Trafigura Beheer BV and Another v Mediterranean Shipping Company SA (The "MSC Amsterdam")
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE AIKENS,Mr Justice Aikens |
| Judgment Date | 26 April 2007 |
| Neutral Citation | [2007] EWHC 944 (Comm) |
| Docket Number | Case No: 2006/107 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 26 April 2007 |
[2007] EWHC 944 (Comm)
the Honourable Mr Justice Aikens
Case No: 2006/107
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Mr Dominic Kendrick QC (instructed by Reed Smith Richards Butler, Solicitors, London) for the Claimants
Mr Luke Parsons QC and Mr Chirag Karia (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 19 th, 20 th, 21 st, 22 nd, February 2007
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 Aikens:
A. Outline of the case
This case arises from an international conspiracy to steal 18 containers which held 360 tonnes of copper cathodes (“the cargo”). The containers were shipped on board the defendants' containership “ MSC Amsterdam” (respectively “the shipowner” or “MSC” and “the ship”) at Durban, South Africa on 30 September 2005. The conspirators were able to use employees of the ship's agents in Durban to produce a fraudulent second set of bills of lading, naming a company in Shanghai as the consignee when it was not. The ship's cargo manifest was also altered. This was all done without causing suspicion because the bills of lading and manifest were all produced electronically. The false bills of lading were sent to the fraudsters in Shanghai, who were able to obtain a delivery order for the containers from the ship's agents there. Using this delivery order, the fraudsters paid customs duty and VAT on the cargo and thus obtained the authority of the customs to discharge the containers holding the cargo from a container terminal in which they were being held.
When the Claimants, as the true consignees, tried to obtain delivery orders for the cargo, they were told that delivery orders had already been given. Investigations revealed the fraud. Luckily, the shipowner was able to instruct the container terminal not to release the containers from the terminal without further instructions. The cargo is now worth over 2US$ million. 1 There is currently litigation in the Maritime Court of Shanghai between the fraudsters, the shipowners and their agents in Shanghai over the ownership of the cargo.
The genuine bill of lading contains a “Law and Jurisdiction” clause, which provides that any claim or dispute arising from the contract of carriage evidenced by the bill of lading is to be subject to the exclusive jurisdiction of the High Court of Justice in London and English law is to apply. The Claimants issued a claim form against the shipowner in the Commercial Court on 13 February 2006. The claim is for delivery up of the cargo or damages from the shipowner for the conversion of the cargo.
The containers remain in the container terminal in Shanghai pending resolution of these disputes in both courts.
In the present trial, which took place over four days, I heard evidence from one witness of fact and two experts. Most of the evidence was concerned with the subject of “hedging”, which I describe in more detail below. The witnesses were truthful and helpful and ultimately there was little that was in dispute between them. I had very full and helpful written submissions from Mr Kendrick QC for the Claimants and Mr Parsons QC and Mr Karia for the defendants. These submissions were supplemented by oral argument. I reserved judgment.
B. The facts leading to the conversion of the containers
The cargo of copper had been sold by Rustenburg Platinum Mines Limited (“Rustenburg”) to Trafigura Beheer BV Amsterdam office (“Trafigura”) on FOB terms, under a Memorandum of Agreement between Rustenburg and Trafigura dated 2` February 2005. By this contract, which was effective as from 1 January 2005, Trafigura agreed to purchase 6000 tonnes of copper cathodes from Rustenburg during
the period 1 January to 31 December 2005. The purchases were to be in 500 ton lots per month, all FOB Durban, South Africa.
A bill of lading (“the bill of lading”) on the form of the defendants, Mediterranean Shipping Company SA, was issued to Rustenburg on 30 September 2005. The bill of lading is in the conventional “box” form. It names Rustenburg as the shippers. In fact the carriage had been arranged by Trafigura (as FOB buyers) through its shipping agents/freight forwarders on about 29 August 2005. 2 So Trafigura was the real shipper and was a party to the contract of carriage with the shipowner evidenced by the bill of lading. The bill of lading was made out “ To Order” and the “ notify party” was identified as C Steinweg Warehousing (FE) Pte Ltd, Shanghai. That company is the Chinese subsidiary of one of the world's largest LME 3 warehousing companies. Shanghai was named as the discharge port in the bill of lading.
Trafigura had sold the cargo to Shanghai HMC Company Limited (“HMC”), the second claimant, which is a company incorporated in the People's Republic of China (“PRC”). HMC is wholly owned by persons affiliated to Trafigura. The sale contract, dated 19 October 2005, 4 was for the sale of 360 tonnes of “Off – grade Amplates Copper metals” on “CIF Liner Terms” Shanghai. The price of this CIF sale was not fixed at the time of the sale contract. The contractual terms for calculating the price of the cargo are complex. I will set them out below. They may have to be considered in detail in relation to part of the Claimants' claim for damages. In the event, Trafigura has not yet been paid by HMC for the cargo.
The bill of lading was produced and issued by employees of Mediterranean Shipping Co (Pty) Ltd (“MSC South Africa”), which is MSC's South African agent. The information needed for the entries in the “shipper”, “consignee” and “notify party” boxes on the bill of lading was provided by the shipper's (ie. Trafigura's) agents, who were Windward Shipping (Pty) Ltd. The bill itself was generated when the information was put onto a “template” bill of lading displayed on a computer screen. The first and genuine bill of lading, which has the number MSCUDN 065539, was signed by an authorised employee of MSC South Africa, as agent for the Master. 5 The “set” of three original and genuine bills of lading was released to Rustenburg (supposedly as “shipper”) in early October 2005, against payment of the freight. That totalled US$6,570 for the 18 containers. In evidence, Mr Richard Tildesley (Trafigura's Risk Manager) accepted that it was not the habit of Trafigura to declare to a shipowner the value of copper shipped in containers. 6 Nor did Trafigura expect the value of the copper to be declared on the bills of lading. 7 Neither was done in this
case. However, it was Trafigura's practice to notify the sale invoice value of the cargo to its cargo insurers when the cargo is declared to them. 8
At the same time that the bill of lading was prepared, employees of MSC South Africa also entered details of the cargo, shippers, consignee and notify party on a computerised form of ship's cargo manifest.
Trafigura paid Rustenburg's invoice for the cargo on 12 October 2005. The invoice price was US$1,399,396.69. When Trafigura paid Rustenburg for the cargo, the three original bills of lading which had been issued to Rustenburg were endorsed by it and the set of three was sent to Trafigura, via Trafigura's shipping agents, ACS.
It is now clear that an international group of professional fraudsters procured the issue of a second, unauthorised and fraudulent bill of lading and also procured an unauthorised and fraudulent alteration in the ship's cargo manifest. 9 Like the genuine bill of lading, this second bill of lading was generated by computer at the offices of MSC South Africa. It is likely that two junior employees of MSC South Africa were complicit in these frauds. 10 On the second bill of lading “Ningbo Toptrade Imp & Exp Co Ltd” (“Ningbo”) was named as both the consignee and the “notify party”. Although this company does exist and is incorporated in the PRC, it was neither consignee nor the notify party. The fraudulent bill of lading is different in other respects from the genuine one. A comparison of the terms of the two bills is set out in Appendix One to this judgment. The fraudulent bill was, of course, given the same number as the genuine one, ie. MSCUDN 065539.
The computer record of the ship's cargo manifest was also altered to show Ningbo as the consignee of the cargo and the notify party. The false cargo manifest details were transmitted to the ship's computer as being the correct cargo manifest. The second bill of lading and the false version of the ship's cargo manifest were also sent electronically to MSC's agents in Shanghai, China Marine Shipping Agency Shanghai Co Ltd, which is known as “Sino – Agent” or “Sinotrans”.
If cargo is to be discharged at a port in the PRC, the shipowner must transmit electronically a copy of the ship's cargo manifest to the customs authorities at the discharge port. Without the cargo manifest the customs authorities will not accept any import cargo declaration. So the production and transmission of the false cargo manifest was the key to the prosecution of the fraud in this case.
The ship arrived at Shanghai on 23 October 2005 and began to discharge her container cargo. The cargo was discharged and taken to a yard designated by the shipowners. That yard is run by the Shanghai East Container Terminal Co Ltd
(“SECT”). The yard is also known as the Hudong Container Terminal. 11 The containers are still in this container terminal.
On 24 October 2005, someone representing Ningbo attended Sino – Agent's office and presented...
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