SHV Gas Supply and Trading SAS v Naftomar Shipping & Trading Company Ltd Inc. [QBD (Comm)]

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMR JUSTICE CHRISTOPHER CLARKE
Judgment Date15 Nov 2005
Neutral Citation[2005] EWHC 2528 (Comm)
Docket NumberClaim No: 2003 FOLIO 957

[2005] EWHC 2528 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Before

Mr Justice Christopher Clarke

Claim No: 2003 FOLIO 957

Between
Shv Gas Supply & Trading Sas
Claimant
and
Naftomar Shipping & Trading Co Ltd Inc
Defendant

Mr Stewart Buckingham (instructed by Clyde & Co) for the Claimant

Mr Michael Ashcroft (instructed by Thomas Cooper & Stibbard) for the Defendant

Hearing dates: 24 th—26 th October 2005

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
1

On 17 th February 2003 SHV Gas Supply and Trading SAS, the Claimant, ("SHV"), agreed to sell and Naftomar Shipping and Trading Co Ltd Inc, the Defendant, ("Naftomar") agreed to buy 2,700 mt +/- 5% at Sellers' option commercial butane meeting Melilli specifications CIF Tunisia Port—La Goulette or Gabes. Melilli is a port on the east of Sicily. The discharge port was to be declared at latest upon berthing at loading port. The price was US $ 390 per metric tonne and was to be paid by telegraphic transfer to the Sellers' bank account on the bill of lading quantity with a value date latest 20 days from the bill of lading date against telex invoice and normal shipping documents or sellers' letter of indemnity. The contract contained the following clauses:

"Vessel AZUR GAZ Accepted by the Buyer

Laycan Feb 17–19th 2003 consequently ETA Gabes Feb 20 am La Goulette Feb 19 pm

Demurrage: 9,500 USD PDPR

Force Majeure Neither Seller nor Buyer shall be liable in damages or otherwise for any failure or delay in the performance of any obligation hereunder other than the obligation to make payment, where such failure or delay is caused by force majeure, or any event occurrence or circumstance reasonably beyond the control of that party including without prejudice to the generality of the foegoing (sic), Acts of God, strikes, fires, floods, wars (whether declared or undeclared), riots, boycotts, restrictions imposed by government authorities including allocations, priorities, requisitions, quotas and price controls.

The party whose performance is so affected shall immediately notify the other party here (sic), indicating the nature of such cause and, to the extent possible inform the other party of the expected duration of the force majeure event.

Commercial Terms Where not in conflict with the above, Incoterms 2000 for CIF sales plus latest amendments to apply.

Maritime Terms The Asbatankvoy charterparty amended for LPG attached to this contract where not in conflict with terms of the main body of this contract shall apply".

2

Incoterms 2000 provide as follows:

"A4 Delivery

The seller must deliver the goods on board the vessel at the port of shipment on the date or within the agreed period"

3

The contract was negotiated through the brokers FL Gaz, in the person of Madame Francois Lesenfans. She communicated with Mrs Pons, a senior trader employed by SHV and Mr Paolo Michi, a trader employed by Naftomar. Mrs Pons and Mr Michi did not deal with each other. The contract is contained in a recap fax sent by Madame Lesenfans to the parties on 17 th February, as amended by a subsequent e-mail.

The charterparty

4

No Asbatankvoy charterparty was attached to that recap but the charter referred to was a voyage charter dated 31 st January 2003 between Gas Marine, of Ezzahra, Tunisia and SHV which provided for the carriage on the "AZUR GAZ" of 2,700 mt of butane or LPG mix for carriage from Melilli to one safe/berth/port West or East Med, limited to a small number of discharging port options. These did not include Gabes or La Goulette, although these were later agreed. The laydays were to commence on 16 th February and the cancelling date was 19 th February.

Naftomar's sale contract with STIR

5

Naftomar needed the cargo as a matter of urgency in order to supply it to Societe Tunisiene des Industries de Raffinage ("STIR") with whom it had a contract to deliver 220,000 m.t. LPG and/or commercial butane for the Tunisian market during 2003, with deliveries to be made each month.

6

The negotiations for the contract between SHV and Naftomar were begun and concluded on 17 th February and took only a matter of hours. In the course of them SHV became aware that the cargo was urgently required in Tunisia. The price that Naftomar paid ($ 390/mt) reflected the urgency of its need.

SHV's purchase contract with ERG

7

SHV had a term contract with ERG Raffinerie Mediterrane S.A.R.L. ("ERG") for the purchase of 10 monthly cargoes of 2,500–3,200 mt, final quantity at Buyer's option, of which 6 were to be butane, 4 LPG, (3 from one refinery and 1 from another) FOB Priolo. Priolo is in the same area as Melilli. There was a mutual option for an additional delivery of the same quantity. Clause 8 of that contract provided:

"8. DELIVERY/NOMINATION

FOB PRIOLO G…BY VESSELS ACCEPTABLE TO THE SELLER IN THE AGREED CONTRACTUAL PERIOD ACCORDING TO THE FOLLOWING NOMINATING PROCEDURE…

SELLER WILL…DECLARE A 5 DAYS LIFTING PROGRAMME..

..BUYER WILL CONFIRM OR COUNTER PROPOSE ALTERNATIVE 5 DAYS LIFTING PERIOD(S)…

,,SELLER AND BUYER WILL REACH A FINAL AGREEMENT FOR THE LIFTING PERIOD..

4 WORKING DYS BEFORE THE 1ST DAY OF THIS AGREED 5 DAYS LIFTING PERIOD BUYER WILL NARROW SUCH PERIOD TO A 3 DAYS LAYCAN..

THE AGREED LAYCAN IS AN ESSENTIAL ELEMENT OF THE CONTRACT, IN FAVOUR OF THE SELLER."

8

By 17 th February 2003 SHV had not yet found a buyer for the February 2003 parcel of butane. The cost of that parcel, under the applicable price formula in the ERG contract, was $ 354/mt. SHV had however entered into the charterparty referred to in paragraph 4 above. On 13 th February SHV declared to the Owners of the AZUR GAZ ("Owners") "intention Lavera to be confirmed tomorrow morning". On 14 th February SHV gave Owners voyage instructions specifying that the ship was to load the butane at Melilli, the suppliers being ERG, and that the cargo was to be discharged at the Geogaz Terminal at Lavera, near Marseille. I do not regard these notifications as representing a settled intention that the butane should be stored in order to be used for subsequent supply to the French retail market. In the absence of any purchaser, instructions had to be given to the Owners and it was natural that they should be for the vessel to sail to a place where the cargo could be stored. I accept the evidence of Mr Nillus of SHV that SHV did not put commercial butane in store at Lavera for the French market, which normally seeks refinery grade butane; but did so either to await price rises or with a view to supplying a special purchaser like Lyondell.

Laycan

9

The term "laycan" is habitually used in the negotiation of charterparties, to refer to the earliest date at which the laydays can commence and the date after which the charter can be cancelled if the vessel has not by then arrived. By extension the term is to be found in FOB sales, so as to provide that the seller can cancel the contract if the vessel, which it is the buyer's duty to procure, does not arrive at the port by the cancellation date. The expression does not fit so easily into the confines of a CIF contract where it is the seller's obligation to make a contract of carriage, ship the goods on board and tender the customary documents.

10

In the present case the reference to "laycan" in the sale contract came about because Mrs Pons, who was aware of the reference to "laycan" in the SHV contract with ERG (an FOB contract), wished to ensure that an identical provision was contained in SHV's contract with Naftomar. Mr Michi and Madame Lesenfans were unclear what the word "laycan" meant in the context of a CIF sale. Mr Michi thought that the word probably referred to loading but because of the uncertainty he required SHV to give ETAs for Gabes and La Goulette. Mrs Pons then came back with estimates for arrival at La Goulette on 19 th February in the afternoon and at Gabes on 20 th February in the morning and, having done so, agreed to add the words "consequently ETA Gabes Feb 20 am, La Goulette Feb 19 pm".

Bad weather at Melilli

11

Melilli lies in Santa Panagia Bay on the east coast of Sicily, some 4 nautical miles north of Siracusa on the north side of Cape Santa Panagia. A number of refineries, including ERG, have terminals there and vessels moor alongside terminal jetties. Melilli is protected from weather from the south and west but exposed to winds from the north and north east.

12

In February 2003 Melilli experienced an unusually long spell of bad weather, which prevented vessels from loading. On 12 th February 5 platforms, the ERG Terminal, the ENI Terminal and the ASI/IS Quay were inoperative for 6 hours; on 13 th February one platform was inoperative for 7.5 hours; on 14 th February 4 platforms were inoperative for periods ranging from 1.5 hours to 10 hours. On 15 th and 16 th February 5 platforms and the ERG Terminal were inoperative throughout the day due to heavy swells and a NE wind force 7. On 17 th February the same applied with the addition of the ENI Terminal and the ASI/IS Quay.

13

The "AZUR GAZ" arrived at Melilli on 17 th February at 2030, tendering Notice of Readiness at the same time, which was accepted at 2033. Because of the bad weather she had to lie in the outer roads of Santa Panagia Bay, some 12 nautical miles offshore. That is the customary anchorage in times of exceptionally bad weather. 13 other vessels were held in the same position. Between 17 th February and 3 rd March 2003 Melilli experienced winds of at least force 4 to 5 for most of the period. On 17 th, 19 th and 28 th February the winds reached force 7 to 8. The usual wind speed during February is of the order of force 2 to 3.

14

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