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Interpretation –  recap email incorporating VITOL terms construed

The facts

The vessel was chartered for the carriage of fuel oil or vacuum gas oil from 1/2 safe ports, Black Sea to 1/2 safe ports/STS US Gulf. Charterers had the option to discharge and reload at Antwerp.

The recap email generally incorporated the VITOL voyage charterparty terms, amended 1 November 1999.

Under the rubric “vessel info” the following was recorded “TBOOK WOG VSL IS APPROVED BY: BP/LITASCO/STATOIL EXXON VIA SIRE”

Adjacent to a reference to the VITOL standard clause 18, the email read: “TBOOK VSL APPROVED BY: TBOOK VSL APPROVED BY: BP/EXXON/ LUKOIL/STATOIL/MOH”

The VITOL standard clause 18 read as follows:

“18.Oil companies approvals clause

Owner warrants that the vessel is approved by the following companies and will remain so throughout the duration of this charterparty. Owner(s) to advise including inspection dates and expiry dates”

The vessel loaded cargo at Odessa and Batumi. The charterers exercised the option to reload in Antwerp and eventually 200 000 barrels of VGO was discharged at Houston and 100 000 at Port Allen.

At Antwerp the class annual survey was carried out. Shell and Conoco SIRE inspections were also conducted. It was discovered that the low suction sea chest valve required repair. The class surveyor agreed to postpone repairs until after completion of the next leg of the voyage to the US Gulf.

The cargo was offered to Shell/STUSCO at an agreed price subject to the approval of the vessel. They refused to approve the vessel and on the ground of such refusal refused in turn to purchase the cargo.

It was accepted that the defect discovered at Antwerp would compromise the vessel’s approval ratings with all oil majors.

Charterers claimed the difference between what they said they were obliged to sell the cargo for and what they could have obtained in the proposed sale to Shell.

Owners claimed demurrage.


The issues were tried before HH Mackie J in the Commercial Court.

He found that the TBOOK (to the best of owners’ knowledge) promise continued throughout the voyage and that the owners had breached the warranty contained in clause 18.

Even though Shell was not one of the four majors mentioned in the warranty, he found a causal link between Shell’s refusal of approval and the alleged loss suffered by charterers.

He referred the issue of demurrage to the Admiralty Registrar to give the parties a further opportunity to lead evidence.

The Court of Appeal (Longmore, Davis LJJ and Sir David Keene – main judgement by Longmore LJ) upheld an appeal finding that the clause as set out in the recap email was intended to replace the standard VITOL clause 18 so that the continuing guarantee of oil majors’ approval did not apply.


The outcome of the appeal is undoubtedly correct.

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