Glencore Energy UK Ltd v Cirrus Oil Services Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Tomlinson,Lord Justice Underhill |
| Judgment Date | 25 July 2013 |
| Neutral Citation | [2013] EWCA Civ 905 |
| Docket Number | Case No: A3/2012/2622, A3/2012/3220 & A3/2012/3221 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 July 2013 |
[2013] EWCA Civ 905
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE TEARE
Royal Courts of Justice
Strand, London, WC2A 2LL
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Tomlinson
and
The Right Honourable Lord Justice Underhill
Case No: A3/2012/2622, A3/2012/3220 & A3/2012/3221
and
and
Mr Robert Bright QC & Ms Jessica Sutherland (instructed by Reed Smith LLP) for the Appellant
Mr Chirag Karia QC (instructed by Andrew Jackson Solicitors) for the Respondent
Mr Charles Kimmins QC & Mr Socrates Papadopoulos (instructed by Ince & Co LLP) for the Third and Fourth Parties
Mr Simon Rainey QC (instructed by Herbert Smith Freehills LLP) for the Fifth Party
Hearing dates: 22 nd & 23 rd May 2013
Approved Judgment
Facts
In April 2009 the Akpo FPSO Terminal opened for business, 106 miles south-south-west of Port Harcourt in the Niger Delta. The production rights in the Akpo oil field were held by a consortium including China National Offshore Oil Corporation. The operator of the terminal was Total Upstream Nigeria Ltd ("Total"). The Nigerian authorities were always concerned about possible theft of crude oil and required an official from the Nigerian Department of Petroleum Resources ("the DPR") to be present during the loading of vessels in order to verify the actual quantity of oil loaded on board such vessels.
On or about 29 th July 2009 China Offshore Oil (Singapore) International Pte Ltd ("COOSI") sold and Vitol Asia Pte Ltd bought 1 million barrels (plus or minus 5% at buyer's option) of Akpo Condensate for delivery free on board. Shortly thereafter Vitol Asia sold the same quantity on the same terms to Vitol S.A. On or around 10 th August 2009 the same quantity of Akpo crude oil was sold to Trafigura Beheer B.V. ("Trafigura"), also on f.o.b. terms.
It was therefore for Trafigura to provide a ship to load the oil at the Terminal. They had, already, on 30 th July, agreed a charterparty of the vessel "CRUDESKY" on an amended BP Voy 3 form with the Great Elephant Corporation as disponent owners ("the Owners") of that vessel. Later in August, they nominated the vessel pursuant to their contract with Vitol and ordered the vessel to proceed to the Terminal to load.
Crudesky arrived at the Akpo Terminal at 03.00 hours on 29 th August, but on that date the DPR representative at the Terminal left without informing Total and without the permission or approval of the DPR in Port Harcourt. The vessel gave notice of readiness at 00.01 hours on 30 th August and laytime under the charterparty began at 06.01 hours on that day. At 09.12 on 31 st August the vessel berthed and an agent and what the judge called "the authorities" boarded her at 10.20 hours. At 13.00 hours hose connection was made but loading could not begin because the export valve was padlocked and no DPR representative was present with a key to unlock the padlock.
By this time Total's lifting supervisor, Mr Bankole, had arrived on the scene. Between 12.00 and 15.00 hours he telephoned the DPR office at Port Harcourt to ask when a DPR representative would arrive at the Terminal. He was told that a Mr Idoniboye would arrive sometime on 1 st September. He then discussed the matter further with DPR's Head of Operations at Port Harcourt, Mr Pepple, and asked if it would be possible to begin loading while the DPR representative was not present at the FPSO. He said that he appreciated that the padlock would have to be severed from the export valve but he said Total would pay for a new padlock once loading was completed. The judge found:—
"Mr Bankole understood from his conversation that Mr Pepple had given him verbal authorisation to sever the padlock and commence loading operations."
At 16.12 hours, on Mr Bankole's instructions, the padlock on the export valve was cut and loading began.
Mr Idoniboye, the new DPR representative, arrived at about 12.15 on 1 st September. At about the same time Total's Lagos office asked for written clearance for loading from the DPR in Lagos. That was granted between 15.00 and 18.00 and Mr Idoniboye was told to print out the clearance given. He was unable to do so because his computer had a glitch which meant that the clearance could not be printed out. At 21.00 hours loading was completed and about that time Mr Idoniboye received notification that the DPR in Lagos had revoked the clearance it had given earlier. At 21.54 hoses were disconnected and at 22.18 the vessel was unmoored from the FPSO and began to drift. She could not leave because she had not received documents evidencing the loading of the cargo.
At 09.19 on 3 rd September the laytime allowed by the charterparty expired and the vessel was thereafter on demurrage.
On 7 th September the DPR in Lagos sent two letters. The first was to Total noting that loading had proceeded without requisite clearance and saying that Total's actions were viewed by the Federal Government as an economic crime. They threatened appropriate sanctions. The second letter was addressed to the Chief of Naval Staff requesting the Navy's assistance in ensuring that the vessel be restricted and prevented from sailing away pending resolution of the matter by the Federal Government. Naval personnel proceeded to board the vessel at 18.24 hours on 9 th September and remained on board after the time she dropped anchor at the Bonny offshore Terminal, a distance away from the Akpo terminal.
Discussions on resolving the crisis continued until 9 th October when the Ministry of Petroleum Resources wrote to Total requiring them to pay a fine of US$12 million to the DPR's US$ account in New York and requiring them to discipline the personnel of Total who had "perpetrated the dastardly act". The DPR also wrote to the Chief of Naval Staff to say that the vessel would be allowed to sail away.
On 13 th October Total paid the required fine and the vessel was released. She sailed back to the Akpo FPSO and disembarked the Nigerian naval personnel. Thereafter the DPR completed the cargo documentation which arrived on board at 09.54 on 16 th October. At 13.00 the vessel sailed for the port of discharge.
In very broad terms the judge held that the vessel was on full demurrage from 09.19 on 3 rd September until 7 th September but as from that date she was only on half demurrage by reason of a "restraint of princes" clause in the charter. He further held that Trafigura could claim that their vendors had failed to give them quiet possession of their cargo from 1 st to 7 th September but that Vitol and COOSI could rely on force majeure clauses exempting them from governmental interference or unforeseeable consequences as from 7 th September to 16 th October. There is now an appeal. The burden of presenting the appeal was undertaken by Trafigura whose main concern was to pass the demurrage, for which they were liable, on down the sale and purchase chain initially to Vitol who might then pass it ultimately to COOSI.
Relevant Contractual Provisions
The charterparty of 30 th July 2009 incorporated the terms of BP Voy 3 of which relevant terms were:—
"15. Loading and Discharge of cargo
The cargo shall be pumped into the vessel at the expense of and at the risk and peril of charterers as far as the vessel's manifold only, and pumped out of the vessel at the expense of and at the risk and peril of Owners as far as the vessel's manifold only.
…
21. Laytime/Demurrage/Force Majeure
Any delay(s) arising from adverse weather or sea state conditions, fire, explosions, breakdown … or failure of equipment, plant or machinery in or about ports or places of loading and/or discharge, Act of God, act of war, labour dispute, strike, riot, civil commotion or arrest or restraint of princes, rulers or peoples shall, provided always that the cause of the delay(s) was not within the reasonable control of Charterers or Owners or their respective servants or agents, count as one half laytime or, if the Vessel is on demurrage, at one half of the demurrage rate."
The sale and purchase contract between Vitol and Trafigura was on the terms of the General Conditions of the Nigerian National Petroleum Corporation for the sale and purchase of Nigerian Crude Oil ("the NNPC terms"). Article 6 of those terms was entitled "Loading Conditions and Demurrage" and provided (by Article 6.5.1) for demurrage to be paid to the Buyer for laytime in excess of allowable laytime. Article 6.5.2 contained exclusions from laytime and demurrage for (inter alia)
"(f) Force Majeure as stipulated in Article 21 herein."
Article 18.1 provided:—
"Each party hereby agrees to comply and to procure its personnel, directors, agents, contractors, representatives and permitted assigns to comply with all laws, rules, regulations, valid directives and policies and bye laws applicable and necessary for the performance by each party of its obligations under this Contract."
Article 21 (the Force Majeure clause) provided:—
"Neither the Seller nor the Buyer shall be held liable for failure or delay in the performance of its obligations under this Contract, if such performance is delayed or hindered by the occurrence of an unforeseeable act or event which is beyond the reasonable control of either party ("Force Majeure") …
21.1
The act or event constituting Force...
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