Silver Queen Maritime Ltd v Persia Petroleum Services Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lindblom |
| Judgment Date | 18 November 2010 |
| Neutral Citation | [2010] EWHC 2867 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: TLQ/10/0814 |
| Date | 18 November 2010 |
[2010] EWHC 2867 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Before: Mr Justice Lindblom
Case No: TLQ/10/0814
Mr Richard Jacobs Q.C. (instructed by King & Spalding LLP) for the Claimant
Mr Orlando Fraser (instructed by Memery Crystal LLP) for the Defendant
Hearing dates: 26 – 29 October 2010
Judgment Approved by the court for handing down (subject to editorial corrections)
Mr Justice Lindblom:
Introduction
These proceedings relate to a dispute concerning payment for a marine oil exploration survey in the Lavan Island region of the Persian Gulf, undertaken between August 2008 and February 2009 by the Claimant, Silver Queen Maritime Ltd. (“Silver Queen”) under a sub-contract with the Defendant, Persia Petroleum Services PLC (“PPS”), which had contracted for this and other work with the Iranian government.
The essential issue for the court at this stage is whether that dispute has been conclusively settled. In the main proceedings Silver Queen has sought damages and declaratory relief in respect of money due to it under a contract it entered into with PPS for the carrying out of the survey.
The court now has before it four preliminary issues. These relate to the Silver Queen's contention, resisted by PPS, that the main proceedings were settled by a binding agreement made between the parties in July 2009, and to the PPS's contention, resisted by Silver Queen, that the proceedings were settled by an agreement made in August 2009.
The parties
Silver Queen is a subsidiary of SeaBird Exploration PLC (“Seabird”). Seabird supplies specialist maritime seismic survey services to oil companies and others. Seismic survey is used to determine whether hydrocarbon deposits are present in an area. PPS is, or was, engaged in the provision of services to the oil and gas industry, mainly in Iran. These services have included exploration and drilling, field development and refining. One of its subsidiaries is Keyhan Exploration and Production Services (“KEPS”), which, on 22 January 2007 entered into a contract with the Iranian Offshore Oil Company (“IOOC”). IOOC is a subsidiary of the National Iranian Oil Company (“NIOC”).
Background to the preliminary issues
PPS subcontracted the marine survey work to Silver Queen under a written agreement which took effect on 18 May 2008 (“the May 2008 contract”)
The work was done by the survey vessel R/V Geo Mariner, mobilized for the task by Silver Queen. It was begun in August 2008. Invoices were rendered. After October 2008, however, those invoices were not paid. It appears that after Silver Queen had been paid for the work done until October 2008, IOOC stopped funding the payment of Silver Queen's invoices by PPS. The reasons for this non-payment are the subject of dispute between Silver Queen and PPS in the main proceedings. In the Amended Particulars of Claim the outstanding amount for payment under the May 2008 contract, for the period from 31 October 2008 to March 2009, is said to be in excess of 10 million Euros. Silver Queen has retained all unpaid for data taken by the R/V Geo Mariner pending the payment of this sum, but has said that it is ready and willing to release the data once it has been paid.
Silver Queen maintains that the terms of the May 2008 contract are clear. It says it was entitled to be paid for the work it did no matter whether KEPS was paid under its contract with IOCC, and that there is no scope for any implied term to the effect that Silver Queen's entitlement to payment from PPS depended on payment being received by KEPS from IOOC.
On 4 January 2009 PPS's Chief Executive Officer, Mr Ahmad Tabassi, spoke on the telephone to Seabird's Chief Operating Officer, Mr Thor Higraff, telling him about a letter, dated 28 December 2008, which IOOC had sent to KEPS, expressing concern about the fact that the invoices for the survey work were not being paid, with the result that the survey data was being withheld. The letter was sent by e-mail to Mr Higraff shortly after this conversation. The parties’ respective accounts of the conversation between Mr Tabassi and Mr Higraff differ, and I shall come to the substance of that disagreement shortly.
On 10 February 2009 the survey was completed. R/V Geo Mariner left. The survey data were retained by Silver Queen.
Between February and early May 2009 Seabird attempted, without success, to persuade IOOC to pay it for the survey data it had retained while its invoices to PPS remained unpaid. In the course of those discussions Seabird accepted the principle of reducing the amount of money it was seeking. It offered to accept approximately 7.5 million Euros and, subsequently, 6.5 million Euros for the work that had not been paid for.
On 19 February 2009 Silver Queen issued its claim. On 17 April 2009 PPS served its Defence and Counter claim. On 12 May 2009 Silver Queen served its Reply and Defence to Counterclaim. The proceedings were then, on 15 May 2009, stayed for one month to allow time for settlement discussions to take place.
Such discussions began in June 2009. By 17 July 2009 the detailed terms of the settlement had been resolved. They were then reduced into a settlement deed (“the Settlement Deed”). PPS executed the Settlement Deed and sent it to Silver Queen in an e-mail from its solicitors, Memery Crystal, to Silver Queen's, King & Spalding, at 5.01 p.m. on 21 July 2009. PPS purported to withdraw from the settlement in an e-mail sent by Memery Crystal to King & Spalding at 8.15 a.m. on 22 July 2009, alleging that there had been “non-disclosure” by Silver Queen. The alleged “non-disclosure” related to the meetings that had taken place between Silver Queen and IOOC in February and April 2009. Silver Queen took the view that it was now too late for PPS to withdraw from the settlement. It executed the Settlement Deed and sent it back to Memery Crystal by e-mail at 4.04 p.m. on 22 July 2009.
Correspondence between the solicitors ensued. Silver Queen persisted in its contention that there was a concluded settlement; PPS remained adamant in its contention that there was not.
On 25 August 2009 the parties met on Kish Island in Iran. IOOC attended as an observer. Minutes of the meeting were signed for either party. At the meeting Silver Queen indicated that it would be willing to accept the sum of 5.2 million Euros to resolve the dispute, provided this was paid by 30 September 2009, but that if this amount were not acceptable to PPS it would “revert to the higher binding claim.” The sum of 5.2 million Euros was not paid by PPS to Seabird by 30 September 2009.
Silver Queen's position is that no binding agreement for a settlement for 5.2 million Euros ever existed. Since the condition upon which its offer depended was not fulfilled, there was no contract. Even if a contract was created, it was plainly a term of that contract that payment of 5.2 million Euros would be made by 30 September 2009. If this did not happen there was nothing to prevent Silver Queen from pursuing the higher figure in the claim it had launched. PPS says that the issues of whether any binding legal agreement was reached on 25 August 2009 and, if it was, what were its terms and effect only falls to be determined by the court because still no funds have come from IOOC to PPS, despite PPS having vigorously pursued IOOC for the money.
On 23 June 2010 Master Roberts ordered that the disputes as to settlement should be resolved by a trial of preliminary issues. Disclosure and the production of witness statements were ordered.
On 30 June 2010 Silver Queen issued an amended claim, seeking a declaration that PPS is bound by the terms of the Settlement Deed and for the sums said to be due under the Settlement deed, in the alternative to the original claim for money due under the May 2008 contract. On 7 July 2010 PPS served its Amended Defence and Counterclaim. On 14 July 2010 Silver Queen served its Amended Reply and Defence.
On 27 September 2010 PPS gave notice of its intention to amend its Defence to advance its case on the primary basis of non-disclosure, though not at that stage abandoning the argument on fraudulent misrepresentation pleaded in its Amended Defence and Counterclaim and adding the alternative contention that, even if the agreement in the Settlement Deed cannot be rescinded on either of those grounds, it nevertheless should not be enforced because of Silver Queen's unconscionable conduct.
The preliminary issues
At outset of the trial before me the four preliminary issues for determination
were these:
1. Was a concluded settlement reached in July 2009?
2. If a concluded settlement was reached in July 2009, can the settlement be rescinded for
i. non-disclosure, or
ii. fraudulent misrepresentation?
3. If a concluded settlement was reached in July 2009, can and should the court nevertheless decline to enforce the valid and binding settlement?
4. Was a further settlement reached in August 2009 (on Kish Island), which has the effect that Silver Queen cannot pursue its claim under the July 2009 settlement (or its original claim in the proceedings)?
After the evidence in the trial had been heard, however, PPS abandoned its allegation of fraudulent misrepresentation, and the second part of the second main issue has therefore fallen away.
The facts
The May 2008 contract
The May 2008 contract contains obligations on the part of PPS to pay mobilization and demobilization fees, and day rates during production and standby.
Clauses 1.1 and 1.2 obliged PPS to make payments to Silver Queen, including a fee of 650,197 Euros for mobilization and daily operational fees of about 100,000 (99,536) Euros, for...
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