England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE TEARE

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/07/2013

Lord Justice Longmore:

Facts

1. In April 2009 the Akpo FPSO Terminal opened for business, 106 miles south-south-west of Port Harcourt in the Niger Delta. The production rights in the Akpo oil field were held by a consortium including China National Offshore Oil Corporation. The operator of the terminal was Total Upstream Nigeria Ltd ("Total"). The Nigerian authorities were always concerned about possible theft of crude oil and required an official from the Nigerian Department of Petroleum Resources ("the DPR") to be present during the loading of vessels in order to verify the actual quantity of oil loaded on board such vessels.
2. On or about 29^th July 2009 China Offshore Oil (Singapore) International Pte Ltd ("COOSI") sold and Vitol Asia Pte Ltd bought 1 million barrels (plus or minus 5% at buyer's option) of Akpo Condensate for delivery free on board. Shortly thereafter Vitol Asia sold the same quantity on the same terms to Vitol S.A. On or around 10^th August 2009 the same quantity of Akpo crude oil was sold to Trafigura Beheer B.V. ("Trafigura"), also on f.o.b. terms.
3. It was therefore for Trafigura to provide a ship to load the oil at the Terminal. They had, already, on 30^th July, agreed a charterparty of the vessel "CRUDESKY" on an amended BP Voy 3 form with the Great Elephant Corporation as disponent owners ("the Owners") of that vessel. Later in August, they nominated the vessel pursuant to their contract with Vitol and ordered the vessel to proceed to the Terminal to load.
4. Crudesky arrived at the Akpo Terminal at 03.00 hours on 29^th August, but on that date the DPR representative at the Terminal left without informing Total and without the permission or approval of the DPR in Port Harcourt. The vessel gave notice of readiness at 00.01 hours on 30^th August and laytime under the charterparty began at 06.01 hours on that day. At 09.12 on 31^st August the vessel berthed and an agent and what the judge called "the authorities" boarded her at 10.20 hours. At 13.00 hours hose connection was made but loading could not begin because the export valve was padlocked and no DPR representative was present with a key to unlock the padlock.
5. By this time Total's lifting supervisor, Mr Bankole, had arrived on the scene. Between 12.00 and 15.00 hours he telephoned the DPR office at Port Harcourt to ask when a DPR representative would arrive at the Terminal. He was told that a Mr Idoniboye would arrive sometime on 1^st September. He then discussed the matter further with DPR's Head of Operations at Port Harcourt, Mr Pepple, and asked if it would be possible to begin loading while the DPR representative was not present at the FPSO. He said that he appreciated that the padlock would have to be severed from the export valve but he said Total would pay for a new padlock once loading was completed. The judge found:-

"Mr Bankole understood from his conversation that Mr Pepple had given him verbal authorisation to sever the padlock and commence loading operations."

6. At 16.12 hours, on Mr Bankole's instructions, the padlock on the export valve was cut and loading began.
7. Mr Idoniboye, the new DPR representative, arrived at about 12.15 on 1^st September. At about the same time Total's Lagos office asked for written clearance for loading from the DPR in Lagos. That was granted between 15.00 and 18.00 and Mr Idoniboye was told to print out the clearance given. He was unable to do so because his computer had a glitch which meant that the clearance could not be printed out. At 21.00 hours loading was completed and about that time Mr Idoniboye received notification that the DPR in Lagos had revoked the clearance it had given earlier. At 21.54 hoses were disconnected and at 22.18 the vessel was unmoored from the FPSO and began to drift. She could not leave because she had not received documents evidencing the loading of the cargo.
8. At 09.19 on 3^rd September the laytime allowed by the charterparty expired and the vessel was thereafter on demurrage.
9. On 7^th September the DPR in Lagos sent two letters. The first was to Total noting that loading had proceeded without requisite clearance and saying that Total's actions were viewed by the Federal Government as an economic crime. They threatened appropriate sanctions. The second letter was addressed to the Chief of Naval Staff requesting the Navy's assistance in ensuring that the vessel be restricted and prevented from sailing away pending resolution of the matter by the Federal Government. Naval personnel proceeded to board the vessel at 18.24 hours on 9^th September and remained on board after the time she dropped anchor at the Bonny offshore Terminal, a distance away from the Akpo terminal.
10. Discussions on resolving the crisis continued until 9^th October when the Ministry of Petroleum Resources wrote to Total requiring them to pay a fine of US$12 million to the DPR's US$ account in New York and requiring them to discipline the personnel of Total who had "perpetrated the dastardly act". The DPR also wrote to the Chief of Naval Staff to say that the vessel would be allowed to sail away.
11. On 13^th October Total paid the required fine and the vessel was released. She sailed back to the Akpo FPSO and disembarked the Nigerian naval personnel. Thereafter the DPR completed the cargo documentation which arrived on board at 09.54 on 16^th October. At 13.00 the vessel sailed for the port of discharge.
12. In very broad terms the judge held that the vessel was on full demurrage from 09.19 on 3^rd September until 7^th September but as from that date she was only on half demurrage by reason of a "restraint of princes" clause in the charter. He further held that Trafigura could claim that their vendors had failed to give them quiet possession of their cargo from 1^st to 7^th September but that Vitol and COOSI could rely on force majeure clauses exempting them from governmental interference or unforeseeable consequences as from 7^th September to 16^th October. There is now an appeal. The burden of presenting the appeal was undertaken by Trafigura whose main concern was to pass the demurrage, for which they were liable, on down the sale and purchase chain initially to Vitol who might then pass it ultimately to COOSI.

Relevant Contractual Provisions

13. The charterparty of 30^th July 2009 incorporated the terms of BP Voy 3 of which relevant terms were:-

"15. Loading and Discharge of cargo

The cargo shall be pumped into the vessel at the expense of and at the risk and peril of charterers as far as the vessel's manifold only, and pumped out of the vessel at the expense of and at the risk and peril of Owners as far as the vessel's manifold only.

…

21. Laytime/Demurrage/Force Majeure

Any delay(s) arising from adverse weather or sea state conditions, fire, explosions, breakdown … or failure of equipment, plant or machinery in or about ports or places of loading and/or discharge, Act of God, act of war, labour dispute, strike, riot, civil commotion or arrest or restraint of princes, rulers or peoples shall, provided always that the cause of the delay(s) was not within the reasonable control of Charterers or Owners or their respective servants or agents, count as one half laytime or, if the Vessel is on demurrage, at one half of the demurrage rate."

14. The sale and purchase contract between Vitol and Trafigura was on the terms of the General Conditions of the Nigerian National Petroleum Corporation for the sale and purchase of Nigerian Crude Oil ("the NNPC terms"). Article 6 of those terms was entitled "Loading Conditions and Demurrage" and provided (by Article 6.5.1) for demurrage to be paid to the Buyer for laytime in excess of allowable laytime. Article 6.5.2 contained exclusions from laytime and demurrage for (inter alia)

"(f) Force Majeure as stipulated in Article 21 herein."

Article 18.1 provided:-

"Each party hereby agrees to comply and to procure its personnel, directors, agents, contractors, representatives and permitted assigns to comply with all laws, rules, regulations, valid directives and policies and bye laws applicable and necessary for the performance by each party of its obligations under this Contract."

Article 21 (the Force Majeure clause) provided:-

"Neither the Seller nor the Buyer shall be held liable for failure or delay in the performance of its obligations under this Contract, if such performance is delayed or hindered by the occurrence of an unforeseeable act or event which is beyond the reasonable control of either party ("Force Majeure") …

21.1

The act or event constituting Force Majeure shall include, but not [be] limited to

I. Act of God

II. Act of Government intervention, directive, or policy (whether war, Federal or State Government)."

15. The sale and purchase contract between COOSI and Vitol incorporated both Incoterms 2000 and Total's General Terms and Conditions for FOB sales of crude oil (2007 edition) ("the Total terms"). Incoterms provided that the term FOB

"requires the seller to clear the goods for export."

Clauses A2 and A4 further said:-

"The seller must obtain at his own risk and expense any export licence or other official authorisation and carry out, where applicable, all customs formalities necessary for the export of the goods. … The seller must deliver the goods … at the port of shipment and in the manner customary at the port on board the vessel nominated by the buyer."

Relevant Total terms are:-

"II.1 The Oil shall be delivered to Buyer in bulk FOB at the Loading Terminal, into vessel(s) provided by the Buyer.

VI.5 All applicable governmental, local and port authority regulations, Seller's, Seller supplier's and/or Loading Terminal Operator's regulations, procedures and any other requirement of any nature whatsoever in force at the Loading Terminal at the time of delivery shall apply to Buyer's Vessel…

VII. 2 Buyers shall ensure that the Vessel shall, within the Vessel Presentation Range and within any time limit prescribed in the regulations, procedures and requirements referred to in sub-section VI. 5 above: (i) arrive at the Loading Terminal, complete formalities and in all respects be ready to load the shipment and (ii) tender an effective N.O.R.

VII. 5 Subject to Buyer complying with the provisions of section VII. 2 above, Seller, having regard to the regulations, procedures and requirements referred to in sub-section VI. 5 above, shall commence loading as soon as reasonably practicable….

XII. 1 Neither party shall be deemed in breach of the Agreement as a result of, or be liable to the others for, any failure, omission or delay in its performance in whole or in part of any of the terms or conditions of the Agreement … if such failure, omission or delay arises or results from any cause reasonably beyond, or to be treated as reasonably beyond, the control of that party (any such event being hereafter referred to as "Force Majeure")."

Breaches of Contract

16. Much of the time at trial was, with the assistance of Nigerian lawyers, taken up with determining the status of two Procedure Guides issued by the Nigerian authorities and whether there had been any breach of their terms. The first was the Terminal Operations Guide issued by the Nigerian National Petroleum Corporation ("the NNPC"). The second was the Procedure Guide for the determination of the Quantity and Quality of Crude Oil and Petroleum Products at Custody Transfer Points issued by the DPR in Lagos. The Terminal Operations Guide provided for the need for an inward clearance certificate in connection with the loading of a vessel and required relevant parties to permit Customs, Task Force and Immigration to board the vessel for necessary inspection and issue of the inward clearance certificate after receipt of which loading would commence. It attached a proforma document in Appendix G2 which was to be signed by a body which later became the DPR and certified that the tanker named in it was "cleared to load".
17. The Quantity and Quality Guide required information to be provided to the DPR resources at the Headquarters, Divisional and Terminal offices for the purposes of granting loading clearance. Since this guide stated that it had been issued pursuant to statutory provisions, the judge decided that it constituted a "regulation" which the DPR had power to make while the Terminal Operations Guide was probably a manual rather than a "regulation". He also held (para 28) that the requirement in Appendix G2 of the Terminal Operations Guide for the DPR to sign the inward clearance certificate "had become in practice a requirement for the DPR in Lagos to grant such clearance (the loading clearance referred to in the Quantity and Quality Guide) and for the head office to inform the local DPR representative that such clearance had been given". The position seems to have been that in a normal case Total would ask DPR in Lagos for inward clearance (as in fact they did on 1^st September) and that such clearance would be transmitted from DPR headquarters in Lagos to the DPR office in Port Harcourt which would in turn transmit it to their representative at the FPSO terminal who might, when he received it, be either at that Terminal or on board the ship which was seeking the clearance.
18. The judge then rejected a contention that loading without clearance on 31^st August was a criminal offence under Nigerian law but concluded (paras 46-50) that there were 3 breaches of the Procedure Guides in

i) commencing to load without inward clearance from the DPR;

ii) severing the padlock (since the Terminal Operations Guide provided that the DPR should unlock the loading valve); and

iii) loading in the absence of the DPR representative (since para 5.2.1 of the Quantity and Quality Guide provided that a gauge ticket should be issued by the DPR on the basis of results obtained before and after loading).

He went on to hold that it was difficult to describe Total's conduct as "culpable" in circumstances where their Mr Bankole had sought and obtained permission from Mr Pepple to commence loading.

19. As far as breaches of the various contracts were concerned, the judge held

i) as between the Owners and Trafigura, laytime expired at 09.10 on 3^rd September 2009 and the vessel was thereafter on demurrage and he need not therefore consider an alternative claim for damages for detention based on the facts (1) that the loading of the cargo was the responsibility of Trafigura under the charterparty, (2) that the loading was to be at the risk and peril of Trafigura pursuant to clause 15 of the charterparty and (3) that there had been the 3 breaches of the Procedure Guides to which I have referred. He held, however, that Trafigura could take advantage of the restraint of princes exception to reduce the claim for demurrage to half rate as from 7^th September because the delay thereafter was caused by a "new cause" namely the improper conduct of the Minister of Petroleum Resources in seeking unlawfully to impose a "fine" on Total. None of the delay after 7^th September was within the reasonable control of Total so that the requirement that the cause of the delay should not be "within" the reasonable control of charterers or their respective servants or agents was met.

ii) as between Trafigura and Vitol, Article 18 of the NNPC Conditions required Vitol to comply with the Procedure Guides which were valid "directives" or "policies" (and presumably in the case of the Quantity and Quality Guide "regulations") Vitol could only comply with the Guides through the Terminal operator. But since Total had not complied with the Guides in the 3 respects referred to above, Vitol were themselves in breach which caused delay to the vessel at any rate until 7^th September. He rejected a claim that Vitol were in breach of the statutory terms implied by sections 12(1) and (2)(a) of the Sale of Goods Act 1979 (the right to sell and the term that there be no charge or encumbrance) but accepted a submission that Vitol were in breach of section 12(2)(b) entitling a buyer to have quiet possession of the goods. Since the vessel was prevented from leaving Nigeria once loading was complete, Trafigura's possession of the goods was not being "quietly enjoyed" but forcibly interrupted between 1^st and 7^th September. Thereafter the delay was caused by the Minister's unlawful demand for a "fine". The judge also held that there was a breach of Article 30 of the NNPC conditions which warranted that Vitol had taken all necessary action to perform its obligations under the contract but said that that added nothing to the breaches of Article 18 and the implied term relating to quiet possession. He went on to hold that, "essentially for the same reasons" as he had held that Total's failure to comply with the procedure guides was not "culpable", that failure was beyond both Total's (and therefore Vitol's) reasonable control and that the Force Majeure clause accordingly applied; nor did the judge consider it foreseeable that the DPR would refuse to issue cargo documents and prevent the departure of the vessel until mid-October. Trafigura's claims against Vitol therefore failed.

iii) as between Vitol and COOSI (had it been necessary to consider this claim), loading clearance was an "official authorisation" of the kind mentioned in clause A2 of Incoterms. The duty to procure that clearance before loading began was an absolute (as opposed to "best endeavours") obligation of which COOSI were in breach. They were also in breach of s. 12(2)(b) of the Sale of Goods Act 1979 for the same reason as Vitol were in breach of the same term in relation to Trafigura. The judge did not accept an alternative claim that there was a breach of Article VII. 5 of the Total Conditions as he rejected the argument that that clause imposed any obligation on COOSI other than commencing loading as soon as reasonably practicable. But in any event the delay to the vessel arose from a cause beyond Total's (and hence COOSI's) reasonable control.

20. The only arguments which we received in respect of breach were:-

i) (from Mr Simon Rainey QC on behalf of COSSI) that there was no breach of section 12(2)(b) of the Sale of Goods Act 1979 because there was no true interference with Trafigura's quiet possession and that the possession had to be that of Vitol for the section to apply and since Vitol immediately resold on the same terms as to risk to Trafigura there could have been no possession of Vitol at any relevant time; and

ii) (again from Mr Rainey) that the Incoterm as to the provision of necessary authorisation such as a loading clearance was only a due diligence obligation.

21. It suffices for present purposes to say that, on these points, I agree with the judge for the reasons he gave. It follows that there can be no doubt that there were breaches of contract on the part of Vitol and COOSI respectively. There are, however, three key issues which need determination:-

i) whether, as the judge held, the delay was caused by an unforeseeable force majeure event beyond the reasonable control of Total (for the purpose of the Trafigura/Vitol contract) or beyond their reasonable control (for the purpose of the Vitol/COOSI contract);

ii) whether, if not, COOSI and Vitol can say that the delay was beyond their own control or reasonable control;

iii) whether, as the judge held, the unlawful act of the Minister in seeking to impose a "fine" of US$12 million broke the chain of causation so that any liability of Vitol or COOSI is to be confined to the delay before 7th September.

Beyond the (reasonable) control of Total or, if relevant, the contracting party?

22. I have already set out the essential facts of the case; more detail can be found in the judgment. One critical fact found by the judge is (para 28):-

"the requirement in Appendix G2 of the Terminal Procedure Guide for the DPR to sign the inwards clearance certificate had become, in practice, a requirement for the DPR in Lagos to grant such clearance (the loading clearance referred to in the Quantity and Quality Guide) and for the head office to inform the local DPR representative that such clearance had been given."

He also recorded in the same paragraph that the DPR in Lagos gave its loading clearance between 15.00 and 18.00 on 1^st September 2009. What the judge does not specifically spell out in that paragraph but makes clear in para 11 of the judgment is that it was Total's commercial department in Lagos which (as one would expect) asked the DPR for that clearance. The official channel of communication was thus a channel which existed between Total in Lagos and the DPR in Lagos.

23. This is a factor which, as it seems to me, was not sufficiently taken into account by the judge when he considered whether the delay that occurred to the vessel was within Total's control or Total's reasonable control. The scheme of his judgment is to describe (in paras 6-10) the events from the perspective of Total's lifting supervisor, Mr Bankole, and then to conclude that, although there were the 3 failures to comply with the Procedure Guides which he identified, "Total's" conduct was "not culpable" (paras 48-50) and therefore (para 115) that the failure to comply with the Procedure Guides was beyond Total's (reasonable) control.
24. There are, with respect, two difficulties with this approach. In the first place it assumes that Mr Bankole is the same as Total whereas Total is in fact much more than Mr Bankole. Mr Bankole may have acted entirely reasonably in the difficult circumstances in which he found himself but one must ask whether Total as a complete entity acted reasonably not just whether Mr Bankole did. Secondly, "culpability" is not the fundamental question. It may be a relevant consideration but the real question is whether the delay was caused (speaking generally) by circumstances beyond the (reasonable) control of Total. If that is the question to be addressed one needs to know why it was that Total in Lagos did not seek inwards clearance from the DPR in Lagos until 1^st September. Whether Total asked for clearance through official channels at any particular time was a matter which was in their control. If they chose to proceed without seeking official clearance from Lagos in the usual way, that is a matter which was, at all times, within their control.
25. It goes without saying that a force majeure clause must be construed in accordance with its own terms; it also need hardly be emphasised (a) that it is an exceptions clause and any ambiguity must be resolved against the party seeking to rely on it and (b) that the concept of being "beyond [a corporate person's] control" sets a comparatively high hurdle since corporations usually do have a significant measure of control over their own business, see Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd's Rep. 323 and Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery (No. 3) [2003] 2 All ER (Comm) 640. All that said, it is necessary to look at the individual clauses.

(a) The Charterparty

26. Although the charterparty contains a general exceptions clause in which the concept of events within the reasonable control of the parties does not appear (clause 46), force majeure in connection with demurrage is specifically catered for by clause 21 and it is therefore that clause (providing for half demurrage rather than full demurrage) which needs to be considered. There is a specific list of causes of delay which can be relied on, the only relevant one of which is

"arrest or restraint of princes, rulers or peoples."

There is the further provision that the cause of the delay

"was not within the reasonable control of Charterers or Owners or their respective servants or agents."

The judge was prepared to assume that, since the loading of the vessel was Trafigura's responsibility under clause 15 of the charter and since the loading could only be performed by Total as operator of the Terminal, Total were the agents of Trafigura for the purpose of clause 21 but he held that, since the cause of the delay was beyond the reasonable control of Total, Trafigura could rely on the restraint of princes exception to reduce the demurrage rate by half.

27. For the reasons I have given, I cannot agree with the judge that the delay occurring to the vessel was beyond Total's control. The question remains whether it was beyond their "reasonable" control.
28. My opinion is that the delay was not beyond Total's "reasonable control" if one looks (as one should) at Total as one entity. For reasons which we do not know, Total in Lagos did not ask for official loading clearance from the DPR in Lagos before the vessel began to load. They (Total) preferred, by their Mr Bankole, to deal with the DPR representative in Port Harcourt. That was their choice. But in circumstances in which the judge found that there was an official channel of communication in Lagos for obtaining loading clearance, it was a choice which carried a risk. Exercising a choice which carries a risk is doing something which is within one's control. Using the usual channels which would carry no risk is also within one's control. It was not beyond Total's reasonable control to exercise one choice rather than another. In this context "culpability" is not a determinative criterion.
29. The question then arises whether Trafigura can say that, even if the cause of the accrual of demurrage was within Total's reasonable control, it was not within the reasonable control of Trafigura themselves or "their servants or agents" within clause 21 of the charterparty. A literal constructionist might say that strictly speaking Trafigura delegated the loading operation, for which they were responsible under the charterparty, to Vitol S.A. who were their "agents" for the purpose of clause 21 and that the delay to the vessel was beyond the control of themselves (Trafigura) and their agents Vitol S.A. The fact that Vitol S.A. delegated the loading operation to Vitol Asia Pte Ltd, who would for this purpose be Trafigura's sub-agents, and that Vitol Asia Pte Ltd delegated it to COOSI who would for this purpose be Trafigura's sub-sub-agents and COOSI then delegated it to Total, who would for this purpose be Trafigura's sub-sub-sub agents, does not make Total Trafigura's agents for the purpose of a clause which does not refer to sub-agents at all.
30. This to my mind would be strict construction with a vengeance, although both Mr Kimmins and Mr Bright espoused the argument if, for any reason, the liability for demurrage could not be passed down the line to COOSI. The intention of the charterparty was that if anything went wrong with the loading operation for any reason, that was the charterers' responsibility. If Total had, for example, damaged the ship during the loading operation, Trafigura would have to bear that liability and look down the sale and purchase line of contracts for any indemnity. It would not be consistent with the concept of the charterers being responsible for defaults in loading, that they should be able to excuse themselves on the basis that the event causing the damage was outside the control of themselves or their immediate contracting party. By contracting with Vitol S.A., Trafigura initiated (or participated in) a chain of contracts which led to the actual loading of the vessel being done by Total. If the events that occurred were within the (reasonable) control of Total, then Trafigura should be contractually liable to the Owners of the vessel for the consequences of those events. In other words, for the purpose of clause 21 of the charterparty, Total are the agents of Trafigura in relation to the loading of the cargo.

(b) The Trafigura/Vitol purchase contract

31. Similar considerations apply to the Trafigura/Vitol purchase contract. The Force Majeure clause in Article 21 excuses the Seller for delay in the performance of its obligations if performance is delayed or hindered by the occurrence of an "unforeseeable" act or event which is beyond the reasonable control of either party. This imposes an extra requirement (or affords an extra reason for escape from liability) to the requirement of clause 21 of the charterparty which just requires the relevant event not to be within the reasonable control of the charterers. The Seller (Vitol), if it wishes to rely on this clause must also prove that the relevant event was "unforeseeable". On the other hand the event is to be one beyond the reasonable control of "either party". There is no mention of servants or agents.
32. It does not seem to me that the word "unforeseeable" adds much to the concept of "within reasonable control". If one is looking at Total's position, once one has decided that the loading in breach of the Procedure Guides was within Total's reasonable control, it is very likely that the same event is foreseeable. It was certainly foreseeable in this case that if loading took place without inward clearance and without the presence of a DPR representative on board (let alone by severing the padlock on the loading connection), questions would be asked and the vessel would not be allowed to leave until they were answered. Mr Kimmins for Vitol submitted that it was not foreseeable that the DPR would disavow the agreement made by their employee Mr Pepple. But if the official channels are by-passed, it is all too likely that the DPR would want to know why they were being by-passed and whether there had been any opportunity for oil to have been surreptitiously obtained. The truth is that the word "unforeseeable" is a general word intended to encompass the sort of events listed in clause 21 of the charterparty as shown by the non-exclusive instances of events given in Article 21.1 of the NNPC terms.
33. The fact that the Force Majeure clause requires an act or event which is beyond the reasonable control "of either party" at first blush made it more promising for Mr Kimmins (than for Mr Bright) to argue that it was not Total's "reasonable control" with which one should be concerned but only Vitol S.A.'s "reasonable control". There are, however, two difficulties with the submission. In the first place the Seller's obligation is to place the cargo "free on board" the vessel. This necessarily means that Vitol was responsible for the operation of putting the oil cargo on board vis-à-vis Trafigura, just as much as Trafigura was responsible vis-à-vis the Owners under the charterparty. Subject to the considerations dealt with below, that must mean that Vitol are responsible for anything that goes wrong during the loading operation subject to any exclusion clauses in the sale contract. The fact that the Force Majeure clause refers to acts or events beyond the reasonable control of "either party" means therefore beyond the reasonable control of that party or any party to whom the contractual performance of that party's obligation has been delegated by that party.
34. If that is too controversial a construction of the Force Majeure clause, the matter, as far as Vitol is concerned, is put beyond doubt by Article 18.1 of the NNPC terms by which either party (thus including Vitol) agreed to procure that its agents and contractors complied "with all rules, regulations, valid directions and policies and bye-laws applicable and necessary for the performance by each party of its obligations under this Contract". Vitol did not procure that its contractor COOSI complied with the Procedure Guides because the Procedure Guides were contravened in the three respects which I have mentioned. That non-compliance puts Vitol in breach of their obligations under the sale and purchase contract to Trafigura and the damages for that breach are the sums for which Trafigura are themselves liable by way of demurrage to the Owners. In the light of Article 18.1 it would be absurd if Vitol could excuse themselves from the consequences of that breach by reference to the Force Majeure clause when it was their own breach of contract that caused the supposed force majeure in the first place. So to allow Vitol would be to allow them to take advantage of their own wrong.

(c) The Vitol/COOSI contract

35. The same considerations apply to the Vitol/COOSI contract of sale on Incoterms 2000 and Total Crude FOB Terms (2007). Incoterms expressly state that it is the Seller's obligation to clear the goods for export and that must include obtaining loading clearance for the vessel when necessary. It also requires the Seller to obtain any official authorisation which must also include any relevant loading clearance. Section XII of the Total terms provides that neither party is to be deemed in breach as a result of any failure, omission or delay in performance if such failure, omission or delay arises or results from any cause reasonably beyond the control of that party. There is no equivalent to Article 18.1 of the NNPC terms but since COOSI have assumed responsibility for loading the cargo, they must be responsible for the acts or defaults of those to whom they have delegated the loading operation. COOSI have not indicated whether they delegated the loading operation directly to Total or to the consortium which included China National Offshore Oil Corporation or to some other body. But the fact is that Total conducted the loading operation and, if the delay or failure in performance which occurred to the vessel arose or resulted from causes within Total's reasonable control, then COOSI must be responsible for that delay. For the reasons I have given I consider that the vessel's detention (at any rate up to 7^th September) did indeed arise or result from causes within Total's reasonable control and that COOSI cannot therefore exclude their liability to Vitol for sums for which Vitol are themselves liable to Trafigura.

Vitol's or COOSI's "own control"

36. I have said that the judge was prepared to assume that the relevant "control" for the purpose of the force majeure clause in the various contracts was the "control" of Total. It may well be that he, in fact, decided that Total's "control" was the relevant "control" as a matter of law because he cited with approval (para 112) the judgment of Moore-Bick J in Fyffes Group Ltd v Reefer Express Lines Ltd (The Kriti Rex) [1996] 2 Lloyd's Rep. 171 in which that learned judge had said (page 196, lhc) with reference to force majeure clauses:-

"In general I think it is fair to approach such clauses with the presumption that the expression force majeure is likely to be restricted to supervening events which arise without the fault of either party and for which neither of them has undertaken responsibility."

In that case the f.o.b. buyer had undertaken to provide a ship which was delayed by poor maintenance on the part of the shipowner. The buyer was held to be unable to rely on the clause since, as between himself and his seller, he had assumed the contractual responsibility of providing a seaworthy ship.

37. In the charterparty in the present case Trafigura had undertaken the responsibility of loading the vessel and in the respective f.o.b. sale contracts, Vitol and COOSI had likewise undertaken that responsibility. It is for that reason that I have already said that Vitol and COOSI cannot rely on the force majeure clause unless they can show that the relevant acts or events were beyond the reasonable control of Total, being the person who discharged that responsibility.
38. Mr Rainey submitted that this approach and, indeed, the relevant part of The Kriti Rex were both wrong because they were inconsistent with the judgment of this court in Coastal (Bermuda) Petroleum Ltd v VTT Vulcan Petroleum S.A. (No. 2) (The Marine Star) not referred to in The Kriti Rex possibly because it was decided after the conclusion of the argument and only reported 5 months after Moore-Bick J had given judgment, see [1996] 2 Lloyd's Rep. 383. In that case Coastal as c.i.f. buyers sought to recover damages for non-delivery from the defaulting sellers including amounts for which they claimed to be liable to their associated company, Coastal Aruba, for loss of yield at the Aruba refinery pursuant to an on-sale to Coastal Aruba. Mance J held that it would be commercial nonsense if in this situation the defendants could rely on the fact that the on-sale contract contained a force majeure clause exempting either party to that contract and held the defendant sellers liable for the loss of yield for which the buyers were themselves liable to their associated company. The Court of Appeal disagreed for four reasons set out in the judgment of Saville LJ (pages 386-7) with whom Hutchison and Nourse LJJ agreed:-

"Firstly, it seems to me that the word "seller" or "sellers" means and can only mean the selling party in the relevant contract containing the force majeure clause, and does not refer to sellers further up the chain. Mr Havelock-Allan accepted that this must be so in that part of the clause dealing with –

…breakdown or injury to ships, pipelines, machinery or other facilities of the seller or those from whom the seller obtained products purchased hereunder…

I can find nothing in the rest of the clause that indicates that "seller" or "sellers" should be given a different meaning elsewhere.

Secondly, I do not accept the suggestion that in "back to back" cases, all those concerned are contracting on the basis that liabilities will necessarily be passed all the way up or down the chain. Certainly this could be said to be, as the judge put it, the "raison d'être" of the form of the contract between the respondents and their associated company, but this does not help if such an intention cannot be derived from the words the parties have used.

Thirdly, the argument based on "back to back" contracts really involves the unacceptable proposition that the meaning of the words used will change if and when the string is created, which will often only happen after the contract is made, when the same nomination or declaration is passed down the line.

Finally, while I am prepared to accept that in general terms the clause can be said to be designed to deal with "fortuities", I can see no basis for distinguishing between immediate and more distant sources of supply. In either case, so far as the sellers are concerned, there has been a fortuitous event preventing them from performing."

39. It is noteworthy that this court was not considering the case posited by Moore-Bick J in The Kriti Rex namely whether, if the relevant party was himself contractually responsible for a relevant part of the carrying out of an international sale contract (e.g. by having, in an f.o.b. contract, to provide a well-maintained ship or by applying for any necessary clearance), he could nevertheless rely on the absence of any control of his own rather than the absence of control of the party to whom he had delegated his responsibility. The c.i.f. contract in The Marine Star was a straightforward sale of goods (indeed it seems a sale of goods already shipped) so questions of delegation of personal contractual responsibility did not arise. I do not therefore consider that The Marine Star in any way inhibits this court from approving the approach of Moore-Bick J in The Kriti Rex and the assumption (or decision) of Teare J in the present case. I am fortified in that conclusion by the fact that in Frustration and Force Majeure (2^nd ed. 2004) at para 12-026 Professor Sir Guenther Treitel thinks that The Kriti Rex was arguably correctly decided on this point.
40. If, however, that is wrong for any reason, only COOSI can avail themselves of the argument since, as I have said, Vitol have no answer to the reliance Trafigura can place on Article 18 of the contract as between them. For COOSI to succeed on the facts they would have to show that the acts or events which occurred were beyond their own reasonable control. They are the closest party to Total. In circumstances where they must have acquired the oil directly or indirectly from a member of the consortium which included their fellow Chinese corporation, China National Offshore Oil Corporation and which must have dealt directly with Total, it is by no means clear that COOSI could not have had any influence on the way matters developed at the AKPO terminal. The judge did not find it necessary to focus on COOSI's activities in Nigeria, saying merely (para 1) that COOSI bought the cargo from another company but has made no claim against that company in these proceedings. That decision not to bring such a claim would have to be investigated before COOSI could bring themselves within section XII of the Total terms and, on the evidence before the judge, it is unlikely that the burden of bringing themselves within that section could be held to have been discharged.
41. It is, perhaps, fair to say that we received only limited submissions on this question save that Mr Rainey began to rely on Article XII. 2 of the Total terms which provides:-

"… a cause shall be treated as being reasonably beyond the control of the seller if it arises or results from, or in connection with

(a) compliance … with a direction or request of any … national, port … local government or other authority …"

When, however, the court asked what direction or request had been made with which COOSI had complied, he desisted from pursuing this argument.

42. In all the circumstances, I would, if necessary, have held that, on the assumption section XII entitles COOSI to look only to the question whether the acts or events that occurred were beyond COOSI's own control, COOSI have not proved that they were beyond their own control.

Events on and after 7^th September

43. The judge accepted (para 58) the evidence of an expert Nigerian lawyer that the imposition of a "fine" of US$12 million on Total was "an abuse or arbitrary exercise of power". He further held (para 59) that in the ordinary course of events one could have expected that the DPR would have investigated with Mr Pepple what he had done and would then have allowed the vessel to sail "probably by 7^th September 2009". In the event, however, the DPR was only permitted to issue the documents enabling the vessel to depart on 16^th October 2009 after the fine had been paid. He then held (para 68) that the detention of the vessel after 7^th September was caused by the improper actions of the Minister and (para 87) that Vitol's breach of contract caused the delay up to 7^th September but not thereafter since, if the Minister had not sought to impose the fine, DPR would have issued documents enabling the vessel to leave by that date. He therefore rejected Trafigura's argument that losses incurred after 7^th September were recoverable.
44. In the end all of this was of no consequence since the judge held that the respective force majeure clauses excluded the losses in any event. But now that I have held that the force majeure clause cannot be relied on, it is necessary to decide whether the Minister's abuse or arbitrary exercise of power is a new intervening cause which displaces the original breaches of contract by Vitol and/or COOSI.
45. We were told that the judge came to his own (obiter) decision on this point without the benefit of adversarial argument.  Having had the benefit of oral argument together with reference to some authority e.g. the decisions of Gross LJ in Borealis AB v Geogas Trading SA [2011] 1 Lloyd's Rep 482 paras 44 and 104 (adopted and approved by the Court of Appeal in Sealion Shipping Limited and Another v Valiant Insurance Company ("The Toisa Pisces") [2012] EWCA Civ 1625,[2013] 1 Lloyd's Rep 108) and of Tomlinson J in Vinmar International Limited v Theresa Navigation SA [2001] 2 Lloyd's Rep. 1 at paragraph 55 in which those learned judges used the metaphor of "obliterating" or "wholly supplanting" the original cause, I have come to the conclusion that the chain of causation cannot be said to have been broken in this case.  Chitty on Contracts, 31st Edition 2012 paragraph 26-059 does indeed say that the voluntary act of a third person intervening between the breach of contract by the defendant and the loss suffered by the claimant will normally break the chain of causation but adds that it will depend on the court's appraisal of the particular circumstances.
46. The particular circumstances of this particular case are that the operator Total cannot say it was beyond their control that loading took place by severing the padlock on the relevant export pipe without inwards clearance being granted by the DPR or a DPR representative being on board. The Nigerian authorities were always concerned to prevent any overloading of cargo and the presence of their representative during loading was an important part of the alleviation of their concern. The fact that the authorities may have over-reacted and sought to impose a fine which they were not entitled to do by their own law (and which Total in the event paid) is little to the point. The authorities could have investigated the incident without doing anything illegal and such investigation would inevitably last a certain amount of time.
47. If every arbitrary exercise of power in any country of the world where ships come and go were sufficient to displace serious breaches of contract, that might be an encouragement to lawlessness. It was never suggested that the loss from delay between 7^th September and 17^th October was too remote because it was not within the reasonable contemplation of the parties that the Nigerian authorities would take a very serious view of what had happened. The loss initially incurred up to 7^th September is a justified claim and the loss thereafter has the same quality. Different considerations might arise if the shipowners had been fined and then sought to recover the amount of the fine but that has not happened here. I would hold that loss incurred by the delay has been caused by the initial breaches of contract.

Conclusion

48. In the event therefore I would hold that the Owners' claim for demurrage succeeds in full and that the claim can be passed by Trafigura on to Vitol and by Vitol to COOSI and I would allow this appeal accordingly.

Lord Justice Tomlinson:

49. I agree.

Lord Justice Underhill:

50. I also agree.