Petroplus Marketing AG v Shell Trading International Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE ANDREW SMITH,Mr Justice Andrew Smith |
| Judgment Date | 14 May 2009 |
| Neutral Citation | [2009] EWHC 1024 (Comm) |
| Docket Number | Case No: 20081381 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 May 2009 |
[2009] EWHC 1024 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before : Mr Justice Andrew Smith
Case No: 20081381
Michael Nolan (instructed by Davies Johnson & Co.) for the Claimants
Michael Collett (instructed by Ross & Co.) for the Defendants
Hearing dates: 4 May 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 Andrew Smith :
The claimants, to whom I refer as “Petroplus”, are refiners and wholesalers of petroleum products. On 10 June 2008 they entered into an agreement with the defendants, to whom I refer as “Shell”, by which they agreed to sell FOB Coryton (where Petroplus have a refinery) 29–32,000 mt. of high sulphur fuel oil (“HSFO”) and 1–2,000 mt of light cycle oil (“LCO”). Shell have paid US$19,175,043.07 for the oil. Petroplus claim that they are entitled to a further US$2,024,490.34, together with interest. They apply for summary judgment for this amount, and alternatively for an interim payment. Shell have brought a counterclaim for late delivery and demurrage.
The sale was made through two brokers employed by Trident Oil (Gibraltar) Ltd. Mr. Martin Lederman acted for Petroplus, receiving instructions from a Mr. Marcel Lämmler, and Mr. John Warner acted for Shell, receiving instructions from a Mr. David Thwaite. Mr. Lämmler and Mr. Thwaite, the traders, did not communicate directly with each other or with the broker acting for the other party, and the contract was made between the two brokers. On 11 June 2008 Mr. Lederman sent to Petroplus and Mr. Warner sent to Shell an email confirming the agreement. They were in identical terms (apart from the sender and the recipient), and included these provisions:
i) The oil was to be lifted in one lot at Coryton during the period 21 – 25 June 2008, and Shell were to declare a three-day loading range by the close of business on 16 June 2008.
ii) The price for the HSFO was to be “the average of the Platts mean quotation under the heading 'barges FOB Rotterdam' and '3.5pct' less a discount of USD 0.50 per metric tonne applicable for the bill of lading date, the immediately two preceding quotations and the two immediately following quotations (B/L+2–2). If no Platts quotation on B/L date then the immediately two preceding quotations and the two immediately following quotations to apply… Price is per metric tonne on bill of lading quantity for FOB Coryton”. I shall refer to this as the “pricing provision”
iii) Against the side-title Payment, “To be effected in full, without deduction, offset or counterclaim in US dollars by telegraphic transfer to seller's nominated bank account latest five working days after bill of lading date against telex invoice and normal shipping documents, or seller's telex letter of indemnity for temporarily missing documents in a format acceptable to buyer”. I shall refer to this as the “payment provision”.
iv) “Where not in contradiction with the above, Petroplus General Terms and Conditions Edition to apply”. Petroplus's General Terms and Conditions included that “Payment for the Product shall be made without discount, deduction, withholding, set-off or counterclaim by telegraphic transfer in immediately available funds on or before the due date defined in the Deal Confirmation to the bank…”; and that if payment was late interest would be payable at LIBOR for one month US$ as published by the National Westminster Bank, plus two percentage points per annum. They also included a force majeure clause.
On 12 June 2008 Petroplus sent to Shell an email with this preamble:
“This contract confirmation cancels and supersedes any communications whether written or oral by and between the buyer and seller, any communications by any broker or agent acting on behalf of buyer or seller and any contract confirmation generated by the buyer in relation to the subject matter set out below. … This memorializes the deal concluded by us on June 10, 2008 and we hereby record details of the agreement reached between our companies.”
The formula for determining the price in this confirmation did not, however, confirm what had been orally agreed: Petroplus say that this was because of an error made by an employee. It was as follows (emphasis added):
“(A) Price for High Sulphur Fuel Oil 3.5%. Price shall be in US dollars per mt, FOB Coryton on bill of lading quantity, as measured in vacuum, to be equal to mean Platt's market scan quotations under heading Barges FOB Rotterdam for High Sulphur Fuel Oil 3.5% less a discount of 0.50 dollars per mt aspublished on period 19 June 2008 to 25 June 2008”.
“(B) Price shall be in US dollars per mt, FOB Coryton, based on bill of lading quantity, as measured in vacuum, to be equal to mean Platt's market scan quotations under heading CIF cargoes NWE/basis ARA for Gasoil 0.1% multiplied by the factor 0.87 as published during a five business day period, starting two business days prior to the bill of lading date. …”.
(Although this is not expressly stated, paragraph (B) was clearly concerned with the price for the LCO.)
By an e-mail sent on 16 June 2008 Petroplus narrowed the loading dates to between 23 and 25 June 2008. On 24 June 2008 Shell nominated the “Ninae” to load the cargo and gave loading instructions. By then it had become apparent that there would be a delay in delivery of the HSFO.
On 24 June 2008 Shell's contract department responded by fax to the communication of 12 June 2008. They acknowledged receipt and continued:
“… We are pleased to confirm agreement to this contract subject to the following amendments:
Preamble
Please delete as this contract was concluded in a phone conversation on the 10 th June 2008. Subsequent telexes/faxes between the parties merely seek to record the details of the agreement already reached. Any terms contained in such telexes which are different to those in the oral agreement constitute proposals to vary the oral agreement, and must be agreed by both parties”.
Shell proposed amendments to many of the clauses set out in the communication of 12 June 2008, and said this about the price:
“(A) After “Bill of Lading quantity” please add “save for fraud or manifest error”. Please delete “vacuum” and replace with “air”. After “25 June 2008” please add “inclusive”.
“(B) Please head “ Price for light cycle oil:”. Please delete “vacuum” and replace with “air”. Please insert “quotation” after both instances of “business”.”
Shell made other requests or stipulations, including that the contract should incorporate the BP Oil International General Terms and Conditions Sales and Purchase of Crude Oil (2000 Edition) with various amendments, instead of Petroplus' General Terms and Conditions.
When Petroplus received this fax, they say, they realised the error made on 12 June 2008. On 30 June 2008 they responded to Shell, agreeing with some of the suggested changes and rejecting others. They set out a “revised price clause”, apologising for “any inconvenience caused”. For the HSFO it read:
“ Price shall be in US dollars per mt, FOB Coryton, based on bill of lading quantity, as measured in air, to be equal to mean Platt's market scan quotations under heading Barges FOB Rotterdam for high sulphur fuel oil 3.5% less a discount of 0.50 US dollars per mt as published during a five day business day period, starting two business days prior to the bill of lading date.”
They rejected other proposals about the pricing clause suggested by Shell.
The delivery of the HSFO was delayed in circumstances and for reasons that are not immediately relevant for present purposes. In summary, Petroplus say that they were let down by a supplier and so did not have the necessary feedstock. The vessel started to load on 3 July 2008. On that day Shell accepted some of the proposals made by Petroplus on 30 June 2008, but they maintained that BP Oil's standard terms, as amended by them, should “govern this deal”, and said about the price:
“Not agreed. We maintain the wording of your contract dated 12 th June amended as per our response of 24 th June”.
On 4 July 2008 Petroplus wrote that they had corrected the price clause on 30 June 2008 because of a mistake in the communication of 12 June 2008, that they considered Shell's communication of 3 July 2008 to be a rejection of the contract and that they had therefore suspended loading. In the event an agreement was reached, and loading was completed. A bill of lading in respect of 27,881.689 mt of HSFO, measured in air, was issued on 5 July 200A bill in respect of the LCO had been issued on 3 July 2008.
Petroplus sought payment for the amount of cargo measured in air (abandoning an initial claim for the amount measured in vacuum) on the basis of the price set out in the communications of 11 June 2008. Shell contend that they are liable only for a price for the HSFO calculated on the basis of the communication of 12 June 2008. The dispute reflects an increase in the market price between 25 June 2008 and the time that the cargo was delivered and the bill of lading issued.
As I have indicated, it is common ground that, in providing that for pricing by reference to quotations “published on period...
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