The Lagos State High Court has granted interim preservative orders in favour of United Bank for Africa Plc (UBA) in a $242 million dispute involving alleged diversion and non-delivery of petroleum products against Switzerland-based energy trading company, Vitol SA, and four other shipping companies.
The orders, granted last Thursday by Justice K. A. Jose, followed an application by UBA seeking to prevent the dissipation of assets and dealings with funds up to the disputed amount pending the determination of the substantive dispute.
Bode Olanipekun, SAN, lead counsel to UBA, urged the court to grant the interim reliefs against Vitol and the other respondents.
In her ruling, Justice Jose granted three of the prayers sought by the bank, stating: “Prayers 1–3 are granted as prayed against the 2nd Respondent only.”
The application was brought pursuant to Order 43 Rule 1 of the High Court of Lagos State (Civil Procedure) Rules 2019 and the Lagos State High Court Practice Direction No. 2 of 2019.
UBA is seeking to establish in the substantive proceedings that Vitol SA and the owners of the vessels involved are liable for alleged conversion, misrepresentation and negligence arising from the non-delivery of petroleum products covered by the transactions.
According to court documents, the dispute centres on petroleum cargoes allegedly shipped to Nigeria under transactions facilitated by letters of credit issued by UBA.
In an affidavit supporting the application, Anthony Chilaka, the bank’s Group Head of Recoveries and Remedial Management, said UBA issued a letter of credit in favour of Vitol SA to facilitate the petroleum products transactions.
Chilaka stated that the cargoes were transported to Nigeria and that the masters of the vessels issued bills of lading covering the shipments.
He further alleged that Vitol subsequently endorsed the bills of lading to the order of UBA and handed over the original documents to the bank.
According to the affidavit, the endorsement entitled UBA to take possession of the cargoes upon completion of the voyages.
However, the bank alleged that it did not receive the gasoil despite the completion of the voyages.
“The applicant has not been given possession of the gasoil despite completion of the voyage,” the affidavit stated.
UBA further alleged that the petroleum products were instead diverted for the use of another party, arguing that the failure to deliver the cargoes amounted to conversion and negligence.
The bank maintained that the respondents had obligations arising from the transactions and the endorsement of the shipping documents, which it claimed were not fulfilled.
It also alleged that other cargoes associated with the transactions were diverted to third parties after their respective voyages rather than delivered to the bank.
As part of its efforts to preserve assets pending the resolution of the dispute, UBA sought orders restricting the respondents from dissipating assets or dealing with funds up to the amount in controversy.
The bank also cited 34 financial institutions and public agencies in connection with the application. They include commercial banks, merchant banks, microfinance banks, the Nigerian Ports Authority and the Nigeria Customs Service.
The substantive proceedings are expected to determine the parties’ respective liabilities over the disputed petroleum cargoes and the allegations of conversion, misrepresentation and negligence.
The interim orders are preservative in nature and do not, in themselves, constitute a final determination of the allegations against Vitol SA or the other parties.
Comment here