Vitol Bahrain EC v Nasdec General Trading Llc & Ors

This is an application by the Third Defendant to set aside the order I made ex parte on 16 November 2012 granting permission for service out of the jurisdiction.

The Claimant (“Vitol”) is a company established in accordance with the laws of Bahrain, and a member of the well known group which carries on business trading and refining oil and petroleum products. The First Defendant (“Nasdec”) is a Dubai company which sold two cargoes of oil to Vitol in March and May 2012, for which Vitol paid the contractual price of almost US$ 120 million. The cargoes were delivered into shore tanks at Fujairah, UAE in April and June 2012. The shore tanks are owned by VTTI Fujairah Terminals Limited (“VTTI”). VTTI is a company which is 50% owned by the Vitol group, the other 50% being owned by MSC Berhad of Malaysia. Its oil storage facility in Fujairah is leased to Vitol.

The Second and Third Defendants are companies within the Fal group, established in Dubai and Sharjah respectively. I shall refer to the Second Defendant as Fal Oil Dubai and the Third Defendant as Fal Oil. Both claimed title to the oil delivered into storage at VTTI, although the claim to title is now maintained by Fal Oil alone. It contends that Nasdec was a company set up or operated by Fal Oil’s former general manager, Mohammed Osman who dishonestly misappropriated the cargoes, with the consequence that Nasdec did not itself have good title and could not pass good title to Vitol.

The Fourth Defendant (“Standard Chartered”) is the well known bank. It is a company established under the laws of England and Wales by Royal Charter. It had a security interest in a number of cargoes owned by the Fal group. Any relevant involvement took place through its branch office in Dubai.

Vitol commenced these proceedings on 9 November 2012. The main claim is for a declaration that Nasdec had good title to the oil and passed good title to Vitol upon delivery at VTTI’s Fujairah terminal. Fal Oil Dubai and Fal Oil were joined as those who had been asserting title in UAE so as to bind them to such declaratory relief. Standard Chartered was also joined for the purposes of binding it to the determination of title in the oil, because it appeared that if Fal Oil or Fal Oil Dubai had an interest in the cargoes, Standard Chartered would or might have a security interest in them. There is an alternative claim against Nasdec for breach of warranty of title if, contrary to Vitol’s primary case, Nasdec did not have good title.

Vitol applied for permission to serve Nasdec, Fal Oil Dubai and Fal Oil out of the jurisdiction in Dubai and Sharjah. The contracts of sale between Vitol and Nasdec were governed by DIFC law (a distinct body of law within Dubai) and Dubai jurisdiction, but pursuant to the contracts Nasdec provided warranties of title which were themselves governed by English law and provided for exclusive English jurisdiction. Jurisdiction against Nasdec was founded on the English law and jurisdiction provisions in the warranties of title. Against Fal Oil Dubai and Fal Oil, two alternative bases. were relied on:

England was said to be the appropriate forum because of the pursuit of claims against Nasdec in England, to which Fal Oil and Fal Oil Dubai were necessary or proper parties. In addition Vitol relied on the presence in England of Standard Chartered, and of Nasdec’s managing director Amin Fadul Ali, who is Mohammed Osman’s son.

On 16 November 2012 I granted permission to serve Nasdec, Fal Oil Dubai and Fal Oil out of the jurisdiction. Service was effected on Fal Oil in due course through diplomatic channels on 30 September 2013. Having acknowledged service, Fal Oil now applies to set aside my order of 16 November 2011. Fal Oil submits that the appropriate forum is Fujairah, where there are civil proceedings to which Fal Oil, Nasdec and Vitol are parties, in which the question of title to the cargoes will be determined.

Vitol contends that the permission was properly granted at the time the order was made. It recognises, however, that in the light of the subsequent course of proceedings in Fujairah and England, the Fujairah court may reach a determinative conclusion binding on Vitol as to title in the cargoes which renders further pursuit of the English proceedings unnecessary. It therefore makes a cross application for a case management stay, which can be lifted if and when it is necessary in the light of what is decided in Fujairah. It sought to have its application for a case management stay heard in priority to Fal Oil’s jurisdiction challenge, but on 29 January 2014 Teare J ordered that the application for the case management stay be heard immediately after Fal Oil’s jurisdiction challenge application in the event that such application is unsuccessful.

With this brief introduction, I need to recount the chronology of events in a little more detail.

The cargoes in question were sold by Nasdec to Vitol pursuant to two sale contracts dated 30 March 2012 and 8 May 2012. The contracts were respectively for 600,000 and 620,000 barrels of oil to be delivered ex-ship at the VTTI terminal at Fujairah. Payment was to be made 15 days after commencement of discharge against presentation of documents, which included a warranty of title in prescribed form 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 DIFC law and the 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, and subject to the exclusive jurisdiction of the English Court.

Warranties of title were provided by Nasdec for each cargo in the agreed form. They warranted that in consideration of the payment of the full purchase price Nasdec had marketable title free and clear of any lien or encumbrance and full right and authority to transfer and effect delivery of the cargo.

The first cargo was loaded on board the vessel AL KHALIDIA at Khorfakkan in the UAE. The vessel was owned by a subsidiary of Fal Oil. A bill of lading dated 16 April 2012 was issued which did not name the shipper but stated that the cargo was consigned to the order of Nasdec. Between 17 and 20 April 2012 the cargo was discharged from the vessel into the shore tanks at VTTI. The warranty of title was provided by Nasdec and Vitol paid for the cargo. Vitol 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 was carried on another vessel owned by a subsidiary of Fal Oil, the SEA LION. It had also been loaded at Khorfakkan and a bill of lading dated 30 May 2012 was issued in the same form as for the AL KHALIDIA cargo. The cargo was discharged at the VTTI terminal between 31 May and 3 June 2012. Again Vitol received the warranty of title, paid for the cargo, and obtained a non-negotiable copy of the bill of lading. The total amount of the two cargoes delivered was 175, 442.156 mt. The contractual price paid by Vitol was US$ 119,481,290.13.

The bills of lading incorporated the terms of the applicable charterparty. Both vessels had apparently been chartered to Sudan Petroleum Corporation, from whom Nasdec claims to have purchased the cargoes, although Fal Oil contends that the fixture recaps evidencing those charterparties are not genuine. If they are, the charterparties contained a London arbitration clause, and therefore the bills of lading as contracts of carriage would be governed by English law.

Fal Oil first asserted an interest in the cargoes by a letter dated 11 June 2012 addressed to VTTI. In that letter Fal Oil appeared to assert that it was party to a sale contract with VTTI and to make a claim for the price of the cargo delivered to VTTI. It demanded that if payment was not made, VTTI should arrange for the cargo to be reloaded on Fal Oil designated vessels.

VTTI responded on 13 June 2012 pointing out that it was a terminal which 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 confirmed that the terminal had received approximately the volume of oil stated and that it was stored in tanks leased to Vitol. Vitol’s contact details were given and 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.

Having been told that it was Vitol who claimed ownership of the cargoes and had possession of them in the tanks leased from VTTI, Fal Oil was aware that a dispute as to title in the cargoes would primarily rest between it and Vitol. However Fal Oil did not pursue the matter directly with Vitol. On 14 June 2012 Fal Oil Dubai applied to the court of first instance in Fujairah for an attachment of VTTI’s refined products stored at the terminal. In that application, Fal Oil Dubai claimed that the cargo had been “handed over to VTTI by way of trust for storing” and it asserted that it, Fal Oil Dubai, was the owner of the cargo. In support of its application Fal Oil Dubai produced a report from a “marine expert” who opined that because Fal Oil Dubai said they had all original bills of lading in their possession (which Vitol denies) the cargoes belonged to Fal Oil Dubai. The court granted the attachment on the same day, 14 June 2012.

The attachment was successfully challenged by VTTI on the basis that, amongst other things, it had a contractual relationship with Fal Oil. The attachment was set aside on 27 July 2012. In the meantime civil proceedings were commenced on 20 June 2012, as is necessary when an attachment order is made. The civil proceedings were commenced by Fal Oil, not Fal Oil Dubai which had obtained the attachment. The claim was brought against VTTI. Vitol was not party to the proceedings. The claim was founded on the same ground as Fal Oil Dubai’s attachment, namely that the cargoes had been handed over to VTTI by way of trust for storing and 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. The basis on which this is said to give rise to a claim to the oil as against VTTI is explained in a subsequent witness statement of Yazan Al Saoudi, a practising lawyer in UAE representing Fal Oil dated 1 July 2013. He says that under UAE law the party possessing the original bills of lading is the legal owner and has title to the cargo referred to in the bills; and that as a matter of UAE law, VTTI, having acknowledged receipt of the cargo, is liable to deliver it back to Fal Oil or pay its value unless VTTI can show that it does not belong to Fal Oil. Accordingly the claim against VTTI raises the key issue of whether the cargo belongs to Vitol or Fal Oil. That evidence was not challenged in the evidence put before me on these applications.

The bills of lading had both been made out to the order of Nasdec and had not been endorsed to Fal Oil or anyone else. There was no evidence of any intention on behalf of Nasdec to transfer title to Fal Oil. In a memorandum filed in the Fujairah proceedings on 22 July 2010, Fal Oil produced a letter purportedly from Nasdec dated 6 June 2012 which it contended showed that Fal Oil owned the cargo. The letter purported to confirm that Nasdec worked only as Fal Oil’s agent for marketing the cargoes, that Fal Oil was the owner of the cargoes which had been loaded from Fal Oil’s storage, that the cargoes had been delivered at VTTI Fujairah on behalf of Fal Oil and that it was Fal Oil who were entitled to the contractual proceeds. Nasdec maintains that this letter is a forgery, and Vitol does not accept it as authentic. Fal Oil contends that as a matter of UAE law the letter takes effect as an endorsement of the bills of lading.

In August 2012, Fal Oil Dubai and Fal Oil commenced criminal proceedings in Sharjah against Mohammed Osman, in which they alleged that Mr Osman misappropriated oil cargoes belonging to them, and specifically the AL KHALIDIA and SEA LION cargoes.

On 14 October 2012 Nasdec intervened in the civil proceedings in Fujairah. In its Intervention Petition, it asserted that Fal Oil had never had title to the cargoes and that it, Nasdec, had purchased them from the Sudan Petroleum Corporation. It sought a determination that it acquired ownership of the cargoes when it purchased them from Sudan Petroleum Corporation, and acted lawfully in selling them and transferring ownership to Vitol. The petition was granted and Nasdec became, and remains, a party to the Fujairah civil proceedings.

That was the state of play when proceedings were commenced in England on 9 November 2012 and when the application for permission to serve out of the jurisdiction was made to me on 16 November 2012, save that at that stage Nasdec’s intervention petition was pending. I dealt with the application ex parte on paper in the usual way, and granted permission.

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.

In March 2013, Vitol made an application in the English proceedings for permission for documents disclosed here to be provided to VTTI for use in the Fujairah proceedings and for it to be allowed itself to use the documents in such proceedings because, as its solicitor explained, it was “concerned that it might need to intervene in the UAE proceedings and present its position at short notice.”

The Fujairah accounting 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 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. An expert’s report is not binding on the Fujairah court. Fal Oil submitted that the Fujairah Court was always bound to decide the question of title because of the nature of Fal Oil’s claim against VTTI and Nasdec’s intervention, relying on evidence from Yazan Al Saoudi. Vitol relied on evidence from its UAE lawyers to the contrary.

Meanwhile, experts were also appointed in the criminal proceedings. In a report submitted to the court on 5 May 2013, the 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 theft by him of the cargoes. The experts also concluded that the oil in Fal Oil’s storage was of a different quality from the oil delivered to the VTTI terminal, and accordingly the latter could not have come from Fal Oil’s stock.

On a subsequent application (see below), Males J, who had a greater volume of evidence than was before me, concluded that at this stage it seemed likely that the civil proceedings would come to an end in the near future, with Fal Oil’s claim against VTTI being dismissed (para 33).

On the same day as the criminal expert’s report was submitted to the court in Sharjah, 5 May 2013, Fal Oil applied to join Vitol to the civil proceedings in Fujairah. It also sought to challenge the expert’s conclusions in both the civil and criminal proceedings.

The application to join Vitol in Fujairah prompted Vitol to make an application in England for an anti suit injunction. This was something of a change in stance. Until then, Vitol had seemed content for the issue of title to be dealt with between Fal Oil, VTTI and Nasdec in UAE. An anti suit injunction was granted by Cooke J on 24 May 2013 at an ex parte hearing.

The inter partes hearing of the application to continue the injunction did not take place until 25 October 2013. In the meantime, Vitol was joined to the civil proceedings in Fujairah by an order of the Fujairah court of 29 September 2013. There is a dispute about how this came about notwithstanding the existence of the injunction granted by Cooke J. The order of the Fujairah first instance court joining Vitol also stayed the civil proceedings pending the Sharjah criminal proceedings. Fal Oil appealed.

When the matter came before Males J on the return date for the continuation of the anti suit injunction on 25 October 2013, the Claim Form had only recently been served on Fal Oil through diplomatic channels on 30 September 2013, and on 22 October 2013 Fal Oil had filed an acknowledgment of service indicating an intention to contest jurisdiction. That application had not, however, been issued, and was not before Males J. Fal Oil declined an invitation at the hearing to treat it as being made on that occasion. Fal Oil Dubai has not entered an acknowledgement of service. There is a dispute about whether it has been validly served. Defences had been served by Nasdec and Standard Chartered. Nasdec, not surprisingly, maintained that it had title, gave good title to Vitol, and did not resist the making of any declaration to that effect. Standard Chartered adopted the essentially neutral approach that it would abide by the decision of the Court as to where title to the cargoes lay. It did not advance any claim against Vitol if Fal Oil was held to have title to the cargoes.

Males J gave judgment on 1 November 2013, dismissing the application to continue the anti suit injunction. He concluded that Fujairah was the natural forum for determination of the question of title to the cargoes; and that that was determinative of the application because it is well established that the English court will not grant an injunction unless it has some interest of its own to protect, the typical example being where England is the natural forum, which it was not in this case: see paragraph 41.

Before me Fal Oil particularly rely on the findings of Males J in the following paragraphs of his judgment:

“Natural forum

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”.”

On 18 November 2013 Fal Oil issued its jurisdiction challenge application.

On 8 December 2013 the Fujairah court of appeal made its decision on appeal from the order of the Fujairah first instance court of 29 September 2013 which had joined Vitol and stayed the civil proceedings pending the criminal proceedings. It is common ground that the appeal was allowed in the latter respect, so that the civil proceedings should continue, and the case was returned to the court of first instance to be considered on its merits. There is a dispute as to whether the effect of the Fujairah appeal court decision was to overturn the order for joinder of Vitol to the proceedings.

On 9 February 2014 the Fujairah court of first instance referred the matter back to the expert.

On 23 March 2014 the Fujairah court of first instance held a hearing and made an order in the following terms (in translation):

“The court decided to postpone the hearing to 27/4/2014 for the [expert] report to be issued. The court authorises the appointed expert to appoint a marine expert and an expert specialised in bunker supply for ships….the experts’ mission is to examine all the documents submitted, the bills of lading, the masters reports and the type of the bunker available on board the ship and compare it to the type of the bunker delivered to the defendant by the claimant and by the party who asked to join the proceedings or the party that was joined during the hearing of 29/9/2013 in order to determine the identity of the owner of the cargo disputed. … The appointed expert must conclude his report based on the reports of the above mentioned experts, knowing that Vitol Bahrain has been joined as a party in the claim by virtue of the decision issued by the said court dated 29/9/2013. The expert must submit his report in the hearing above mentioned.”

This appears to make it clear that Vitol remains a party to the proceedings.

The principles in relation to permission to serve out of the jurisdiction are well established and were recently summarised by Lord Collins in Altimo Holdings & Investment Limited v Kyrgyz Mobil Tel Limited [2012] 1 WLR 1804 at [71]:

“On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to he tried on the merits, ie a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: eg Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd’s Rep 457, para 24. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context “good arguable case” connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 555-557, per Waller LJ affirmed [2002] 1 AC 1; Bols Distilleries BV v Superior Yacht Services (trading as Bols Royal Distilleries) [2007] 1 WLR 12, paras 26-28. Third, the claimant must satisfy the court that in all the circumstances the [foreign jurisdiction] is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.”

The argument before me focussed on the third requirement. Fal Oil was content to assume that Vitol brought itself within a relevant gateway under the second requirement.

Mr Thomas QC argued that an issue estoppel arose by reason of Males J’s decision that Fujairah, not England, was the natural forum for resolution of the dispute. But an issue estoppel can only arise where the issue is identical in each application, and the issue decided by Males J is different from the issue before me in two respects:

Mr Thomas QC submitted in the alternative that the reasons given by Males J in November 2013 for concluding that Fujairah was the appropriate forum for resolving the dispute between Vitol and Fal Oil over title to the cargoes applied with equal force to the position at 16 November 2012, and demonstrated that England was not a clearly or distinctly more appropriate forum than Fujairah when permission was sought and granted.

On behalf of Vitol, Mr Collins QC emphasised that the question was whether England was a more appropriate forum as matters stood in November 2012, not whether it is so now or when the matter came before Males J, by which time, he submitted, subsequent events had altered the picture. He argued that the starting point was to recognise that Vitol had a right to bring proceedings in England against Nasdec and Standard Chartered. In the case of Nasdec it was a contractual right conferred by the exclusive jurisdiction clause. In the case of Standard Chartered it was a jurisdictional right founded on the latter’s presence here. There could be no doubt, he submitted, that Fal Oil was a necessary and proper party to those claims, because the issue of title to the cargoes required a single investigation which arose between all four parties, all of whom needed to be bound by the determination which the English Court was bound to make in any event against Nasdec and Standard Chartered: Altimo v Kyrgyz Mobil at [87]. Once it is established that a person is a necessary and proper party to a claim against one or more anchor defendants in England, that is a weighty factor in favour of granting permission to join them to the English proceedings: The Eras EIL Actions [1992] 1 Lloyd’s Rep 570 per Mustill LJ at p 591. The question is no longer whether England is distinctly the more appropriate forum for the resolution of the disputes between the claimant and the foreign defendant(s) viewed in isolation, but whether England is distinctly the more appropriate forum for resolution of the disputes between them which it is necessary and proper to determine together with the claims against the anchor defendant(s). The policy engaged is the undesirability of duplicative proceedings and conflicting judgments. It is not enough for Fal Oil to contend that subsequent events have demonstrated that Fujairah was an available forum, because Vitol is not bound to forego its right to sue Nasdec and Standard Chartered here. At the date of the application for permission, these considerations pointed clearly in favour of England as the appropriate forum for the declaratory relief sought against Fal Oil. It is only the subsequent course of the English and Fujairah proceedings, and the failure of the anti suit injunction application, which has forced Vitol into recognition that a case management stay would be sensible because of the potential resolution of the issue by the Fujairah Court.

Attractively though these arguments were presented, I am not persuaded by them. I keep in mind the nature of the necessary or proper party head of jurisdiction, to which Lord Collins referred in Altimo v Kyrgyz Mobil in the following terms:

“73 The necessary or proper party head of jurisdiction is anomalous, in that, by contrast with the other heads, it is not founded upon any territorial connection between the claim, the subject matter of the relevant action and the jurisdiction of the English courts: Tyne Improvement Comrs v Armement Anversois SA (The Brabo) [1949] AC 326, 338, per Lord Porter. Piggott, Foreign Judgments and jurisdiction, 3rd ed (1910), Pt III, p 238, said: “This is perhaps the most important of the sub-rules, for it throws the net of jurisdiction over a wider area; and the principle of considering the nature of the cause of action which pervades the whole subject, appears here to be ignored.” Consequently as Lloyd LJ said in Golden Ocean Assurance Ltd v Martin (The Goldean Mariner) [1990] 2 Lloyd’s Rep 215, 222:

“I agree . . . that caution must always he exercised in bringing foreign defendants within our jurisdiction under Ord 11, r 1(1)(c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction.””

The starting point when considering the necessary or proper party head of jurisdiction is to examine the nature of the claim which arises against the anchor defendant(s). That is the claim to which it must be necessary or proper for the additional defendant(s) to be party. At this first stage, the approach requires consideration of such claim in isolation, that is to say assuming that there will be no joinder of the additional foreign defendant(s).

In this case, the claims advanced against Nasdec and Standard Chartered in these proceedings would not and could not have been made against them in November 2012 in the absence of joinder of Fal Oil; they would not and could not have been pursued against Nasdec and Standard Chartered alone. If Fal Oil were not party to the proceedings, the English Court would not entertain a claim by Vitol against Nasdec for a declaration that Nasdec had good title to the cargo and passed it to Vitol. There has never been any issue between them on that question, as was clear when these proceedings were commenced. Both agree that Nasdec had and passed good title. The Court will not allow A to bring a claim against B for a declaration that B has no right or claim against him where no such right or claim has been asserted by B against A: In re Clay [1919] Ch 66; Midland Bank Plc v Laker Airways [1968] QB 689. One reason is that the Court will not make declarations which serve no useful purpose.

It is only because Fal Oil had asserted title to the cargo that any possibility arose of Vitol seeking a declaration against Nasdec. It did so not in order to determine a dispute between itself and Nasdec, but in order to determine a dispute between itself and Fal Oil. A declaration of the position between Nasdec and Vitol which neither of them disputed would serve no useful purpose, because it would not bind Fal Oil as the real party with whom Vitol is in dispute. Absent Fal Oil being joined to the proceedings, there would be no point in Vitol pursuing a claim for such declaration, and in any event the Court would not grant it.

The alternative claim by Vitol against Nasdec for damages for breach of the warranties of title would also be bound to fail if pursued without Fal Oil being party to the proceedings. Vitol does not assert a breach of the warranties by Nasdec; indeed it contends the opposite, as does Nasdec. In the absence of Fal Oil or anyone else in the proceedings establishing a defect in Nasdec’s title, the claim would be bound to fail. Vitol’s damages claim would be struck out if Fal Oil were not party to the proceedings, because there would be no allegation of a defect in Nasdec’s title by anyone in the proceedings. Indeed Vitol could not found jurisdiction to advance such a cause of action against Nasdec here, because it could not satisfy the first requirement of establishing a case on the merits with a real prospect of success.

The same is true of the claim by Vitol against Standard Chartered Bank. The latter had not, at the date of the permission application, asserted any claim against Vitol. Nor had it asserted any title adverse to that of Vitol or Nasdec. In this latter respect, Mr Collins QC relied on the quotation from a press report of 23 August 2012 set out in paragraph 23.4 of the Particulars of Claim that “……Standard Chartered has a lien on a FAL-owned ship containing fuel oil worth $120m, which traders and Asian media reports said had gone missing last month. “The ship and oil is secured. We know where it is” the banker said””. This is not obviously a reference to a quantity in shore tanks derived from two separate shipments, and the pleading realistically avers that Vitol does not know whether this is a reference to the cargoes in issue in these proceedings. That is an insufficient basis for asserting that Standard Chartered was claiming an interest in the cargoes, or to be such as to justify a claim for declaratory relief against Standard Chartered in isolation. Standard Chartered was joined because it was anticipated that as a result of Fal Oil having asserted that the cargoes emanated from Fal Oil’s own floating storage facility, Standard Chartered might at some future stage claim to have such an interest. That would have made it a proper party to a claim against Fal Oil to determine title. It was not sufficient to justify a claim for declaratory relief against Standard Chartered in isolation.

In any event, if Standard Chartered were the only available anchor defendant, Fujairah would plainly be the appropriate forum notwithstanding the ability to serve Standard Chartered here because of its presence in England. Any claim to a security interest by Standard Chartered would depend upon Fal Oil’s claim. Standard Chartered has no case and no evidence of its own to advance on the question, and is wholly reliant on Fal Oil in both respects. It was Fal Oil which was acting as the protagonist in asserting and pursuing a claim to title adverse to that of Vitol and Nasdec. Fujairah is the available forum to which all the protagonists, ie Vitol, Fal Oil and Nasdec are amenable where title can be resolved.

These considerations reflect the fact that it is only because there was a claim to title in the cargoes by Fal Oil, and therefore a dispute between Vitol and Fal Oil, that any potential issue arose between Vitol and Nasdec or Standard Chartered. The latter are parasitic on the former.

This undermines each step in Vitol’s argument. Vitol has no claim it can pursue here independently of a claim against Fal Oil, and had none when the application for permission was made. There is no independent claim to which Fal Oil can be said to be a necessary or proper party. Because on this application Fal Oil was content to concede that Vitol brought itself within a jurisdictional gateway (implicitly the necessary or proper party gateway), this is not itself a complete answer to Fal Oil’s application. But it colours the argument as to whether England is clearly and distinctly the more appropriate forum, upon which Fal Oil based its application.

Vitol is not being deprived of a contractual right to sue Nasdec in England by not being able to sue Fal Oil here. It has no such right in respect of the relief it claims. Similarly it has no right vis a vis Standard Chartered of which it is being unfairly deprived merely because Standard Chartered has a presence here. It would not and could not have pursued Nasdec and Standard Chartered here in isolation from a claim to which Fal Oil was party. I accept that Vitol can legitimately say that if the Fujairah Court were to determine the question of title adversely to Vitol and Nasdec, then Vitol might wish to pursue its damages claim against Nasdec, and would be entitled to do so in England, although I share Males J’s doubts as to whether that is likely if Nasdec is just a vehicle through which Mr Osman stole the cargoes. But that time has not arrived and may never arrive; if it does, only then will there be a claim against Nasdec which can be pursued by Vitol in England; and Fal Oil will not on this hypothesis be a necessary or proper party to it because it will have no interest in such proceedings, having had its claim to title determined in its favour in Fujairah.

What ordinarily makes the entry through the necessary or proper party gateway a weighty factor in favour of exercising the discretion to grant permission is the risk of duplication of time and cost, and the risk of inconsistent judgments. However such risk is absent in this case. There is no claim which will be pursued in England in any event if Fal Oil is not a party. There is therefore no risk of duplication or inconsistent judgments if Vitol is required to pursue its claim against Fal Oil in the forum which is appropriate for its resolution, and to which Nasdec, Fal Oil and Vitol are amenable.

Any other conclusion would involve putting the cart before the horse. The only dispute which requires resolution is the claim by each of Vitol and Fal Oil against each other to have good title to the cargoes. Nasdec is a necessary and proper party to the resolution of that dispute. It is, as Males J said at paragraph 39 of his judgment, to approach the question from the wrong end to start with the question of title between Vitol and Nasdec.

None of these considerations arises from a change in circumstances occurring since the date on which I granted permission, although the subsequent course of the Fujairah and English proceedings, the evidence filed, and the adversarial argument before me, has all cast much more light on them than was apparent to me at the time I dealt with the permission application on paper. The issue of who had title to the goods was an issue in the Fujairah proceedings at the time the permission application was made in November 2012 (as appears from Fal Oil’s claim supported by the marine expert report and the relief sought by Nasdec’s intervention). Title was understood by Vitol in November 2012 to be the question in issue in those proceedings, as is apparent from paragraphs 16-19 of the Particulars of Claim, from paragraphs 33 and 71 of the witness statement in support, and from Vitol’s solicitor’s witness statement of 27 March 2013, made at a time when there had been no significant change of circumstances in the Fujairah proceedings since 16 November 2012 save for the acceptance of Nasdec’s intervention petition. Mr Collins QC’s reliance on Males J’s finding that in May 2013 it appeared likely that the civil proceedings would come to an end (paragraph 33) does not assist Vitol on this point. Males J did not say that it was unlikely that the proceedings would come to an end without determination of the issue of title; and if he had, that could only have been based on the stance of the court appointed expert in his report made on 3 April 2013, which post dates the permission application. In any event, what is relevant on the current application is whether Fujairah was an available forum, in November 2012, in which Vitol could have pursued its claim to title effectively against Fal Oil. Nothing which has happened in Fujairah casts any doubt upon the fact that Fujairah is a forum available to Vitol for that purpose. It is open to Vitol to have the issue of title in the cargoes determined there in proceedings to which Fal Oil and Nasdec were amenable: Fal Oil had commenced the proceedings and Nasdec had sought to intervene to have the issue of title determined. Whether or not Vitol wants to be a party, or has in fact remained joined as a party, is neither here nor there. A claimant cannot render an available and more appropriate forum unavailable or less appropriate by choosing not to participate in proceedings in that forum.

I conclude, therefore, that at the time of the permission application, England was not clearly or distinctly the appropriate forum for Vitol’s claim against Fal Oil. On the contrary, Fujairah was a clearly more appropriate forum.

That is sufficient to dispose of the present application in Fal Oil’s favour. I should record that in its skeleton argument for the hearing, Fal Oil sought, in the alternative, a forum non conveniens stay, based on the circumstances as they now exist (whilst arguing that there is no relevant difference in circumstances from the position when permission was granted). Such a stay would have different consequences from a case management stay, for which Vitol contended. Mr Collins QC was unable to point to any prejudice caused by the application for a forum non conveniens stay being raised at this late stage and without the formality of an application notice. It was advanced on the same grounds, and supported by the same evidence, as was already relied on in the jurisdiction challenge application. Had I taken the view that there had been a relevant change of circumstances, and that the permission I granted should not be set aside, I would have allowed the alternative stay application to be made, and would have granted it on the basis that as matters now stand, Fujairah is clearly the most appropriate forum for resolution of the claims to title. There are proceedings there in which it seems to me very likely, at the lowest, that the title issue will be determined. Fal Oil, Nasdec and Vitol are party to those proceedings (or at least Vitol can be a party to them if, contrary to what appears from the latest evidence, it does not remain a party by reason of its joinder on 29 September 2013). For the reasons given by Males J, that is where the issues can most conveniently be tried in the interests of justice.

There remains Vitol’s application for a case management stay which applies to the claim against Nasdec and Standard Chartered Bank. The latter has consented to such a stay. Nasdec has not appeared and has not objected. It is clearly appropriate that no further steps should be taken in these proceedings pending the outcome of the Fujairah proceedings. Accordingly I will grant such a stay.