Trafigura Maritime Logistics Pte Ltd v Clearlake Shipping Pte Ltd

In construing a poorly drafted commercial contract, the court must read the language in its factual and commercial context, giving effect to the parties’ objectively ascertainable intention. Commercial common sense may resolve uncertainty, but cannot rewrite a bad bargain. A clause requiring discharge without original bills of lading was construed as providing a deemed indemnity on the owners’ P&I Club terms, despite defective drafting and the late provision of the wording. A formal signed letter was unnecessary where the indemnity was invoked by agreement and conduct. The indemnity covered losses caused by the delivery and arrest, subject to ordinary contractual remoteness principles. Loss was assessed by reference to the lost fixture and a reasonable substitute-earnings credit; speculative profits from a later hypothetical fixture were excluded. Arrest expenses were recoverable separately.

Two related commercial claims arose from the discharge and delivery of crude oil without presentation of the original bills of lading for the vessel Miracle Hope. Trafigura claimed against Clearlake Shipping Pte Ltd under an indemnity. Clearlake Chartering USA Inc and Clearlake Shipping claimed against Petrobras Brasileiro SA under a corresponding indemnity. The vessel was later arrested in Singapore in proceedings brought by Natixis, causing security costs, legal expenses and the loss of a subsequent fixture.

The central issues were the construction and formation of the indemnities, the effect of a later novation in the charter chain, whether an internal Clearlake indemnity was implied, and the proper measure of recoverable loss.

1. Liability under the indemnities. Clause 33(6), read as a whole and in its commercial context, required discharge or delivery without presentation of original bills of lading only against an indemnity. The words referring to submission of the owners’ P&I Club wording before lifting subjects were surplus and ineffective once the parties made the charters unconditional. The alternative constructions would produce commercially absurd results.
2. The indemnity was deemed to be given on the owners’ P&I Club terms, subject to the surviving qualifications in clause 33(6)(v)–(vii). A formal signed letter was not required. The discharge orders, correspondence and conduct amounted to an invocation of the contractual indemnity. Any requirement for a formal document had been waived, or PBSA was estopped from relying on it.
3. “Discharge” and “delivery” could in principle be distinct concepts, but in this commercial context they were used interchangeably. The instructions identified the receiver and contained no direction to discharge while retaining control of the cargo. The delivery therefore fell within the indemnity.
4. The later agreement substituting CSPL for CUSA under the Trafigura charter was a novation. It transferred past and future charter liabilities to CSPL and extinguished CUSA’s liability to Trafigura under that charter. Separately, the Clearlake parties had an implied internal indemnity: their established practice, contemporaneous evidence and commercial necessity showed that CUSA would indemnify CSPL where CUSA chartered out a vessel and CSPL gave the upstream indemnity.
5. The Contracts (Rights of Third Parties) Act 1999 did not enable CSPL to enforce the CUSA–PBSA indemnity in its own name.
6. The indemnity responded only to loss caused by the delivery or arrest and was subject to ordinary contractual remoteness principles. Trafigura could recover the profit lost on the whole P66 Fixture, less the costs of earning it and net earnings under the substitute Traf CP during the corresponding period. Speculative loss based on a later Follow On Fixture was excluded. Arrest-period expenses were recoverable separately.
7. The claims by Trafigura against CSPL and CUSA against PBSA succeeded to the extent stated. Quantum, future costs and consequential orders were left to be dealt with by agreement or at the hand-down hearing.