Trafigura Beheer BV v Renbrandt Ltd

This is the Claimant’s application for summary judgment. It is supported by a witness statement of Mr Carl Walker of Ince & Co. Until the morning of the hearing (24 November 2017) it was assumed by both the Claimant and the Court that the Defendant would play no part in the proceedings. The Defendant had not acknowledged service. There is Affidavit evidence before me which shows that the Claim Form and other documents were served on the Defendant in Nigeria on 8 February 2017 and that the Application Notice and evidence in support of this application were served on the defendant on 25 September 2017. It therefore came as something of a surprise when Walker Morris LLP came onto the record on the morning of the hearing and a witness statement of Claire Acklam and detailed skeleton argument were served on behalf of the Defendant. Ms Acklam’s witness statement gives no explanation as to why the Defendants chose to appear at the very last moment. Nevertheless both parties were content for me to proceed with the application and I did so. I am grateful to both counsel for dealing with matter so expeditiously.

The Claimant seeks permission to apply for summary judgment on its claim, together with declarations from the Court that:-

The cargo which was supplied by the Claimant to the Defendant pursuant to the contract of sale numbered 179041 and dated 4 August 2008 (“the Contract”) was not off-specification; and

The Claimant has no liability of whatsoever nature to the Defendant, whether monetary or otherwise under the Contract or as a matter of law.

The background to this Claim is as follows. Pursuant to the Contract the Claimant agreed to sell, and the Defendant agreed to purchase, 25,000 mt of gasoil, plus or minus 10% in the Claimant’s option, with delivery on FOB terms by way of ship to ship transfer offshore Cotonou, Benin, for delivery during the period 4 August 2008 and 11 August 2008.

Following later amendments to the Contract, the quantity of cargo under the Contract was reduced to 10,000 mt plus or minus 10%, and the delivery date was put back until October 2008.

The Contract contained the following express terms:

Between about 4 and 12 October 2008 the Claimant delivered to the Defendant approximately 9,865.69 mt of gasoil (the “Cargo”) by way of ship to ship transfer from MT Bonito, the mother vessel, to MT Sichem Province (the daughter vessel) offshore Cotonou, as evidenced by two bills of lading dated the 4 and 12 October 2008 respectively.

The Cargo had been loaded onto MT Bonito on or about 16 August 2008. Upon loading, the Cargo was tested, and a certificate of quality was issued by Saybolt Nederland BV (“Saybolt”), a well-known independent inspectorate of international repute. This confirmed that the sulphur content of the Cargo was 0.261%. It follows from this that the Cargo was on specification – the sulphur content of the gas oil was lower than the maximum of 0.3% stipulated in the Contract.

No claim was submitted by the Defendant within 5 days of the issue of the Bills of Lading as regards the quality of the Cargo.

This notwithstanding, the Defendant subsequently alleged that the Cargo was off-specification.

On 10 June 2009, the Defendant filed a petition with the Nigerian Economic and Financial Crimes Commission (the “EFCC”), contending that the Cargo was “off-spec” and contaminated with other cheaper cargoes. That petition was subsequently withdrawn on 4 June 2010. Mr Walker says that the Claimant believed that the matter was closed following the withdrawal of this petition.

Then, more than seven years later, on 20 September 2016 the Defendant filed a second petition with the EFCC in relation to the same matter. The Claimant has since commenced proceedings in Nigeria seeking a declaration that the Defendant acted maliciously in filing that petition, and claiming damages of N2,000,000. The Defendant responded to those proceedings by contending, amongst other allegations, that the Nigerian court lacks jurisdiction to hear the claim on the basis that the claim falls within clause 20 of the Contract which (as I have set out) provides for all disputes between the parties to be resolved before the High Court in England. In its response the Defendant specifically referred to the existence of these proceedings in England and was clearly aware of them.

The Claimant did not apply for a default judgment and has instead elected to proceed to a summary judgment on the merits. This is a proper course to take in my judgment, because (a) the normal practice of the Court is not to grant declaratory relief on an application by way of a default judgment; and, (b) as I understand it from Mr Walker’s evidence, there is a risk that a default judgment may not be enforceable in Nigeria.

The appropriate test for summary judgment is set out in CPR 24.2. Put shortly, for judgment to be given, the Court must be satisfied that (a) there is no real prospect of the Defendant successfully defending the claim; and (b) there is no other compelling reason for a trial. I bear in mind the principles which apply to applications for summary judgment. These were summarised in the judgment of Lewison J. (as he then was) in Easyair Ltd v Opal Telecom [2009] EWHC 339 at [15].

The Defendant resists the application on four grounds, as set out in the detailed skeleton argument prepared by Ms Parry. These are:-

Permission to apply for summary judgment should not be granted. There are grounds to believe that there has been no valid service of the legal documents on the Defendant;

The matter should be heard in arbitration, pursuant to Clause 20 of the Contract;

Even if permission to apply for summary judgment is granted, the defendant has real prospects of success.

There are other compelling reasons why the matter should proceed to a full trial.

The Defendant asserts that it was not validly served with the Claim Form in accordance with the requirements of Nigerian law and that permission to apply for judgment should not be granted whilst the validity of service is in doubt. The Defendant relies upon what is said to be the opinion of Mr Oluwaseyi Balogun as to Nigerian law. Ms Acklam says that this was not served in the form of an expert statement due to exigencies of time. This is something of an understatement. The opinion was served far too late, contains no clue as to who Mr Balogun is or as to what his qualifications are, and is unsigned. It has no evidential status and therefore provides no support for the Defendant’s submission. I therefore proceed on the basis that the Claim Form and other documents were properly served on the Defendant.

The Claimant required permission from the Court to apply for summary judgment because the Defendant had not filed an acknowledgment of service or a defence (CPR 24.4(1)). If it still is necessary for such permission to be given following the Defendant’s appearance at Court then I give it because I accept the Claimant’s submission that, although the purpose of CPR 24.4(1) is to protect the position of a defendant who wishes to dispute jurisdiction from being required to engage in the merits of the claim pending such application, that purpose does not apply where the time limit for filing an acknowledgment of service is passed and no jurisdiction challenge has been issued: see Speed Investment v Formula One Holdings [2005] 1 WLR 1233; Phillips v Avena [2005] EWHC 3333 (Ch) para 23.

The Defendant contends that the Claimant’s claim should be brought in arbitration by virtue of clause 20 of the Contract. I do not accept this argument. Clause 20 is a poorly drafted hybrid jurisdiction clause. The first paragraph provides for all disputes to be submitted to the exclusive jurisdiction of the High Court in London. The second provides that arbitration shall be claimed within 5 days from the bill of lading date failing which the claim shall be deemed waived and absolutely barred without recourse to litigation and arbitration. There is a carve out for claims and disputes in respect of demurrage, port costs, shifting, freight differential, heating and/or AWRP.

In my judgment, the principal function of the arbitration clause is to address the Buyer’s claims as to quantity and quality. It does not apply to a claim for a declaration of non-liability which, ex hypothesi, can only sensibly be made after a claim has been made against the Claimant and which, in this case, was only made several years after the cause of action allegedly arose. If the Defendant is correct then the Claimant would have no contractual remedy in circumstances where the Defendant brings a claim against the Claimant which is both out of time and in breach of the jurisdiction clause. That would be a commercially absurd result and is not one that is justified on a sensible and commercial reading of Clause 20.

Declaration too broad. The Defendant submits that the Claimant’s proposed second declaration is too broad. I agree with this and would, had the matter proceeded in the absence of the Defendant, have required the Claimant to reformulate it. The Claimant has indicated its willingness to do so. This is not, however, a reason to put the matter off. The Court’s and the Defendant’s concerns can be met by an appropriately formulated declaration.

Declaratory relief time-barred in any event. The thrust of the Defendant’s case here is that the declaration of non-liability is time-barred in very much the same way as any claim by the Defendant in respect of off-spec cargo would be time-barred. If correct, this argument would lead to the absurd position that the Claimant is effectively precluded from contending in the contractually agreed forum that the Defendant’s claims are time-barred in circumstances where the Defendant has wrongfully brought a time-barred claim in a non-contractual forum. The argument is not, however, correct. As Lord Mance JSC made clear in Aspect Contracts Ltd v Higgins Construction Plc [2015] 1 WLR 2961 at 2970 [21], a claim that a person has not broken a contract is not a claim in which it can be said that any cause of action has accrued, let alone accrued on any particular date. I do not accept the Defendant’s assertion that there has been undue delay on the part of the Claimant in bringing its claim.

The Defendant deals with the merits of the Claim under this heading. I am entirely satisfied that the Defendant has no prospect of successfully defending this claim. I say this for three reasons.

First, the Cargo was on-specification. This is confirmed by the Saybolt certificate of quality, which confirms that the Cargo had a sulphur content of less than 0.3% and therefore complied with the only express warranty given by the Claimant as to the quality of the Cargo. Pursuant to clause 14 of the Contract, the certificate of quality is final and binding on the parties. The purpose of a conclusive evidence clause such as this is to avoid disputes as to quality and to achieve finality once a proper and independent certificate of inspection has been issued: see e.g. Toepfer v Continental Grain [1974] 1 Lloyd’s Rep 11, in which Lord Denning MR said (at pp.13-14) that

Secondly, the Defendant did not submit a claim in respect of quality within 5 days. There is a vague assertion that it did so in the Nigerian proceedings but no evidence in support of that has been produced to me. It follows that even if there were any basis for making a claim in respect of the quality of the Cargo, that claim has been waived and is absolutely barred.

Thirdly, any claim is time barred by reason of s.5 of the Limitation Act 1980.

The Defendant asserts that this approach is based on an overly narrow analysis of Clause 14 and is divorced from the entirety of the testing regime as set out in Clauses 13 and 14. I do not agree. Clause 13 is not relevant to the issue which I have to decide. It is concerned only with quantity, not with quality. Quality is to be determined at the time of loading of the Mother Vessel. The badly drafted reporting requirement in the second full paragraph of Clause 14 has no bearing on the time and place at which quality is to be determined.

Finally, I am satisfied that it is appropriate for the Court to grant suitably worded declarations sought because a useful purpose will be served in making them. As I have set out, the Defendant has alleged in Nigeria that the Cargo was “off-spec”, and this issue is currently the subject of (i) a petition before the EFCC and (ii) proceedings before the Nigerian courts. It is likely to be of assistance to both the EFCC and the Nigerian courts to have the ruling of an English Court on this issue, given that it is governed by English law.

I therefore give the Claimant permission to apply for summary judgment on its claim and will grant a declaration of non-liability in respect of any quality claim in an appropriate form. Counsel for the parties should seek to agree a suitable wording.