Vitol Bahrain EC v Nasdec General Trading Llc & Ors

This is an application by the claimant (“Vitol”) to continue an anti-suit injunction initially granted by Cooke J on 24 May 2013 to restrain the second and third defendants (together “Fal Oil”, companies incorporated respectively in Dubai and in Sharjah in the United Arab Emirates) from pursuing any application to join Vitol to proceedings commenced by Fal Oil in Fujairah in the UAE and from making any claim against Vitol in connection with the title to two cargoes of oil other than in the present action. As matters have since developed, Vitol has now been joined as a party to the proceedings in Fujairah and seeks the continuation of the injunction in a modified form requiring Fal Oil to take positive steps to extricate it from those proceedings.

The Fujairah proceedings were originally begun against a company called VTTI Fujairah Terminals Ltd. VTTI is a company which is 50% owned by the Vitol group, the other 50% being owned by MSC Berhad of Malaysia. It operates an oil storage facility in Fujairah where it leases tanks to Vitol. Vitol does not contend that Fal Oil’s pursuit of the Fujairah proceedings as originally constituted was or would now be vexatious or oppressive and does not criticise the procedures of the Fujairah court. But it does contend that Fal Oil’s attempt to bring it into the Fujairah proceedings is vexatious and oppressive conduct which ought to be restrained by an injunction.

The underlying dispute concerns title to two cargoes of oil which were the subject of two sale contracts between Vitol as buyer and a company called Nasdec General Trading LLC as seller. Nasdec provided warranties, expressly governed by English law, that it had good title to the oil, which was delivered to Vitol and stored in the tanks leased by Vitol from VTTI. Fal Oil, however, contends that this was oil which Nasdec (a Dubai company operated by a former Fal Oil employee) had dishonestly misappropriated from it, with the consequence that Nasdec did not itself have good title, and therefore could not pass a good title to Vitol, so that the oil remains the property of Fal Oil.

As explained below, that was not how Fal Oil’s case was initially put. Nevertheless the current position is that the question whether Nasdec had a good title to the oil is central to both proceedings. Vitol brings this action in England, seeking primarily a declaration that Nasdec had a good title to the cargoes or, in the alternative, damages against Nasdec for breach of the warranties which it had given. It has obtained permission to serve the claim form on the two Fal Oil defendants, who have indicated that they propose to challenge the jurisdiction of this court but have not yet done so. In Fujairah Fal Oil has brought proceedings against VTTI (but initially, not against Vitol) in which Nasdec is also a party, seeking to establish that it has title to the oil.

Vitol was content with this position, not least as it appeared that the Fujairah proceedings were moving towards a dismissal of Fal Oil’s claim. However, on 5 May 2013, almost 11 months after the commencement of the Fujairah proceedings and six months after the commencement of this action, Fal Oil sought for the first time to join Vitol as a defendant to the Fujairah proceedings. It was this that prompted Vitol’s application for an anti-suit injunction.

The cargoes in question were sold by Nasdec to Vitol pursuant to two sale contracts, dated 30 March and 8 May 2012, for the sale of low sulphur fuel oil DES (delivered ex ship) at VTTI. The contracts were respectively for 600,000 and 620,000 barrels of oil, with a maximum sulphur content of 0.145% by weight. Payment was to be made 15 days after commencement of discharge against presentation of documents, which included a warranty of title but did not include bills of lading. Property was to pass as the oil passed the vessel’s permanent flange at the discharge port. The contracts were subject to the law and exclusive jurisdiction of the courts of Dubai, but they provided that the warranty of title to be given by Nasdec was to be governed by English law.

Warranties of title were provided by Nasdec for each cargo in the agreed form. The warranty in the case of the first cargo stated as follows:

“We refer to an outturn quantity of 600,022 US Barrels of Oil delivered to you by vessel MT AL KHALIDIA at VTTI Terminal, Fujairah and discharged during 18 April 2012.

In consideration of your payment of the full purchase price of USD 61,640,860.00 we hereby expressly warrant that we have marketable title, free and clear of any lien or encumbrance to such material, and that we have full right and authority to transfer and effect delivery of such material to you.

This warranty of title shall be governed by and construed in accordance with English law and any disputes, controversies or claims arising out of or in relation to this warranty of title shall be subject to the exclusive jurisdiction of the English courts.”

The warranty in the case of the second cargo was in the same form.

The first cargo, carried on a vessel called “AL KHALIDIA”, was discharged at the VTTI terminal at Fujairah between 17 and 20 April 2012. It had been loaded on board the vessel at Khorfakkan in the UAE. A bill of lading dated 16 April 2012 was issued, in the standard Tanker Bill of Lading form, which did not name the shipper but stated that the cargo was consigned to the order of Nasdec. The bill incorporated the terms of the applicable charterparty, which as it contained a London arbitration clause was governed by English law. Vitol paid for the cargo. It did not obtain an original bill of lading, which did not form part of the contractual shipping documents, but it did obtain a non-negotiable copy of the bill.

The second cargo, carried on a vessel called “SEA LION”, was discharged at the VTTI terminal between 31 May and 3 June 2012. It too had been loaded at Khorfakkan. A bill of lading dated 30 May 2012 was issued in the same form as for the “AL KHALIDIA” cargo. Vitol paid for this cargo also, and again obtained a non-negotiable copy of the bill of lading.

Both the carrying vessels were owned by subsidiaries of Fal Oil. It appears that both vessels had been chartered to Sudan Petroleum Corporation, although Fal Oil contends that the fixture recaps evidencing these charterparties are not genuine. Nevertheless it is certain that the Fal Oil owned vessels did discharge the cargoes into the tanks leased by Vitol at VTTI. Fal Oil should therefore be in a position to show where the oil (which in total amounted to 175,442.156 mt with a total contract price of US $119,481,290.13) had come from.

Fal Oil first intimated a claim in relation to these cargoes in a letter to VTTI dated 11 June 2012. After referring to the cargoes, the letter continued:

“You recognise that you have confirmed safe receipt of the said cargo and have confirmed that it is in fact according to the agreed supply specifications.

You have, without any legal cause or explanation, denied Fal Oil they would of the due price of USD 119,481.13 representing the full price of the cargo noting that the transfer of the title of the cargo was subject to the full settlement of the cargo price.

Accordingly, we hereby put you on notice to, within 24 hours from receiving this letter, transfer the full cover price of USD 119,481,290.13 to our below designated bank account.”

I accept the submission of Mr James Collins QC for Vitol that in this letter Fal Oil was clearly asserting a contractual claim to the price. Although it did not identify the contract pursuant to which this claim was made, it was asserting the existence of a contract or contracts of sale and claiming a right to payment thereunder.

VTTI responded on 13 June 2012, pointing out correctly that it was a terminal that stored oil, that it did not buy, sell or trade in oil products, and that it had no recorded commercial dealings with Fal Oil. It continued:

“Based on the product information contained in your letter we confirm that the terminal received approximately the volume of oil stated and this oil was stored in tanks leased to Vitol Bahrain.”

Vitol’s contact details were then given. The letter was also copied to Vitol, who responded on the same day explaining that it had purchased the two cargoes, had paid for them in full, and considered that it was the right and proper owner of them. Accordingly Fal Oil had been told by 13 June 2012 that it was Vitol which had purchased the cargoes, which had possession of them in the tanks leased from VTTI, and which claimed ownership of them. It might have been expected, therefore, that if Fal Oil wished to pursue the matter, it would do so with Vitol.

Instead, however, on 14 June 2012 Fal Oil Dubai applied for and obtained an attachment order over refined products stored in VTTI. The attachment was sought in support of a claim for the price of the cargoes of which Fal Oil was said to be the owner “as per” the bills of lading. This attachment, however, was successfully challenged by VTTI on the basis that (among other things) it had no contractual relationship with Fal Oil.

Undaunted, on 20 June 2012 Fal Oil Sharjah commenced civil proceedings against VTTI in Fujairah, but not against Vitol. In this claim Fal Oil did not assert the contractual claim which it had advanced in its initial letter and in its attachment, but claimed instead that it had “handed over” the cargoes to VTTI “by way of trust, for storing”. That was clearly not the case. Fal Oil had no relationship with VTTI and had done no such thing, as it must have known. Fal Oil’s claim also relied on the bills of lading, the originals of which were in its possession (although it is not clear how it acquired them), as giving it title to the cargoes. However, the bills of lading had both been made out to the order of Nasdec and had not been endorsed to Fal Oil (or at all). In those circumstances it is hard to see how possession of the bills would give Fal Oil title as a matter of English law (by which the bills appear to be governed) or indeed as a matter of the law of the UAE (which in this respect appears to be no different from English law). At this stage, therefore, Fal Oil appeared to be asserting title based on the bills of lading, an assertion which would appear to assume that Nasdec, the party apparently entitled to the cargoes according to the bills of lading, had either been acting on its behalf or had validly transferred title to Fal Oil. However, there was no evidence of any intention on the part of Nasdec to transfer title to Fal Oil.

Fal Oil sought to plug this gap in a memorandum filed in the Fujairah proceedings on 22 July 2012. This asserted that “the title of the handed over oil belongs to the party whose name is mentioned in the bill of lading as a consignee”. That party, of course, was Nasdec and not Fal Oil. However, Fal Oil produced a letter purportedly from Nasdec dated 6 June 2012 which, it said “acknowledges that the Plaintiff Fal Oil Company Limited, owns the oil handed over to the Defendant”. This letter, addressed "To whom it may concern”, stated:

“Although we, Nasdec General Trading LLC, PO Box 113296, Dubai, UAE is the consignee as per the above B/Ls we would like to confirm the following:

1.

We worked only as the agent of Fal Oil Co Ltd, PO Box 6600, Sharjah, UAE for marketing the B/Ls quantity.

2.

Fal Oil Co Ltd is the owner and has a clear title on the above said B/Ls quantity and was loaded from Fal storage.

3.

The B/L quantity is delivered at VTTI, Fujairah on behalf of Fal Oil Co Ltd for onward sale and the proceeds are to be paid to Fal Oil Co Ltd.

4.

If the value of the cargoes were not settled to Fal Oil Co Ltd directly, Fal Oil Co Ltd has the right to take the cargoes back.

5.

The undersigned personally guaranty that the full value of the above 2 cargoes, should be collected and paid to Fal from the receiver.”

Nasdec maintains that this letter is a forgery and Vitol does not accept it as authentic. Nor it seems does Fal Oil, whose Fujairah lawyer, Mr Yazan Al Saoudi, states that Fal Oil relies on the letter “for its effect as an endorsement [of the bills of lading] and for no other purpose”. It is not clear how this rather odd letter came to be written. If what is said in it is true, it would confirm that the oil originated from stock held in storage by Fal Oil, and that Nasdec had acted as an agent for Fal Oil in marketing the cargoes. In my view, despite a contrary suggestion which in the end Mr Robert Thomas QC for Fal Oil did not pursue, "marketing" would clearly extend to the conclusion of the sale contracts and the giving of the warranties of title.

Perhaps it is because of this that Fal Oil does not rely on the truth of the contents of the letter, but only seeks to rely on it as an endorsement of the bills. It is difficult to see how the letter could have operated as such an endorsement by Nasdec, but even if that is what it purported to be, the “endorsement” on 6 June 2012 came some six weeks after Nasdec had transferred to Vitol whatever title it had to the first cargo pursuant to the sale contracts and the warranties of title, and several days after it had transferred title to the second cargo. Therefore this “endorsement” could not have transferred anything to Fal Oil. Indeed the assertion that it operated as an "endorsement" seems fatal to Fal Oil’s case, as that assertion is necessarily premised on Nasdec having had good title prior to that endorsement.

Fal Oil’s case in Fujairah changed again in August 2012, when it commenced criminal proceedings in the UAE against its former employee Mr Mohammed Osman, alleging in effect that he had stolen the cargoes from Fal Oil, using Nasdec as a company which he had set up in order to do so. Fal Oil relied on stock reports provided to Standard Chartered Bank, to whom stocks of oil which it held had been pledged. It contended that Mr Osman had abused his position as a senior employee of Fal Oil by disposing of oil which formed part of these stocks for his own benefit – and presumably that he had also been in a position to exercise control over the carrying vessels. Finally, therefore, Fal Oil had advanced what has turned out to be its real case as to title to the cargoes.

If true, this allegation had the potential to impact on Vitol’s title to the cargoes. If Nasdec had effectively stolen them, it would not have had any title which it could transfer to Vitol. Accordingly Vitol commenced this action on 9 November 2012.

The position in the English action is as follows.

Vitol’s claim is for a declaration that Nasdec had good title to the cargoes and was therefore able to and did transfer good title to Vitol. That is the primary relief sought, although there is also an alternative claim against Nasdec for damages for breach of the warranty of title which arises only if the primary claim fails.

Jurisdiction over Nasdec, the first defendant, was established by reason of the exclusive English jurisdiction clause in the warranties of title. As between Vitol and Nasdec, England is the agreed venue for determination of any issue about Nasdec’s title. Nasdec has submitted to the jurisdiction and has served a Defence in which it agrees with Vitol’s primary claim, maintaining that it did have good title and was therefore able to transfer that good title to Vitol. There is, therefore, no issue about that as between Vitol and Nasdec.

Jurisdiction over the two Fal Oil companies, the second and third defendants, was established on the basis that they are necessary or proper parties to the claim against Nasdec, and also on the basis that the claim is made “in relation to a contract” governed by English law, namely the warranties of title, although it is not suggested that the Fal Oil defendants were parties to either of those contracts. Fal Oil Sharjah, the third defendant, has acknowledged service and has indicated that it intends to challenge the jurisdiction of this court, but has not yet issued an application to do so. Fal Oil Dubai, the second defendant, has not yet been served through diplomatic channels, but has also indicated that when it is served, it intends to challenge jurisdiction. I asked Mr Thomas whether he was willing to treat the present hearing as Fal Oil’s challenge to the jurisdiction of this court, but he had no instructions to agree this.

Standard Chartered Bank, an English company, is the fourth defendant. It has served a Defence which, although unable either to admit or deny most of the facts pleaded concerning title to the cargoes, provides information about the stocks pledged to it by Fal Oil. That information is clearly derived from Fal Oil, and is that cargo pledged to Standard Chartered on a vessel called the “DASMAN” had been loaded onto Fal Oil vessels at the instigation of a “rogue employee”, that the oil had then been sold by Nasdec, a company owned by this employee, and that 180,000 mt of this oil was now located in storage in Fujairah in the possession of Vitol. However, it is clear that this account cannot be correct. The oil delivered to Vitol was low sulphur oil (maximum sulphur content 0.145%) whereas the oil pledged to Standard Chartered Bank on the “DASMAN” had a much higher sulphur content. This has led Fal Oil to suggest that high sulphur oil on the “DASMAN” must have been blended with other low sulphur oil which it also held in stock, but that explanation seems (at least on the material available) thoroughly implausible. It would have required a massive quantity of low sulphur oil to be blended with oil from the “DASMAN” but no explanation has been given of where or when such an operation could have taken place and not a single document in support has been produced.

Since Nasdec has not challenged the jurisdiction of this court and (as it has agreed to an English exclusive jurisdiction clause) has no grounds on which it could do so, it appears that this action will continue in any event, at any rate against Nasdec and Standard Chartered Bank. However, Nasdec does not dispute Vitol’s primary claim that it had good title and Standard Chartered Bank has no evidence with which to do so. The only party with any interest in challenging Nasdec’s title and access to evidence with which to do so is Fal Oil.

Following the commencement of the criminal proceedings in Fujairah in August 2012 the civil and criminal proceedings there have developed further.

On 14 October 2012 Nasdec intervened in the civil proceedings claiming to have acquired title to the oil which, it said, it had purchased from the Sudan Petroleum Corporation so as to be able to transfer a good title to its buyer.

At a hearing on 30 December 2012 the Fujairah court appointed an accounting expert to investigate the ownership of the oil and whether it had been delivered to VTTI. The expert issued his report on 3 April 2013. He concluded that there was no contractual relationship or direct dealings between Fal Oil and VTTI, and that the cargoes had been received by VTTI for the benefit of Vitol. On this basis, the expert concluded that there was nothing due from VTTI to Fal Oil and that it was unnecessary to resolve the dispute about ownership of the cargoes, which was the subject of the criminal proceedings against Mr Osman. The expert’s report is not binding on the Fujairah court, which is free either to accept or to reject its findings, although I understand that it is common for the findings of a court appointed expert to be accepted.

Meanwhile, experts were also appointed in the criminal proceedings. In a lengthy report submitted to the court on 5 May 2013 those experts concluded that while Mr Osman was in breach of his duties to Fal Oil for not having obtained the necessary consent of the board of directors for dealings involving Nasdec, there had been no embezzlement of the cargoes. The experts also concluded that the oil in Fal Oil’s storage was of a different quality to the oil delivered to the VTTI terminal, which therefore could not have come from Fal Oil’s stock.

At this stage, therefore, it seemed likely that both sets of proceedings in Fujairah were likely to come to an end in the near future, with Fal Oil’s civil claim against VTTI being dismissed and with the acquittal of Mr Osman, at any rate on the serious charges which had the potential to affect Nasdec’s ability to transfer good title to Vitol. It was at this stage that Fal Oil applied in the Fujairah civil proceedings to join Vitol as a party to the proceedings, while at the same time challenging the various experts’ conclusions. In response Vitol applied without notice for the anti-suit injunction to restrain Fal Oil from pursuing its application to join Vitol to the Fujairah proceedings, which Cooke J granted.

Since the grant of that injunction there have been further hearings in the Fujairah proceedings. There is a dispute between the parties as to how it has come about, and which of them is responsible for this position, but the upshot of these further hearings is an order made by the Fujairah court on 29 September 2013 which accepted the joinder of Vitol as a party to the action and suspended all further proceedings until the conclusion of the criminal case. Vitol contends that this occurred because Fal Oil failed to co-operate, as it was required to do, to stay the application to join Vitol as a party, and instead sought a stay of the Fujairah proceedings as a whole, which is not what Vitol had wanted to happen. Fal Oil, on the other hand, contends that it was Vitol who failed to co-operate by taking the necessary steps to achieve a stay of the joinder application, and that Vitol has submitted to the jurisdiction of the Fujairah court by deliberately contesting the merits of the case.

The two categories of cases in which the English court will typically grant an anti-suit injunction were described by Rix LJ in Star Reefers Pool Inc v JFC Group Ltd [2012] EWCA Civ 14, [2012] 1 Lloyd’s Rep 376 at [25]:

“There was no dispute about the basic principles applicable to the power to grant an anti-suit injunction. What was needed was either an agreement for exclusive jurisdiction or, its equivalent, an agreement for arbitration in England, in which case the court would ordinarily enforce the parties’ agreement by granting an anti-suit injunction in the absence of a strong reason not to do so; or else two other conditions had to be satisfied, namely England had to be the natural forum for the resolution of the dispute and the conduct of the party to be injuncted had to be unconscionable ...”

Vitol does not contend that there is any exclusive jurisdiction or arbitration clause which it can invoke in order to obtain an injunction against Fal Oil. Nor does it contend that it was unconscionable for Fal Oil to bring its proceedings in Fujairah. It accepts that those proceedings should continue, albeit without Vitol as a party. Rather its case is that Fal Oil’s attempt to join Vitol to those proceedings was vexatious and oppressive. Its case has four main strands: (i) the circumstances in which the application to join Vitol was made demonstrate that the claim against Vitol is made in bad faith as part of a strategy of obfuscation and delay; (ii) it is oppressive for Vitol to be exposed to two sets of proceedings dealing with the same subject matter; (iii) Fal Oil’s claim in Fujairah is so weak that it is bound to fail; and (iv) England is the natural forum for the resolution of the dispute about title to the cargoes.

Whether or not an anti-suit injunction is granted, it appears that both actions will continue, in England and in Fujairah, and that in each action a decision will need to be reached about the ownership of the cargoes. In the English action Vitol seeks a declaration to determine that question as between Vitol and Nasdec in any event, regardless of whether Fal Oil’s eventual challenge to the jurisdiction of the English court is successful. In Fujairah, even if Vitol were to cease to be a party, it seems likely that precisely the same question will still need to be determined as Nasdec is an intervening party, notwithstanding the view of the court appointed expert in the civil proceedings that the claim could simply be dismissed on the ground that VTTI is the wrong defendant.

It seems to me, therefore, that a sensible starting point is to consider where that question of title is most suitably determined in accordance with the interests of justice. In my judgment there is only one answer to that question, which is that the question should be determined in Fujairah. The real parties between whom that question arises are Fal Oil and Vitol, neither of whom has any connection with this country and between whom there is no contract of any kind. Vitol is a UAE company, as are the Fal Oil defendants. Most of the relevant evidence and witnesses are in the UAE. None of them are here. The question will depend on whether the cargoes sold by Nasdec were misappropriated in some way from Fal Oil, which is not a matter which seems likely to have anything to do with English law. Conversely it does seem likely that the law of the UAE would apply to that question, as that is where the cargoes were located (see Dicey, Morris & Collins on the Conflict of Laws, 15^th edition, 2012, Rule 133). Indeed the oil may still be there, although the evidence about that is not clear.

The only connection with England is the warranties of title given by Nasdec, which are subject to English law and exclusive jurisdiction, but as between Vitol and Nasdec there is no dispute. Both Vitol and Nasdec contend that the warranties were complied with. In my judgment it is artificial for Vitol to say that the question of title as between it and Nasdec has to be litigated here and that justice therefore requires that this question should also be litigated here as between it and Fal Oil. That approaches the question from the wrong direction. As between Vitol and Nasdec there is nothing to litigate unless and until Fal Oil makes good its claim. Indeed if Fal Oil is able to make good its claim that the cargoes were misappropriated by Nasdec, Vitol’s alternative claim against Nasdec for damages for breach of warranty would seem most unlikely to be worth pursuing. The idea that a company which on this hypothesis would be no more than a thief would be good for a claim for some US $119 million seems far-fetched.

Moreover Vitol does not suggest that the question of title cannot suitably be determined in Fujairah. On the contrary it contended that this question should be determined in the Fujairah proceedings at a time when it appeared that those proceedings were about to determine that question adversely to Fal Oil and at one time it indicated that Vitol itself “might need to intervene in the UAE proceedings and present its own position at short notice”. The words in quotation marks are taken from a witness statement dated 27 March 2013 by Vitol’s solicitor in support of an application for permission not only to provide documents disclosed in this action by Standard Chartered Bank to VTTI, but also to use them itself in Fujairah if the need arose. Vitol’s solicitor explained that “the outcome of the proceedings [in Fujairah] has a direct and potentially adverse effect on Vitol”.

This conclusion that Fujairah is the natural forum for determination of the question of title is sufficient for a conclusion that the anti-suit injunction should not continue. It is well established that the English court will not grant such an injunction merely because pursuit of foreign proceedings is vexatious, but will only do so if it has some interest of its own to protect, the typical example of such an interest being where England is the natural forum: see Airbus Industrie GIE v Patel [1999] 1 AC 119, as well as the citation above from Rix LJ’s judgment in Star Reefers.

However, I will state my conclusions on the remaining strands of Vitol’s argument.

It is perhaps understandable, given the chronology of the Fujairah proceedings summarised above and the various changes in the way in which Fal Oil has put its case, that the belated attempt to join Vitol just as the proceedings there seemed about to come to an inglorious end should have appeared to Vitol like a desperate last throw of the dice by Fal Oil. That applies with even greater force when Fal Oil was told in clear terms at the outset that the correct party to sue if it wished to pursue a claim to title to the oil was Vitol and not VTTI. Nevertheless Fal Oil chose to sue VTTI and took no steps to join Vitol for almost 11 months after the commencement of proceedings in Fujairah and six months after the commencement of this action in England.

However, in the light of the unchallenged evidence of Mr Al Saoudi, Fal Oil’s lawyer with the conduct of the proceedings in Fujairah, it would not be right to conclude that the joinder application was made in bad faith. His evidence is that the procedure adopted in Fujairah was in accordance with local practice and procedure because it is unusual in the UAE for a claimant to bring proceedings against two different defendants in the alternative. He explains that it is more usual for a defendant who contends that the wrong party has been sued to join the party which it considers should be liable, and that in circumstances where the leasing arrangements between VTTI and Vitol were not public knowledge there were valid grounds under UAE law for Fal Oil to direct its claim against VTTI. He says that it was only when it became clear that VTTI would not join Vitol and would not disclose to Fal Oil the documents which evidence the leasing arrangements that Fal Oil decided to join Vitol to the proceedings. This evidence is contained in a witness statement dated 1 July 2013 and has not been controverted by evidence from Vitol.

Moreover, as Mr Al Saoudi’s witness statement also explains, it was open to Vitol to object to the joinder on the ground that Fal Oil’s conduct was abusive. It seems to me that any such objection would be much better considered in the Fujairah court than here, turning as it does on the nuances of local practice and procedure.

The relevance of the fact that there will be multiple proceedings was described by Bingham LJ in E.I. Du Pont de Nemours & Co v Agnew [1987] 2 Lloyd’s Rep 585, 589:

“In approaching a case of this kind it is appropriate to bear in mind the general undesirability of concurrent proceedings between the same parties on the same issues in different jurisdictions. As Lord Brandon observed in The Abidin Daver [1984] AC 398 at 423G:

‘… In this connection it is right to point out that, if concurrent actions in respect of the same subject matter proceed together in two different countries, as seems likely if a stay is refused in the present case, one or other of two undesirable consequences may follow: first, there may be two conflicting judgments of the two Courts concerned; or, secondly, there may be an ugly rush to get one action decided ahead of the other, in order to create a situation of res judicata, or issue estoppel in the latter.’

It is, as Lord Diplock said (at 412D) ‘a recipe for confusion and injustice’. The general undesirability of such concurrent proceedings is, however, but one consideration to be played as part of the overall assessment. It cannot necessarily lead to a stay or setting aside of English proceedings. It may, on the facts, the correct to restrain pursuit of the foreign proceedings (as in Societe Nationale Industrie Aerospatiale v Lee Kui Jak [1987] AC 871) or to make no order. The policy of the law must nonetheless be to favour the litigation of issues only once, in the most appropriate forum.”

Thus, while in some circumstances it may be oppressive for a party to be exposed to two sets of proceedings dealing with the same subject matter, that will depend on the facts. The question of which court is the most appropriate forum will always be highly material. In the present case that forum is the UAE. Moreover, the risk of multiple proceedings existed from the outset, as is clear from Vitol’s application for permission to use the documents disclosed by Standard Chartered Bank. Even before there was any application to join Vitol in the proceedings in Fujairah, Vitol recognised that it might be affected by those proceedings, and contemplated that it might need to intervene in them to protect its own interests. That will remain the position even if an injunction were now to be granted requiring Fal Oil to take steps to extricate Vitol from those proceedings.

In reality, as Mr Thomas submits, the fact the proceedings in Fujairah will continue in any event is a factor against the grant of an injunction. As the Fujairah proceedings are going to continue, it makes sense for the issue of title to be determined there, where all relevant parties will be bound. The fact that Vitol has chosen to litigate the title issue here against Nasdec, which has no reason to dispute that it passed good title to Vitol, should not be allowed to obscure the reality of the position as I have described it.

The circumstances in which the English court will find that a party’s pursuit of foreign proceedings is vexatious and oppressive because those proceedings are bound to fail were described by Rix LJ in Star Reefers at [31]:

“We were also shown a number of authorities where the weakness of the case sought to be pursued in the foreign court has been the subject of comment. In Midland Bank v. Laker Airways at 700 Lawton LJ said that “the weakness of the evidence is a factor which can be taken into account, together with more weighty factors, in deciding whether conduct is unconscionable”, but that to treat such weakness “as a separate and distinct ground” of unconscionability was problematic. English judges could not set themselves up as examining magistrates to decide whether a foreign court had a case fit for trial. It was only in a case where it was “plain” that a case was “bound to fail” that the making of it was vexatious (see British Airways Board v. Laker Airways Ltd [1985] AC 58 at 86); but such cases were “likely to be rare”. Such a rare (and clearly extreme) case (where the foreign claim was said to be “utterly absurd”) was found to exist in Shell International Petroleum Co v. Coral Oil Co Ltd [1999] 2 Lloyd’s Rep 606 at 609 (Thomas J); see also Trafigura v. Kookmin at [51] where an issue of the meaning of English words in a contract which had already been decided by the English court was said to be “hopeless”. In Elektrim SA v. Vivendi Holdings [2009] 1 Lloyd’s Rep 59 (CA) at [121] the foreign claim was described as “hopeless” and “bogus”. In The Eras EIL Actions [1995] 1 Lloyd’s Rep 64, on the other hand, Potter J was not prepared to regard the foreign pleas as “either made in bad faith or doomed to failure” and therefore looked for evidence of unconscionability elsewhere (at 84 lhc). It would seem to follow that in the present case, where Teare J stated that he was unable to resolve the issue of Russian law, while he was entitled to take his view of the apparent weakness of JFC’s claim in Russia into account, he was hardly entitled to found himself on it as one of his two principal reasons for finding JFC’s conduct to be vexatious.”

As this passage makes clear, it is not the function of the English court to determine which cases proceeding in foreign courts have sufficient merit to be allowed to proceed. The cases mentioned by Rix LJ where the weakness of the foreign proceedings has been a factor, including in rare cases a decisive factor, in the grant of an injunction on the ground that their pursuit constitutes unconscionable conduct which the English court can restrain have all been cases where the English court has intervened to protect an interest of its own – or, more accurately, to protect an interest of the applicant which is justiciable and suitable for vindication here. Indeed in the absence of such an interest there is no reason why the English court should intervene. They are also cases which have involved something akin to bad faith on the part of the foreign claimant. In such cases the hopeless nature of the claim has provided evidence of such bad faith or similarly vexatious conduct, as distinct from being a reason in itself to grant an injunction. After all, if the foreign proceedings are really bound to fail, then fail they will. In such circumstances, it might be said that in general no harm will be done by allowing that to happen in the foreign court.

Thus in Midland Bank (in contrast to the related case of British Airways Board v Laker Airways Ltd [1985] AC 58) the claimant (an English company) had no relevant connection with the United States, none of the conduct which formed the subject of the United States anti-trust proceedings had taken place in the United States, and that conduct which had taken place in England was lawful as a matter of English law. In those circumstances it is not surprising that the United States proceedings against Midland Bank were regarded as unconscionable, but the Court of Appeal did not find it necessary to decide whether those proceedings were wrongly described as frivolous and vexatious because of what was said by the bank to be the weakness of the case on the merits.

In Shell International Petroleum Co v. Coral Oil Co Ltd (No 2) [1999] 2 Lloyd’s Rep 606, however, an injunction was granted on the basis that the proceedings in Lebanon were bound to fail. Thomas J described the claim there as "plainly unsustainable" and "utterly absurd". It is notable, however, that the background to this case was a previous claim between the same parties where an injunction had been granted by Moore-Bick J on the ground that the claim restrained fell within the scope of an English jurisdiction clause: see [1999] 1 Lloyd’s Rep 72. This led Thomas J to conclude that the defendant was "casting around for a claim to bring against Shell, quite irrespective of whether it had any real substance", and that in this context, and also because both companies were English, the English court had sufficient interest for the grant of an injunction.

In Glencore International AG v Exeter Shipping Ltd [2002] EWCA Civ 528, [2002] 2 All ER (Comm) 1 Rix LJ did not in the end find it necessary to determine whether the proceedings in Georgia which it was sought to restrain were hopeless, but he did observe that the claim in Georgia was obscure and difficult, and to some extent relied on this for his conclusion at [69] that the proceedings were "part of a deliberate strategy of harassment and vexation, designed to wear down Glencore by making it as difficult and expensive as possible for it to bear the burden of litigation on several fronts”. Thus the apparent weakness of the claim was evidence of the defendant’s bad faith, while the English court had an interest in granting an injunction to protect proceedings of its own.

The anti-suit injunction granted by Field J inTrafigura Beheer v Kookmin Bank (No 2) [2006] EWHC 1921 (Comm), [2007] 1 Lloyd’s Rep 669 had a similar background. There had already beendecisions by Cooke J that the English court had jurisdiction to hear the claimant’s claim and was the natural forum in which to do so ([2005] EWHC 2350 (Comm)) and by Aikens J that the governing law (including the law applicable to the claim which the defendant bank intended to bring in Korea) was English law and that any other conclusion would be "bizarre" ([2006] EWHC 1450 (Comm), [2006] 2 Lloyd’s Rep 455). The defendant bank had submitted to the jurisdiction of the English court. In those circumstances Field J held at [51] that the English court had a strong and legitimate interest to protect its own proceedings by the grant of an injunction.

What Lawrence Collins LJ said in Elektrim SA v Vivendi Holdings 1 Corporation [2008] EWCA Civ 1178, [2009] 1 Lloyd’s Rep 59 at [121] was that “the inherent weakness of a claim, taken together with other matters, may be an important factor in the consideration of whether foreign proceedings are vexatious or oppressive”. It was in that context that he referred to the defendant's claims as "hopeless" and "bogus" and as "plainly a cynical device to establish an independent cause of action in Florida”. That supposedly independent cause of action was in fact to recover the same loss as was already the subject of proceedings in England. Once again, therefore, the English court had an interest in protecting its own proceedings.

Finally on this point, in Star Reefers itself Rix LJ found that the Russian proceedings were not commenced in order to frustrate determination of the dispute in England, that there was nothing unconscionable about the way in which they had been conducted, and that the defendant had not submitted to the jurisdiction of the English court.

There may well turn out to be force in Vitol’s submission that Fal Oil’s claim in Fujairah is so weak that it is bound to fail. Vitol can point to the contradictory ways in which Fal Oil has advanced its case, as well as the fact that the initial ways in which it did so (a contractual claim for the price, a claim to have handed over the cargoes to VTTI "by way of trust, for storing", and a claim as endorsee of the bills of lading) are either demonstrably wrong or apparently fatal to its case that Nasdec never had title at all and effectively stole the cargoes. The suggestion that the oil came from the “DASMAN” also cannot be right. It is true too not only that the experts in the criminal proceedings in Fujairah, who appear to have been provided with documents and evidence which I have not seen, concluded that Nasdec had not embezzled the cargoes, but also that if Fal Oil’s case is correct, it must have access to a substantial volume of evidence showing where in the stocks held by it the cargoes came from. Large quantities of oil are not moved around by ship to ship transfers or blended with other oil of different quality without extensive documentation being generated.

All that said, the cases discussed above show that it is only in an exceptional case that the English court should conclude that a claim advanced in proceedings abroad is hopeless. In my judgment the evidence in the present case falls short of satisfying the demanding standard required for such a conclusion. Fal Oil does after all appear to have possession of the original bills of lading and there is something odd about the 6 June 2012 letter. While there appear to be difficulties in Fal Oil’s case, it would be wrong to conclude that the case is hopeless when it is clear that the full story of how the oil came to be sold to Vitol has not yet been told.

In any event the English court has no interest of its own to protect which would make this an appropriate case to reach a conclusion as to whether the claim in Fujairah is bound to fail. Once it is determined that the natural forum to resolve any question of title as between Vitol and Fal Oil is the Fujairah court, and that there is no proper basis to conclude that Fal Oil was acting in bad faith in order to undermine the English action, the merits of the claim in Fujairah are a matter solely for that court.

For these reasons I conclude that the injunction granted by Cooke J without notice should not continue. This conclusion makes it unnecessary to resolve the dispute between the parties as to how it came about that, despite the terms of the injunction, Vitol has now been joined to the proceedings in Fujairah.