Vitol SA v Genser Energy Ghana Ltd
| Jurisdiction | England & Wales |
| Judge | Ms Lesley Anderson |
| Judgment Date | 22 July 2022 |
| Neutral Citation | [2022] EWHC 1812 (Comm) |
| Docket Number | Claim No: LM 2021-000176 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1812 (Comm)
Ms Lesley Anderson QC sitting as a Deputy Judge of the High Court
Claim No: LM 2021-000176
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD))
Rolls Building
Fetter Lane
London
EC4Y 1NL
Siddharth Dhar and Felix Wardle (instructed by Holman Fenwick Willan LLP, 65 Crutched Friars, London EC3N 2AE, for the Claimant)
Simon Mills and Alexander Kingston-Splatt (instructed by Addleshaw Goddard LLP, One St Peter's Square, Manchester M2 3DE, for the Defendant)
Hearing dates: 13, 14, 15 and 20 June 2022
Introduction
The Claimant, Vitol SA (“Vitol”), is an energy and commodities company incorporated in Switzerland. Amongst other things, it trades in propane. The Defendant, Genser Energy Ghana Limited (“Genser”), is an energy company incorporated under the laws of Ghana. Genser operates power plants in Ghana and sources energy, and the natural resources which are required to make it, from various suppliers as well as supplying some of the energy which it generates to third parties for the operation of their power plants. Genser is subject to Ghanaian law and regulation.
Vitol and Genser started to trade with each other in 2016. The present proceedings concern a contract between the parties for the sale by Vitol and the purchase by Genser of propane. During this period, Vitol was the sole supplier from which Genser purchased propane. Vitol's principal claim is for USD 3,582,365.95 which is the unpaid balance of a settlement sum calculated by it under the terms of the relevant contract. I will refer to that as the Settlement Amount Claim. If that claim fails, Vitol claims USD 559,281.16 in respect of various unpaid invoices. I will refer to that as the Unpaid Invoices Claim.
I have been assisted by detailed written skeleton arguments and helpful written and oral submissions from Counsel for both parties. I am grateful to them.
The SPA
The main contractual document between the parties is a Sale and Purchase Agreement dated 15 March 2018 (“the Original SPA”). It is common ground that the Original SPA was then amended by a series of Addenda (although Genser denies that Addendum 7 was agreed or performed and so that is in issue before me).
The Original SPA contains the following material terms set out in unnumbered paragraphs:
5.1. The Product was propane.
5.2. The Term Period was 1 April 2018 to 30 April 2018 but would be extended to 15 November 2018 unless Genser wished to assign the agreement to Gold Fields Ghana Limited (“Gold Fields”), a mining concession to which Genser supplied power. Genser was to pay a fee of USD 108,000 as terminal fee for the contract ending on 30 April 2018 (“the Termination Fee”).
5.3. Genser was to purchase a minimum of 9,000 MT (+/-5% at Vitol's option) of propane on a take-or-pay basis (“the Quantity Clause”). Take or pay contracts are common in the commodity trading industry. It is not in issue that the buyer is required to pay for the minimum agreed tonnage of the commodity whether it opts to take delivery of the same or not.
5.4. Delivery was to be DAP one safe port, one safe berth at Takoradi, Ghana on board a vessel to be nominated by Vitol and accepted by Genser. DAP means Delivered at Place and it is not in issue that this meant Vitol was only obliged to deliver the propane to Takoradi. The seller in such arrangements bears all the risk in bringing the goods to the named place, here Takoradi. It was then for Genser as buyer to obtain at its own risk and expense any import licence or authorisation to clear the Product for import.
5.5. The price in US dollars basis DAP Takoradi was to be “Opis non TET MB Propane” plus a premium of USD 54 per m/t (“the Price Clause”). It is not in issue that Opis non TET MB is an industry term which means “Mont Belvieu” pricing, which is a list of prices for propane published by OPIS.
5.6. Genser was to pay to Vitol USD 12,000 per day pro rata during the term of the agreement towards the cost of the floating storage unit (“Floating Storage Unit” or “FSU”) and bunkering (“the Floating Storage Clause”). The Floating Storage Unit costs were to be invoiced and paid in advance on a monthly basis, before the start of each monthly hire period.
5.7. The quantity of Product sold under the Agreement was to be the vessel discharge figures determined at the discharge terminal by an independent inspector (“the Determination of Quality and Quantity Clause”). If the minimum quantity of 9,000 m/t was not discharged, it would be considered the delivered quantity under the Take or Pay agreement.
5.8. Prepayments were to be in line with a Prepayment Schedule and Genser was to make bi-monthly payments of USD 2,500,000 each month (“the Pre-Payment Clause”). Prepayments were to be assigned to cover product and floating storage fees unless Genser chose to pay the floating storage fee separately. Vitol as Seller was not under any obligation to discharge the Product if the prepayment schedules were not fulfilled by Genser.
5.9. Where any of the parties detected an inconsistency in the quality, quantity, invoices, prices and any other issue arising under the Agreement, it was immediately but not later than three (3) working days to notify the other party of such dispute (“the Cure Clause”). Upon receipt of notice of the dispute, the other party was to take steps to remedy the issue within seven (7) days. The parties might then come to an agreement to resolve the same in accordance with the dispute resolution mechanism.
5.10. Risk in the Product delivered under the Agreement was to pass from Vitol to Genser as the Product passed the vessel's permanent flange at the discharge point but not before full prepayment had been received. As will be seen, the commercial basis of the agreement later changed but at this point the net effect was that Vitol was not exposed to any credit risk.
5.11. If the Payment Due Date was a Saturday or New York Federal Reserve bank holiday other than Monday, payment was due on the previous New York Federal Reserve banking day. In the event that the Payment Due Date was a Sunday or a Monday New York Federal Reserve banking holiday, payment was due on the following New York Federal Reserve banking day.
5.12. Neither Vitol or Genser was to be liable for damages or otherwise for a failure, delay, hindrance, reduction in, interference with, curtailment or prevention of performance of its obligations under the agreement insofar as that party proved that the failure was due to an impediment beyond its control including but not limited to any compliance with any law, regulation or ordinance, or with any order, demand or request of an international, national, port, transportation, local or other authority or agency (including the International Energy Agency) or of any body or person purporting to be or to act for any such authority or agency or any corporation directly or indirectly controlled by any of them (“the Force Majeure Clause”). Such a Force Majeure Event was not to include any delay, hindrance, interference with, curtailment or prevention of a party's accrued obligation to make payment under the agreement whether in respect of price, despatch, demurrage or to provide any instrument for payment or payment security or any other financial obligation whatsoever. The Force Majeure Clause goes on to make express provision for the parties' obligations to give effect to it.
5.13. Where any applicable general terms and conditions did not provide any relevant time limite, Genser was to notify Vitol of any complaint relating to Vitol's failure to deliver Product meeting the contractual description and/or condition and/or quality and/or quantity no later than the 45 th day following completion of discharge and in no event was either party to be liable in respect of any claim or dispute where legal proceedings in respect of that claim or dispute had not been commenced within one year of the date of delivery of the Product, or in the case of total loss, within one year of the date on which the Product should have been delivered. If notice was not given and/or legal proceedings not commenced in respect of any complaint, claim or dispute within the time limits specified, such claim was to be time barred and any liability of the other party in respect of that complaint, claim or dispute was to be finally extinguished (“the Time Bar Clause”).
5.14. The Agreement was governed by and to be construed in accordance with English law (“the Jurisdiction Clause”).
5.15. Otherwise, and where not in conflict with the terms of the Agreement, Incoterms 2010 were to apply. Nothing turns on this save that Vitol contends that Genser was in breach of Incoterms 2010, B4, when it failed to take deliveries of propane in mid-May 2019.
5.16. The parties agreed and undertook to one another that in connection with the Agreement they would each respectively comply with and act in a manner consistent with all applicable laws, rules, regulations, decrees and/or official government orders (“the Lawful Conduct Clause”).
5.17. Any notice or other communication given to a party under or in connection with the Agreement was to be in writing and in English and, in the case of a notice sent by email to Genser concerning “Contracts/Pricing/Notification”, to Baafour Asiamah-Adjei at baafour.asiamiah-adjei@genserafrica.com; Daniella Akowuah at Daniella.akowuah@genserghana.com and FUEL@genserghana.com, which is a generic email address (“the Notice Clause”). Any notice or communication by email is deemed to have been effective when delivered in each case unless delivered on a non-Business Day or after 5.00pm (local time at the location of the recipient party) on a Business Day, in which case it was deemed to have been delivered on the next Business Day. Business Day...
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