Glencore International AG v The Cherry: Delivery of Cargo Without Bill of Lading & Agency in Oil Trade Dispute

Glencore International AG sued the owners of the vessels Cherry, Epic, and Addax in the Court of Appeal of Singapore, decision date 2002-11-12, for breach of contract and conversion related to undelivered fuel oil. Glencore claimed damages for fuel oil that was not delivered to them and/or was converted by the appellants. The court dismissed the appeals, except for the appeal of the owners of the Cherry in respect of the Hyperion cargo, which was allowed. The primary legal issues revolved around what constitutes delivery under a bill of lading, the scope of an agent's authority, and causation of loss due to breach of contract and tort of conversion.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeals dismissed with costs, except for the appeal of the owners of the Cherry in respect of the Hyperion cargo, which is allowed.

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Glencore sues vessel owners for undelivered fuel oil. Court of Appeal addresses delivery without bill of lading and agent authority, ruling for Glencore.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Glencore International AGRespondentCorporationAppeals DismissedWon
Owners of the vessels Cherry, Epic and AddaxAppellantCorporationAppeal Allowed in PartPartial

3. Judges

Judge NameTitleDelivered Judgment
Yong Pung HowChief JusticeYes
Chao Hick TinJudge of AppealNo
Judith PrakashJudgeNo

4. Counsels

Counsel NameOrganization
Kenny YapAllen and Gledhill
Corina SongAllen and Gledhill
Vivian AngAllen and Gledhill
Lim TeanRajah and Tann
Shem KhooRajah and Tann
Steven Chong SCRajah and Tann

4. Facts

  1. Glencore claimed damages for fuel oil that was not delivered to them.
  2. The vessels were managed by Dynacom Tankers Management Ltd and time chartered to Metro Trading International Inc.
  3. Metro was a significant supplier of bunkers and fuel oil and owned a floating fuel oil storage facility.
  4. Glencore and Metro had a business relationship involving the purchase, storage, and resale of oil.
  5. Three parcels of oil were purchased by Metro from KPC and on-sold to Glencore.
  6. Glencore voyage chartered the vessels to carry the oil to Fujairah and deliver it to the storage facility.
  7. A fourth parcel was bought by Metro from the National Iranian Oil Company and shipped on board the vessel Hyperion.

5. Formal Citations

  1. The Cherry, CA 39/2002, 40/2002, 41/2002, [2002] SGCA 49

6. Timeline

DateEvent
Events giving rise to the actions took place.
Glencore chartered the Cherry from Metro.
Cherry loaded a cargo of 87,972 metric tons of bunker grade fuel oil 380 cst at the port of Mina Abdulla, Kuwait.
Glencore gave discharge instructions to Metro.
Metro directed Cherry to follow local instructions from Metro storage coordinator.
Defendants allegedly misappropriated and removed approximately 32,635.720 mt of 180 CST Cargo from the vessel Hyperion and loaded the same on board the Vessel.
Cherry arrived at Fujairah and discharged only 32,000 metric tons of the oil.
Defendants carried approximately 32,635.720 mt of the 180 CST Cargo on board the Vessel from Fujairah, U.A.E. to Port Dickson, Malaysia pursuant to a bill of lading.
Telex was dated for the Epic ITT contract.
Telex dated to Metro from Glencore for the Cherry ITT contract.
Glencore instructed BTC through their agents, Glencore UK Ltd (‘Glencore UK’), to endorse the bill to the order of Credit Lyonnais and forward it to Credit Lyonnais.
Collapse of Metro was discovered.
Mr Justice Moore-Bick delivered his judgment.
Kuwait Airways Corporation v Iraqi Airways Co decision.
Decision Date

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the appellants breached their obligations under the bill of lading to deliver the entire cargo.
    • Category: Substantive
    • Sub-Issues:
      • Failure to deliver cargo
      • Partial discharge of cargo
  2. Conversion
    • Outcome: The court found that the respondents were not entitled to make a claim for conversion of the Hyperion cargo on 7 December 1997.
    • Category: Substantive
    • Sub-Issues:
      • Right to sue for conversion
      • Immediate right to possess goods
  3. Agency
    • Outcome: The court found that Metro was not acting as Glencore's agent with the authority to instruct the vessels to retain cargo on board.
    • Category: Substantive
    • Sub-Issues:
      • Construction of agent’s authority
      • Implied authority of agent
  4. Causation
    • Outcome: The court found that the appellants' breaches of contract were an effective cause of the respondents' loss.
    • Category: Substantive
    • Sub-Issues:
      • Effective cause of loss
      • Intervening cause
  5. Delivery of Cargo
    • Outcome: The court found that delivery of cargo does not necessarily include its discharge from the carrying vessel.
    • Category: Substantive
    • Sub-Issues:
      • What constitutes delivery
      • Delivery without surrender of original bills of lading

8. Remedies Sought

  1. Damages

9. Cause of Actions

  • Breach of Contract
  • Conversion
  • Breach of Duty as Bailees
  • Wrongful Detention
  • Wrongful Interference

10. Practice Areas

  • Commercial Litigation
  • Shipping Litigation
  • Admiralty Litigation

11. Industries

  • Shipping
  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Lloyd v Grace, Smith & CoHouse of LordsYes[1912] AC 716United KingdomCited regarding the liability of a principal for the acts of their agent, even if the agent acts fraudulently.
The HoudaCourt of AppealYes[1994] 2 LLR 541United KingdomCited for the principle that a time charterer cannot insist on delivery of cargo without production of the bill of lading.
Farquharson Bros. & Co. v King & CoHouse of LordsYes[1902] AC 325United KingdomCited for the principle that a principal is not liable merely because by appointing the agent he gives him the opportunity to behave fraudulently.
Morris v C.W. Martin & Sons LtdQueen's BenchYes[1966] 1 QB 716United KingdomCited for the principle that a principal is not liable merely because by appointing the agent he gives him the opportunity to behave fraudulently.
Pole v LeaskCourt of ChanceryYes[1860] 28 Beav 562United KingdomCited for the proposition that when an authority given to an agent is in general terms it would be construed liberally and according to the usual course of dealing.
Bristol & West of England Bank v Midland Railway CoQueen's BenchYes[1891] 2 QB 653United KingdomCited regarding the right to sue for conversion and whether that right can be transferred.
Margarine Union G.M.B.H. v Cambay Prince Steamship CoQueen's BenchYes[1969] 1 QB 219United KingdomCited for analysis of Bristol Bank case.
The "Future Express"English Court of AppealYes[1993] 2 LLR 542United KingdomCited for accepting the analysis of Bristol Bank case.
Leigh & Sullivan Ltd v Aliakmon Shipping Co LtdHouse of LordsYes[1986] 1 AC 785United KingdomCited for the principle that in order to claim in negligence for loss of or damage to property, one must have legal ownership or a possessory title at the time of the loss.
The Filiatra LegacyNo Court SpecifiedYes[1991] 2 LLR 337No Jurisdiction SpecifiedCited as support for the proposition that as owners of the Hyperion cargo they were entitled to sue for conversion.
The Feng HangHigh CourtYes[2002] 2 SLR 205SingaporeCited for the principle that a claimant can recover damages for a breach of contract or in tort where that breach (or wrong) was the ‘effective’ or ‘dominant’ cause of the loss.
Galoo Ltd v Bright Grahame MurrayCourt of AppealYes[1994] 1 WLR 1360United KingdomCited for the principle of ‘dominant and effective cause’ in contractual cases.
Kuwait Airways Corporation v Iraqi Airways CoHouse of LordsYes[2002] 2 WLR 1353United KingdomCited for dealing with causation in a claim for conversion.
Hiort & anor v The London and North Western Railway CompanyCourt of AppealYes[1879] 4 Ex D 188United KingdomCited regarding the issue of causation and damages in a conversion claim.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Bills of Lading Act (Cap 384)Singapore
Sale of Goods Act (Cap 393)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Bill of Lading
  • Delivery
  • Voyage Charter
  • Time Charter
  • Letter of Indemnity
  • Storage Facility
  • Conversion
  • Discharge Instructions
  • ITT Contracts
  • Cargo
  • Fuel Oil
  • Metro Storage Coordinator
  • Non-Delivery

15.2 Keywords

  • Admiralty
  • Shipping
  • Bills of Lading
  • Agency
  • Contract
  • Conversion
  • Fuel Oil
  • Glencore
  • Metro
  • Delivery
  • Cargo

17. Areas of Law

Area NameRelevance Score
Bills of Lading Act90
Agency Law85
Contract Law80
Admiralty and Maritime Law75
Breach of Contract70
Conversion65
Torts60
Causation55

16. Subjects

  • Admiralty
  • Shipping
  • Agency
  • Contract
  • Tort