Addax Energy SA v Petro Trade Inc
[2023] EWHC 1609 (Comm)
Litasco SA v Der Mond Oil and Gas Africa SA & Anor
15 November 2023
[2023] EWHC 2866 (Comm)
High Court
A company (Litasco) owed money by another company (Der Mond) won a court case. The judge didn't believe Der Mond's excuses for not paying, such as blaming problems with international money transfers or new laws.
Key Facts
- •Litasco SA (Claimant) sought summary judgment against Der Mond Oil and Gas Africa SA and Locafrique Holding SA (Defendants) for outstanding payments under an agreement (Addendum) rescheduling existing debt.
- •The Addendum followed negotiations stemming from an initial contract for oil sale where Der Mond failed to make full payment.
- •Defendants argued they had a realistic prospect of defending the claim due to force majeure, trade sanctions, and misrepresentation.
- •The Addendum included clauses for payment, interest, acceleration, and a warranty against sanctions violations.
- •Defendants’ Amended Defence introduced claims of misrepresentation (fraudulent and negligent) and breach of implied term/collateral warranty, alleging the Addendum was linked to a non-binding MOU for a joint venture that Litasco never intended to pursue.
- •Defendants also argued force majeure due to difficulty in making international payments due to sanctions concerns and lack of foreign currency.
- •Defendants claimed the sanctions (Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019) prevented payment.
- •Litasco argued the force majeure and sanctions defences were unarguable, as the payment obligation was already accrued before any alleged sanctions changes.
- •Payments were made initially through EcoBank and then FBN Bank Senegal, before subsequent payments were not forthcoming.
Legal Principles
Principles for granting summary judgment.
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch); Lex Foundation v Citibank [2022] EWHC 1649 (Comm)
Force majeure: hindrance vs. prevention of performance; application to accrued debt obligations.
Peter Dixon & Sons Ltd v Henderson Craig & Co Ltd [1919] 2 KB 778; Toprak v Finagrain [1979] 2 Lloyd’s Rep 98
Application of sanctions regulations as a matter of contract vs. general law.
Mints v PJSC National Bank Trust [2023] EWCA Civ 1132
Frustration of contract; application to accrued payment obligations.
Law Reform (Frustrated Contracts) Act 1943
Construction of force majeure clauses and sanctions regimes
Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323
Interpretation of 'control' under Regulation 7 of the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019
Mints v PJSC National Bank Trust [2023] EWCA Civ 1132
Outcomes
Summary judgment granted to Litasco.
Defendants' misrepresentation, force majeure, and sanctions defences were deemed unarguable. The court found no evidence of misrepresentation by Litasco, insufficient evidence of force majeure, and no applicable sanctions changes after the Addendum's effective date. The court held the Addendum was an unconditional promise to pay.