The Singapore High Court has ruled against a request by Brazil's Petrobras to throw out an arrest warrant against a VLCC in a high-profile cargo dispute.
The decision comes as the fight is now being waged in Singapore, after a London court ordered the Brazilian oil company to pay $76m in security to release Cido Shipping's 318,000-dwt tanker Miracle Hope (built 2019).
In the latest round, Petrobras asked the Singapore court to throw out the March order allowing Natixis to arrest the VLCC over allegations that the bank was not reimbursed for its financing of the 1m-barrel oil cargo that Singapore oil trader Hontop Energy bought from the Rio de Janeiro-based energy company.
In court, Petrobras argued that Natixis failed to disclose a master security agreement and other banking documents that would have allowed the court to confirm the bank's claim that it had been assigned rights from Hontop.
But in the court's decision Navin Anand, an assistant registrar at the court, ruled that Natixis did not breach its duty to give a "full and frank disclosure".
The court official said that at the time the bank applied for a warrant of arrest, it was not required to show that its claim was likely to succeed.
"The duty of full and frank disclosure does not require Natixis to disclose every relevant document, as it must during discovery," Anand wrote, referring to the fact finding phase of a case.
Petrobras' lawyers also argued that the bills of lading were now spent — that is, no longer in force because the cargo had been delivered.
But the court said bills of lading are only spent when delivery was made to the party entitled to the goods.
The cargo had been discharged in China against a letter of indemnity signed by Petrobras, despite Natixis still holding on to the bills of lading.
"Given that the owners delivered the cargo to Hontop without production of the bills of lading, there can be little doubt that Natixis has a prima facie claim for breach of the contract of carriage," Anand wrote.
The oil company, which was represented by law firm Joseph Tan Jude Benny, claimed that that too much time had elapsed between the cargo discharge and the bank demanding possession of the cargo.
However, the court said it did not understand how the time lapse was even relevant to the merits of the claim.
The Miracle Hope’s arrest led to a string of legal actions, involving a complex chain of parties, that played out in courts both in Singapore and London.
Owned by Cido Shipping of Hong Kong, the ship had been on long-term charter to Trafigura Maritime Logistics. That company, the chartering arm of trading giant Trafigura, had in turn chartered it to Gunvor subsidiary Clearlake Chartering USA, which had sub chartered it for one voyage to Petrobras.
After buying the cargo from the Brazilian oil company, Hontop allegedly failed to reimburse Natixis for a $65m letter of credit, prompting the vessel's arrest in Singapore on 12 March.
After the High Court ruled on 8 May that Petrobras should pay the security, the Miracle Hope was released from the custody of the sheriff three days later.
Eric Martin contributed to this story.
