Galtrade Ltd v BP Oil International Ltd

JurisdictionEngland & Wales
JudgeMr Adrian Beltrami
Judgment Date05 July 2021
Neutral Citation[2021] EWHC 1796 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCL 2020 000015

[2021] EWHC 1796 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A, 1NL

Before:

Mr. Adrian Beltrami QC

Sitting as a Judge of the High Court

CL 2020 000015

Between:
Galtrade Limited
Claimant
and
BP Oil International Limited
Defendant

Sean O'Sullivan QC, instructed by Jackson Parton, on behalf of the Claimant.

Oliver Caplin, instructed by Hill Dickinson LLP, on behalf of the Defendant.

Hearing dates: 14–17 June, 21 June 2021.

I direct that pursuant to CPR PD 39A paragraph 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 Adrian Beltrami QC:

A. INTRODUCTION

1

Both the Claimant and the Defendant carry on the business of fuel oil trading. By contract Ref: E180021288(F) dated 10 October 2018 (the Contract), the Defendant agreed to sell to the Claimant four parcels of 30–35,000 mt of low sulphur straight run fuel oil ( SRFO) over the course of 4 months from November 2018 to February 2019, FOB Taman on the Black Sea coast. The price was index-linked to Platts 1% sulphur fuel oil FOB Mediterranean plus USD 22.50/mt. The third parcel ( Parcel 3) was loaded on the mt Pioneer on 10 February 2019. It is common ground that Parcel 3 did not comply with the contractual specification in 3 respects and that the Defendant was thereby in breach of contract. The parties are in dispute over the consequences of that breach. The Claimant purported to reject Parcel 3 and claims damages calculated by reference to what it describes as its wasted expenditure. The Defendant, for its part, contends that the Claimant breached the Contract by wrongfully repudiating it and by refusing to pay for Parcel 3. It counterclaims for what it contends are its losses caused by that breach.

2

The trial was conducted over 5 days between 14 June 2021 and 21 June 2021, remotely via Microsoft Teams. The two factual witnesses, Edoardo Filosa ( EF) for the Claimant and Wilhelm von Schweinitz ( WVS) for the Defendant, were the traders responsible for the Contract. Both gave their evidence openly and helpfully. They disagreed over the scale of the Defendant's breach and its impact on the Claimant, and each tended to blame the other for what had happened, but there was no substantive dispute over the primary facts, in respect of which there was in any event a sizeable documentary record through emails, texts and recorded telephone calls.

3

Pursuant to the Order of Moulder J dated 3 July 2020, as amended by the consent Order of Bryan J dated 30 March 2021, the parties were granted permission to rely on the evidence of two experts each. The idea was that one expert would address “ quality” and the other “ trading/marketability”. It may be that these issues turned out to be less distinct than initially envisaged because there was certainly an overlap in the expert evidence, on both sides. But this was not in and of itself a problem and I do not consider that either party was disadvantaged.

4

The parties relied on evidence from the following experts:

a. Mr David Jones, for the Claimant. David Jones is a chartered chemist, a director of CWA Oil & Chemicals Department and an experienced cargo surveyor. He was asked to provide technical comments on the quality issues surrounding the shipment of Parcel 3.

b. Mr Tom James, for the Claimant. Tom James has extensive experience in the commodity sector. He is currently the CEO and CIO of TradeFlow Capital Management, a specialised commodity cargo investor. In addition to expertise in risk management, he confirmed that he has also direct involvement in the purchase and sale of physical cargoes. He was asked to give evidence on the fuel oil trading market.

c. Mr Peter Jones, for the Defendant. Peter Jones is a chemical engineer with many years of experience in the oil and gas sector, including working at major oil refineries. His evidence addressed technical aspects of refinery economics and product blending, as well as related questions of marketability.

d. Ms Catherine Jago, for the Defendant, has extensive experience in the oil industry, including as oil trader, oil broker, oil pricing journalist and consultant. Her evidence was given as an oil market expert.

5

The experts produced detailed reports and supplementary reports, together also with joint memoranda. Each gave evidence orally and was cross-examined. They were all well qualified and knowledgeable in their fields and they each gave clear evidence of their expert opinions, which I considered to be generally helpful. I discuss elements of the evidence by reference to specific issues below.

B. THE FACTS

B1. The Contract

6

The Contract was evidenced by, amongst other documents, a confirmation of trade sent by email on 12 October 2018. Given the importance of the terms of the Contract to the resolution of the dispute between the parties, it is necessary to set out a number of the material terms:

7

The Parcels: Under the heading “Grade”, the Contract was for the sale of “ Non EU Qualified LOW-SULPHUR STRAIGHT-RUN FUEL OIL of Slaviansky origin meeting the agreed specification at the time and place of loading.” There were four parcels, each of a “ QUANTITY AGREED MUTUALLY BETWEEN BUYER AND SELLER” of a minimum of 30,000 metric tonnes and a maximum of 35,000 metric tonnes.

8

There was then listed a series of detailed specifications under the subheading “Guarantees”. These comprised either minimum or maximum values for each of Density, Viscosity, Water content, Ash content, Flash point, Sulphur content, Pour point, P-value, Xylene equivalent, Toluene equivalent, Bromine, Sodium, Vanadium and Nickel. Under the further sub-heading “Typicals”, there was a similar (though not identical) list of specifications with attendant values. Whilst the “Typicals” values were no doubt of commercial interest, it was common ground that they did not define the contractual obligation of the Defendant.

9

Delivery: each Parcel had specified delivery terms. For Parcel 3, they were as follows: Delivery shall be given and taken FOB Taman with Laydays of 30 January 2019 to 31 January 2019. Seller to narrow to a one (1) day loading window latest COB 27 th January 2019.”

10

Price: The fixed price per METRIC TONNE(S) FOB Taman shall be the arithmetic average of the high quotes for FUEL OIL 1% SULPHUR under the heading CARGOES FOB MED as published in Platts European Marketscan plus a premium of 22.50 US dollars per metric tonne… The applicable quotation(s) shall be those published in the 10 consecutive publication(s) dated immediately after the BILL OF LADING date of the shipment in question.”

11

Inspection: quality was to be determined at the load port in accordance with the governing General Terms and ConditionsA mutually agreed independent inspector shall be appointed to determine the quality and quantity.”

12

General Terms and Conditions: except as specifically detailed, the transaction was governed by the Defendant's General Terms and Conditions for Sales and Purchases of Crude Oil and Petroleum Products 2015 Edition (the General Terms).

13

The following provisions of the General Terms have a relevance to the dispute:

14

Part 1, Section 2, “Measurement and sampling, independent inspection and certification”:

2.1.1 Measurement of the quantities and the taking of samples and analysis thereof for the purpose of determining the compliance of the… Product with the quality and quantity provisions of the Special Provisions shall be carried out in the following manner…

…(b) where the Loading Terminal is not operated by the Seller or the Seller's Affiliate and if jointly agreed upon by the Buyer and Seller, by an independent inspector in accordance with the good standard practice at the Loading terminal at the time of shipment….”

15

Part 1, Section 3, “Risk and property”:

3.1 … the risk and property in the… Product delivered under the Agreement shall pass to the Buyer as the… Product passes the Vessel's permanent hose connection at the Loading Terminal.”

16

Part 1, Section 7, “Time allowed, delays and demurrage”:

“7.1 Delays

In the event of any delay of any kind or from any cause whatsoever whether in connection with the scheduling of the Vessel's turn to load (including any change in such scheduling), provision of a Berth for the Vessel, berthing or loading of the Vessel or otherwise howsoever without limitation, and provided always that the Vessel is eventually loaded pursuant to Section 6.2.2, any rights of the Buyer against the Seller, however the same may arise and whether or not arising under the Agreement, shall be limited in all circumstances whatsoever to a claim for the payment of demurrage as specified below, and the Buyer shall not be entitled to complain directly or indirectly of any delay except for the purpose of founding a claim to such demurrage.”

17

Part 8, Section 57, “Definitions and Interpretation”:

“57.1.51 “Product” means wholly or partially refined petroleum product or biofuel of the grade specified in the Special Provisions…

57.1.59 “Special Provisions” means the oral or written agreement in which, by reference, these General Terms and Conditions are incorporated to form the Agreement…

57.1.61 “typical” means a quality or characteristic often attributable to… Product from a particular source, given without guarantee and not amounting to a representation or warranty that such typical quality or attribute will be present in the… Product supplied;”

18

Part 8, Section 59, “Quality and claims in respect of quality/quantity”:

“59.1 Quality

59.1.1 Unless otherwise stated in the Special Provisions, the quality of… Product delivered hereunder shall not be inferior to the specification (if any) set out in the Special Provisions. Whether...

To continue reading

Request your trial
2 cases
  • Soteria Insurance Ltd (formerly CIS General Insurance Ltd) v IBM United Kingdom Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 4 April 2022
    ...46 Mr Kramer QC, on behalf of IBM, also took the court to a decision of the deputy judge in Galtrade Ltd v BP Oil International Limited [2021] EWHC 1796 where one of the issues was whether the defendant had established that the claimant would have lost money even if the cargo had been in ac......
  • Cardiorentis AG v IQVIA Ltd
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 10 February 2022
    ...that this claim was for expenditure ‘which has been thrown away, that is, wasted, by reason of the breach…’. In Galtrade v BP Oil [2021] EWHC 1796 (Comm), at [117] Adrian Beltrami QC, sitting as a High Court Judge, said: ‘It is important also to understand that the mere incurrence of expend......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT