Law firm wins $2m case over ship held in Nigeria
THE shipping and transport department at a Hull law firm has won a significant case in the Commercial Court in London.
Andrew Jackson won the case, worth almost $2 million, on behalf of its clients, Taiwanese-based The Great Elephant Corporation, against Trafigura Beheer BV, the charterers of Crudesky – one of Great Elephant's vessels – for demurrage and other sums.
"Demurrage" refers to the time when a charterer remains in possession of a vessel after laytime – the period normally allowed to load and unload cargo – notably the charges the charterer pays during this period.
In July 2009, Trafigura chartered the Crudesky to lift a cargo of oil from the Akpo FPSO Terminal, which is located offshore of Port Harcourt in Nigeria.
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The vessel arrived at the Total-operated terminal in September 2009, but the representative from the Nigerian Department of Petroleum Resources (DPR) left, and failed to inform Total or his office.
Total's lifting supervisor arrived at the FPSO to find the Crudesky ready to load, but no one from the DPR to unlock the meter that recorded the quantity delivered.
The supervisor contacted the DPR office in Port Harcourt, and was told by the head of operations that loading could begin without the DPR's representative – even though this would require the padlock securing the meter to be cut.
However, after loading was completed and hoses were disconnected, the DPR in Lagos revoked the clearance, prompting a 44-day saga that saw the DPR temporarily close the terminal while the Nigerian Navy ensured the ship didn't sail away.
Shipping and transport lawyer David Hall, an associate with Andrew Jackson, said: "The circumstances in this case were pretty remarkable. There are lots of strange things happening in Nigeria, but this ultimately breaks down to somebody snipping a padlock."
On September 7, 2009, the DPR wrote to Total, stating loading had started prematurely and without DPR supervision, and that Total had broken the lock.
Accusing Total of "economic crime", the DPR demanded an explanation within 24 hours.
The DPR requested assistance from the Nigerian Navy, to prevent the Crudesky from sailing away.
Mr Hall added: "The Nigerian Government is fairly strict with regards to loading irregularities, and in this instance the crew on board the tanker were having to walk around while people with guns were walking around the ship.
"There was also always the possibility the Government might decide to confiscate the ship, and risk that the terminal would be closed, so this incident would have been very concerning to everybody."
On October 9, 2009, the DPR wrote to Total ordering them to pay $12 million and to severely discipline the operations team on board the Akpo "who perpetrated the dastardly act".
After the fine was paid, the Crudesky was allowed to sail back to the Akpo terminal, where cargo documents were put on board on October 16 – more than 44 days after the three hours allowed in the charter agreement had expired.
Andrew Jackson, on behalf of its client, claimed against Trafigura for demurrage.
"Trafigura denied the vessel was awaiting cargo documents, and said this was a "restraint of princes", which cut the demurrage rate by half pursuant to clause 21 of the charterparty," said Mr Hall.
"The case provides an extreme example of how long a vessel can be "awaiting cargo documents". In this case, three hours was allowed in the charter contract for the paperwork to be completed, but it took over six weeks.
"It also demonstrates the quality of international work we are bringing to Hull."