Glencore Energy UK Ltd v Springfield Energy Ltd

Where a party seeks to avoid a settlement by alleging that the underlying transaction was illegal under foreign law, it bears the burden of proving the illegality. The court must identify the activity actually performed and the person who performed it under the relevant regulatory regime. A seller of petroleum products does not necessarily perform regulated activities merely because its goods are delivered into a foreign country and title is retained. A licensing requirement does not itself create a criminal offence unless the offence and penalty are defined by written law.

Glencore claimed US$1,234,205.91 under a settlement agreement compromising liabilities arising from contracts for the sale of petroleum products to Springfield. Springfield later alleged that the underlying contracts were illegal under Ghanaian law because Glencore had performed regulated petroleum activities without a licence.

The alleged activities were importation, transportation, storage and sale under the National Petroleum Authority Act. Springfield also alleged criminality and counterclaimed for restitution. The issues were whether Glencore had performed any licensable activity in Ghana and, if so, whether the settlement should be enforced.

1. Claim allowed and counterclaim dismissed. Judgment was entered for Glencore for US$1,234,205.91, together with interest calculated under the settlement agreement.
2. The burden of proving illegality lay on Springfield. The court applied the principle stated in Hire Purchase Furnishing Co v Richens (1887) 20 QBD 387, that where facts are equally consistent with legality or illegality the law presumes against illegality.
3. Questions of Ghanaian law were questions of fact. The court preferred Dr Aziz Bamba’s evidence. Importation was performed by Springfield, which signed the import declarations. Storage was performed by Tema Fuel Company, which operated the licensed storage facility. Glencore did not transport the products in Ghana and did not sell them in Ghana.
4. Retaining title did not make Glencore the operator of those regulated activities. Glencore therefore performed none of the activities requiring a licence under section 11 of the National Petroleum Authority Act.
5. The absence of a licence would not, in any event, have constituted a criminal offence. Section 61(2) prescribed penalties for offences for which no specific penalty was provided; it did not itself create an offence. Article 19(11) of the 1992 Constitution of Ghana required the offence and penalty to be prescribed in written law.
6. There was no unlawful act by Glencore. Neither the amended sale contracts nor the settlement agreement was illegal or unenforceable. It was unnecessary to decide the hypothetical consequences under English law if the underlying contracts had been unlawful.

First-instance decision. No prior appellate decision is stated in the judgment.