Kolmar Group AG v Traxpo Enterprises Pvt Ltd [QBD (Comm)]

JurisdictionEngland & Wales
JudgeMR JUSTICE CHRISTOPHER CLARKE,Mr Justice Christopher Clarke
Judgment Date01 February 2010
Neutral Citation[2010] EWHC 113 (Comm)
Docket NumberCase No: 2007 FOLIO 1642
CourtQueen's Bench Division (Commercial Court)
Date01 February 2010

[2010] EWHC 113 (Comm)




Before: Mr Justice Christopher Clarke

Case No: 2007 FOLIO 1642

Kolmar Group Ag
Traxpo Enterprises Pvt Limited

Mr Michael Ashcroft (instructed by Arbis LLP) for the Claimant

The defendant was not represented

Hearing dates: 17 th December 2009

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.


Mr Justice Christopher Clarke:


In this action the buyer, Kolmar Group AG (“Kolmar”), a Swiss corporation, claims against the seller, Traxpo Enterprises Pvt Limited (“Traxpo”), an Indian corporation:

(i) restitution of US $ 1,495,566.61 which Kolmar claims was extracted from it by economic duress;

(ii) $ 691,708.73 for short delivery of cargo;

(iii) $ 356,424.60 for demurrage; and

(iv) $ 5,162 for shifting expenses.


The trial began on 17 th December 2009. By then Traxpo had failed to serve any witness statements by 30 th September 2009, the date provided for in a consent order of 8 th September 2009, and had dispensed with the services of its former solicitors. It had not engaged in the mediation provided for by that order. On 9 th December 2009 Gross J declined to adjourn the trial, not being persuaded by anything he had read that such an adjournment was appropriate. He indicated that it would be open to Traxpo to renew its application to the trial judge. Traxpo renewed its application on paper but I, also, saw no justifiable basis on which to adjourn a trial that had been fixed for some time.

The contract


On or about 27 th and 28 th August 2007 Kolmar agreed to buy and Traxpo agreed to sell (a) 15,000 m.t. methanol +/—5% at Buyer's option at $ 255 per metric ton and (b) an optional 2–3,000 metric tons of cargo +/—5% in Buyer's option at $ 265 per metric ton; in each case FOB Kandla for shipment within September 2007. The methanol was to be of Qatari or Russian origin. Payment was to be at sight against an irrevocable documentary letter of credit payable against presentation of specified documents. Under the heading “Maritime Conditions” the contract provided that laytime was to commence 6 hours from tendering Notice of Readiness or when the vessel was all fast at berth whichever first occurred. The laytime allowed and the demurrage rate were to be agreed upon vessel nomination. All other maritime conditions were to be in accordance with the Asbatankvoy Charter Party form.


The contract, which was expressly subject to English law and High Court jurisdiction, is contained in or evidenced by two faxes from Kolmar dated 28 th August 2007. It also provided that Incoterms 2000 should apply where not in conflict with the other conditions of the contract.


Clause A4 of Incoterms 2000 provided that:

“The seller must deliver the goods on the date or within the agreed period at the named port of shipment and in the manner customary at the port onboard the vessel nominated by the buyer”.


On 27 th August 2007 Mr Sudarshan Tapuriah (“Mr Tapuriah”), a director of Traxpo, the person with whom the contract had been agreed, e-mailed Ms Tara John (“Ms John”), the managing director of Meteor 5A Neelamber, Kolmar's local representative in India, details of Traxpo's stock position of methanol as at that day, giving details of the quantities landed from various vessels and the tanks into which the various quantities had been discharged. The total was said to be 29,211.636 m.t.


Kolmar wanted the methanol in order to sell it, via a sale to Kolmar Inc, to Methanex, an important customer in the United States of America and one of the world's largest methanol companies. In August 2007 Methanex was experiencing production problems and had an urgent requirement for cargoes. The USA prohibits the importation of methanol originating from Iran or China.


On 29 th August 2007 Mr Tapuriah e-mailed Ms John, requesting an amendment to provide that the quantities should be 15,000 m.t +/—5% at Sellers' option and 2–3,000 m.t. +/—5% at Sellers' option respectively; but this proposed amendment was never agreed to.

Nomination of the vessel


On 29 th August 2007 Meteor Private Ltd forwarded to Traxpo Kolmar's nomination of the vessel “Fairchem Mustang”. (Nothing turns on any distinction between one Meteor company and another and I shall refer to them simply as “Meteor”). The nomination provided for a cargo with a minimum quantity of 17,500 m.t up to a full cargo in charterer's option of about 17,526 m.t., for laytime of 250 mt/hr shinc and for demurrage at $ 20,000 pdpr. Traxpo accepted this nomination subject to laytime being at 175 m.t./hr to which Kolmar was prepared to agree.


It seems that, when the contract was made, Traxpo did not have access to sufficient cargo at the same or a lesser price with which to be able to supply Kolmar at the contract price. After the contract was made the market price of methanol increased dramatically and, as will become apparent, Traxpo found itself driven to attempt to escape from its contractual obligations.


Intertek Caleb Brett (“Intertek”) was asked by Meteor to sample 8 tanks from two different terminals at Kandla —2 at United Storage and Tank Terminals Ltd (“USTTL”) and 6 at Friends Salt Works and Allied Industries Ltd (“FSWAL”). These tanks had about 20,800 m.t. in them in all. When Intertek tested them the acidity in the methanol was found to be higher than the contract maximum of 30 mg/kg in all of the tanks. This was, however, a problem which could be addressed by the use of caustic soda. The potassium permanganate was found to be excessive in one of them. Intertek also tested a further 9 shore tanks including two tanks from another terminal – Friends Oil and Chemicals Terminal. The 17 tanks were tanks from among which it had been indicated to Mr Joseph, Meteor's operations manager, that the methanol would be drawn.


On Tuesday 4 th September, following the tank inspections, Ms Meyer of Kolmar gave Meteor a list of 15 of the tanks (2 of the 17 contained product which Meteor had learnt did not belong to Traxpo), specifying which tanks were unacceptable (3 in number), and which were Kolmar's first, and which its second, choice. As a result Mr Joseph e-mailed to Mr Tapuriah a list of 12 out of 15 tanks containing 19,450.028 m.t which he asked to be earmarked for loading. One of them was USTTL 204, which at the time of inspection contained 4,718.039 m.t. He also pressed for a certificate of origin.


These arrangements, whereby the tanks at Kandla from which the methanol was likely to come were inspected on behalf of the buyer in advance to see whether their content was off specification, followed by a request to earmark those tanks that were satisfactory to the buyer, were a perfectly normal and sensible thing to do. They did not mean that there was an agreement between the parties that as a matter of contract the contract cargo had to come from those tanks. Nor was it agreed that the usual procedure of testing before and after loading would be dispensed with.


By Thursday 6 th September Kolmar had updated their analysis of the relevant tanks and informed Meteor that only 10 of the tanks were acceptable (two of the 12 on the list referred to in para 11 above being unacceptable) and that, if the 10 acceptable tanks were loaded, the total cargo would be 16,619.834 m.t.. Since Kolmar did not want to pay deadfreight Ms Meyer asked Meteor to get Traxpo to allocate about 900 m.t. from a different tank.

Monday 10th September


On Monday 10 th September J.M. Baxi & Co (“Baxi”), the vessel's agents, gave notice that the vessel was now due at Kandia on around 19 th or 20 th September and would be ready for loading on arrival. Ms Meyer replied to Mr Joseph's e-mail forwarding the notice to inquire about progress in respect of the additional 900 m.t. She also said that she awaited details from Traxpo for the Letter of Credit.

Negotiations about the letter of credit


On 10 th September Ms John, who was from Meteor's Calcutta office, phoned Mr Tapuriah to ask him about the details of the letter of credit. He said he would send them shortly. Mr Tapuriah then e-mailed to say that Traxpo wanted the letter of credit to be established in favour of an Indian company called PEC Ltd, which was Traxpo's financier, and to be advised through the State Bank of India, permitting negotiation of third party documents as the invoice and other documents would be issued by Traxpo. His message was passed on to Ms Meyer.


On 11 th September Kolmar sent Meteor a draft letter of credit to be forwarded (as it was) to Traxpo for review.

Wednesday 12th September


On 12 th September ING in Geneva opened a letter of credit on behalf of Kolmar, advised through the State Bank of India, in favour of PEC Ltd in respect of 17,500 m.t +/—5% at $ 255 per m.t. with a latest date for shipment of 30 th September. The letter of credit did not state that 3 rd party documents were acceptable. A copy of the letter of credit was e-mailed by Meteor to Traxpo on that day.


The Letter of Credit was subject to UCP 600 which provides:

“Article 1.

Application of UCP

The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no 600 (“UCP”) are rules that apply to any documentary credit …. when the text of the credit expressly indicates that it is subject to these rules. They are binding on all parties thereby unless expressly modified or excluded by the credit.

Article 14

k The shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit”.

Article 18

Commercial Invoice

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