English High Court Grants Summary Judgment in Litasco SA v Der Mond Oil and Gas Africa SA Case Over Unpaid Oil Debt

Introduction

In the case of Litasco SA v Der Mond Oil and Gas Africa SA & Anor, the English High Court’s Commercial Court addressed several legal questions concerning summary judgment, misrepresentation, force majeure, trade sanctions under the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2019 (“the 2019 Regulations”), and the principle of frustration. The dispute revolved around an unpaid debt for crude oil sold and delivered by Litasco to Der Mond under a contract, which was later restructured through an addendum.

Key Facts

Litasco, an oil trading company, entered into a contract with Der Mond for the sale of crude oil, with partial deliveries paid for. Following Der Mond’s failure to settle the full price, an agreement was reached to reschedule the debt (the Addendum), stipulating that Der Mond would make payments in instalments.

Der Mond claimed the negotiations were linked to a proposed joint venture for trading Russian oil in West Africa, which was to fund their repayments. They argued the understanding of a mutually beneficial business relationship influenced their agreement to the Addendum. When Litasco sought to enforce the Addendum after Der Mond failed to make payments, Der Mond raised defenses of misrepresentation, force majeure, sanctions, and frustration.

Legal Principles

Summary Judgment

The court referred to the well-established principles for granting summary judgment and evaluated whether the defenses had any realistic prospect of success.

Misrepresentation

The alleged misrepresentation regarding Litasco’s intention to enter a joint venture with Der Mond was scrutinized. The court held that no express or implied representation was made that could have induced Der Mond’s agreement to the Addendum. Additionally, the evidence did not support Der Mond’s claim of being misled.

Force Majeure

The court considered whether Der Mond’s inability to make payments due to banking issues related to sanctions constituted a force majeure event under the contractual clause. The court determined that clauses trigger when force majeure events “hinder” rather than “prevent” performance, but found the evidence did not establish that Der Mond’s payment was hindered as much as necessary under the contractual clause.

Trade Sanctions

Clause 15 of the contract required compliance with various sanctions regimes. The court examined if Litasco fell under the 2019 Regulations’ prohibitions. It was argued that Litasco might be controlled by sanctioned persons such as Mr. Alekperov or President Putin. However, the court found no arguable case for this.

Frustration

Lastly, the court rebuffed the defense of frustration, stating that the developments cited by Der Mond did not render the contract’s performance impossible nor illegal under the 2019 Regulations.

Outcomes

The court dismissed all of Der Mond’s defenses, ruling that they were speculative, without factual support, or, at best, ungrounded in speculation. The defenses did not hold any realistic chance of success, and therefore, Litasco’s application for summary judgment was granted.

Conclusion

The Litasco SA case reaffirms classical legal principles concerning the provision of summary judgments and the uphill task faced by defendants seeking to rely on misrepresentation, force majeure, trade sanctions, and frustration defenses when challenged by compelling contractual terms and factual narratives. The decisive factor was rooted in the lack of evidence to support the defenses advanced by Der Mond, coupled with the robust terms laid out in the contract, the Deed of Payment, and the Addendum. The court did not hesitate to uphold the established obligations when the defenses presented were unable to prove their realistic prospects for success.