A Brazilian customs seizure of clean petroleum products led to the cancellation of a series of product tanker voyages and a legal fight between trader Vitol and Brazilian customer Copape Productos de Petroleo.
Trader and tanker owner Vitol has claimed it is out “tens of millions of dollars” on its would-be customer’s alleged failure to pay for most of the cargo of one chartered-in MR2 tanker, and its refusal to follow up on further contracts.
Vitol is asking the US Southern District of New York (SDNY) federal court to order Copape to come to the arbitration table. Total damages are not spelt out in legal filings, but come to at least $17m.
The brand-new customer relationship between Vitol and Copape blew up in connection with a 21 March 2021 delivery at Paranagua of some $30m worth of naphtha and octane booster by the 53,600-dwt Celsius Rimini (built 2009).
Copape, according to Vitol, had asked it to split the tanker’s cargo into five parcels, and to designate two local importing agents, Basoli Comericio Importacaoe Expoertacao and Terra Nova Trading, as the buyers because Copape did not have the necessary import licenses to do the business directly. Vitol went along with that.
When the ship called, Copape and Basoli paid for the first of the five parcels, but Vitol claimed that Brazilian customs authorities seized the next one, worth some $9.4m, because Basoli had not paid import duties. Vitol claimed that Copape still owes for the seized parcel.
Vitol’s lawyers told the court the customer refused to take the rest of the Celsius Rimini shipload, and Vitol had to make arrangements to take redelivery and find new customers to mitigate losses. Legal filings only specify the cost of this exercise, including demurrage, as “substantial”.
Thereafter, Vitol told the court it accommodated Copape for some months in its requests to have further deliveries postponed. In the end, however, Vitol claimed that Copape reneged on contracts for four further shipments that would have yielded some $7.6m for the seller in 2021. That “led to complete discontinuation of the parties’ business dealings,” according to Vitol’s lawyers.
Vitol has named Jesse R Peirce as its New York arbitrator and Copape has named Leo G Kailas, but under protest.
E-mail and text message records show Houston-based Vitol officials negotiated the deal directly with Copape officials, but Copape has taken the position that it is not a signatory to the sales contracts and not bound by their arbitration clauses. Vitol has countered that Basoli and Terra Nova signed as agents of Copape as a disclosed principal intending to bind it to the contract, and that Copape itself “repeatedly invoked the provisions of [the contracts] for its own benefit”.
TradeWinds has contacted Copape officials for comment.
The dispute with Vitol is not the first in which Copape has faced a US action to compel arbitration.
In 2012, Glencore successfully sued Copape in the SDNY to compel arbitration based on an arbitration clause in Glencore’s general terms and conditions, which Copape had never seen, but which were incorporated by reference in a copy of Glencore’s standard sales contract.
