Choil Trading SA v Sahara Energy Resources Ltd
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE CHRISTOPHER CLARKE,MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 26 February 2010 |
| Neutral Citation | [2010] EWHC 374 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2008 FOLIO 1121 |
| Date | 26 February 2010 |
[2010] EWHC 374 (Comm)
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Strand, London, WC2A 2LL
Before: The Hon Mr Justice Christopher Clarke
Case No: 2008 FOLIO 1121
Mr Chirag Karia (instructed by Davies Johnson & Co.) for the Claimant
Mr Mark Smith (instructed by Spenser Underhill Newmark) for the Defendant
Hearing dates: 2 nd, 3 rd, 4 th, 10 th December 2009
Approved Judgment
I direct that prsuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
MR JUSTICE CHRISTOPHER CLARKE:
1. Choil Trading SA, the claimant (“Choil”) was but no longer is an oil trader. It sold 30,000 metric tonnes of Jet A1 to Sahara Energy Resource Ltd, the defendant (“Sahara”), another oil trader. It is common ground that $ 61,833.33 is due to Choil from Sahara for demurrage under that contract.
2. The dispute between the parties relates to what Choil alleges was a significant quality defect in a cargo of naphtha purchased by Choil from Sahara FOB Port Harcourt in Nigeria. The cargo contained an abnormally high quantity of Methyl Tertiair Buthyl Ether (“MTBE”), a man made substance which is not a by-product of the production of naphtha. After the dispute arose the parties came to an arrangement whereby Choil would accept delivery of the naphtha and make a payment of the purchase price less $ 1,200,000 and Sahara agreed to pay demurrage of $ 272,781,25 (less than the sum claimed) in relation to both contracts on the basis that this should be without prejudice to the legal position of the parties. It is accepted that Sahara is entitled to the balance of the price of the naphtha in the sum of $ 1,200,000.
The contracts
PPMC and Sahara
3. On 3 rd May 2007 Pipelines and Products Marketing Company Ltd (“PPMC”), a subsidiary of the Nigerian National Petroleum Corporation, offered Sahara 30,000 mt of Naphtha from Port Harcourt Refinery at Alesa Eleme +/- 5% at Sellers option. The quality was to be “ PHRC 1 Naphtha quality” and the price was to be the mean of Platts quotations for Naphtha bought FOB Rotterdam for 5 consecutively published quotations with the bill of lading date as day 3 (otherwise known as PPMC's prompt pricing option) minus $ 79.50 per m/ton. The offer provided that the laycan was to be advised, subject to product availability and acceptance of offer. The laytime was to be 42 hours + 6 hours after NOR SHINC. Notice of Readiness was to be tendered between 0600 and 1600 hours. On July 16 th PPMC informed Sahara that the laycan to load the cargo was 25 th – 26 th July 2007 subject to product availability.
4. On 11 th July Port Harcourt Refining Company (“PHRC”) took what was described as a representative sample from Tank 52tk03A. This revealed that the Saybolt Colour of the naphtha was +23.9. This certificate was provided to Choil. There are a number of tanks at Port Harcourt, and product is interchanged between them. Some of them are tanks used for loading and some are intermediate tanks, 03A was an intermediate tank.
Sahara and Choil
5. Sahara entered into negotiations with Choil to sell the naphtha to it. On 17 th July there was an exchange of messages between Cyril Secchi of Choil and Elizabeth Driay of Sahara which included the following:
“Cyril secchi: j'ai une toute petite question pour toi: sur ce naphtha, c'est as is?
Eli Driay: yep
Cyril secchi: ok cool merci”.
Wednesday 18 th July
6. On 18 th July Ms Driay of Sahara e-mailed Simon, Martin and Cyril (i.e. Simon McKenzie, Martin Farr and Cyril Secchi) of Choil as follows:
“Following our conversation, please look at following and confirm your agreement.
We expect name of your ship asap to fully confirm the deal. Shall you have two in mind please mention to us, so we could clear them both.
Quantity: 30,000 mt +/- 2 5% buyers option but always subject to terminal/operational final agreement.
Quality: PHRC naphtha quality. You have received the specs taken from the tank which is what is being made available to us.
Laycan: 25–26 th July 2007
Inspection: 50/50, we recommend Q + Q, which is of great help there.
Price
High cif quotation for naphtha CIF cargoes NEW 3 for five consecutively published quotations around bill of lading (2/1/1, 3/0/2) minus 40,00 usd/mt (forty dollars per metric ton)
Payment
Against letter of credit to be opened ASAP, please indicate which bank you are willing to use to facilitate the process.
Payment: 20 days after bill of lading date
Port dues Borne by buyers”
Thursday 19 th July
7. On Thursday 19 th July someone at Choil filled in an internal deal sheet which noted, inter alia, the following:
“Laytime 36 + 6”
8. At 1438 Martin Farr of Choil replied to Ms Driay's e-mail of 18 th July as follows:
“Just to confirm the deal as below, and we will send u the full contract back to u this afternoon once our ops have written it! The l/c is being worked on by the finance dept and bank and we expect this to be sent to you this afternoon too”.
What was below was Ms Driay's e-mail of 18 th July.
9. At 1610 Choil asked Banque Cantonale de Genève (“BCG”), by an e-mail copied to Sahara, to open a letter of credit in favour of Sahara. BCG notified Credit Agricole Indosuez (Suisse) S.A. (“Credit Agricole”) by telex of the issuance of that credit. A paper copy letter of credit was generated at 1755.
Friday 20 th July
10. At 1014 Mr Lorin Jessenberger of M2S S.a.r.l. (“M2S”), Geneva, a service company which acted on Choil's behalf, e-mailed to Mr Nwagagbo of Sahara Choil's loading and documentary instructions.
The 20 th July terms
11. At 1212 Mr Balmon of M2S e-mailed on behalf of Choil to Valerie Riahi of Sahara in the following terms (“the 20 th July terms”):
“ We are pleased to confirm the following transaction concluded on July 18 th 2007 as per terms and conditions here below:
1. Seller
Sahara Energy Resource Ltd …
2. Buyer
Choil Trading SA
3. Product
Naphtha
Quality
4. Naphtha of normal running production as produced by Port Harcourt Refining Company with following actual specifications as determined at loadport on the basis of samples drawn from shore tanks
……
Saybolt Colour ASTM D 156 + 23.9
5. Quantity
30,000 metric tones +/- 5 PCT in Buyer's option
6. Price
In USD/MT, FOB one safe port/one safe berth Port Harcourt, on B/L weight, calculated as follows:
Average of High Quotations as published by Platts European Marketscan for the five consecutive publication dates around the b/l date under the heading ‘CIF NWE/Basis ARA 4” for Naphtha minus a differential of USD 40.00…
7. Delivery
In one lot as full or part cargo, fob one safe port/one safe berth Port Harcourt, by M/T “TBC”/SUB to be acceptable to seller, such acceptance not to be unreasonably withheld, consistent with Laycan 25–26 July 1007, both dates inclusive.
8. Payment
Payment shall be effected without set off, withhold, deduction or counter-claim, with latest value twenty (20) calendar days after B/L date (B/L date to count as day zero) against presentation of seller's invoice and full set of 3/3 original bill(s) of lading, duly issued or endorsed to the order of buyer or buyer's designee, and other usual shipping documents or in the absence of the original shipping documents, seller's invoice and letter of indemnity in a wording and countersigned by a first class bank both acceptable to buyer (telex/fax invoice and letter of indemnity acceptable).
9. Laytime
Laytime allowed to seller for delivery hereunder shall be 36 hours SHINC, pro rate for part cargo.
Laytime shall commence either 6 hours after NOR tendered at Loadport or upon berthing, whichever is earlier and expire at hoses disconnection, provided however that vessel is not detained for seller's or loading terminal own purposes in excess of two hours following hoses disconnection, otherwise time will cease when vessel is fully released by seller/loading terminal
Laytime shall otherwise be calculated as per charter party terms and conditions
10. Demurrage
Demurrage shall be at charterparty rate as per charterparty terms and conditions
11. West African Clauses
War risk premiums if any to be for sellers acc.
Port costs in West Africa exceeding USD 15,000 shall be for sellers account.
Any taxes and or dues on cargo and or freight including but not limited to Nigerian conservancy due, handling charges and levy to be for sellers account.
If any vetting arrangement is or should become necessary to call Nigeria, sellers to arrange for same at their time and expenses.
Any time awaiting naval clearance to be for sellers account.
If the vsl is delayed (other than caused by buyer or vessel), sellers to pay demurrage rate pd/pr for the duration of the waiting time.
Buyers will invoice sellers and sellers to pay demurrage every 5 days against buyers invoices.
Any delays in obtaining Nigerian task force permission to enter Nigerian waters to count in full as used laytime or demurrage if on demurrage.
NMA fee if imposed shall be for sellers account. The sellers are responsible for the NMA approvals.
12. Determination of quantity and quality
A mutually acceptable independent inspector shall be appointed to monitor and verify the quality and quantity of product loaded. The costs of the independent inspector shall be borne equally between the parties.
The quality and quantity of the product delivered shall be determined by measurement, sampling and testing in the manner customary at the loading terminal which shall be in accordance with recognised methods and practices for such determinations. The results of such measurement, sampling and, except in the case of fraud...
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