A US federal judge has thrown out most claims against a unit of trading giant Glencore in a dispute over allegedly contaminated shipping fuel.
The decision by district judge Lorna Schofield will allow the lawsuit by a shipowner linked to Greece’s Aeolos Maritime to continue on the owner’s breach of contract claim, but she said damages will be capped at $300,000 and could ultimately be minimal.
As TradeWinds has reported, Serifos Maritime lodged the lawsuit in December against Glencore Singapore, claiming that the commodities trader sold it contaminated bunkers. The company, which shares an address with Aeolos, had bought $2.18m of the fuel for its 310,000-dwt tanker Serifos (built 2009) in March last year.
The lawsuit, in which London ship manager Andros Maritime Agencies was also suing Glencore in the US District Court for the Southern District of New York, was the latest in a string of similar lawsuits against the trader.
But in her order, Schofield dismissed claims of negligence, gross negligence, strict liability and intentional misrepresentation claims against Glencore.
In the negligence and strict liability claims, Serifos had sought to recover its as-yet-unspecified costs for mitigating the “catastrophic harm” to its VLCC that the contaminated fuel threatened to cause.
But the judge said those costs were economic losses, rather than physical losses to the vessel, that are not recoverable in such cases.
No physical damage
“While the complaint repeatedly avers that contaminated fuel could severely damage a vessel’s engines or scrubber systems, it does not allege actual damage to the vessel,” she wrote.
“The allegation that the vessel ‘encountered significant main and auxiliary engine issues’ does not, by itself, amount to a claim of physical injury to those engines.”
Schofield threw out the intentional misrepresentation and gross negligence claims because Serifos did not establish that Glencore had a legal duty outside the contract with Serifos, and no legal exceptions that exist under New York law applied.
“The tort claims are essentially a repackaging of the contract claim,” she wrote.
And while allowing the breach of contract claim, Schofield said the contract contained a liability limit and held Glencore responsible only for the cost of replacing the fuel. Those costs could be minimal, she wrote, because the complaint alleged that Glencore did remove and replace all but 62.1 tonnes of the more than 3,760 tonnes of fuel it had supplied.
Serifos and Andros are represented in the case by attorneys Thomas Tisdale and Timothy Nast of New York’s Tisdale & Nast Law Offices. Glencore is represented by New York-based Peter Behmke and his team from Herbert Smith Freehills.
