Niru Battery Manufacturing Company & Anor v Milestone Trading Ltd. & Ors, Court of Appeal - Commercial Court, August 28, 2002, [2002] EWHC 1425 (Comm),[2002] 2 All ER (Comm) 705
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Niru Battery Manufacturing Company & Anor v Milestone Trading Ltd. & Ors, Court of Appeal - Commercial Court, August 28, 2002, [2002] EWHC 1425 (Comm),[2002] 2 All ER (Comm) 705
[2002] EWHC 1425 (Comm) Case No: 1999 Folio 910 IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONCOMMERCIAL COURTRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 11th July 2002B e f o r e :THE HONOURABLE MR JUSTICE MOORE-BICK- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Mr. Ali Malek Q.C. and Mr. David Quest (instructed by Richards Butler) for the claimantsThe first and second defendants did not appear and were not representedMr. Ali Mahdavi in personMr. Michael Bloch Q.C. and Miss Karen Maxwell (instructed by Clyde & Co) for the fourth defendantsMiss Geraldine Andrews Q.C. and Miss Zoe O'Sullivan (instructed by Ashurst Morris Crisp) for the fifth defendants- - - - - - - - - - - - - - - - - - - - -JUDGMENTMr Justice Moore-Bick: IntroductionThe first claimant, Niru Battery Manufacturing Company (``Niru''), is an Iranian company which, as its name suggests, carries on business as a manufacturer of batteries. For this purpose it requires substantial quantities of lead for use as a raw material. In the early part of 1998 Niru entered into a contract with the first defendant, Milestone Trading Limited (``Milestone''), for the purchase of 10,000 metric tons of lead ingots for shipment to Iran. Milestone was a subsidiary of Woralco Holdings Ltd, an English company owned by a discretionary trust established for the benefit of the Mahdavi family of which the third defendant, Mr. Ali Mahdavi, is a member. Mr. Mahdavi is an Iranian who left Iran at the time of the Islamic Revolution and subsequently established a successful metal trading business in this country. Woralco Holdings is the holding company of a group whose business is the production and trading of non-ferrous metals. Milestone itself was incorporated in the Republic of Ireland and was used by the Woralco group as a single purpose vehicle for entering into the contract with Niru. It had no significant assets of any kind.The first contact between Niru and the Woralco group occurred in January 1997 when Woralco Ltd, the principal trading company in the group, wrote to Niru expressing interest in tendering for the supply of lead ingots. Its letter, which was addressed to Niru's commercial manager, was seen by the managing director, Mr. Rahnama, who gave instructions to find out who had brought Niru to Woralco's attention. It was then passed to Mr. Ahadifar, the deputy head of the Commercial Department, who passed it to Mr. Khodayari, a member of the Foreign Purchase department, for action. Mr. Khodayari quickly made contact with Mr. Mohammed Sadri, a long standing friend of Mr. Mahdavi who acted as a commercial agent for the Woralco group in Iran. In response to the letter of enquiry Niru sent a fax to Woralco inviting it to submit an offer for the sale of 10,000 metric tons of lead ingots in the form of a pro forma invoice. The fax, which was written in English, was signed by Mr. Ahadifar and a copy was sent to Mr. Sadri. Woralco did submit an offer and although these initial contacts did not ultimately bear fruit, contact between Niru and Woralco and between Niru and Mr. Sadri as Woralco's agent had been firmly established.The sale contractIn September 1997 Niru invited tenders for the supply of a further 20,000 metric tons of lead from a number of companies including Woralco. It appears that as a result of its earlier offer Woralco had by then been added to Niru's list of acceptable suppliers. On 23rd October Woralco responded by making an offer to supply 10,000 metric tons of lead on terms broadly similar to those previously quoted. These included, in particular, a provision for payment to be made by letter of credit against FIATA multimodal bills of lading and a certificate of weight and quality issued by SGS.Over the course of the following three months negotiations continued between the parties. At the end of November 1997 Milestone was substituted as seller for Woralco in response to Niru's refusal for political reasons to enter into a contract with a British company. During this period the negotiations were mainly directed to the quantity of goods to be supplied and the price at which they should be sold. Many months earlier Niru had secured from the Central Bank of Iran US$5.84 million in foreign exchange in order to enable it to buy lead from a Swiss supplier. Its negotiations with the Swiss seller had eventually fallen through, but Niru had retained the benefit of the foreign currency allocation which thereafter played a large part in its negotiations with Woralco. Fluctuations in the market price of lead also played an important part since Niru wanted to make full use of the currency available to it and also to obtain as keen a price for the goods as possible.In the event the negotiations between Niru and Milestone culminated in an agreement on the terms of a pro forma invoice sent by Milestone to Niru on 2nd February 1998. Th...See the full content of this document
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