Clearlake Chartering USA Inc. v Petróleo Brasileiro S.A.
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Jacobs,Mr Justice Jacobs |
| Judgment Date | 31 March 2020 |
| Neutral Citation | [2020] EWHC 805 (Comm) |
| Date | 31 March 2020 |
| Docket Number | Case No: CL-2020-000171 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 805 (Comm)
Mr Justice Jacobs
Case No: CL-2020-000171
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Robert Thomas Q.C. and Ben Gardner (instructed by Kennedys Law) for the Claimants
Henry Byam-Cook Q.C. (instructed by White & Case LLP) for the Defendants
Hearing dates: 30 th March 2020
Approved Judgment
I direct that pursuant 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.
The Application
The Claimants seek an urgent mandatory injunction compelling the Defendant (“Petrobras”) to provide security to enable the release of the m/t MIRACLE HOPE (“the Vessel”) from arrest in Singapore or, alternatively, substitute security to replace that which may have been put up to secure the Vessel's release. I shall refer to the Claimants collectively as “Clearlake”, and individually as “CUSA” and “CSPL”. The basis of the application is that Petrobras is contractually obliged to provide the security sought, but has so far failed to do so.
This application follows an application made by Trafigura Maritime Logistics Pte Ltd (“Trafigura”) in claim CL-2020-000159 for equivalent relief against CSPL. On 24 March 2020, following an urgent application, Henshaw J. granted the following operative relief in favour of Trafigura:
i) The Defendant must provide forthwith such bail or other security as may be required to prevent such arrest or detention or to secure the release 2 of the Vessel. For the avoidance of doubt, the Defendant is required to provide the aforementioned bail and/or security directly to the Bank.
ii) 2. Upon a demand to do so from Head Owners, the Defendant is to supply directly to Head Owners sufficient funds to defend any proceedings brought by Natixis against Head Owners in connection with the delivery of the Cargo.
The bank referred to in that order was Natixis, Singapore branch (“Natixis”). The proceedings by Trafigura against CSPL, and now by Clearlake against Petrobras, result from the commencement of proceedings in Singapore by Natixis against the registered shipowner, Ocean Light Shipping Inc. (“Ocean Light”) for alleged misdelivery of a cargo of oil which had been carried from Brazil to China in the latter part of 2019. Natixis claim to be the holders of bills of lading in respect of that cargo. The contractual charterparty chain relating to the voyage from Brazil to China comprised (i) a timecharter between Ocean Light and Trafigura on an amended Shelltime 4 form dated 29 April 2019, (ii) a voyage sub-charter from Trafigura to CUSA on an amended Shellvoy 6 form dated 21 August 2019, and (iii) a back to back voyage sub-charter, also dated 21 August 2019, from CUSA to Petrobras. As described below, the role and involvement of CSPL in this contractual chain is a matter which is to some extent in dispute.
An order having been made against CSPL on 24 March, the Claimants now seek an equivalent order against Petrobras who were at the bottom of the charterparty chain. The operative relief sought is as follows:
i) The Defendant must provide forthwith such bail or other security as may be required to prevent such arrest or detention or to secure the release of the Vessel, or if such bail or other security has already been provided by another party, to provide forthwith such substitute security to replace security that may have been provided by another party to prevent such arrest or detention or secure the release of the Vessel. For the avoidance of doubt, the Defendant is required to provide the aforementioned bail and/or security directly to the Bank.
ii) Upon a demand to Trafigura Maritime Logistics Pte Ltd or the Claimants to do so from Head Owners, the Defendant is to supply directly to Head Owners sufficient funds to defend any proceedings brought by Natixis against Head Owners arising out of or in connection with the discharge or delivery of the Cargo, or alternatively to supply such funds to the Claimants if any of Trafigura Maritime Logistics Pte Ltd or the Claimants has provided such funds to the Head Owners.
Petrobras were not given formal notice of the application when it was issued by Clearlake on Friday 27 March 2020, but they were given informal notice (albeit less than one day). Clearlake therefore recognised that a duty of full and frank disclosure arose. However, I was shown correspondence which indicated that Petrobras had previously been given notice of Clearlake's potential claim as well as developments in the proceedings brought by Trafigura. Because of the urgency of the case, I ordered that the application should be heard on Monday 30 March 2020. By the time of the hearing, Petrobras had been able to serve a short witness statement with a small number of relevant documents exhibited, and skeleton argument in opposition to the application. At the hearing (which was a remote hearing conducted by the Skype for Business video conferencing platform) Mr. Byam-Cook was able to make detailed submissions for approximately half a day as to why the interim relief should not be granted.
Factual background
The relevant factual and contractual background to present proceedings is largely set out in the judgment of Henshaw J and it is not necessary for me to repeat his description in detail. Certain aspects of the factual background had, however, not been the subject of focus in the application before Henshaw J. and were relevant to the parties' arguments. What therefore follows below is a broad summary which incorporates the particular factual matters relevant to the parties' arguments.
The Vessel was arrested by Natixis Bank, Singapore Branch (“Natixis”), the holders of bills of lading in respect of a trade of 1m US barrels of Lula Crude Oil from Brazil to China (“the Cargo”). The Vessel is still currently on time charter to Trafigura from her Ocean Light pursuant to the time charter dated 29 April 2019 on an amended Shelltime 4 form (“the Head Charter”). In contrast, the two voyage charters have been performed.
Trafigura sub-chartered the Vessel on an amended Shellvoy 6 form to CUSA on 21 August 2019 (“the Clearlake Charter”) for carriage of crude oil from Brazil to the Far East. By an addendum to the Clearlake Charter dated 2 December 2019, after the Cargo had been discharged, it was agreed between Clearlake and Trafigura that the Clearlake Charter would be amended so that the charterer was CSPL (the Second Claimant).
Clearlake's case is that CUSA was originally named in the Clearlake Charter by mistake and that the intention had been for CSPL to charter in tonnage, for a back-to-back booking note to be agreed with CUSA and for CUSA to charter out tonnage to Petrobras. That this was the intention is borne out by an internal Clearlake email dated 29 August 2019 (i.e. not long after the Clearlake charter had been concluded and long before any dispute had arisen) from Mr. Ryan Lynch to a colleague:
So here is what we will need on this
1- Recap: Trafigura -> CSPL
2- Booking note CSPL -> CCUSA
3- Recap (below is ok) CCUSA -> Petrobras
Can you do an addendum/ revision with Trafigura change charterer to CSPL, and send us a booking note for CSPL -> CCUSA
Whom is doing ops? Would suggest Vikas or Gareth given the LOIs etc will need back to back and we need to make sure it works
This intention was to some extent accomplished, in that the addendum was drawn up and executed in December 2019 substituting CSPL for CUSA under the Clearlake charter. But Clearlake omitted to draw up a back-to-back booking note between CSPL and CUSA. It is this omission that has provided the foundation of one of Petrobras' arguments that there has been a ‘break in the contractual chain’, such that no relief should be granted to Clearlake. The substance of the argument is that any liability on the part of CSPL towards Trafigura (or those further up the contractual chain) cannot be passed down the contractual chain to Petrobras; because it is CSPL which may have liabilities up the contractual chain, but only CUSA which has claims against Petrobras, and (because of the break in the chain) CSPL's liabilities cannot be passed down to CUSA. The Claimants' case is that, for present purposes, the precise relationship between the Clearlake parties is in relation to the Vessel does not matter.
Also on 21 August 2019, CUSA entered into a sub-charter with Petrobras, (“the Petrobras Charter”). The Petrobras Charter was on materially back-to-back terms with the Clearlake Charter. Both Charters provided at clause 33(6) of the amended Shellvoy form:
“Notwithstanding any other provision of this Charter, Owners shall be obliged to comply with any orders from Charterers to discharge all or part of the cargo provided that they have received from Charterers written confirmation of such orders.
If Charterers by telex, facsimile or other form of written communications that specifically refers to this clause request Owners to discharge a quantity of cargo either:
(a) without bills of lading …
then Owners shall discharge such cargo in accordance with Charterers' instructions in consideration of receiving the an LOI as per Owners' P&I Club wording to be submitted to Charterers before lifting the “subs”. Following indemnit [sic] deemed to be given by Charterers on each and every such occasion and which is limited in value to 200 per cent of the C.I.F value of the cargo on board
(i) Charterers shall indemnify Owners, and Owners' servants and agents in respect of any liability loss or damage of whatsoever nature (including legal costs as between attorney or solicitor and client and...
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