Re Interlink Overseas Trading LLC
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE HART |
| Judgment Date | 04 November 2005 |
| Neutral Citation | [2005] EWHC 3250 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 7142 of 2003 |
| Date | 04 November 2005 |
[2005] EWHC 3250 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
trand, London, WC2A 2LL
The Honourable Mr Justice Hart
Case No: 7142 of 2003
MS H STONEFROST (Instructed by Messrs Speechley Bircham) appeared on behalf of the Petitioner
MR R GILLIS (Instructed by Messrs Howrey) appeared on behalf of the Respondent
Approved Judgment
Friday, 4 November 2005
This is the hearing of a winding up petition presented as long ago as 12 November 2003. The petitioner is a Cypriot company; the respondent company is a company incorporated in Delaware. It is not in dispute between the parties that given that the company's centre of main interest is in England, this court has jurisdiction to hear the petition.
The petition is a creditor's petition founded on various allegations of indebtedness by the company to the petitioner. The parties are agreed that the only basis now upon which the petition can succeed is on the basis of the alleged indebtedness of the company to the petitioner under a contract dated 25 February 2003. The parties are in dispute as to the quantum of the indebtedness under that contract, which is put by the petitioner as a little over US $5 million. The company says that that figure is over-stated. That, however, is not a dispute which I have to resolve.
The only issue which I have to determine is whether the indebtedness is a present indebtedness. The petitioner contends that it is and the company contends that it is not. The company concedes that, if the court finds there to be a present indebtedness, a winding up order will be made. The company, however, contends that on the true construction of the contract, it is not liable to pay until it has received payment from a third party, alternatively that there is an issue on that question which it is not proper to resolve on a winding up petition.
The contract in question was a contract for the supply of 40,000 metric tonnes +/-10 per cent of Russian export blend crude oil to be delivered during February/March 2003 in the seller's (ie petitioner's) railway cars at "DAF Ukraine/Romanian border at Vadolf Siret". The price "with bogies changed for Romanian gauge" being fixed by reference to a published price "on railway bill date".
The critical clause was clause 6 which read:
"PAYMENT TERMS.
Payment by telegraphic transfer on receipt of funds from receiver Rafo SA (30 days after RWB date)."
The contract was governed by English law and incorporated the terms known as Inco Terms 2000, although these latter terms are agreed to be irrelevant to the question which I have to determine.
The critical provision in clause 6 only makes sense with some knowledge of what the words "receiver Rafo SA (30 days after RWB date)" mean. As to that, the background to the contract appears, in essence, to have been as follows. Rafo SA is a Romanian company which operates, or at the material time operated, an oil refinery in Romania. The contemplation of the parties and the purpose of the contract was to enable the company to fulfil an obligation which it either had, or was about to undertake, to deliver oil to that refinery. The RWB date was the date specified on the bill of carriage relating to the parcels of oil delivered pursuant to the contract. It was contemplated that the company's onward contract for sale would stipulate a date for payment by reference to the same railway bill dates.
The reference to a "receiver" in the phrase "receiver Rafo SA", appears to be a reference to Rafo SA as being the ultimate recipient of the oil. There is no suggestion that Rafo SA at the material date was in any form of receivership.
The onward contract contemplated by the contract was entered into on the following day, 26 February 2003. This onward contract was entered into by the company, not with Rafo SA, but with an Austrian subsidiary of Rafo SA, namely Rafo Austria. On the evidence Rafo Austria was a company of no substance, it being the contemplation of the parties (that is the parties both to the contract and to the onward contract) that payment under the onward contract would in fact be made by Rafo SA. By the onward contract, the company promised the delivery of 55,000–70,000 +/-10 per cent metric tonnes of Russian export blend crude at a price calculated by reference to the same publication as under the contract, but by a formula which on its face allowed a turn to the company, with the payment obligation being by telegraphic transfer within 30 days of the railway bill date.
The onward contract is governed by Romanian law, although nothing turns on this.
It is relevant at this stage to mention two further agreements associated with the contract and the onward contract. In date order they are, first, a loan agreement dated 13 March 2003, made between the petitioner and the company, whereby the petitioner agreed to lend to the company up to US $1 million to finance the transport by railway of the crude oil purchased by the company from the petitioner under the contract from the Romanian border to the Rafo refinery. That loan agreement contained this provision in relation to repayment:
"The Loan will be repaid in tranches immediately on receipt by Borrower [ie the company] from Rafo SA of each payment for the applicable crude oil, at the same rate per each metric ton paid for by Rafo as was drawn down by the Borrower plus interest at 12 per cent per annum from the date of drawdown until payment."
That loan agreement was governed by English law.
Secondly, a guarantee agreement dated 21 March 2003 made between Rafo SA and the company whereby Rafo SA guaranteed the obligations of Rafo Austria under the onward contract.
The oil was duly delivered by the petitioner to the company pursuant to the contract pursuant to various railway bills, the dates of which are uncontroversial and duly delivered by the company to the refinery pursuant to the provisions of the onward contract. No payment in full was however made by Rafo Austria or Rafo SA to the company. The company's position is that it is under no obligation to pay the petitioner unless and until it has received funds under or by reference to the onward contract or the accompanying guarantee. The company accepts that it is under an implied obligation to use all reasonable endeavours to exploit the economic value of the rights it enjoys as against Rafo Austria and Rafo SA, and to the extent to which funds are generated by that exploitation, to apply them in discharge of its obligations under the contract....
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