Trafigura Pte Ltd & Anor v Emirates General Petroleum Corp (EMARAT)

Under English law, a contract may be binding without a witnessed signature, initials on every page or a signature by the person who first negotiated the transaction. The question is whether the parties objectively demonstrated an intention to be bound by the terms evidenced in writing. A buyer under a CIF contract ordinarily bears import duties unless the contract provides otherwise. Contractual time-bar provisions may waive claims not notified within the specified period. Where quality is contractually determined by an independent inspector from representative composite samples, the relevant obligation may concern the whole cargo rather than individual parcels.

Trafigura PTE claimed more than US$83 million from Emarat for unpaid balances under two cargoes of gas oil delivered in August and September 2008. Emarat did not participate in the trial. It disputed the contract’s validity, alleged that the product was off specification, challenged invoice calculations and asserted a customs-duty claim.

The court had earlier rejected Emarat’s jurisdiction challenge. A full trial on the merits was ordered because a judgment obtained by mechanical default might have been difficult to enforce where the defendant’s assets were located. The issues were whether a binding contract existed, whether the cargo complied with its quality terms, whether any customs-duty claim could be set off, and what sums were due.

1. Contract formation and validity. The contract was binding. On the balance of probabilities, the signature of Emarat’s General Manager was genuine. In any event, Emarat’s communications, issuance of payment undertakings and performance objectively demonstrated agreement to the written terms. English law did not generally require a witnessed signature or initials on every page for contractual efficacy.
2. Customs duties. Under the CIF arrangement, delivery and title passed upon shipment outside the UAE and Emarat was the importer. Article 147 of the UAE Federal Law No. 18 of 1993 on Commercial Transactions placed import fees and clearance charges on the buyer unless the contract provided otherwise. Clause 28 in fact expressly allocated customs duties to the buyer. Any contractual claim was also barred by the applicable time limit.
3. Quality. The contractual quality determination was based on representative composite samples and concerned the product as a whole. The composite analysis of the Grace Victoria cargo exceeded the contractual minimum Cetane Index of 50. Any quality claim was additionally waived by failure to notify it within 45 days of discharge.
4. Payment and relief. The unpaid invoices were calculated in accordance with the contract. Trafigura PTE was entitled to judgment for the principal sums and contractual interest at one-week LIBOR plus 1 per cent. The requested declaration concerning all customs-duty claims was refused as too wide, although the claimant was entitled to payment without withholding, set-off, counterclaim or deduction.

First-instance proceedings. The judgment records that:

• High Court (Commercial Court): Flaux J rejected Emarat’s jurisdiction challenge on 26 June 2009 and permitted Trafigura Beheer BV to be added as a claimant.
• High Court (Commercial Court): David Steel J directed a full trial on the merits on 9 October 2009.
• High Court (Commercial Court): Tomlinson J entered judgment for Trafigura PTE for the unpaid invoices and contractual interest, while refusing the wider declaratory relief.