Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD (No 3) sub nom Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD (No 2)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Aikens
Judgment Date04 Nov 2002
Neutral Citation[2002] EWHC 2210 (Comm)
Docket NumberCase No: 0 2001 Claim No: 528

[2002] EWHC 2210 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

COMMERCIAL COURT

Before

The Honourable Mr Justice Aikens

Case No: 0

1999 Folio No 1513

2001 Claim No: 528

Between
Mamidoil—Jetoil Greek Petroleum Company SA
Moil—Coal Trading Company Limited
Claimants
and
Okta Crude Oil Refinery Ad
Defendant

Mr Bernard Eder QC and Mr Luke Parsons (instructed by Stephenson Harwood) for the Claimants

Mr John Jarvis QC and Mr Daniel Lightman (instructed by Bird & Bird, subsequently by Morgan, Lewis & Bockius) for the Defendants

Hearing dates: 2–19 and 30 July; 2 October 2002

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. It may be subject to editorial corrections.

………………………..

Mr Justice Aikens Mr Justice Aikens

Mr Justice Aikens

A. Synopsis of the case

1

These proceedings have taken place against the background of a long—standing quarrel between two branches of a Greek family and the tumultuous events in the Balkans over the last decade. There are two actions which have been tried together. The actions concern contracts relating to the supply and "manipulation" (ie. handling) of crude oil. The defendants ("Okta") are the owners of a refinery at Skopje, now the capital of the Former Yugoslav Republic of Macedonia ("FYROM"). The first named Claimant ("Jetoil"), is a Greek company. It entered into a contract with Okta in 1993, ("the 1993 contract"), which gave Jetoil the exclusive right of manipulation, at its terminal in Thessaloniki, Greece, of non—heated crude oil bought by Okta for its own account. That contract also gave Jetoil a right of "first refusal" to supply crude oil to Okta. It contained an English law and arbitration clause.

2

In the first action (1999 Folio No 1513) Jetoil claims damages for breach of the 1993 contract, which was concluded on 5 March 1993 and states that it is valid for 10 years, ie. until March 2003. Jetoil's claim is made under two heads. First Jetoil alleges that, from July 1999, Okta failed to permit Jetoil to manipulate, at its terminal in Thessaloniki, all the non—heated crude oil that Okta had bought on its own account (as opposed to a purchase for any other party). Jetoil asserts that this failure continued until the time of the trial. The second head of claim is for alleged breach by Okta of Jetoil's right of first refusal to supply crude oil to Okta.

3

Okta accepts that, since July 1999, it has failed to permit Jetoil to manipulate the non—heated crude oil that Okta has bought for its own account. Okta also accepts that since July 1999 it has not afforded Jetoil the right to exercise a first refusal to supply Okta with crude oil that Okta wishes to buy for its own account. Okta says that the FYROM government sent letters to Okta dated 16 and 26 November 1999 and then again on 30 May 2001. Okta says that effectively the letters were an order that Okta should not perform the 1993 contract. Okta relies on a "force majeure" clause in an annex to the 1993 contract which states that neither party will be responsible for damage caused by failure to perform the contract if that failure is attributable to "acts or compliance with requests of any governmental authority". Although Okta accepts that it did not give Jetoil prompt notice of this alleged force majeure event, as is required by the terms of the 1993 contract, Okta submits that it can still rely on the "force majeure" provision of the 1993 contract to avoid any responsibility for its admitted failure to perform that contract since July 1999.

4

Jetoil denies that Okta's failure to perform the 1993 contract is attributable to a request by the government of FYROM to Okta not to perform that contract with Jetoil. Jetoil says that, from July 1999 at the latest, Okta had decided to deal instead with another Greek oil company, Hellenic Petroleum SA ("Hellenic"). This was because, by July 1999 Hellenic, through a joint venture company called EL.P.ET ("Elpet"), had obtained a significant shareholding interest in Okta.

5

Jetoil's case is that once Okta had come under the control of Hellenic in July 1999, Okta had no choice but to deal with Hellenic. Hellenic wished both to supply and handle non—heated crude oil that Okta needed to purchase. Thus Okta decided that it would deal only with Hellenic, rather than Jetoil or Moil—Coal and it started to do so.

6

In November 1999 Jetoil obtained an injunction in the English Court ordering Okta to perform the 1993 contract so as to permit Jetoil to manipulate crude oil bought by Okta. Jetoil's case is that Okta then persuaded the FYROM government to "request" that Okta did not perform the 1993 contract. Jetoil submits that as a result of this request from Okta the FYROM Minister of Trade signed and sent the letters of 16 and 26 November 1999 to Okta. Therefore this is not truly a case of a request by a governmental authority not to perform the 1993 contract. Moreover, Jetoil asserts, the letters do not say in clear terms that it is requesting Okta not to perform the 1993 contract.

7

These points are all challenged by Okta. There are also points on the quantum of the claim under the 1993 contract.

8

The second named Claimant ("Moil—Coal"), is a Cypriot company. It says that it entered into an oil supply contract with Okta in 1998 for the supply of 500,000 MT of crude oil over a period of one year from September 1998 to 1999 ("the oil supply contract"). In the second action (2001 Folio 528), Moil—Coal claim damages for breach of the oil supply contract. Okta argues that the oil supply contract was intended only to be a "framework agreement", to be superseded by contracts for individual cargoes. Okta also says that the contract terms are too vague to be enforceable. There are further points on quantum.

9

At a late stage in the trial before me Jetoil sought leave to amend its pleadings in both actions to claim a declaration that the 1993 contract was binding and that Okta and its privies, which are said to include Elpet, are estopped from denying the binding nature of the 1993 contract. Jetoil further claimed an injunction against Okta and its directors and officers from pursuing proceedings in the courts of the FYROM. A mandatory injunction ordering Okta to discontinue those Macedonian proceedings was also sought.

10

It was the case that in July 2001 Elpet (not Okta) had commenced proceedings against Jetoil in the courts of the FYROM. Elpet sought a declaration that the 1993 contract is not valid and binding. It also sought temporary measures to prevent any payment, by Okta, of damages awarded in the English Courts in the current proceedings. On 2 July 2002 the Macedonian Court gave judgment in favour of Elpet and granted an interlocutory injunction as requested.

11

Leave to amend Jetoil's pleadings was not seriously opposed. I granted leave and heard argument on this additional issue some time after most (but not all) of the other aspects of the case had been dealt with.

B. The parties in the case

12

Jetoil is a company incorporated in Greece. By 1993 and thereafter Mr Kyriakos Mamidakis was the Chairman of Jetoil. He gave evidence before me. He stated that in 1968 his branch of the Mamidakis family fell out with his uncle, Mr George Mamidakis. Following this family quarrel Jetoil was founded in 1969. It has operated as a Greek oil and trading company which has supplied the Greek domestic market with all grades of petroleum products. It also supplies companies internationally. In 1972 Jetoil constructed a crude oil storage facility at Thessaloniki. The facility has a storage capacity of some 190,000 cubic metres. In 1956 Mr George Mamidakis had constructed a similar installation at Thessaloniki. It was owned by his company, George Mamidakis & Co. In 1999 George Mamidakis & Co was sold to Hellenic, which is a company owned by the Greek state and is a commercial rival to Jetoil. Therefore from 1999 Hellenic owned and operated the George Mamidakis & Co oil installations at Thessaloniki.

13

Moil—Coal is a Cypriot registered company that was founded in 1986. Mr Kyriakos Mamidakis was the Chairman and Managing Director of that company, although he no longer holds that position following changes in the law in Greece. Moil—Coal is an oil and coal trading company. For many years it has delivered crude oil to Jetoil's installations at Thessaloniki.

14

The background to the creation of Okta and its interest in the refinery at Skopje is a little complex. Before the break up of Yugoslavia, two entities dealt with the supply and storage of crude oil in the territory of the Macedonian Republic of Yugoslavia. They were Jugopetrol—Skopje ("Jugopetrol"), which was later replaced by Makpetrol Export—Import Skopje ("Makpetrol"), and Organsko Hemiska Industria Naum Naumovksi—Borce ("OHIS"). Jugopetrol and OHIS decided, in the 1970s, to construct an oil refinery in Skopje. It was built with the aid of Russian finance. The refinery was able to operate by 1982 and had a capacity of some 2.5 million metric tonnes. In 1979 both Jetoil and George Mamidakis & Co entered into contracts with Yugoslav entities for the receipt, storage and delivery of crude oil to the refinery at Skopje. Delivery of the oil was by railway tankers.

15

The refinery at Skopje was owned by a company that was itself owned by the Yugoslav state. In December 1990 the company owning the refinery became known as OKTA Crude Oil Refinery AD, (ie. Okta), but this was merely a change of name. Okta remained a wholly state owned company.

16

In November 1992 the FYROM declared itself independent of Yugoslavia. Okta continued to own and operate the refinery. At the time that the 1993 contract and the 1998 oil supply contract were...

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