A Lagos State High Court has granted interim preservative orders of Mareva injunction in favour of United Bank for Africa Plc (UBA) in a dispute over the alleged diversion and non-delivery of petroleum products valued at $242 million involving 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 matter.
The bank accused Vitol SA and the other respondents of allegedly failing to deliver petroleum cargoes consigned to its order under the relevant bills of lading, despite the completion of the voyages to Nigeria.
However, in her ruling, Justice Jose granted three prayers in UBA’s application against the second respondent only, stating: “Prayers 1–3 are granted as prayed against the 2nd Respondent only.”
UBA’s 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.
The bank is seeking to establish in the substantive proceedings that Vitol SA and the owners of the vessels involved in the transactions are liable for alleged conversion, misrepresentation and negligence arising from the non-delivery of the petroleum products.
Leading UBA’s legal team, Bode Olanipekun, SAN, urged the court to grant the interim preservative orders against Vitol and the other shipping companies. The bank also cited 34 financial institutions and public agencies, including commercial banks, merchant banks, microfinance banks, the Nigerian Ports Authority and the Nigeria Customs Service, in connection with the application.
How the dispute arose
In an affidavit supporting the application, UBA’s Group Head of Recoveries and Remedial Management, Anthony Chilaka, explained that the bank had issued a letter of credit for the benefit of Vitol SA to facilitate petroleum products transactions.
According to the affidavit, the petroleum cargoes were transported to Nigeria, following which the masters of the vessels issued bills of lading covering the shipments. UBA alleged that Vitol subsequently endorsed the bills of lading “to the order of” the bank and delivered the original shipping documents to it.
The bank maintained that the endorsement of the documents entitled it to take possession of the cargoes upon completion of the voyages. However, Chilaka stated that the petroleum products, identified in the affidavit as gasoil, were not delivered to the bank despite the vessels having completed their voyages. “The applicant has not been given possession of the gasoil despite completion of the voyage,” the affidavit stated.
UBA further alleged that the cargoes were instead applied to the use of another party, contending that their non-delivery amounted to conversion and negligence. The bank argued that the respondents had obligations arising from the underlying transactions and the endorsement of the bills of lading, which it claimed were not fulfilled.
According to the bank, the shipping documents were central to its claim because they identified UBA as the party to whose order the cargoes were consigned. The alleged failure to deliver the products, despite the endorsement and handover of the original documents, forms a major part of its case.
UBA also alleged that cargoes associated with the transactions were diverted to the use of other parties after the completion of their respective voyages, instead of being delivered to the bank.
Mareva injunction and asset preservation
A Mareva injunction is an interim court order designed to prevent a defendant from dissipating or dealing with assets in a manner that could frustrate the enforcement of a judgment that may subsequently be delivered.
By seeking the orders, UBA is trying to preserve assets or funds up to the disputed amount while pursuing its claims against the respondents.
The substantive proceedings are expected to determine the parties’ respective obligations, the circumstances surrounding the delivery of the cargoes and whether the alleged conduct gives rise to liability for conversion, misrepresentation or negligence.
The outcome of the substantive dispute could have implications for the parties’ contractual and commercial obligations arising from the petroleum transactions, particularly the role of letters of credit and bills of lading in financing, transporting and taking delivery of international cargoes.
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