Glencore Energy UK Ltd v OMV Supply & Trading Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Ross Cranston |
| Judgment Date | 23 April 2018 |
| Neutral Citation | [2018] EWHC 895 (Comm) |
| Docket Number | Case No: Claim No CL-2016-000676 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 April 2018 |
[2018] EWHC 895 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Ross Cranston
Case No: Claim No CL-2016-000676
Chris Smith (instructed by Clyde & Co LLP) for the Claimant
Henry Byam-Cook (instructed by Holman Fenwick Willan LLP) for the Defendant
Hearing date: 11–12 APRIL 2018
Introduction
This claim arises out of a contract for the sale of oil on CFR terms between the claimant seller, Glencore Energy UK Ltd (“Glencore Energy”) and the defendant buyer, OMV Supply & Trading Ltd (“OMV”). Because of congestion at the discharge port, OMV requested, and Glencore Energy agreed, that the vessel carrying the oil should wait offshore until a berth was available. It is common ground that ordinarily OMV would make payment in respect of the period the vessel spent waiting. Glencore Energy makes the claim in implied contract, the amount calculable at the demurrage rate, with an additional payment for bunkers consumed while the vessel was at the waiting area. OMV contends that in the circumstances Glencore's claim is for demurrage and that it is time barred because it was not made within the contractual period for demurrage claims.
At the hearing there was oral evidence on behalf of Glencore Energy from Mr Thomas Large and Mr Richard Prince. Mr Large is a risk manager on Glencore Energy's fuel oil desk, but at the relevant time was involved in cargo operations on its crude oil desk. Mr Prince is a senior freight trader at ST Shipping and Transport Pte Ltd (“ST Shipping”). ST Shipping acts as Glencore Energy's in-house shipping department, with its primary role being to provide shipping services to companies within the Glencore group which trade oil products and require tonnage to fulfil their trading obligations. No one from OMV gave evidence.
Background
On 30 October 2015 Glencore Energy and OMV reached heads of agreement for the sale by Glencore to OMV of 80,000 mt of Siberian light crude oil to be loaded from Novorossiysk, Russia. Glencore sent a draft sale contract to OMV on 2 November, and OMV sent non-controversial revisions to various clauses on 4 November. Under clause 5 of the agreement, delivery was to be “CFR basis one safe berth / port basis Augusta, Italy with scheduled loading dates 10 th–14th November 2015, weather and safe navigation permitting, on board vessel ‘TBN’/sub to be acceptable to Buyer…”
Laytime was provided for in clause 9 of the contract, demurrage in clause 10:
“9. Laytime
Laytime allowed at disport shall be 36 hours, commencing 6 hours after tendering of notice of readiness or upon commencement of discharge, whichever first occurs. Laytime computation shall be as per the general terms and conditions.
10. Demurrage
Except as herein provided, for all time exceeding the allowed laytime, Buyer shall pay demurrage to Seller in accordance with the actual charterparty rate. Any claim for demurrage to be received latest 90 days from completion of discharge otherwise it will be deemed to have been waived, and any such claim not to exceed the amount properly due by seller to the shipowner. Seller will supply Buyer copy of owner's claim prior to payment.”
Clause 24 of the contract stated that where not specifically covered by the “above terms”, the agreement was to be governed by BP 2007 General Terms and Conditions for CFR deliveries. That was a reference to the 2007 edition of BP Oil International Limited's General Terms and Conditions for Sales and Purchases of Crude Oil (“the BP Terms”).
The BP terms, section 13, was headed “Time allowed, delays and demurrage”. Clause 13.1 covered time allowed for discharge, 36 hours. Running hours were dealt with in clause 13.1, which provided, in part:
“13.2.1 Running hours shall commence Berth or no Berth 6 hours after NOR is tendered or on commencement of discharge, whichever is the earlier. For the purposes of calculating running hours, discharge shall be deemed to be completed upon disconnection of discharging hoses.”
Clause 13.2.2 set out certain exemptions when delay was not to be counted, including at clause 13.2.2(b) “inward passage until the Vessel is securely moored at the Berth…” There was a time bar for demurrage claims in clause 13.2.4. Demurrage claims were addressed in clause 13.3.
Clause 24.1 contained definitions: “discharge port” was the berth at which the oil to be delivered under the terms was to be discharged; “laytime” was the time allowed to the seller for loading under the terms, or the time allowed to the buyer for discharge under them; and “NOR” meant:
“the valid notice of readiness to load or discharge, as the case may be, as given by the master of the Vessel…to the Seller…at the Loading Terminal or to the Buyer…at the Discharge Port respectively.”
Along with negotiations for the sale of the oil, there had been negotiations over the chartering of a vessel to deliver it. On 30th October 2015 Mr Large of Glencore had referred the details of two vessels to perform the contract to OMV, one being the MT Seagrace. OMV had referred these to its vetting department, and on 2nd November 2015 OMV accepted the MT Seagrace (“the vessel”) on terms set out in its email. Mr Large notified ST Shipping.
Mr Prince of ST Shipping then concluded a charter for that vessel through the brokers, Clarksons, acting for the owners. It was between ST Shipping as charterers on the one hand and the owners, Cooper Navigation Ltd (“the Owners”) on the other. In the recap which Clarksons sent, laytime was specified as 84 hours, Sundays and holidays included. Demurrage was at a rate of $US 32000 per day pro rata. Address commission was set at 1.25% on freight, deadfreight and demurrage.
The charterparty was based on the BPVoy 4 form as modified. Clause 20 of that form contained a time bar for demurrage claims: these needed to be made within 90 days from the time of discharge of the cargo, and had to have documentary support. Clause 22 was headed Revised Charterers' Voyage Orders for Loading or Discharge Ports and provided, in its relevant parts:
“22.1 If at any time after the date of this Charter, Charterers, notwithstanding that they may have nominated a loading or discharge port, wish to issue revised Charterers' Voyage Orders and instruct Owners to stop and/or divert the Vessel to an alternative port within any Ranges stated in Section E or F of Part 1, or cause her to await orders at one or more locations, Owners shall issue such revised instructions to the Master as are necessary to give effect to such revised Charterers' Voyage Orders and the Master shall comply with such revised instructions as soon as the Vessel is free of any previous charter commitments.
22.2 If…
22.2.3 the Vessel is, after loading, instructed by Owners to stop and await orders at Charterers' request then all time spent by the Vessel awaiting orders shall count as laytime or, if the Vessel is on demurrage, as demurrage.”
After Mr Prince of ST Shipping had concluded the charterparty with the owners on 2 November 2015, he sent the same day to Glencore Energy, including Mr Large, a fixture recap recording the position as between the owners and ST Shipping. This was topped and tailed from the recap Clarksons had sent him. However, there was no mention of Glencore Energy, the parties remaining ST Shipping and the Owners, and the recap referred to commission payable to Clarksons. In his evidence Mr Prince accepted that the owner-ST Shipping charterparty would not necessarily be back to back in all cases with the ST Shipping-Glencore Energy arrangements, as where the former was a time charter and the latter (as in this case) a voyage charter.
The background to what Mr Prince had done was that under a Frame Agreement between Glencore Energy and ST Shipping, Glencore Energy informs ST Shipping that it requires a vessel for a particular trade. ST Shipping then seeks to provide vessels from ST Shipping's own fleet or by chartering them, although failure to locate a vessel is not a breach of contract. Pricing is a market related price plus a service fee. Each transaction is to be summarised in a fixture recap. Under the Frame Agreement, ST Shipping is not to represent itself as an agent of Glencore Energy, not to commit Glencore Energy without prior approval, and not to bind Glencore Energy in any way. Glencore Energy must settle its obligations to ST Shipping within 30 days of receipt of an invoice. Schedule A of the Frame Agreement provides that freight and demurrage is to be paid as per fixture recap/charterparty.
The same day Mr Large received the ST Shipping-Owners recap from Mr Prince, 2 November 2015, he had sent it, not the ST Shipping-Glencore Energy recap, to OMV. From this point ST Shipping and Mr Prince dropped out of the picture and Glencore Energy took over the handling of day to day operations and the provision of instructions to the vessel.
On 3 November 2015 OMV confirmed that the discharge port was Trieste and provided documentary/discharge instructions. The oil was destined for the SIOT (Società Italiana per l'Oleodotto Transalpino SpA) terminal there and the transalpine pipeline. On 6 November 2015 Glencore Energy provided the vessel with discharge orders. On 9 November her master issued an NOR; the vessel had arrived at Novorossiysk and it was ready to load. The NOR stated that laytime was to commence in accordance with the terms of the charterparty of 2 November. Loading commenced on 9 November and was completed the next day. The vessel left Novorossiysk.
Meanwhile, the previous day, 9 November 2015, OMV sent an email to Glencore Energy in the following terms:
“As there are no berthing prospects currently for the Seagrace at Trieste....
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