Great Elephant Corporation v Trafigura Beheer BV [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE TEARE,Mr. Justice Teare |
| Judgment Date | 27 June 2012 |
| Neutral Citation | [2012] EWHC 1745 (Comm) |
| Docket Number | Case No: 2010 FOLIO 60 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 June 2012 |
[2012] EWHC 1745 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: 2010 FOLIO 60
and
and
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Chirag Karia QC (instructed by Andrew Jackson) for the Claimant
Robert Bright QC and Richard Waller QC (instructed by Reed Smith) for the Defendant
Charles Kimmins QC and Socrates Papadopoulos (instructed by Ince and Co.) for the Third and Fourth Parties
Simon Rainey QC (instructed by Herbert Smith) for the Fifth Party
Hearing dates: 27–28 March and 2–3 April 2012
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 oil tanker CRUDESKY loaded a cargo of crude oil at the AKPO FSPO Terminal, part of a deepwater oil and gas field off Port Harcourt, Nigeria, between 31 August and 1 September 2009. The vessel was not permitted to leave Nigeria by the local authorities until mid-October 2009 and only then on payment of a "fine" of US$12m. The detention of the vessel has given rise to a claim by the disponent owner of the vessel, Great Elephant Corporation ("the shipowners"), against the charterers, Trafigura Beheer BV ("Trafigura"), for demurrage and other sums. Trafigura had bought the cargo from Vitol SA and seeks to pass on its liability, if any, to Vitol SA. Vitol SA in turn seeks to pass on its liability, if any, to Vitol Asia Pte Limited from whom it bought the cargo. Finally, Vitol Asia Pte Limited seeks to pass on its liability, if any, to China Offshore Oil (Singapore) International Pte Limited ("COOSI"), who sold the cargo to Vitol Asia Pte Limited. Since there is no dispute between the Vitol companies who must have bought and sold on back to back terms I shall refer to both companies as "Vitol". COOSI bought the cargo from another company but has made no claim against that company in these proceedings.
This dispute about liability for delay to CRUDESKY in departing Nigeria has generated over 300 pages of written submissions with reference to over 100 authorities. However, much depends upon the facts and so, before setting out the terms of the charterparty and the several sale contracts (which were not back to back), it is necessary to make findings as to what, on the balance of probabilities, happened in Nigeria, what procedures governed the loading of crude oil in Nigeria, whether any offences contrary to the local law were committed and what lawful authority, if any, the local authorities had to detain the vessel and her cargo.
The court heard oral evidence from three experts in Nigerian law. A fourth gave evidence in writing but was not called. For two reasons the expert evidence, whilst in some respects helpful, was not ultimately of great assistance. First, in the absence of evidence that the principles of statutory construction were any different in Nigerian law than in English law the court has inevitably found itself construing the Nigerian legislation. For the same reason many of counsel's submissions were not based upon the expert evidence but were indeed their own submissions. Second, much of the "expert" evidence was comingled with issues of fact and the facts assumed by the experts were not necessarily the facts as found by the court. Of the expert witnesses who gave oral evidence I found Mr. Ilogu the most reliable, though I was not able to accept all that he said. He was a careful witness who recognised the limits of his expertise as a lawyer and that much depended upon the facts. When faced with points against his opinion he fairly recognised them. Mr. Oditah QC is no doubt very familiar with Nigerian law and with practices in Nigeria but in cross-examination he was reluctant to confront obvious difficulties in his construction of Nigerian legislation and as a result I found myself reluctant to place reliance on his evidence. Mr. Fagbohunlu was knowledgeable and often helpful but also showed, at times, a reluctance to recognise difficulties in the construction of the legislation.
Events in Nigeria
The AKPO FPSO terminal is located 106 miles south south west of Port Harcourt in the Niger delta. It is operated by Total Upstream Nigeria limited ("Total"). The FPSO is a vessel with a capacity of 350,000 metric tonnes summer deadweight and is moored to a single point mooring. Tankers loading cargo at the terminal are moored bow to bow with the FPSO and the cargo is transferred via a hoseline assembly. The AKPO terminal had only come into service in April 2009. In an email from Total dated 28 August 2009 reference was made to "operational challenges associated with the start up of the AKPO field." There was concern as to the reliability of the calibration of the equipment which monitored the quantity of oil pumped on board a vessel at the terminal. There was also concern that unless appropriate steps were taken to enable the quantity loaded to be verified by the presence of an official from the Nigerian Department of Petroleum Resources (the "DPR") at the port of discharge the AKPO terminal might be shut down. This concern no doubt reflected the fact that the Nigerian authorities viewed theft of crude oil (a resource which belonged to the Nigerian people pursuant to section 1 of the Nigerian Petroleum Act 1969) very seriously.
CRUDESKY was nominated as the lifting vessel on 28 August 2009. It appears that another vessel had earlier been nominated as the lifting vessel. The vessel arrived at the AKPO terminal at 0300 on 29 August 2009. The DPR representative on board the FPSO (Mr. Tuboalabo) left the FPSO without informing Total and without the approval of the DPR in Port Harcourt. The vessel tendered Notice of Readiness at 0001 on 30 August 2009. A pilot and surveyors boarded her at 1700 on that day. The vessel was berthed at 0912 on 31 August 2009 and an agent and "the authorities" boarded her at 1020. The independent surveyors monitoring the operations reported that "inward clearances were granted at 1145 on 31 August 2009". However, such inward clearances cannot have been signed by the DPR representative on board the FPSO because he had left on 29 August 2009. Also on the morning of 31 August clearance from the Crude Oil Management Department (COMD) was received. At 1300 the hose connection was established.
By this time the Total lifting supervisor, Mr. Bankole, had arrived on the FPSO with the lifting crew. Between noon and 3 pm he telephoned the DPR in Port Harcourt to enquire when the DPR representative would arrive. He was informed that the DPR representative, Mr. Idoniboye, would not arrive until 1 September 2009. Mr. Bankole discussed with Mr. Pepple, the Head of Operations at DPR Port Harcourt, the possibility of obtaining the DPR's agreement to commence loading whilst the DPR representative was not on board the FPSO. Mr. Bankole mentioned that this would "imply severing the padlock currently installed on the export valve" but that Total would replace the padlock with a new one once the lifting operations had been completed. Mr. Bankole understood from his conversation that Mr. Pepple had given him verbal authorisation to sever the padlock and commence the loading operation.
Mr. Bankole assumed that the DPR in Lagos (where the headquarters of the DPR was) had given authorisation to load and that such clearance was "on its way". That Mr. Bankole made such an assumption is an indication that, although inward clearance had been granted before noon on 31 August 2009 (but not signed by a local DPR representative), some further authorisation to load was required from the DPR in Lagos.
In the course of the conversation between Mr. Bankole and Mr. Pepple the latter asked if it was safe to start loading in the absence of the DPR representative on board the FPSO. Mr. Bankole said it would be safe because exactly the same procedures would be followed and that the independent inspectors and surveyors were on board.
Accordingly, on instructions from Mr. Bankole the padlock was cut and loading commenced at 1612 on 31 August 2009.
Total's report, from which much of the above narrative is taken, states by way of summary that Mr. Bankole "misunderstood the verbal authorisation" which had been granted to him by Mr. Pepple. It was suggested by Mr. Robert Bright QC, counsel for Trafigura, that no authorisation had been given by Mr. Pepple but that Mr. Bankole had misunderstood Mr. Pepple to have given authorisation. If that had been the position I would have expected Total to have said that Mr. Bankole misunderstood Mr. Pepple to have given him authorisation. Instead, Total referred in terms to the "verbal authorisation which is granted to him by the DPR representative in Port Harcourt." It seems to me, in circumstances where Mr. Bankole had asked for authorisation to start loading in the absence of the DPR representative, had pointed out that that would require the padlock on the valve to be cut, had said that Total would replace the lock and had discussed the safety of the loading operation in the absence of the DPR representative and where, following the conversation, Mr. Bankole authorised the cutting of the lock, that it is more likely than not authorisation was given by Mr. Pepple. I prefer Total's detailed "list of known facts" to its "root causes summary". The reference to a "misunderstanding" was probably intended to refer to an erroneous assumption by Mr. Bankole that verbal authorisation by Mr. Pepple of DPR Harcourt was sufficient. Events proved that it was not.
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