Unicredit Bank A.G. v Euronav N.v
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 28 April 2022 |
| Neutral Citation | [2022] EWHC 957 (Comm) |
| Docket Number | Case No: CL-2021-000020 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 957 (Comm)
Mrs Justice Moulder
Case No: CL-2021-000020
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
John Russell QC and Gemma Morgan (instructed by HFW LLP) for the Claimant
Robert Thomas QC and Paul Toms (instructed by Preston Turnbull LLP) for the Defendant
Hearing dates: 28–31 March 2022
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.
THE HON. Mrs Justice Moulder
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to the National Archives. The date and time for hand-down is deemed to be 10:30am on 28th April 2022.
This is a claim for damages brought by the Claimant, UniCredit Bank A.G. (“UniCredit” or the “Bank”) for the alleged breach by the Defendant, Euronav N.V. (“Euronav” or the “Owners”) of the bill of lading by delivering (part of) a cargo of low sulphur fuel oil (the “Cargo”) to a third party not against production of the bill of lading. Both liability and quantum are in issue. The Bank seeks damages of US$24,701,600.
Introduction
The Bank is a bank with its headquarters in Munich, Germany, which is involved in commodities trade finance.
The Defendant was at all material times the owner of the vessel “SIENNA” (the “Vessel”).
BP Oil International Ltd (“BP”) were the sellers of the Cargo and the original charterers of the Vessel in relation to the carriage of the Cargo. (An issue about the role of BP Europa SE is dealt with below.)
Gulf Petrochem FZC (“Gulf”) were the buyers of the Cargo from BP and became the charterers of the Vessel by a novation (the “Novation Agreement”).
By a bill of lading issued at Rotterdam and dated 19 February 2020 (the “Bill of Lading”) and signed by or on behalf of the Master of the Vessel, the Owners acknowledged shipment of the Cargo on board the Vessel in apparent good order and condition for carriage to and delivery at Fujairah, UAE. The Bill of Lading was made out to the order of BP or their assigns.
The Bank financed the purchase by Gulf of part of the Cargo (“the Financed Cargo”) by way of letter of credit on or about 1 April 2020.
It was intended between the Bank and Gulf that the Financed Cargo would be re-sold to sub-buyers, approved by the Bank (the “Sub-buyers” or the “Offtakers”), on payment terms that required those Sub-buyers to pay the Bank directly, 90 days from the date of invoice against presentation of the invoice and a Certificate of Quantity issued by an independent surveyor.
The charterparty with BP was novated to Gulf on 6 April 2020.
The Financed Cargo was discharged from the Vessel by Owners by STS transfer to two other vessels, “KUTCH BAY” and “PRESTIGIOUS” between around 26 April and 2 May 2020 (“Discharge”). Discharge occurred without Owners requiring production of the Bill of Lading by any person.
The dates for payment of the invoices fell due in the period 26 July–9 August 2020. Whilst in April/ May 2020 the Bank had no specific concerns about Gulf falling into default, according to the Bank's evidence:
“Things changed completely and rapidly in July of course once the market started to have suspicion of wide scale fraud”
By mid-July the Bank was aware that Gulf had a “liquidity distress” and suspected “fraudulent behaviour”.
On 7 August 2020, BP endorsed the original Bill of Lading to the Bank and this was received by the Bank in Hamburg on 13 August 2020.
Witnesses
For the Bank the Court heard from the following factual witnesses:
i) Ms Diana Bodnya employed by the Bank as Director Commodity Trade Finance, Switzerland. She was responsible for managing the relationship with Gulf.
ii) Mr Martin Borchert employed by the Bank as Head of Recovery Management Foreign Markets & Financial Institutions. Mr Borchert gave evidence relevant to the Bank's quantum case.
iii) Mr Patrick Cotasson employed by the Bank as Managing Director.
For the Owners the court heard evidence from Mr Christof Van de Gaer, employed as a Charterer at Euronav.
The court also has evidence from Captain Philippe De Meyer, Master of the Vessel during the voyage which is the subject of these proceedings. His evidence was admitted as hearsay.
Expert witnesses as to the value of the Financed Cargo were instructed but, in the event, they were not called as the value of the Financed Cargo at the date of delivery or the method of calculating the value if the value were not to be determined at the date of delivery was agreed by the time of trial.
The court did hear expert evidence on the counterfactual position in relation to the quantum case from Mr Daniel Corrigan, instructed by the Defendant, who was cross examined.
Financing arrangements
In 2019, the Bank agreed to provide financing to Gulf by way of a facility agreement and first demand guarantee dated 18 December 2019 (“Facility Agreement”). As security for this financing, the Bank and Gulf entered into a pledge agreement and a deed of assignment, both also dated 18 December 2019 (the “Pledge Agreement” and the “Deed of Assignment”). Under these agreements, amongst other things, all rights under bills of lading issued in respect of financed goods were pledged and assigned to the Bank.
It was not in dispute that some of the trades which are financed by the Bank proceed by way of the Bank's client on-selling the goods to its buyers. The repayment of the bank loan, so called “self-liquidating”, is effected by the proceeds being paid directly by the sub-buyer to the Bank.
Issue 1: Did the Bill of Lading contain and/or evidence the/a contract of carriage in respect of the Cargo on or after 6 April 2020 (being the date of the Novation Agreement) and prior to the alleged misdelivery? Issue 2: Alternatively, were Owners' obligations as regards the carriage of the Cargo contained exclusively in the Charterparty and/or the Novation Agreement of 6 April 2020?
Issues 1 and 2 represent the cases advanced for the Claimant and the Owners respectively, as formulated by the parties during the trial in the Agreed List of Issues.
The crux of these issues is whether when BP ceased to be the charterer on 6 April 2020 by reason of the novation of the charterparty to Gulf, the contract of carriage at the time of delivery was contained in the Bill of Lading. BP remained the holder of the Bill of Lading at the time of delivery,
I understood it to be common ground that where a shipper is also the charterer the bill of lading is not the contract of carriage of goods but a mere receipt.
It is clear on the authorities that where a bill of lading is issued to a charterer and then indorsed to a third party, it attains contractual status upon indorsement on the basis that “a new contract appears to spring up between the ship and the consignee on the terms of the bill of lading” ( Tate & Lyle Ltd. v Hain Steamship Co. (1936) 55 Ll. L. Rep. 159, 174).
However in this case there was no indorsement of the Bill of Lading to a third party; rather BP, the original shipper, ceased to be the charterer and thus from the date of the novation, the Bill of Lading was no longer in the hands of the charterer. (It seems to have been accepted for the Owners that the Bill of Lading was not endorsed to Gulf at any point — the Bank received the original Bill endorsed by BP in August 2020.)
It was submitted for the Bank that there was no reason to distinguish the situation in this case from the position which would result on indorsement of the Bill. To the extent that a further contract came into existence between Gulf and the Owners which was contained in the novated Charterparty, it is the Bank's case (Reply paragraph 8 and 9) that that contract had no bearing on the Bill of Lading contract of carriage, or the rights or liabilities contained therein; the Novation Agreement operated simply as a transfer of rights and obligations under the Charterparty from BP to Gulf.
It was submitted for the Owners that there was no authority to support this proposition for which the Bank contends. It was submitted that the Bank sought to draw a false analogy with the orthodox position and infer the creation of contractual rights. It was submitted (Defendant's skeleton paragraphs 95 and 96) that by the novation the arrangements between the Owners and BP were terminated and BP did not intend the relationship to be governed by the Bill of Lading if their existing relationship was dissolved.
Discussion
It was submitted for the Claimant (paragraph 63 of its skeleton for trial) that:
“… where a bill of lading is in the hands of a charterer of the carrying vessel, the bill of lading, for that period of time, is not a contractual document in the full sense; as between charterer and shipowner, the bill is merely a receipt in a charterer's hands. The contractual relationship between the charterer and shipowner is governed by the charterparty itself.” [Emphasis added]
The claimant relied on Aikens Bills of Lading (3rd edition, 2020) at paragraph 7.23 for that proposition. However Aikens states:
“7.23 An important exception to the rule that a bill of lading contains or evidences the contract of carriage is where the bill of lading is issued to (or indorsed to) the charterer, in respect of goods carried on board the chartered ship. At least where the carrier under the bill of lading is the same party as the “owner” for the purposes of the charterparty, a bill of lading has no contractual force, and constitutes a receipt only in the hands of the charterer,...
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