24/07/2013

Great Elephant Corp v Trafigura Beheer BV

In a judgment handed down on 25 July 2013, the Court of Appeal reversed a decision of Teare J relating to a chain of sale contracts of Nigerian crude oil. In breach of local regulations, Total, the operator of the Akpo oil terminal, commenced the loading of the vessel “Crudesky” without the presence of a representative of the Nigerian Oil Ministry, because its employees thought that the irregular loading had been authorized. This led to the vessel being detained by the Nigerian authorities for a month and a half, only being released upon payment by Total of a “fine” of USD12 million. The buyers at the top of the chain incurred considerable demurrage as a result of the delay and sought to pass their losses down the chain. The Court of Appeal decided, reversing Teare J, that force majeure clauses in the sale contracts did not protect the sellers of the cargo because the events leading to the breaches of contract were not beyond the control of Total, to who the sellers in the chain had delegated the performance of their obligation under the sale contracts to load the cargo. In that regard the court considered the relationship between the judgment of Moore-Bick J in The Kriti Rex [1996] 2 Lloyd’s Rep. 171 and the judgment of the Court of Appeal in The Marine Star [1996] 2 Lloyd’s Rep. 383. The court also decided that the intervention of the Nigerian authorities, even if disproportionate, did not amount to a break in the chain of causation.

Charles Kimmins QC and Socrates Papadopoulos, instructed by Ince & Co LLP appeared for Vitol, the successful intermediate party in the chain of sale contracts.