pending collection by East Fish, although eventually Ecolog was required to move the non-compliant product out of the UN warehouse, and the product was stored in a separate storage facility at Ecolog’s expense, pending collection by East Fish. Ecolog asserts that when East Fish failed to collect the product, the product was disposed of in the presence of representatives from the UN16.
The Documentary Evidence
31. The trial was completed in two days. The hearing bundle prepared for use during the trial comprised a little less than 3,000 pages. Many of the documents in the bundle are irrelevant to the issues in the case, which are relatively straightforward. Most of the relevant documents are replicated many times in the bundle. Nowhere in the bundle is it possible to find a complete set of communications between the parties in chronological order. The size of the bundle and the difficulty of locating documents within it are entirely disproportionate to both the amount in issue and the relatively straightforward issues in the case.
32. Despite the difficulties presented by the form of the hearing bundle, I have done my best to identify the relevant documents, the substance of which will be set out in the following portion of these reasons.
33. I will then refer to the evidence of the witnesses, although as will be seen, that evidence does not add a great deal to the conclusions properly drawn from the documents.
34. The commercial relationship between East Fish and Ecolog commenced on 20 August 2014 when Mr Gary Garrido of Ecolog sent an email to Mr Sudheer of East Fish. In that email East Fish were advised that Ecolog had been awarded a contract to supply food to three UN Missions including MINUSMA and MINUSCA. The email requested a competitive offer for the supply of various seafood items listed in the email. The email also listed the various documents which East Fish was required to supply to Ecolog in support of its offer, which included product specifications, analysis for contaminant levels and laboratory analysis for each item in the product list. Documents entitled “UN rations standard” for the various product lines identified in the email were attached to the email. As I have already observed, the assertion by East Fish to the effect that it was never supplied with the UN Specifications for the products it was to supply is not correct.
35. On 6 May 2015, another officer of Ecolog sent an email to Mr Sudheer of East Fish. The email requested a picture of the primary and secondary label of a particular fish product. Mr Sudheer replied by email the following day attaching copies of the proposed labels for the product in question. The labels specified the net weight of the product and the glazing percentage, together with the gross weight of the product. The label contained a UN code for the product and asserted that the product had been processed and packed by East Fish. The label also contained the statement:
“Not for sale, for UN consumption only.”
36. By email dated 9 October 2018, another officer of Ecolog sent purchase orders to Mr Sudheer of East Fish relating to product to be supplied to MINUSMA. The email contained information relating to various aspects of the sale, including the labelling which was to be applied to the product and the invoices which were to include the name of the UN Mission to which the product was to be supplied. The email also specified the documents which had to be provided by East Fish, including a certificate relating to the country of origin of the product.
37. The email contained the following statement:
“Important Note: The UN Specification sheets are sent for your reference during the pre-order and items you have confirmed are ensured to be FULLY COMPLIANT. Any item confirmed by vendor to be fully compliant and rejected on the later stage, VENDOR WILL BE REQUESTED TO TAKE FULL LIABILITY.”
38. On 12 November 2018, the same officer of Ecolog sent another email to Mr Sudheer of East Fish in almost identical terms attaching more purchase orders in relation to seafood to be supplied to MINUSMA. That email contained the same “Important Note” relating to the need for the products supplied to be “fully compliant” and specifying the consequences of non-compliance.
39. I digress to observe that in the light of the documents referred to above, there can’t be any doubt that:
(a) East Fish was aware that Ecolog was acquiring the seafood in order to supply it to UN Missions in Mali and the Central African Republic;
(b) It was a term of the agreements between East Fish and Ecolog relating to the supply of product that the product would comply with the UN specifications;
(c) It was a term of the agreements between East Fish and Ecolog that If the products supplied by East Fish were rejected by the UN as a result of non-compliance with its specifications, the consequences of that rejection would fall upon East Fish.
40. Various purchase orders sent by Ecolog to East Fish are in evidence. Although the dates of the orders and the items ordered vary, the terms and conditions of each relevant order are identical. Those terms include the following:
“4.The Goods shall be delivered by the Vendor to the Location on the date(s) specified in this Purchase Order. The Goods shall be deemed delivered by the Vendor only on completion of unloading of the Goods at the Location specified above.
5.The Vendor warrants that the Goods shall strictly conform to any and all specifications provided by the Customer from time to time or as set out in this Purchase Order. For the avoidance of doubt, the Vendor shall remain liable for the Goods until the Customer has had an opportunity to inspect them at their final delivery destination.
6.Time of delivery is of the essence. If the Vendor fails to deliver any of the Goods by the date specified in the Order, the Customer shall (without prejudice to its other rights and remedies) be entitled at the Customer’s sole discretion, to terminate the Contract in whole or in part; and to purchase the same or similar Goods from a supplier other than the Vendor and recover from the Vendor all costs and losses resulting to the Customer.
7.The Customer will be entitled to terminate the Contract if the Vendor breaches any of its obligations contained herein and the Customer reserves its rights to all remedies at law.
…
10.This Contract is governed and to be construed in accordance with English Law and any disputes arising out of it including any question of its validity construction or existence shall be referred to the Courts of the DIFC, in Dubai UAE.”
41. On 5 February 2019, the Rations Officer of the UN Mission at Bamako in Mali sent an email to Ecolog advising that testing of packages of cooked shrimp supplied by East Fish showed that the glaze content of the package was between 30% and 40%, and testing of raw shrimp supplied by east Fish showed that the glaze content was 30%, where the labels on each product declared that the glaze content was 20%.
42. The email requested information relating to the stock on hand for each product, requiring the glaze content of other products – namely, squid, pollock, plaice and cod to be verified.
43. The email also required Ecolog to supply:
“Non-conformity report and corrective actions due to this major non-conformity from your supplies on labelling as it is deceiving and misguiding the consumer by having errarouns (sic erroneous) information on the label.”
By email dated 7 February 2019 from another officer of Ecolog to Mr Sudheer of East Fish, Ecolog advised:
“As we spoke on the phone, we have serious issue with your items in our missions. After the audit and internal test conducted from our client there is difference in Glazing percentage from the declared percentage in the label.
As of now this might trigger serious dispute with our client. If we fail to prove the declared glaze in the label is correct, our client can blacklist East Fish as source of frozen fish items. Also we are facing with some other requirements from our client.
Please urgently, provide with below info required.
1. Closing reports, in house for each fish item supplied to Ecolog.
2. To search for laboratory to test the Glazing percentage in area with accredited scope.
3. To provide producer/product documents requested previously
a. 1187 – Tilapia – source Guandong Gourment
b. 1173 – King Mackerel – proof of origin Oman
c. 1180 – Fish Snapper – proof from Indian authorities that red snapper is caught in India, FAO51."
44. Mrs Girish of East Fish replied to this email on the same day attaching the “in house glaze checking”17. She advised that third party inspection would be obtained shortly.
45. On 11 February 2019 an officer of Ecolog replied to that email requesting the provision of internal lab reports relating to glazing percentages for all frozen fish items contained in the last five shipments supplied to UN Missions.
46. Further, by email to Mrs Girish of the following day18another officer of Ecolog requested answers to the following questions:
“1.Is the same method of glazing applied for all fish items, including shrimps (raw and prepared)?
2.Please give us detail how you are doing the glazing of product.
3.As per attached explanation about way of deglazing, depending of what, you are applying with sprinkling or immersion of the product in water in order to remove out glazing level?
4.Do you have set the temperature of the water?”
5. Mrs Girish replied to that email on the same day. In that email she advised that all products other than King Mackerel were imported products and they did not know what method of glazing had been utilised by their supplier. She also advised that the product was immersed in water in order to remove the glaze coating. She advised that the water used was chilled, with a temperature range of 0-5oC.
6. Although nothing appears to turn on it, I digress to observe that the only expert witness called in the case, Dr Werner Nader, has expressed the opinion that the method of deglazing described by Mrs Girish is not correct as the water used for deglazing raw shrimp should be room temperature, and the water used for deglazing cooked shrimp should be 27oC.19
7. In his report Dr Nader expresses the view, supported by published research, that the use of low temperature water in the deglazing process leads to a significant underestimation of the glaze. In other words, in Dr Nader’s view, the deglazing methodology used by East Fish tended to underestimate the percentage of glaze in the packaged product.
8. By email of the same date – namely 12 February 2019, Ecolog asked Mrs Girish to contact the supplier of product to East Fish and provide information with respect to the glazing methodology used by the supplier. In relation to the King Mackerel product produced by East Fish, Ecolog asked for information with respect to the glazing methodology utilised in relation to that product. If Mrs Girish replied to that email, the reply does not appear to be in evidence.
9. In the meantime, by email dated 11 February 2019 passing between various officers of Ecolog and various officers of the UN, information was provided in relation to the glazing content in 16 packages of product supplied by East Fish. The glazing content ascertained varied between 29% and 52% of the package. All but one of the packages tested had a glazing content of 30% or more, and six of the packages tested had a glazing content of 40% or more. All of the packages had labels asserting that the glazing content was 20%.
10. By email dated 14 February 2019 an officer of the UN advised officers of Ecolog that:
“As per meeting today with Chief Rations due to misleading labelling on net weight, glazing contents, species and producing (source/catch area) all products supplied by East Fish are on QA20Hold.
For current stocks ECOLOG is requested to send urgently sample to EUROFINS for testing Species identification through DNA testing so we can determine if fish fillets, shrimps and Squid are per UNRs, additionally glazing assessment as per codex standards, MICROBIOLOGICAL, CHEMICAL CRITERIA and PHYSICAL TESTS ARE REQUIRED.”
11. Also, on 14 February 2019 an officer of Ecolog sent an email to Mr Sudheer and another officer of East Fish attaching two different labels for the same lot item 1186 shipped to UN Missions. In the email it was observed that one label was attached to goods purchased from East Fish and shipped to Mali and the other was a label on product received at another UN Mission.
12. The email observes that there is contradictory information on the labels, even though the products are said to have been produced in the same lot on 8 July 2018. The label on the product sold to Ecolog states that the glazing percentage of that product is 20%, and the net weight 8kg, whereas the label on the product sold to another company declares that the glazing percentage is 40% and the net weight of product is 6kg.
13. The email requested an explanation and advised:
“Please make sure that you provide all the details because as informed this is an issue with UN HQ and they have different samples from different items that are packed by you to confirm glazing and also DNA/species of the fish.
The items that we have in stock are on hold. Also they requested to stop all shipment until clarified, therefore please do your best to confirm what is right and what is wrong.
We need ASAP to clarify this issue.”
14. Mr Sudheer sent a copy of the email to Mrs Girish on the same day.
15. If there was any substantive response to the email from Ecolog of 14 February 2019, it is not in evidence.
16. In accordance with the request from the UN, Ecolog supplied samples of product which had been supplied by East Fish to the Eurofins laboratory in Hamburg, Germany for analysis. By email dated 8 March 2019, the results of the DNA analysis of product labelled as cod, haddock and plaice were sent by Ecolog to officers of East Fish, including Mr Sudheer, and to an officer of the UN. The reports of the DNA testing conducted by Eurofins showed that none of the products tested were as represented on the labels, and all were pacific pollock, which is a cheaper product than any of the three products shown on the labels of the packages tested.
17. The email requested East Fish to explain the results. By email dated 10 March 2019, Mr Sudheer advised:
“Noted your mail, please note that we get this products from our supplier same condition, and we send to you same way. We will contact our supplier and will be intimated to you accordingly. In future we can do DNA test, it will cost extra. Please advise.
assure you to give your company full co-operation, and best services. We are looking forward to serving you in the future as well.”
18. I digress to observe that apart from impliedly blaming its supplier for any product substitution, East Fish did not provide any explanation in this or any subsequent email, or indeed in the evidence, in relation to the non-conformity of the product supplied with the product ordered and the product shown on the labels of the packages supplied by East Fish.
19. On 21 March 2019, an officer of Ecolog sent an email to Mr Sudheer reiterating that testing of packages of raw and cooked shrimp showed that the glazing content varied between 30 and 40%, whereas the label asserted that the glaze content was 20%. The email attached Non-Compliance Reports (NCRs) for glaze variance on those products. The email advised:
“All other frozen fish products are at the moment on hold in mission warehouse pending additional documents and laboratory test reports. So, if any lab test report failed to meet UNSTD criteria be aware that additional NCRs will follow.”
20. Mr Sudheer replied to this email by email dated 26 March 2019, in which he stated:
“Noted your mail, we checked with our Management about this issue, maybe excess glaze will be there, but not up to your statement, so please recalculate and send us the revised statements so that we can recheck with Management and issue credit notes.”
21. Ecolog replied to that email by email dated 15 April 2019, in which Mr Sudheer was advised:
“The calculations are remaining the same and the credit note should be issued based on the table below.”
22. Also on 15 April 2019, an officer of Ecolog sent an email to Mr Sudheer and another at East Fish advising:
“The red snapper ordered under various POs for Bamako and Gao Mali was rejected due to fails product origin labelled. The product labelled origin India FAO Zone 51 is not correct since as per attached FAO Fishing Area 51 referenced the fish Red Snapper lutjanus campechanus is not native in that zone. In addition as per different organisations research, FAO Zone 51 has a lot of lutjanus species, but not campechanus. … Please issue credit note for the total claimed amount.”
23. Attached to the email was a chart from a publication showing that the species lutjanus campechanus is only found in fishing zone 31 and is not found in fishing zone 51, which is the fishing zone surrounding India.
24. If East Fish ever replied to this email, the response is not in evidence.
25. Ecolog sent another email to Mr Sudheer of East Fish, and another person in East Fish on 13 May 2019. I digress to observe that by this stage, more than two months had passed since East Fish were advised that testing had shown that inferior fish had been substituted for the fish which it had supplied as plaice, cod and haddock, and almost one month had passed since East Fish were advised that testing had shown that the red snapper which it had supplied as originating in India could not have come from that fishing zone. Although by the email of 10 March 2019 Mr Sudheer had indicated that he would obtain advice from East Fish’s suppliers with respect to the substitution, if that advice had been obtained, it had not been passed on to Ecolog. Indeed, Ecolog had been given no explanation whatever for the matters of which it complained other than the implicit assertion that the fault lay with the suppliers of product to East Fish.
26. In the email of 13 May 2019 East Fish were advised that various supplies of cod, plaice and haddock had been rejected because the goods supplied were not as ordered but were in fact pollock. The email advised that East Fish would not be paid for the rejected goods and further advised:
“The products are still at our warehouse and you can take it back. If not, the same quantity will be disposed and these costs will be added in the claims.”
27. I digress to observe that by at least the time this email was received, East Fish can have been in no doubt that Ecolog had rejected the products supplied by East Fish because they did not comply with the provisions of the relevant purchase orders or the requirements of the UN specifications, and that Ecolog would not pay for the rejected product. East Fish were advised, in unequivocal terms, that unless the product was collected it would be disposed of, at the cost of East Fish.
28. East Fish continued to do nothing by way of response to the issues clearly raised in the emails from Ecolog. The conspicuous and continuing silence from East Fish gives rise to a clear inference, which I draw, to the effect that East Fish had no answer to the assertions of mislabelling with respect to glaze content and country of origin, or to the assorted product substitutions.
29. By 16 July 2019 more than five months had passed since East Fish were advised of the overstatement of the glaze content in the products it had supplied and that all its supplies were “on hold”. More than four months had passed since East Fish were advised of the product substitution which had been detected, and more than two months had passed since East Fish were advised that the seafood should be collected or it would be disposed of at the cost of East Fish.
30. On 16 July 2019 Ecolog sent an email to East Fish in order:
“to clearly set out its position concerning East Fish’s provision of non-compliant seafood products which is a direct breach of contract pursuant to the terms of the Purchase Orders.”
31. The email provided details of the precise amount of the rejected product and further stated:
“Ecolog has formally notified East Fish repeatedly in emails dated 14th February, 21st March, 15th April, 13th May and 6th June 2019. East Fish admitted its fault in its email dated 26th March 2019 and stopped responding to Ecolog’s non-conformities department altogether.21”
32. The email asserted that East Fish owed Ecolog USD168,752 including the amounts invoiced for the rejected goods and transport costs of USD32,419, and proposed that amounts due as between the parties be set off in discharge of the current balance. The email further advised that unless East Fish sent a response within seven days, Ecolog would consider the matter closed on the terms proposed. However, the email concluded with the assertion of a reservation of all of Ecolog’s rights, and an assertion that the email was sent on a without prejudice basis.
33. Mr Sudheer replied by an email of 22 July 2019 in which he advised:
“Please note, the products we supplied to you are we brought from China and we trusted them. If you deduct like this, we will have a great loss and we will not be able to survive. Hence request you to kindly pay at least 80% of which you owe to us.”
34. I digress to observe that East Fish had still made no attempt whatever to deny or rebut the assertions made by Ecolog with respect to the non-compliance of the products supplied but continued to allocate responsibility for the non-compliance to its Chinese suppliers.
“By email dated 23 July 2019, Ecolog advised East Fish that it had:
incurred and continues to incur costs and damages as a direct result of the breach of contract pursuant to the terms of the Purchase Orders by East Fish due to several serious product non-conformities.
East Fish should have acted in line with the internationally accepted business practices (including conducting regular quality checks and tests on all products).
Ecolog repeatedly attempted to contact the management of East Fish in order to reach a resolution but East Fish did not provide any material response. In fact, Ecolog first notified East Fish on 14 February 2019 (over five months ago).
Therefore, Ecolog formally rejects your proposal for payment of 80% of the outstanding dues.
Ecolog maintains its final position, as per its email dated 16 July 2019, and reiterates that both parties will set off the outstanding amounts towards each other as a full discharge of the current outstanding balance.
…
Ecolog may incur further costs and damages (including but not limited to disposal costs, penalties, warehouse charges, etc) and reserves its rights to claim further amounts from East Fish.
We hereby inform you that we have to dispose of all the non-conform products by Thursday (July 25, 2019). If East Fish wishes to collect the rejected products you will have to confirm with the exact time and date of collection no later than COB July 24, 2019 and failure to collect the rejected products will result in Ecolog proceeding with the disposal.
Please note that due to UN’s request to dispose the rejected products and removal from UN warehouse, we must keep the rejected goods outside the warehouse, so daily cost of $300 will apply from July 26, 2019.”
35. Mr Sudheer replied by an email of 24 July 2019 asserting that East Fish had “replied to your all mails”. That assertion cannot be sustained by reference to the evidence. Mr Sudheer also stated:
“We would like to know where are the places and which items the Stocks kept in good condition today itself so that we can arrange for collection.”
36. By email of the same date Ecolog advised East Fish of the location of the product in Mali and reiterated that the deadline for collection of the product remained 24 July 2019, which was the date of the email.
37. Mr Sudheer replied to that email by an email of the same date requesting details of the rejected products (items and quantity) and the name and mobile number of the contact person.
38. Ecolog provided the information requested the following day (25 July 2019) and advised that Ecolog would provide a “final and non-extendable deadline of 1 calendar week to collect the rejected products (ending next Thursday 1 August 2019)”.
39. East Fish replied to that email with an email apparently sent by Mr George Varghese on 25 July 2019 seeking clarification of the information relating to the location of the product and the name of the contact person. Mr Varghese advised that East Fish needed at least two weeks’ time to arrange the collection.
40. By email of 26 July 2019 Ecolog replied, reiterating the information that had earlier been provided in relation to the location of the product and the contact persons. The email further advised:
“We have given you the opportunity to make arrangements in one week ending on next Thursday, 1 August 2019, as per our earlier email. This is our final and non-extendable deadline.”
41. By email dated 27 July 2019 Mr Sudheer requested Ecolog to provide details of the rejected products and a rejection certificate from the UN, after which East Fish would “handover all the details to our Agent and they will do the needful”.
42. By email of 29 July 2019 Ecolog replied advising that East Fish had been given details of the rejected products and that Ecolog would “not accept excuses and delay tactics from East Fish”. The email concluded:
“Failure to collect by the previously advised final and non-extendable deadline of 1 August 2019 will result in Ecolog initiating the disposal procedures immediately thereafter.”
43. Mr Varghese of East Fish replied with an email of 30 July 2019. In that email he again requested the provision of details of the rejection report from the UN and pictures of the rejected products. Mr Varghese also requested Ecolog to assist East Fish in shipping the consignment back.
44. Mr Gelov of Ecolog replied advising that Ecolog was willing to assist East Fish to recover the rejected goods, provided that East Fish acted promptly and in good faith.
45. Mr Gelov advised East Fish that the UN had specific procedures relating to the withdrawal of rejected goods from any of its Missions that are labelled “for UN consumption”. In those circumstances in order to obtain an export release document from the UN, East Fish had to provide import confirmation from the country of destination. Mr Gelov advised that Ecolog required East Fish to provide that document within two business days – that is, by 1 August 2019. The email advised that if East Fish failed to provide the import confirmation within that deadline Ecolog would immediately proceed with disposal of the goods.
46. The email advised that if import confirmation was received by 1 August 2019, Ecolog would extend the deadline for recovery of the rejected goods for a further week – that is, until 8 August 2019.
47. In the email Mr Gelov reiterated that all of the costs, including storage, collection, delivery, taxes and disposal costs to be incurred either for the collection or disposal of the rejected goods were to be borne solely by East Fish.
48. Mr Varghese replied to that email by an email of 31 July 2019 thanking Mr Gelov for the support which he had extended in his email relating to the re-export of the rejected products. Mr Varghese advised that East Fish had approached the local authority in UAE to issue an import confirmation certificate for the rejected products.
49. Mr Gelov replied to that email by email of 1 August 2019 advising that Ecolog’s position and deadlines relating to the collection and disposal of the rejected goods remained the same and confirming that:
“If East Fish is unable to arrange collection before the deadline, then Ecolog will proceed with the disposal without any further notice.”
50. On 5 August 2019, Mr Varghese wrote to Mr Gelov advising that he expected to receive the import confirmation by the end of that day and requesting Mr Gelov “to take the steps to export the rejected goods”.
51. Mr Gelov replied by an email of the same day, confirming that East Fish had been unable to obtain the import confirmation certificate within the deadline specified of 1 August 2019. However, he advised that Ecolog had agreed with the UN to a final deadline of 8 August 2019 and requested advice immediately as to the date of collection so that Ecolog could coordinate with the UN.
52. Mr Gelov reiterated that Ecolog would not be responsible for the re-export and would only assist in relation to dealings with the UN and, if approved, would provide access to the warehouse for loading of the rejected goods. Mr Gelov further advised that Ecolog could assist by making arrangements to bring the rejected goods to a single location in either Bamako or Gao, at a cost estimated at EUR5,200.
53. By email of 6 August 2019 Mr Varghese advised Mr Gelov that East Fish had been informed that the UAE authorities had advised that East Fish needed to submit a letter issued by the government authority of Mali from where the product has been rejected, mentioning the reasons for rejection. Mr Varghese asked Mr Gelov to obtain a letter of that kind from the “Government Authority, Mali”.
54. Mr Gelov replied by an email of the same day advising that if the UN issued a memo detailing the non-conformities of the product due to mislabelling, the UAE authorities would not allow East Fish to use the rejected goods for any commercial purpose. He reiterated that the necessary certificate would have to be obtained from the applicable UAE authorities. The email concluded:
“Ecolog has instructions from the UN to dispose the rejected goods as they are not fit for UN consumption, pursuant to their standard policies and procedures.
Ecolog, therefore, gives you a final opportunity to obtain the necessary documentation on an expedited date basis, otherwise we will proceed with the disposal after the previously provided deadline of 8 August 2019.”
55. Mr Varghese replied by email dated 8 August 2019 advising that East Fish was still trying to obtain the import confirmation from the local authority, and requesting more time to obtain that confirmation. He advised that the confirmation could not be obtained until 18 August 2019 as a result of the Eid holidays which would start that day and continue until 18 August 2019.
56. By email dated 8 August 2019 Mr Gelov advised Mr Varghese that the final deadline of 8 August had lapsed without East Fish making any substantive progress. In the email Mr Gelov stated:
“Ecolog is under pressure from the client, United Nations, to dispose the rejected goods at the earliest since 6 June 2019. Ecolog has given numerous opportunities and deadlines to East Fish. East Fish has not been able to even initiate the process of recovery in over two months. Therefore, Ecolog regrets to inform you that we cannot extend the deadline any further.
Ecolog will proceed with the disposal of the rejected goods in Mali at the start of business day on 9 August 2019.
The storage and disposal costs incurred by Ecolog due to East Fish’s provision of non-compliant and rejected goods will be borne by East Fish, as notified previously. The detailed costs and supporting documents will be provided after the disposal.”
57. By email dated 13 August 2019 Mr Varghese reiterated that all government departments “are holy day for one week” so that East Fish was helpless until next Sunday.
58. Mr Gelov replied by email of the same day advising that Ecolog could not extend the deadline any further and that it would proceed with the disposal of the rejected goods.
59. By email dated 15 August 2019 Mr Varghese provided Mr Gelov with a certificate issued by Ajman Municipality permitting import of the rejected products. The email stated:
“Kindly lend a hand and support us to re-export the rejected products from Mali. As we do not have anyone at the locations provided we hereby request you to take the steps to re-export the rejected products.”
60. Mr Gelov replied by email of the same day advising:
“Unfortunately, we are in a process to dispose of the products and we are not able to help to remove them from the disposal since we passed all the deadlines provided by the UN.”
61. As it happens, disposal of the goods did not take place until 5 October 2019. The evidence provides no explanation for the delay. A certificate confirming that the goods were disposed of on that date executed by officers of Ecolog and the UN has been produced in evidence.
62. On 1 November 2019 Mr Gelov emailed Mr Varghese and Mr Sudheer reiterating Ecolog’s position in relation to the goods supplied by East Fish. In relation to goods supplied to MINUSCA, the goods had been accepted, notwithstanding their excessive glazing, subject to reduction in the purchase price as a result of the reduced quantity of product due to the excessive glazing. In relation to the product supplied to Mali, the non-compliant goods had been rejected and ultimately disposed of as a result of the failure of East Fish to make arrangements to collect the rejected goods.
63. Mr Gelov provided details of the corresponding balances owed by each of East Fish to Ecolog and vice versa, showing a final amount owed by Ecolog to East Fish of USD8,709.67. Ecolog requested East Fish to confirm the final account position provided. Although that confirmation was not forthcoming, it seems that Ecolog paid the amount of USD8,709.67 to East Fish.
The Testimony of the Witnesses
The Claimant’s Witnesses
64. The Claimant adduced evidence from two witnesses, Mrs Renu Girish and Mr Sudheer Padikkalakkandy Balan.
Mrs Renu Girish
65. The evidence in chief of Mrs Girish took the form of a witness statement. In her oral testimony she affirmed the correctness of the matters asserted in that statement.
66. The statement appears to have been prepared without regard to basic principles of evidence and does not distinguish between matters of which Mrs Girish had personal knowledge, and matters which she had derived from information supplied by others. In fact, nowhere in the statement is there any direct assertion to the effect that Mrs Girish had anything to do with the transactions the subject of these proceedings. Nowhere in the statement is it asserted that Mrs Girish did, or did not take any action in relation to the goods which were sold to Ecolog. However, it is clear from the documents to which I have referred that she was engaged in email correspondence relating to the transactions in issue during February 2019. However, there doesn’t appear to be any evidence to the effect that Mrs Girish had any personal involvement in the transactions beyond her engagement in that email correspondence. Further, numerous portions of the witness statement of Mrs Girish are expressed in argumentative terms and contain assertions which are not substantiated. For example, in her statement it is asserted that:
“The claimant had at all times complied with the UN Standards … specifications.22”
However, no basis for that assertion is contained in the statement, which cannot be given any weight. Similarly, in relation to the glazing content of the products supplied, in Mrs Girish’s statement she asserts that:
The claimant supplied the products as per the purchase order at 20% glaze, thereby complying with the requirements.23
However, Mrs Girish does not provide any evidence to the effect that any test was carried out on any of the product supplied in order to establish that assertion, which appears to have no basis, and which cannot be given any weight.
67. In relation to the DNA analysis of the product supplied by East Fish which was analysed by Eurofins, in Mrs Girish’s statement she asserts that:
“The defendants had not provided any proof to the claimant that UN had asked for the test result of the product at any point of time nor has provided any proof that the products were non complied or rejected by UN.24”
The assertion is expressed in argumentative terms but in any event it is factually incorrect as evidence has been provided that the UN required the products to be tested and rejected the products as non-compliant as a consequence of the test results. Significantly omitted is any evidence from Mrs Girish challenging the outcome of the DNA tests conducted by Eurofins or the glazing tests conducted for or by the UN, other than the broad and unsubstantiated assertions to which I have referred.
68. To take another example, in Mrs Girish’s statement, in referring to the pre-inspection report conducted prior to export of the product she asserts that:
“The loaded products were found satisfactory hence the defendants cannot contend that the products were not in accordance with the specifications.25”
Again, this assertion is argument, not evidence. In any event it is incorrect. As the description of the report conveys, the inspection undertaken prior to export is “pre-inspection” and does not involve any testing or analysis which would interfere with the integrity of the product prior to export, such as de-glazing or DNA analysis of the product. Mrs Girish asserted during cross-examination that deglazing analysis was regularly performed as part of the pre-inspection process26but the pre-inspection reports covering the goods the subject of these proceedings, which are in evidence, identify the tests which were performed, which do not include deglazing. It is clear from those reports that all assessments conducted for the purposes of the pre-inspection report were superficial in nature and depended upon what could be observed without any disturbance to the integrity of the packed product. It seems reasonable to infer that if packages of product had been de-glazed in order to determine the glaze content prior to transport of the product to Africa, the product, having been de-frosted, would have to be discarded as it could not be sent to Africa unless frozen. It follows that widespread de-glazing testing would have resulted in significant loss of product.
69. Further, in the email exchanges to which reference has already been made, Mrs Girish explained that the deglazing analysis procedure adopted by East Fish involved the use of water at a temperature between 0o-5oC to deglaze the product. As already noted, Dr Nader, the expert witness called on behalf of Ecolog, has expressed the view both in his written report and his oral testimony to the effect that such a procedure does not accord with accepted practice, which involves the use of water at room temperature. He relies upon a published international report to express the view that the use of refrigerated water to deglaze the product leads to understatement of the glazing content.
70. However, the evidence to the effect that the procedures used by East Fish to assess the content of glaze do not conform to accepted international practice does not appear to have any direct relevance in this case, as there is no evidence to the effect that East Fish ever conducted any tests relating to glazing content on the products supplied to Ecolog which are the subject of these proceedings.
71. In both her witness statement and oral testimony Mrs Girish referred to a Certificate of Analysis which was provided by the Geoscience Testing Laboratory in September 2018 relating to the microbiological analysis of the products tested. However, that evidence is not relevant, because if products were tested at that time they were not the products which were supplied to Ecolog pursuant to the contracts the subject of these proceedings, as those products were supplied after that date.
72. Mrs Girish confirmed during cross-examination that East Fish knew at all times that the products which it was to supply pursuant to the contracts with Ecolog had to comply with UN Specifications, consistently with the documentary evidence to which I have referred.
73. In her witness statement Mrs Girish asserted that:
“All the products were packed in the UAE by the claimant.27”
This assertion is inconsistent with the evidence, and the assertions made by East Fish in emails to Ecolog. The evidence establishes that the product supplied by East Fish to Ecolog was supplied to East Fish by suppliers in China already packed and frozen in ice. The only steps taken by East Fish in the UAE in relation to such products was the affixation of the label and perhaps some additional wrapping. The standard label affixed by East Fish wrongly asserted that the product had been packed by East Fish.
74. There was evidence to the effect that East Fish was responsible for the freezing and packing of some product sourced in the UAE, but the evidence does not establish that any such product was amongst the product supplied by East Fish to Ecolog pursuant to the contracts which are the subject of these proceedings. It is clear from the evidence that the overwhelming bulk, if not all, of the product supplied was apparently sourced outside UAE, predominantly from China and to a lesser extent India.
75. For these various reasons the evidence of Mrs Girish provided no support for the Claimant’s case.
Mr Sudheer
76. The evidence in chief of Mr Sudheer took the form of two witness statements. Each statement had many of the characteristics of the statement provided by Mrs Girish. No attempt is made in either statement to identify the matters of which Mr Sudheer was personally aware, as compared to matters for which he relied upon information provided by others. The statements are replete with argumentative assertions.
77. Almost 500 pages of exhibits were attached to Mr Sudheer’s statement, almost all of which, with the exception of exhibit 3, are completely irrelevant to the issues in the case.
78. Any limited evidentiary value in Mr Sudheer’s statements evaporated when:
(a) After considerable prevarication he conceded that he did not write the statements himself – rather they were written for him by the legal department of East Fish; and
(b) On many occasions he declined to answer questions put to him on the basis that he was only a salesperson, not a technical person, although in fact the subjects addressed in his statement go well beyond issues dealt with by the sales department.
79. For example, in his first statement Mr Sudheer asserts:
The claimant had always supplied products that were compliant with UN STD and firmly believe that the products allegedly rejected by the UN and disposed are not the same products supplied by the claimant.
The statement provides no basis for these assertions. Indeed, at no point has Mr Sudheer ever denied Ecolog’s assertions that product supplied by East Fish was excessively glazed and did not correspond with the species of seafood ordered by Ecolog. In fact, after the allegations of non-compliance had been reiterated during July 2019, in his email of 22 July 2019 Mr Sudheer made no attempt to refute those assertions but instead laid the blame for non-compliance upon East Fish’s Chinese suppliers. Mr Sudheer’s attempt to justify his complete failure to refute any of the assertions made by Ecolog with respect to non-compliance of the product supplied on the basis that he wanted to maintain good commercial relationships with Ecolog is unconvincing, as was his testimony generally, for reasons which will be developed below.
80. The assertions made by Mr Sudheer in each of his statements to the effect that the product rejected by the UN and tested by Eurofins were not the products supplied by Eat Fish is, in each case, a bald assertion entirely unsupported by any evidence of any kind. Those extraordinary assertions cannot be given any weight.
81. Mr Sudheer’s oral testimony was entirely unsatisfactory, as counsel for East Fish implicitly accepted. The unsatisfactory nature of his testimony can be attributed in part to his lack of proficiency in English. Clearly, an interpreter should have been provided by East Fish for the purposes of his testimony, but that was not done.
82. Even after making allowances for Mr Sudheer’s limited proficiency in English, his evidence was entirely unsatisfactory. As already noted, he conceded that he was not the author of his witness statements and declined to answer questions put in cross-examination in respect of many aspects of each statement, on the ground that he was not aware of the matters the subject of his statements. During the course of his testimony, he repeatedly contradicted himself. The answers which he gave generally did not respond to the question asked and invariably involved assertions which appeared to advance the case of East Fish. He constantly prevaricated and refused to answer simple questions which were put to him, in very simple English words repeatedly28. On one occasion cross-examining29. For these reasons I give no weight to the oral or written testimony of Mr Sudheer, unless it is corroborated by other independent evidence. One example of that is his concession, in the course of his evidence, that East Fish was required to comply with UN Specifications and Standards30. That evidence is entirely consistent with all other evidence and can be accepted.
Respondent’s Witnesses
Mr Aleksandar Gelov
83. Mr Gelov is a Senior Contracts Compliance Manager employed by Ecolog. He is based at the office of an Ecolog subsidiary in North Macedonia and overseas contracts and claims compliance functions for Ecolog’s subsidiaries in Mali and the CAR.
84. None of Mr Gelov’s witness statement is written in the first person. Accordingly, like the witness statements provided by the Claimant’s witnesses, the statement fails to distinguish between matters of which Mr Gelov has personal knowledge and matters of which he is only aware by reason of information provided by others.
85. However, unlike the witness statements pertaining to the witnesses called by East Fish, the assertions of fact made by Mr Gelov in his statement are generally substantiated by documents which he identifies and which are attached to his statement. The extent to which Mr Gelov has personal knowledge of the matters asserted in his statement can be readily ascertained by reference to those documents.
86. It is clear from those documents that Mr Gelov first became involved in the issues relevant to these proceedings in about June 2019. The evidence which he gives in relation to events which occurred prior to his involvement is hearsay, and the primary evidentiary source is the documents to which Mr Gelov refers, rather than his testimony. Those documents, together with the documents pertaining to the period after Mr Gelov became involved have already been reviewed in the preceding reasons. Those documents are quite sufficient to establish the relevant sequence of events.
87. Mr Gelov’s testimony extends to Ecolog’s counterclaim for damages for breach of contract. Invoices relating to the product acquired by Ecolog from alternative sources are attached to his statement, as are invoices to Ecolog from Eurofins in respect of the cost of the testing some of the product supplied by East Fish to Ecolog. There is no reason to doubt the veracity of those invoices and Ecolog has provided tables utilising the data provided by those invoices setting out:
(a) The calculation of the additional cost to Ecolog of acquiring replacement product from sources other than East Fish; and
(b) The fees paid to Eurofins for testing product supplied by East Fish.
The former amount totals USD130,689 (AED480,046.83) and the latter amount totals EUR21,860 (AED94,587.57).
88. Mr Gelov’s evidence includes assertions with respect to the time spent by various officers of Ecolog dealing with issues arising from the supply of non-compliant product by East Fish. However, as Ecolog’s claim for damages in respect of that time fails, as a matter of principle, for the reasons given below, it is unnecessary to refer to that evidence in any detail.
89. The oral testimony given by Mr Gelov in the course of cross-examination was credible and consistent with the documentary evidence. I have no reason to doubt the reliability of any of his oral testimony.
90. In the course of that testimony Mr Gelov observed that the UN obtains a tax exemption in relation to the import of products used at its Missions, which is relevant to the capacity to re-export those goods1.
91. In the course of his oral testimony Mr Gelov affirmed the accuracy of the invoices attached to his statements relating to the supply of seafood products from alternative suppliers after the goods supplied by East Fish had been rejected32. He also gave evidence to the effect that there is an exact correlation between the quantity and type of fish rejected by Ecolog, and the quantity and type of fish shown in the certificate relating to the destruction of the product in October 201933. Mr Gelov confirmed that the seafood products were not destroyed because they were inedible or had passed their use by date, but because the product did not comply with the labels in relation to glazing content and the species of the product.
92. In the course of cross-examination Mr Gelov asserted that East Fish were told on either 25 and 28 February to come and collect the goods which they had supplied. However, it is clear that Mr Gelov was not personally involved in dealing with East Fish at this time, and that assertion is not consistent with the documentary evidence upon which he has apparently relied. Accordingly, I do not give that assertion any weight.
Dr Werner Nader
93. Dr Nader is a biologist who was, until his retirement, the co-founder and Managing Director of Eurofins Global Control GmbH in Hamburg. He now acts as a Senior Consultant to Eurofins. He has very considerable experience in relation to food safety management systems and has written many scientific publications and a book in that field. There is no reason to doubt his expertise in relation to the tests which were conducted on the product supplied to Eurofins and in relation to the conclusions properly drawn from those tests.
94. Dr Nader’s evidence in chief took the form of an expert report dated 22 March 2022, and written answers to 26 questions posed by East Fish.
95. Dr Nader reviewed the evidence relating to the performance of the deglazing tests in relation to the product supplied by East Fish to Ecolog, and expressed the view that the deglazing tests appear to have been conducted properly34. The outcome of those tests is summarised in the expert report and shows wide discrepancies between the glazing content asserted on the label of the product and the actual glazing content, which, as noted, in all cases substantially exceeded the glazing content asserted on the label.
96. Dr Nader confirmed the validity of the DNA testing performed by Eurofins which established that products labelled as plaice, cod and haddock were, in fact pacific pollock, and that the particular species of red snapper said to have originated in Indian waters could not have originated from that source.
97. Dr Nader expressed the opinion that where food product is substituted for that shown on the label it raises serious doubts with respect to the integrity of the food supply process, which in turn suggests that there may be a risk to human health arising from the lack of integrity in the process35. That evidence is plausible, and given Dr Nader’s extensive experience in this field, there is no reason to doubt its accuracy.
98. In cross-examination it was put to Dr Nader that Eurofins had not tested any of the product supplied by East Fish to the Mali Mission, because all products tested by Eurofins had come from the CAR. Dr Nader explained that DHL, which was the courier responsible for transporting the product from Africa to the Eurofins laboratory in Hamburg, would not collect frozen product from Mali, so the Mali samples had to be transferred to the CAR, where they were collected by DHL and transported to Hamburg where the testing took place.
99. Dr Nader was a credible and coherent witness and there is no reason to doubt any of his testimony. That testimony, which was uncontradicted, establishes that the seafood products supplied by East Fish to Ecolog did not comply with the requirements of the contracts relating to the supply of the products.
The Issues
The Terms of the Contract(s)
100. The parties did not address in their submissions the question of whether there was a single overarching contract between East Fish and Ecolog or separate contracts created each time a purchase order was sent by Ecolog to East Fish. That is probably because nothing turns upon that question as the contractual terms specified in each purchase order were identical.
101. There is no doubt that it was a term of the contract or contracts for the supply of the products that the products would comply with UN requirements and specifications. That term was imposed in the correspondence exchanged between the parties at the commencement of the arrangements relating to the supply of goods for ultimate use by UN Missions in 2014-2015 and was reiterated in the emails of 17 October and 12 November 2018 which preceded the issue of the purchase orders relating to the goods the subject of these proceedings. These communications have been summarised above. The emails sent in October and November 2018 to East Fish by Ecolog made clear that East Fish would be responsible for product which was asserted to comply with UN Specifications, but which was later rejected by the UN by reason of non-compliance with those specifications.
102. Further, as noted, each of Mrs Girish and Mr Sudheer confirmed that East Fish were well aware that the product supplied had to comply with UN requirements and specifications.
103. The general terms upon which the goods were supplied are those contained within the various Purchase Orders. The relevant provisions of those Purchase Orders have been set out above.
104. By clause 4 of the Purchase Order, it is clear that delivery does not take place until unloading of the goods at their ultimate destination – that is, in Mali and the CAR. Clause 5 makes clear that acceptance of the goods does not take place until Ecolog has had an opportunity to inspect the goods at their final delivery destination – that is, in Mali and the CAR.
105. The reliance placed by East Fish upon the pre-inspection which took place in UAE prior to the dispatch of the goods to the relevant UN Missions is misplaced for at least two reasons. First, it is clear from the contractual provisions to which reference has been made that acceptance does not take place until there has been an opportunity to inspect the goods at their final destinations – in this case in Mali and the CAR. Second, as noted, the pre-inspection was superficial and did not involve any testing of the kind which would interfere with the integrity of the frozen products, such as deglazing or DNA analysis.
106. Clause 6 specifically provides for the failure of the vendor to supply goods within the time specified in the contract. In that event, Ecolog was entitled to terminate the contract in whole or in part and purchase the same or similar goods from an alternative supplier and recover from East Fish all costs and losses resulting therefrom. In the context of this clause, the reference to the supply of goods obviously means the supply of goods in accordance with the contract. Accordingly, the contract specifically provided that in the event of the failure of East Fish to supply goods in accordance with the contract, Ecolog was entitled to terminate the contract and acquire equivalent or similar goods from alternative suppliers on the basis that East Fish would be liable for any additional costs thereby occasioned.
107. Clause 10 of the Purchase Order provides that the contract is to be governed in accordance with English Law. It follows that the provisions of theSale of Goods Act 1979(UK) apply to the contract(s).
108. Relevant provisions of that Act include:
(a) Section 13, which provides that where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description;
(b) Section 17, which provides that property in goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred (in this case, by reason of the specific provisions of the Purchase Order, only after inspection at the final destination of the goods);
(c) Section 20, which provides that unless otherwise agreed, the goods remain at the seller’s risk until property is transferred to the buyer;
(d) Section 35, which provides that where goods are delivered to the buyer and he has not previously examined them, the buyer is not deemed to have accepted the goods until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract;
(e) Section 36, which provides that where goods are delivered to the buyer and the buyer rightfully refuses to accept them, the buyer is not bound to return them to the seller, and it is sufficient if the buyer intimates to the seller that the goods are not accepted; and
(f) Section 51, which provides that where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery, and the measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller’s breach of contract. The section further provides that where there is an available market for the goods in question the measure of damages isprima facieto be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or (if no time was fixed) at the time of the refusal to deliver.
109. As it happens, the statutory provisions are generally consistent with the express provisions of the contract(s) in this case. As the goods were sold by description (that is, by reference to glazing content and species type) the term implied by s 13 of the Act is consistent with the express provision in the contract(s) to the effect that the goods supplied comply with UN requirements and specifications. The provisions of s 17 relating to the passage of property correspond to the express provisions in the contract(s) to the effect that the goods remain at the risk of East Fish until they have been inspected at their point of final destination in order to ascertain whether they comply with the requirements of the contract. That express provision is also consistent with s 35 of the Act. For the purposes of applying that provision, the pre-inspection conducted in the UAE would not amount to previous examination of the goods, because it was not possible for Ecolog to ascertain through that inspection whether the goods supplied were in conformity with the contract. Accordingly, in accordance with s 35, acceptance does not occur until Ecolog has had a reasonable opportunity of examining them for the purpose of ascertaining whether or not they are in conformity, which could only occur at the point of final destination when, for example, the goods could be subjected to de-glazing tests at or about the time the products were intended to be defrosted and consumed.
110. Further, s 36 of the Act is consistent with the contract(s) to the effect that the goods remained at the risk of East Fish if they were rejected at the point of final destination by reason of non-conformity with the contract(s). For reasons which will be developed below, this provision is significant, given that East Fish never advanced any plan or proposal to collect the goods from their location in Mali but continually requested Ecolog to return the goods, inconsistently with the express terms of the contract and s 36 of the Act. Further, the provisions of s 51 of the Act relating to damages for non-delivery are consistent with the express provisions of the contract.
Did the goods comply with the contract(s)?
111. The uncontested evidence establishes beyond doubt that the goods supplied by East Fish did not comply with the requirements of the contract(s) in a number of respects.
112. First, the goods supplied did not correspond with the label which East Fish affixed to the goods with respect to the glazing content of the goods. The misrepresentation on the label is significant, as it resulted in a significant overstatement of the quantity of product within the package supplied, which in turn resulted in an overstatement of the price for the goods supplied.
113. Second, the goods supplied by East Fish did not correspond with either the terms of the order placed by Ecolog, or the description of the goods on the label affixed by East Fish. The goods supplied in order to satisfy orders which were placed for the provision of cod, plaice and haddock were in fact pacific pollock. Further, the goods supplied as red snapper having an origin in India was not red snapper available within the Indian fishing zone.
114. Pacific pollock is a cheaper and inferior product to the goods ordered by Ecolog, and which East Fish represented were the goods supplied, by the affixation of labels indicating the species of the seafood contained within the package. The evidence of Dr Nader establishes that product substitution of this kind raises a serious question as to the integrity of the food supply process, which in turn raises a question as to the safety of the product for human consumption.
115. It follows that East Fish was in breach of the contract(s). It further follows that unless Ecolog had accepted the goods and property in the goods had passed, East Fish was not entitled to the contract price.
Were the goods accepted by Ecolog and did property pass?
116. If the goods had been accepted by Ecolog, and property had passed, East Fish would be entitled to payment of the purchase price, subject to a reduction by reason of any damage sustained by Ecolog as a result of the breach of warranty. In the circumstances of this case, the outcome of this question may have no practical significance, as the evidence establishes that by reason of the non-conformity of the goods with the contract, the goods were of no value to Ecolog, as they could not be supplied to the UN in conformity with Ecolog’s contractual obligations.
117. Accordingly, the damage suffered by Ecolog would be at least equivalent to the purchase price of the goods, irrespective of whether the goods had been accepted and property had passed. However, both the express terms of the contract and s 35 of the Act have the effect that the goods were not accepted by Ecolog unless and until there had been a reasonable opportunity to inspect the goods at their point of final destination in order to ascertain whether the goods conformed to the contract(s). Although the evidence is not entirely clear, it seems that the goods the subject of these proceedings were ordered and supplied between November 2018 and February 2019. It was in February 2019 that the excessive glazing content of the goods supplied was detected, which triggered the conduct of further tests, in particular the DNA analysis. After those tests were performed, Ecolog communicated the results to East Fish in terms which made clear that the goods supplied were unacceptable.
118. In assessing whether Ecolog had had a reasonable opportunity to inspect the goods to ascertain whether they conformed with the contract(s) between November 2018 and February 2019, it must be remembered that the goods were delivered to UN Missions in under-developed parts of Africa. The deglazing test necessarily involved defrosting of the product and was not appropriately carried out on a widescale basis unless and until the product was about to be consumed – otherwise the value of the product would be lost. Further, DNA analysis in order to ascertain compliance with the requirements of the contract relating to the species of product supplied was not available in Africa, with the result that product had to be transported to Europe for analysis.
119. Taking all these considerations into account it is appropriate to conclude that the testing and analysis of the goods supplied took place within a reasonable time after delivery of the goods to their final destinations in Africa, and rejection of the goods was communicated promptly after the results of testing and analysis were obtained. It follows that Ecolog should not be taken to have accepted the goods by the effluxion of time, and property in the goods did not pass.
Did Ecolog breach the contract(s) by failing to return the goods to East Fish?
120. East Fish asserts that even if Ecolog was entitled to reject the goods by reason of their non-conformity with the contract(s), Ecolog was in breach of contract by allowing the goods to be destroyed without providing East Fish with a reasonable opportunity to retrieve them.
121. This contention fails by reason of both the facts and the law. On the facts, it is clear that Ecolog had communicated its rejection of the goods to East Fish no later than March 2019. Despite repeated requests for a substantive response from East Fish to the issues raised by the testing and analysis of the goods, East Fish provided no substantive response to Ecolog at any time.
122. In the email sent to East Fish on 13 May 2019, Ecolog made its position abundantly clear, by advising East Fish that the goods were available for collection. However, again, East Fish provided no substantive response to this email, and made no arrangements in relation to the collection of the goods. In metaphorical terms, East Fish appears to have been burying its head in the sand, in the hope that the problem might go away.
123. Ecolog reiterated its rejection of the goods, again in unequivocal terms, in the correspondence which commenced in July 2019. Only then, some four months after the rejection of the goods, did East Fish attempt to make arrangements for their return to the UAE.
124. However, at no point in the communications relating to those arrangements did East Fish suggest that it would collect the goods from Ecolog in Africa. Rather, at all times prior to the destruction of the goods in October 2019 East Fish requested Ecolog to arrange (and presumably pay for) the return of the goods to the UAE. Those requests were inconsistent with the provisions of the contract(s) and s 36 of the Act.
125. Upon the rejection of the goods, both under the contract(s) and the Act, Ecolog was under no obligation to return the goods to East Fish. If East Fish wished the goods to be returned, East Fish was required to arrange their collection and return from Africa. At no time prior to their destruction did East Fish ever propose to collect the goods from their location in Africa and for more than four months after receiving notice that the goods had been rejected, East Fish did not even request Ecolog to return the goods. It must be remembered that the goods were frozen and perishable, and after their rejection by the UN, Ecolog was incurring costs in arranging their continuing cold storage.
126. Accordingly, the attempt by East Fish to hold Ecolog responsible for its failure to collect the rejected goods fails.
127. For these reasons the claim by East Fish must be dismissed.
The Counterclaim
128. As noted, Ecolog’s counterclaim has three components, namely:
(a) The additional cost of obtaining equivalent quantities of the rejected products from other suppliers;
(b) The costs incurred in the analysis of the products supplied by East Fish; and
(c) Remuneration for the time spent by Ecolog employees dealing with the issues.
129. The first and second components of the claim have been established by the evidence and are heads of claim recognised by both the express terms of the contract and the Act. They are expenses incurred as the direct consequence of the breach of contract by East Fish. The rule inHadley v Baxendale36requires Ecolog to be put in the position in which it would have been if East Fish had performed the contract(s). On that counter-factual assumption, Ecolog would not have incurred any of these costs.
130. The third component of the claim is in a different category. The amounts claimed are, in effect, amounts reflecting the components of the salaries paid to employees of Ecolog during the periods in which they are said to have been occupied dealing with issues arising from the breach of contract(s) by East Fish. However, the evidence does not establish that the amounts claimed would not have been paid but for the breach of contract by East Fish. Put another way, in the absence of evidence, it is to be inferred that the employees the subject of the claim would have been paid their salaries irrespective of whether or not East Fish was in breach of contract. If follows that Eats Fish is in no different position with respect to payment of those salaries by reason of the breach by East Fish, and the payment of those salaries, or any component of those salaries, cannot be said to have been caused by the breach
131. Counsel for Ecolog was unable to identify any authority which entitled Ecolog to damages in an amount reflecting time spent by its employees dealing with the issues which arose. Accordingly, as this component does not relate to expenditure which would not have been incurred but for the breach of contract by East Fish, this component of Ecolog’s claim must be dismissed.
132. For these reasons Ecolog’s counterclaim should be allowed. As the costs the subject of the counterclaim were incurred in different currencies, it is convenient to allow the counterclaim as a single sum in the AED equivalent of those currencies which totals AED574,634.40. As the costs were incurred progressively during the course of 2019 and into early 2020, it is appropriate to fix the date for the commencement of interest as from 1 February 2020.
Costs
133. As the claim has failed and the counterclaim has been upheld, there is no reason why East Fish should not be ordered to pay Ecolog’s costs of the proceedings, to be assessed by a Registrar unless agreed.