The UK high court has ruled that trader Glencore must indemnify Songa Chemical and Navig8 Chemical Pool against a tanker cargo claim by Societe Generale (SocGen).
Justice Andrew Baker found that letters of indemnity (LOIs) applied in the case of a shipment of 19,000 tonnes of sunflower seed oil on the 20,000-dwt Songa Winds (built 2009) in 2016.
Songa owned the ship, which was time chartered to Navig8 and then chartered by Glencore for the voyage from Ilychevsk, Ukraine, to India.
Glencore was fulfilling a contract concluded in late January 2016 to sell 6,000 tonnes to Ruchi Agritrading, a subsidiary or affiliate of Ruchi Soya Industries.
The sale contract provided for property to remain with Glencore until payment.
The vessel loaded under the voyage charter at Ilychevsk in March 2016 and bills of lading were issued dated 13 March 2016 naming Ruchi as the notify party.
After shipment, Glencore's contract of sale with Ruchi Agritrading was replaced by a contract to sell 6,000 tonnes to Aavanti.
In the event, about 4,000 tonnes were delivered to Ruchi from the vessel at New Mangalore and about 2,000 tonnes were delivered to Ruchi at Kakinada.
SocGen makes claim
"The purchase by Aavanti from Glencore appears to have been financed by Societe Generale (SocGen) and SocGen claims to be the lawful holder of the bills of lading for the quantities discharged against the LOIs," Baker said.
Neither Aavanti nor SocGen appears to have been paid for those quantities, whether by Ruchi Agritrading, by Ruchi, or at all, the judge added.
Having obtained security for its claim through a letter of undertaking provided by Glencore, against a threatened arrest of the vessel or a sister ship under proceedings commenced in Singapore, SocGen is now pursuing Songa in London arbitration under the bills of lading for damages for misdelivery.
Songa made a claim against Navig8 that in taking delivery from the vessel, Ruchi represented or was acting on behalf of Aavanti so that delivery was indeed to Aavanti as requested - and Navig made the equivalent claim against Glencore.
Glencore to provide funds
Baker ruled that Navig8 is obliged to indemnify Songa in respect of any liability or settlement relating to SocGen's claim.
And it must provide Songa on demand with sufficient funds to defend SocGen's claim.
In turn, Glencore is also under a contractual obligation to indemnify Navig8 and provide money to defend the claim.
"Whilst I can neither require nor guarantee this, I rather suspect that in those changed circumstances it may well be possible for the parties to resolve the practicalities of dealing with SocGen's claim in their joint interest to defend it or resolve it amicably as cost-effectively as reasonably possible," Baker said.
