In this High Court case Mr Lionel Persey QC considered the claimant’s application for permission to apply for summary judgment, together with declarations from the Court confirming that: (a) the cargo supplied by the claimant was not off specification, and (b) that the claimant had no liability to the defendant of any nature, whether monetary or otherwise.

Factual background

Pursuant to a contract of sale dated 4 August 2008 the claimant agreed to sell, and the defendant agreed to purchase, 25,000 mt of gasoil for delivery during the period 4 August 2008 and 11 August 2008. Following later amendments to the contract, the quantity of cargo was reduced to 10,000 mt, plus or minus 10%, and the delivery date was put back to October 2008.

Between about 4 and 12 October 2008 the claimant delivered to the defendant 9,865.69 mt of gasoil by way of ship to ship transfer. Upon loading the cargo had been tested and a certificate of quality had been issued confirming that it was on specification.

The defendant did not submit a claim regarding the quality of the cargo within five days of the issue of the bills of lading as required under the sale contract. However, on 10 June 2009 the defendant filed a petition with the Nigerian Economic and Financial Crimes Commission (the EFCC) contending that the cargo was off specification and had been contaminated. This petition was later withdrawn on 4 June 2010.

On 20 September 2016, more than seven years later, the defendant filed a second petition with the EFCC. In response to this, the claimant commenced proceedings in Nigeria seeking damages and a declaration that the defendant had acted maliciously in filing the petition. The defendant, however, contended that the Nigerian court lacked jurisdiction on the basis that the claim fell within clause 20 of the contract which provided for disputes to be resolved before the High Court in England.

The English claim form was served on the defendant in Nigeria on 8 February 2017, and the application notice and evidence in support of this application were served on 25 September 2017. The defendant did not acknowledge service, and it was assumed that the defendant would play no part in the proceedings. However, on the morning of the hearing the defendant’s solicitors came on the record, serving a witness statement and detailed skeleton argument on behalf of the defendant.

Legal issues

The defendant stated the following four grounds as reasons for resisting the claimant’s application:

  1. There had not been valid service of the legal documents on the defendant
  2. The matter should be heard in arbitration pursuant to clause 20 of the contract
  3. Even if permission is granted, the defendant has real prospects of success
  4. There are other compelling reasons why the matter should proceed to a full trial

Ground one – permission to apply should not be granted

In asserting that the legal documents were not validly served the defendant sought to rely upon a Nigerian law opinion. The judge dismissed this opinion as it had no evidential status. He therefore concluded that the documents were validly served.

The claimant required permission to apply for summary judgment because the defendant had not filed an acknowledgment of service or a defence. The judge accepted the claimant’s submission that although the purpose of CPR 24.4(1) is to protect the position of a defendant who wishes to dispute the jurisdiction from being required to engage in the merits of the claim pending such application, that purpose does not apply where the time limit for filing an acknowledgment had passed and no jurisdictional challenge has been issued. The judge granted the permission.

Ground two – the matter should be heard in arbitration

In rejecting this submission the judge said that clause 20 was a poorly drafted hybrid jurisdiction clause, with the second paragraph providing that arbitration be claimed within five days from the bill of lading date, failing which the claim would be deemed waived and absolutely barred.

The judge said that, in his judgment, the principal function of this clause is to address the buyer’s claims as to quantity and quality; it does not apply to a declaration of non-liability which can only sensibly be made after a claim has been made against the claimant. The judge said that if the defendant was correct this would produce a commercially absurd result.

Ground three – the defendant has real prospect of success

The judge agreed with the defendant that the claimant’s proposed second declaration was too broad, but said that these concerns could be met by an appropriately formulated declaration.

The main part of the defendant’s case was that the declaration of non-liability was time barred. The judge said this was not correct and referred to Aspect Contracts Ltd -v- Higgins Construction Plc [2015] 1 WLR 2961, where it was held that a declaratory claim that a person has not broken a contract is a claim for which it cannot be said that any cause of action has accrued, let alone accrued on any particular date.

Ground four – there are other compelling reasons why the matter should proceed to a full trial

The judge said that he was entirely satisfied that the defendant had no real prospect of successfully defending the claim and stated the following three reasons for this: (1) the cargo was on specification, this was confirmed by the certificate of quality, and pursuant to clause 14 of the contract the certificate of quality was final and binding on the parties; (2) the defendant did not submit a claim in respect of quality within five days; and (3) the claim was time barred by s.5 of the Limitation Act 1980.

Case Comment

This case usefully reiterates what the appropriate test for summary judgment is also making the point that, by reference to Aspect Contracts Ltd -v- Higgins Construction Plc [2015] 1 WLR 2961, a claim for a declaration that a person has not committed a breach of contract is not a claim that falls within section 5 of the Limitation Act 1980.