Trafigura Maritime Logistics Pte Ltd v Clearlake Shipping Pte Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 06 May 2020 |
| Neutral Citation | [2020] EWHC 1073 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case Nos: CL 2020 000159 AND CL 2020 000171 |
| Date | 06 May 2020 |
[2020] EWHC 1073 (Comm)
Mr. Justice Teare
Case Nos: CL 2020 000159 AND CL 2020 000171
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Ashcroft QC and Oliver Caplin (instructed by Ince Gordon Dadds LLP) for Trafigura
Robert Thomas QC and Ben Gardner (instructed by Kennedys Law LLP) for Clearlake
Henry Byam-Cook QC (instructed by White & Case LLP) for Petrobras
Hearing date: 30 April 2020
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.
On 27 April 2020 I gave judgment in respect of applications made in two related actions on the return date of orders for interim mandatory relief; see [2020] EWHC 995 (Comm). The mandatory relief granted by the court was to enforce an obligation to provide the security required to secure the release of a vessel from arrest in Singapore. On 30 April 2020 I heard counsel in respect of the precise form of the order required to give effect to my judgment and in respect of costs.
The parties and the nature of the dispute between them are apparent from my earlier judgment. I shall assume that the reader of this judgment is familiar with my earlier judgment.
The form of the order
Counsel for Trafigura identified no less than 8 points which the parties had not been able to agree and therefore had to be resolved.
More general words
The first concerns the question whether the order should not only set out the specific order which I had resolved to make, that is, to order the charterer, Clearlake, and the sub-charterer, Petrobras, to make a payment into court in Singapore within 8 working days of the date on which I formally handed down judgment, but should also repeat the more general order made by the court at the ex parte hearing, that is, that the charterer and sub-charterer must provide forthwith such bail or other security as may be required to secure the release of the Vessel. Counsel for Trafigura requested that the more general wording be included. Counsel for Clearlake and Petrobras opposed the inclusion of such general words.
At first sight the opposition of Clearlake and Petrobras appears odd because they were both willing on 22 April 2020 (the date of the inter partes hearing) for the injunctive relief to continue in those terms. However, they say that in circumstances where the court acceded to the application made by Trafigura for an order which gave “greater precision to the order by identifying the date by which action must be taken and describing the action which must be taken” (see paragraph 10 of my earlier judgment) the retention of the more general words risked confusion, something which was undesirable in an order of the court, especially one which contained a penal notice.
There seems to be force in this argument. In circumstances where Trafigura wished to identify with precision what Clearlake and Petrobras were obliged to do the retention of more general words tends to muddy the waters which had just been made clear.
Counsel for Trafigura identified two reasons for keeping the more general words in the order.
The first related to the fact since my earlier judgment Petrobras had informed Clearlake and Trafigura that Natixis was willing to talk to Petrobras about the wording of the bank guarantee which it would accept. This was contrary to Natixis' position on 22 April; see paragraph 49 of my earlier judgment. Counsel for Trafigura therefore suggested that the more general words were required to ensure that Clearlake (and Petrobras) continued their efforts to agree the terms of a bank guarantee acceptable to Natixis, so that security might be provided before the date by which the payment into court was required.
There was no evidence that Natixis was willing to concede either the jurisdiction point or the settlement point (see paragraphs 52 and 53 of my earlier judgment). But assuming that Natixis was so willing the more general words are not, I think, necessary to ensure that Clearlake and Petrobras pursue negotiations with Natixis. First, they have demonstrated genuine and sincere efforts to provide security by way of a guarantee (see paragraph 51 of my earlier judgment). Second, they have every incentive to continue with such efforts because the provision of a bank guarantee would be less costly than a payment into court. Thus it was they that requested a provision in the order to the effect that if a bank guarantee were provided they would not need to make a payment into court.
The second reason suggested for retaining the more general words was that Clearlake and Petrobras feared that Natixis might object to the vessel being released following payment into court and if that objection were successful and the Singapore court required something further to be provided by way of security then the more general words were required to ensure that that further security was provided.
However, it is very difficult to see on what basis Natixis could object to the release of the vessel in circumstances where the requested sum of US$76 million had been paid into court. This therefore seems to be a most unlikely event. Were it to occur, it would be a surprising development and I think it would be preferable for the question whether Clearlake and Petrobras should be ordered to provide some further security to be brought before the court pursuant to the liberty to apply. This would enable the court to say whether, in those surprising circumstances, Clearlake and Petrobras were obliged to provide further security. That seems preferable to assuming that Clearlake and Petrobras would be so obliged in circumstances which are currently difficult to envisage.
I was therefore unpersuaded that the more general words should be retained.
The specific dates
In my earlier judgment I concluded that the requested sum be paid into court within 8 working days of the date on which judgment was handed down. I had thought that that would be 7 May. However, I had not taken into account that 1 May was a public holiday in Brazil and in Singapore and that 7 May was a public holiday in Singapore. Counsel for Trafigura accepted that in the case of Clearlake, a Singaporean company, 8 working days expired on Monday 11 May. Counsel further submitted that in the case of Petrobras, a Brazilian company, 8 working days expired on Friday 8 May. Counsel for Petrobras said that since Petrobras had to effect payment in Singapore it was relevant to take into account that 7 May was a public holiday in Singapore because on that day the Singapore banking and judicial systems would not be functioning. Thus 8 working days expired on 11 May.
It seems to me that when assessing working days it is necessary to take into account public holidays in Singapore, both in the case of Clearlake and in the case of Petrobras, because the payment in to court has to be effected in Singapore. To ignore Singaporean public holidays would give an unrealistic assessment of the available working days.
I therefore concluded that in the case of both Clearlake and Petrobras 8 working days expires on 11 May.
The proviso concerning a bank guarantee
There is no dispute that this proviso be included in the order. The dispute concerns whether it be in the form suggested by Trafigura or in the form suggested by Petrobras. I consider that it should be in the form suggested by Trafigura. That relates to the provision of a bank guarantee, whereas Petrobras' suggestion relates only to agreeing the terms of a bank guarantee, not necessarily its provision.
Staggered obligations
Counsel for Clearlake submitted that, although Clearlake owed an obligation to Trafigura to provide security, the date on which it should provide security should be later than the date on which Petrobras was to provide security so that there would be no unnecessary duplication of expense. If they both had to make payment by 11 May, there would be duplication of expense. If however, Clearlake only had to do so by 15 May then, in the event, as expected, that Petrobras made payment in by 11 May, there would be no need for Clearlake to incur the expenditure of making a payment in.
Counsel for Trafigura objected to this. He pointed out that Clearlake owed an obligation to Trafigura and that this court had held that such obligation should be satisfied by payment in by 11 May. Clearlake was not entitled to wait and see whether it was necessary for it to make a payment in, especially where the ex parte order had been made as long ago as 24 March.
There is much force in that objection. Clearlake has undertaken its own obligation to indemnify Trafigura. Its contractual obligation is not to provide security only if Petrobras does not do so.
However, this court has to make an order in both actions. In circumstances where there are back to back obligations the court is entitled, I think, to bear in mind the possible wasted costs involved in acceding to that objection. I think that the court's order should seek to avoid unnecessary expense if that is possible and consistent with Trafigura's...
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