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2024 MarsdenLR 2875
HIGH COURT MALAYA KUALA LUMPUR
ORIN ENERGY INVESTMENTS LTD – Appellant
Versus
FUTURA ASIA LIMITED – Respondent
[Admiralty In Personam No: WA-27NCC-17-03-2021]
A party cannot claim fraudulent misrepresentation if it is aware of the true nature of the contract, and claims for damages must be supported by evidence of breach.
Headnote:(A) Sales Contract - Fraudulent Misrepresentation - U.S. Sanction Laws - The Plaintiff sought declaratory reliefs and damages against the Defendant for breach of contract due to the delivery of sanctioned oil. The court found that the Plaintiff was aware of the oil's Venezuelan origin and dismissed the claims. (Paras 145, 146)
(B) Counterclaims - Breach of Contract - The Defendant counterclaimed for unpaid balance and losses due to the Plaintiff's failure to accept delivery. The court ruled in favor of the Defendant, awarding damages. (Paras 182, 183)
Facts of the case:
The Plaintiff claimed damages for breach of contract after the Defendant delivered fuel oil of Venezuelan origin, which the Plaintiff alleged was sanctioned. The Defendant counterclaimed for the balance due for the oil delivered. (Paras 1-4, 34-36)
Findings of Court:
The court found that the Plaintiff was aware of the oil's origin and that the Defendant was not in breach of contract. The Plaintiff's claims were dismissed, and the Defendant's counterclaims were allowed for the unpaid balance. (Paras 145, 182)
Issues: The main issues were whether the Plaintiff knew the oil was from Venezuela and whether the Defendant breached the Sales Contract. (Paras 39, 145)
Ratio Decidendi: The court ruled that the Plaintiff had knowledge of the oil's origin and thus could not claim fraudulent misrepresentation. The Defendant's actions were found to be compliant with the terms of the Sales Contract. (Paras 54, 145)
Result: Plaintiff's action dismissed; Defendant's counterclaims allowed. (Paras 145, 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
