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2024 MarsdenLR 2098
HIGH COURT MALAYA KUALA LUMPUR
ORIN ENERGY INVESTMENTS LTD – Appellant
Versus
FUTURA ASIA LIMITED – Respondent
[Admiralty In Personam No: WA-27NCC-17-03-2021]
The court ruled that the Plaintiff was aware of the fuel oil's Venezuelan origin and that the transactions did not violate U.S. sanctions, leading to the dismissal of the Plaintiff's claims.
Headnote:(A) Sales Contract - Breach of contract - Fraudulent misrepresentation - The Plaintiff claimed damages against the Defendant for delivering fuel oil of Venezuelan origin, alleging it was sanctioned oil. The court found that the Plaintiff knew the oil's origin and ruled that the Defendant was not liable for misrepresentation. (Paras 91, 145)
(B) U.S. Sanction Laws - The court examined the implications of U.S. sanctions on the sale of fuel oil originating from Venezuela, concluding that the transactions between the parties did not violate U.S. sanctions as neither party was a U.S. person. (Paras 135, 136)
Facts of the case:
The Plaintiff, Orin Energy, entered into a sales contract for fuel oil with the Defendant, Futura, but later claimed that the oil was sanctioned and originated from Venezuela, leading to a dispute over the contract's performance and terms. (Paras 1-4, 34-36)
Findings of Court:
The court found that Orin Energy was aware of the oil's Venezuelan origin and that the oil was not sanctioned, dismissing the Plaintiff's claims against the Defendant. (Paras 145, 146)
Issues: The main issues included whether Orin Energy knew the oil's origin and whether the transactions were subject to U.S. sanctions. (Paras 39, 40)
Ratio Decidendi: The court ruled that the Plaintiff's claims were without merit as they had full knowledge of the oil's origin, and the transactions did not violate U.S. sanctions, thus the Defendant was not liable. (Paras 91, 145)
Result: The Plaintiff's action was dismissed, and the Defendant's counterclaims were allowed. (Paras 182, 183)
JUDGMENT
Introduction
[1] In this Suit, the Plaintiff, Orin Energy Investments Ltd ("Orin Energy") sought for inter alia, various declaratory reliefs and damages (general, special, aggravated and exemplary) against the Defendant, Futura Asia Limited ("Futura") premised on Futura's breach of an express and fundamental term of a sales contract when it delivered fuel oil of Venezuelan origin to Orin Energy. Orin Energy claimed that the aforesaid fuel oil was sanctioned oil. Orin Energy contended that Futura had fraudulently misrepresented the true origin of the fuel oil and had actively concealed the true origin of the same.
[2] Further, Orin Energy also claimed that Futura had wrongfully induced a breach of the charterparty agreement that it had entered into with the owner of the vessel, MT "Nordic Sirius" to receive the fuel oil vide a ship-to-ship transfer from the vessel, MT "Eser K". This had led the Master of MT "Nordic Sirius" to refuse receiving onboard the vessel further fuel oil when he discovered the Venezuelan origin of the fuel oil.
[3] Futura, on the other hand, claimed that Orin Energy had known all along that the fuel oil that it purchased originated from Venezuela. It is also its case that the fuel oil was not sanctioned oil.
[4] Accordingly, Futura counterclaimed against Orin Energy, inter alia, for the balance purchase price of the parcel of fuel oil that was delivered to Orin Energy, the loss of profits or diminution in market value of the remaining parcels of fuel oil that were undelivered, demurrage for the vessel, MT "Eser K," and other wasted costs incurred by Futura after the ship-to-ship operation between the vessels, MT "Nordic Sirius" and MT "Eser K," was aborted on 18 September 2020.
[5] Both parties had engaged experts on the U.S. Sanction Laws to testify at the trial. A protocol was agreed upon to receive the experts' opinions by way of a 'hot-tubbing' exercise. The protocol is annexed to this judgment as a guide to future cases.
[6] After reading the written submissions and the relevant cause papers and after hearing oral submissions from counsel, I did not find any merits in Orin Energy's claims. On the contrary, I found as a matter of fact that Orin Energy had known all along that it was purchasing fuel oil originating from Venezuela. I also accepted the opinion of the expert engaged by Futura that the fuel oil was not sanctioned cargo at all.
Background Facts
The Parties
[7] Orin Energy is a Labuan incorporated company pursuant to the Labuan Companies Act 1990 with its registered address at Level 4, Main Office Tower, Financial Park Complex, Jalan Merdeka, 87000 Wilayah Persekutuan Labuan, Malaysia.
[8] Futura is a company incorporated in Hong Kong whose registered address is Room 1501, 15/F, Prosperity Tower, 39 Queen's Road Central, Hong Kong.
The Sales Contract
[9] On 25 July 2020, Orin Energy entered into a sale and purchase contract with Futura ("Sales Contract"), whereby Futura agreed to sell and Orin Energy agreed to purchase, 700,000 barrels (equivalent to 104,477 metric tons, at 1 metric ton = 6.7 barrels) of fuel oil ("the Fuel Oil") that were onboard the vessel MT "Eser K" ("Eser K"). Futura was the charterer and party in control of the Eser K and one Rossi Marine Ltd ("Rossi Marine") was the registered owner and commercial operator of the Eser K at the material times.
[10] Orin Energy purchased the Fuel Oil for the purpose of mixing and blending with oils purchased from its other suppliers to form a bituminous mixture to be sold to its purchasers in China. Futura was aware of Orin Energy's blending plan at the material times. Futura was also aware that Orin Energy had 3 other vessels waiting at Linggi, Melaka with other oils on board to be blended with the Fuel Oil.
[11] Under the Sales Contract, the agreed laytime was between 15 August 2020 to 25 August 2020, and to be narrowed by Orin Energy (as the buyer) to 7 days by 31 July 2020. This was the time during which the Eser K must a
