IMSML Website Article 36/2025: Orin Energy Investments Ltd v Futura Asia Ltd [2024] MLJU 2347 - Failure to Deliver Fuel Oil of Venezuelan Origin via a Ship-To-Ship Transfer (Part 1 of 2)
Orin Energy has featured in two previous articles in 2022 before this. For example:
[1] A Tale of Whether An Arbitration Award Rendered Court Proceedings Academic in Orin Energy Investments Ltd v The Owners of The Ship Or Vessel MT ‘Cavalier’ [2022] MLJU 673 (High Court, Kuala Lumpur) per Azlan Sulaiman JC, see https://imsml.org/article-19
[2] Further Tales from Orin Energy Investments Ltd v The Owners of The Ship Or Vessel MT ‘Cavalier’ [2022] MLJU 673 (High Court, Kuala Lumpur) per Azlan Sulaiman JC on The Effectiveness of Incorporation Clauses in Bills of Lading, see https://imsml.org/article-23
Who were the Contracting Parties?
The Plaintiff (Orin Energy Investments Ltd, hereinafter referred to as ‘Orin’) contracted with the Defendant (Futura Asia Limited, hereinafter referred to as ‘Futura’) for delivery of fuel oil, see Paragraph [1]. Orin is a Labuan incorporated company (under the Labuan Companies Act 1990) and has its registered address at Level 4, Main Office Tower, Financial Park Complex, Jalan Merdeka, 87000 Wilayah Persekutuan Labuan, Malaysia, see Paragraph [7]. Futura is a company incorporated in Hong Kong with a registered address at Room 1501, 15/F, Properity Tower, 39 Queen’s Road Central, Hong Kong, see Paragraph [8].
What were the Terms of the Contract of Sale for Fuel Oil?
Under the terms of the sales contract, Futura agreed to sell and Orin agreed to 700,000 barrels of fuel oil. This was equivalent to 104,477 metric tons, at 1 metric ton being equivalent to 6.7 barrels. The cargo was on board the MT ‘Eser K’, which was the control of the registered owner Rossi Marine and her commercial operator, see Paragraph [9].
Why did Orin Purchase the Fuel Oil?
To mix and blend with oils purchased from its other suppliers to form a bituminous mixture. This was then sold to purchasers in China, see Paragraph [10]. Futura was aware of Orin’s business plan at all materials times. Futura was also aware that Orin had 3 other vessels waiting at Linggi, Melaka, which had oils board to be blended with the cargo of fuel oil, see Paragraph [10]
How Delivery was to be Made by Futura to Orin?
In order to facilitate this delivery, Futura entered into a charter party with the shipowner of the MT ‘Nordic Sirius’, see Paragraph [2]. The fuel oil was loaded on board the MT ‘Eser K’ and was supposed to be delivered to the MT ‘Nordic Sirius’ via ship-to-ship transfer, see Paragraph [2].
What Happened During the Delivery?
When the time arrived for delivery, the master of the MT ‘Nordic Sirius’ refused to receive the cargo. The master had discovered that the fuel oil was of Venezuelan origin, see Paragraph [2]. Orin claimed that the oil was sanctioned oil and that Futura fraudulently misrepresented the true origin go the fuel oil and had actively concealed the true origin of the cargo, see Paragraph [1]. In response, Futura claimed that Orin knew all along that the fuel was from Venezuela. Futura added that the fuel oil was also not sanctioned oil, see Paragraph [3].
What were the Parties Claiming?
Orin claimed damages (general, special, aggravated and exemplary) against Futura, see Paragraph [1]. Accordingly, Futura counterclaimed against Orin for the balance of the purchase price for the fuel oil, loss of profits or diminution in the market value of the remaining parcels of fuel oil that were undelivered, see Paragraph [4]. Futura also counterclaimed for demurrage incurred for the MT ‘Eser K’ and other wasted costs incurred in the ship-to-ship operation that was aborted on 19 September 2020.
What are the Relevant Documents Concerning the Fuel Oil when the STS was Aborted?
An Addendum was issued on 16 September 2020, where Orin agreed to pay USD4.5 million directly to Rossi Marine, the Owners of the MT ‘Eser K, instead of to Futura. Only after this would the MT ‘Eser K’ discharge the first 35,000 metric tonnes of Fuel Oil in the MT ’Nordic Sirius’. This portion of the cargo was known as ‘The First Lot’, see Paragraph [17].
After 34,242.852 (of the 35,000 metric tons) had been delivered via STS, the master of the MT ‘Nordic Sirius’ instructed that the delivery be stopped on the basis that the Venezuelan oil could not be accepted, see Paragraph [18]. Through an email dated 18 September 2020, the master of the MT ‘Nordic Sirius’ forwarded to Orin an email from NAT Chartering Ltd (ie an agent of the owners of ‘Nordic Sirius’) that contained an attachment of a certificate of origin for the Fuel Oil. According to that certificate, it was issued by one PdVSA Petrol SA, which was a Venezuelan state oil company, acting mostly through its agent NAT, see Paragraph [18].
What Happened After the STS was Terminated?
Orin demanded proof that the certificate of origin was for the Fuel Oil. Orin said that the certificate of origin was never shown or produced until after the STS operation had ceased on 18 September 2020. The thrust of Orin’s case was that the certificate of origin was false and a fabrication used to disrupt the discharge of Fuel Oil, see Paragraph [20].
Further, Orin also claimed that both the ‘Eser K’ and the ‘Nordic Sirius’ were colluding against it, to deprive Orin of the cargo that it has paid for (and advanced freight had been paid) by inducing a breach of the Nordic Charterparty since both vessels were managed by V Ship Group, see Paragraph [21].
On 18 September 2020, in an email, NAT (the agent of PdVSA Petrol SA, a Venezuelan state oil company) insisted that Orin instruct the master of the ‘Eser K’ to allow the ‘Nordic Sirius’ to backload (ie return the cargo of fuel oil). Orin refused to do this arguing that it had constructive possession of the Cargo because it had been discharged onto the ‘Nordic Sirius’ which it chartered (and had control over its employment), see Paragraph [22].
Orin assured that it would find a replacement vessel to take the Cargo that was on board the ‘Nordic Sirius’. However, on 21 September 2020, NAT insisted again that the Cargo be backloaded onto the ‘Ester K’. NAT insisted that Orin was in breach of the Nordic Charterparty by placing sanctioned cargo onboard the ‘Nordic Sirius’, see Paragraph [23].
In the meantime, Futura informed its broker (Allied Chartering) that it had received ‘a clear indication’ from Orin to backload the Cargo onto the ‘Eser K’. Futura instructed Allied Chartering to obtain approval from the ‘Eser K’ to ‘free that path for our clients’. Note that whilst Futura was doing this, Orin was still looking for a suitable vessel to take the Cargo from the ’Nordic Sirius’, see Paragraph [24].
Futura kept up its pressure on Orin to take delivery of the ‘Remaining Lots of the Fuel Oil’. At no metric time did Futura receive any response from NAT (or confirmation) to allow the ’Nordic Sirius’ to backload the Cargo onto the ‘Eser K’, see Paragraph [26].
Futura’s solicitors (in Monaco) sent an email on 25 September 2020 demanding Orin pay the balance of USD2.2 million to Futura within 2 hours. The solicitors threatened that should Orin fail to do so, Futura would issue not only an invoice for the whole Fuel Oil consignment, including demurrage and other related costs. The solicitors also added that if Orin failed to pay the invoice by 29 September 2020, Futura would terminate the Sales Contract, see Paragraph [26].
On 26 September 2020, Orin’s solicitors responded and refuted Futura’s right to make such claims, see Paragraph [27]. As expected, on 26 September 2020, Futura forwarded its invoice dated 25 September 2020 to Orin. Futura was demanding a sum of USD3,788,874.10, comprising the USD2.2 million balance for the First Lot, but also 22.5 days of demurrage, see Paragraph ]28].
On 29 September 2020, Futura’s solicitors terminated the Sales Contract via email, see Paragraph [30]. Orin’s response was to arrest the ‘Nordic Sirius’ on 5 October 2020. Orin then followed up with an ex parte injunction order against Futura in order to do the following, see Paragraph [31]:
[1] To retrain Futura from interfering with the Cargo;
[2] From threatening or demanding NAT or the Master of the ‘Nordic Sirius’ from handling the Cargo in any manner contrary to Orin’s instructions.
Orin treated Futura’s termination of the Sales Contract as wrongful repudiation via a letter dated 27 October 2020, see Paragraph [32].
Subsequently, the Cargo was transferred to another Vessel, the ‘Vera’ / ‘Dazzle’ for Orin. This was done pursuant to a settlement agreement between Orin and the Owner of the ‘Nordic Sirius’. Orin was then free to ship the Cargo to its buyers in China, see Paragraph [33].
Did Orin Not Know of the True Origin of the Fuel Oil?
Orin made a positive claim that Futura represented that the Fuel Oil was from Gibraltar, see Paragraph [40]. Various contemporaneous were used by Orin to show Futura concealed that Venezuela was the origin of the Fuel Oil, see Paragraph [41]. Orin’s case against Futura was founded on fraudulent misrepresentation, breach of contract (claims in contract) as well as conspiracy to injure or induce a breach of contract (claims in tort), see Paragraph [42].
In the Amspec Report, which documented an analysis of the Fuel Oil, reference was made to ‘Gibraltar’ next to the word ‘origin’. This suggested that the Fuel Oil sold to Orin was from Gibraltar. Futura had suggested that Gibraltar was the location where the sample of Fuel Oil was drawn. This was unlikely as otherwise the word ‘location’ would have been used instead, see Paragraph [43(a)].
The ‘Eser K’ had called at Amuay Bay, Venezuela where the Fuel Oil was loaded. This reference was however, missing from the ‘Eser K’ March 2020 Q88 document which showed where the ship had her last 3 cargoes, charters and voyages, see Paragraph [43(b)].
The Sales Contract expressly incorporated the BP Oil Limited Terms and Conditions for Sales and Purchases of Crude Oil and Petroleum Products, 2015, Version 1.2 (BPGTC). In Section 71.1 of the BPGTC, stipulated that there would be no obligation to pay if that would expose the party to punitive measures such as US Laws on trade sanctions and foreign trade controls. Therefore, the Fuel Oil’s origin must be from a non-sanctioned country was a fundamental term of the Sales Contract, see Paragraph [43].
It was also alleged that Futura deliberately withheld the Material and Safety Data Sheet (MSDS) which contained crucial information relating to the fuel oil. For example, the MSDS would have stipulated that the Fuel Oil was from PdVSA (of Venezuela), see Paragraph [44].
Mr Justice Ong Chee Kwan rejected the submissions of Orin because there was indeed evidence that the it did indeed know of the Venezuelan origins of the Fuel Oil. His Lordship started by observing that even though Orin alleged that it was induced to enter the Sales Contract by Futura’s fraudulent misrepresentation, it had chosen to affirm that contract. So Orin was not seeking to rescind the Sales Contract, but rather accepted the breach and instead, terminated the Sales Contract, see Paragraph [49] and [50].
Mr Justice Ong Chee Kwan held that both Orin and Futura were aware of the Venezuelan origin of the Fuel Oil. The dealings between Orin and Futura started on 4 June 2020 when one Mr Dan Lloyd (PW1) reconnected with Futura’s trader, one Mr Andre Klein. It was at this time that Orin was made aware via Skype that Futura was trading crude and fuel oil from Venezuela. PW1, through Skype had said that he resided in Germany, but was working for Futura, a Hong Kong base company. In particular ‘trading crude and fuel oil from Venz’, see Paragraph [55]. His Lordship observed that there is no dispute that ‘Venz’ meant Venezuela, see Paragraph [56].
On 12 June 2020, PW1 was provided with more details of the Fuel Oil on board the ’Eser K’. This came via an email from Mr Andre Klien that had two attachments, one of which was a legal opinion from Messrs Badell and Grau, see Paragraph [57]. This first legal opinion addressed the dealings between Futura and PdVSA (of Venezuela). The legal opinion was that as a non-US person, Futura would not be subject to the scope of US sanctions, see Paragraph [58]. Since Orin was purchasing the Fuel Oil from Futura, it would therefore not be the subject of US sanctions, see Paragraph [59].
On 15 June 2020, PW1 (via WhatsApp) confirmed that he did indeed review that legal opinion, see Paragraph [60]. At trial, PW1 said that he had no idea what the document was about, explaining that he had no legal background, see Paragraph [61]. This was rejected by Mr Justice Ong Chee Kwan as it was inconsistent with his response to Mr Andre Klien on 15 June 2020, where the had expressly affirmed that he had review the first legal opinion, see Paragraph [62].
There is also evidence that after reading the first legal opinion, PW1 attached an article and sent it to Mr Andre Klien via WhatsApp. The title of that article was ‘Special Report: How China Got Shipments of Venezuela Oil Despite US Sanction’, and it documented sale to purchasers from China about bituminous mixture formed from Fuel Oil originating from Venezuela, see Paragraph [63]. This fortifies that contention that PW1 had at all time intended to purchase the Venezuelan Fuel Oil and resell it to Orin’s Chinese customers, by avoiding US sanctions, see Paragraph [65].
On 19 June 2020, a follow email was sent by Mr Andre Klien to PW1. Attached to this email was a second legal opinion. It concerned the purchase of the Fuel Oil on board the ‘Eser K’ by one Coral Energy. This second legal opinion also concluded that Coral Energy and Futura could do business with PdVSA regardless of there being US sanctions, see Paragraph [67].
Mr Justice Ong Chee Kwan held that Orin as contemplating a similar purchase from Futura as Mr Andre Klien had specifically mentioned to PW1 that ‘a similar legal analysis for both our companies’, ie suggesting a similar legal opinion could be provided for Orin, see Paragraph [68]. Such a similar opinion would not have ben necessary if the Fuel Oil had originated from Gibraltar, see Paragraph [69].
There was also evidence that the reference to Gibraltar was the places where the samples of the Fuel Oil was taken. Mr Andre Klien had informed PW1 via WhatsApp that Amspec had samples of the Fuel Oil on board the ‘Eser K’ in Gibraltar, see Paragraph [70]. In particular, Mr Andre Klien had messaged that ‘we should still have sample with Amspec in Gibraltar’, see Paragraph [70]. It is clear that PW1 knew that the reference to Gibraltar was in respect of the samples, not the origin of the Fuel Oil, see Paragraph [71]. As Gibraltar is not an oil producing country, Mr Justice Ong Chee Kwan concluded that the Fuel Oil originated from Gibraltar was ‘simply untenable’, see Paragraph [72].
Evidence for the ‘Eser K’ being diverted for sampling can be found in Addendum No.2 to the ‘Eser K’ Charterparty dated 2 May 2020, see Paragraph [75]. Therefore, the word ‘origin’ in the Amspec Report does not in fact refer to the country of origin, see Paragraph [80].
PW1 tried to argue that the port clearance document established that the Gibraltar was the Fuel Oil’s origin. This was rejected by Mr Justice Ong Chee Kwan as the port clearance document was simply the port authority’s written approval for the vessel to depart by sailing from that port. There is nothing in that document that mentions the cargo on board, much less the origin of the Cargo, see Paragraph [81]. The ‘certificate of origin’ would have been the relevant document that shows where the Fuel Oil was from, see Paragraph [82].
At all times PW1 was looking for a ‘friendly’ vessel that could carry Venezuelan origin cargo. PW1’s correspondence with Andre Klien also indicated that PW1 was aware of the nee to ‘redoc’, ie re-issue documents in the light of the Venezuelan origin of the Fuel Oil, see Paragraph [83]. The entire conversation about the need to ‘re-do’ the documents to reflect that the cargo was from Malaysia for the transshipment, necessitated for a ‘friendly’ vessel to receive the Fuel Oil, see Paragraph [85]. Further, Orin had taken steps to conceal the origin of the Fuel Oil from its financiers. This extended to receiving the Fuel Oil via ship-to-ship transfer at Malaysia’s Linggi Port, see Paragraph [85].
Can Orin Continue its Suspension of Payment to Futura After it has Taken Delivery of the First Lot of Fuel Oil?
Mr Justice Ong Chee Kwan found that the position of Orin was untenable. On the one hand, it has taken delivery of the First Lot of Fuel from the ‘Nordic Sirius’. Whilst on the other hand, Orin argued that its payment obligation to Futura was suspended. All the while Orin could sell the Fuel Oil to its Chinese buyers without paying Futura, see Paragraph [98].
Thank you for reading IMSML Website Article 36/2025
Stay tuned for the next IMSML Website Article 37/2025: Orin Energy Investments Ltd v Futura Asia Ltd [2024] MLJU 2347 - ‘Hot-Tubbing’ Expert Evidence on US Sanctions Law (Part 2 of 2)
Signing-off for today,
Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); LL.M (Cardiff); Ph.D (Cardiff); CMILT
Professor of Maritime and Transport Law
Faculty of Law
Universiti Teknologi MARA Shah Alam
Selangor, Malaysia
Tuesday, 9 September 2025
Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my