IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY, MALAYSIA

(COMMERCIAL DIVISION)
ADMIRALTY IN PERSONAM NO.: WA-27NCC-17-03/2021

BETWEEN

ORIN ENERGY INVESTMENTS LTD

[Company No.: LL14514] … PLAINTIFF

AND

FUTURA ASIA LIMITED

[Hong Kong Company No.: 2485758] …DEFENDANT

JUDGMENT

Introduction

[1] In this Suit, the Plaintiff, Orin Energy Investments Ltd (“Orin
Energy”) sought for inter alia, various declaratory reliefs and
damages (general, special, aggravated and exemplary) against the
Defendant, Futura Asia Limited (“Futura”) premised on Futura's
breach of an express and fundamental term of a sales contract when
it delivered fuel oil of Venezuelan origin to Orin Energy. Orin Energy
claimed that the aforesaid fuel oil was sanctioned oil. Orin Energy

1
 contended that Futura had fraudulently misrepresented the true
origin of the fuel oil and had actively concealed the true origin of the
same.

[2] Further, Orin Energy also claimed that Futura had wrongfully
induced a breach of the charterparty agreement that it had entered
into with the owner of the vessel, MT “Nordic Sirius” to receive the
fuel oil vide a ship-to-ship transfer from the vessel, MT “Eser K”. This
had led the master of MT “Nordic Sirius” to refuse receiving onboard
the vessel further fuel oil when he discovered the Venezuelan origin
of the fuel oil.

[3] Futura, on the other hand, claimed that Orin Energy had known all
along that the fuel oil that it purchased originated from Venezuela. It
is also its case that the fuel oil was not sanctioned oil.

[4] Accordingly, Futura counterclaimed against Orin Energy inter alia

for the balance purchase price of the parcel of fuel oil that was
delivered to Orin Energy, the loss of profits or diminution in market
value of the remaining parcels of fuel oil that were undelivered,
demurrage for the vessel, MT “Eser K” and other wasted costs
incurred by Futura after the ship-to-ship operation between the
vessels, MT “Nordic Sirius” and MT “Eser K” was aborted on
18.9.2020.

[5] Both parties had engaged experts on the U.S. Sanction Laws to
testify at the trial. A protocol was agreed upon to receive the experts’
opinions by way of a ‘hot-tubbing’ exercise. The protocol is annexed
to this judgment as a guide to future cases.

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[6] After reading the written submissions and the relevant cause papers
and after hearing oral submissions from counsel, I did not find any
merits in Orin Energy’s claims. On the contrary, I found as a matter
of fact that Orin Energy had known all along that it was purchasing
fuel oil originating from Venezuela. I also accepted the opinion of
the expert engaged by Futura that the fuel oil was not sanctioned
cargo at all.

Background Facts

The Parties

[7] Orin Energy is a Labuan incorporated company pursuant to the

Labuan Companies Act 1990 with its registered address at Level 4,
Main Office Tower, Financial Park Complex, Jalan Merdeka, 87000
Wilayah Persekutuan Labuan, Malaysia.

[8] Futura is a company incorporated in Hong Kong whose registered

address is at Room 1501, 15/F, Prosperity Tower, 39 Queen’s Road
Central, Hong Kong.

The Sales Contract

[9] On 25.7.2020, Orin Energy entered into a sale and purchase

contract with Futura ("Sales Contract"), whereby Futura agreed to
sell and Orin Energy agreed to purchase, 700,000 barrels
(equivalent to 104,477 metric ton, at 1 metric ton = 6.7 barrels) of
fuel oil (“the Fuel Oil”) that were onboard the vessel MT "Eser K"
("Eser K"). Futura was the charterer and party in control of the Eser

3
 K and one Rossi Marine Ltd ("Rossi Marine") was the registered
owner and commercial operator of the Eser K at the material times.

[10] Orin Energy purchased the Fuel Oil for the purpose of mixing and
blending with oils purchased from its other suppliers to form a
bituminous mixture to be sold to its purchasers in China. Futura was
aware of Orin Energy’s blending plan at the material times. Futura
was also aware that Orin Energy had 3 other vessels waiting at
Linggi, Melaka with other oils on board to be blended with the Fuel
Oil.

[11] Under the Sales Contract, the agreed laytime was between
15.8.2020 to 25.8.2020, and to be narrowed by Orin Energy (as the
buyer) to 7 days by 31.7.2020. This was the time during which the
Eser K must arrive at the port of discharge in Linggi, Melaka ("Linggi
Port") for the Fuel Oil to be delivered to a ship to be nominated by
Orin Energy by way of ship-to-ship ("STS") transfer since the sale
was based on FOB Eser K. This agreed laytime was narrowed to no
later than 19.8.2020.

[12] However, the Eser K encountered several issues during her voyage
from Gibraltar to Linggi Port. As a result, the Eser K was delayed
and only arrived in Linggi outside the agreed laytime on 27.8.2020.
Consequently, Orin Energy had to reorganise the use of the vessels
it chartered. The vessel that Orin Energy initially intended to use to
take delivery of the Fuel Oil, MT “Evreti,” had gone on to carry other
cargo and Orin Energy had to find another vessel in place of MT
“Evreti.”

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The receiving vessel - Nordic Sirius

[13] Thus, on 11.9.2020, Orin Energy chartered a vessel MT "Nordic

Sirius" ("Nordic Sirius") to take delivery of the Fuel Oil ("Nordic
Charterparty"). The registered owner of the Nordic Sirius at the
material time was NAT Bermuda Holdings, a subsidiary of Nordic
American Tankers Ltd, a U.S. entity.

[14] Both the Eser K and the Nordic Sirius were managed by companies
which were part of a global shipping management group of
companies known as the V Ship group (“V Ship Group”). The Eser
K’s technical operator at the material time was the International
Tanker Management Limited ("ITM"). At the material time, the
Nordic Sirius’ commercial operator was V Ships UK Ltd (“V Ship
UK”), and its technical operator was V Ships Norway AS (“V Ship
Norway”). The ITM, V Ship UK and V Ship Norway were all part of
the V Ship Group.

[15] Orin Energy had made arrangement to blend the Fuel Oil and its
other oils onboard the Nordic Sirius to form about 1 million barrels
of bituminous mixture and transport it to its purchasers in China.
Orin Energy notified Futura of its nomination of the Nordic Sirius on
9.9.2020, and by email dated 11.9.2020, the Nordic Sirius was
approved by Futura and the Eser K for the STS operation.

[16] The Eser K arrived in Linggi on 27.8.2020, outside the agreed

laycan under the Sales Contract. The Eser K tendered its Notice of
Readiness only on 8.9.2020. On 15.9.2020, the Nordic Sirius arrived
in Linggi to receive the Fuel Oil.

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The 1st Lot

[17] On 16.9.2020, Orin Energy and Futura executed an addendum to

vary the terms of the Sales Contract (“the Addendum”). As
captured in the Addendum, Orin Energy was required to pay USD
$4.5 million directly to the owners of Eser K, Rossi Marine, instead
of to Futura, before the Eser K would discharge the first 35,000
metric tonnes of the Fuel Oil onto the Nordic Sirius (“1st Lot”). In this
regard, it is not in dispute that Orin Energy had paid Rossi Marine
USD $4.5 million towards the purchase price for the 1st Lot of the
Fuel Oil.

STS Operation Aborted

[18] On 18.9.2020 at about 03:36 a.m., STS operations were carried out
to discharge the 1st Lot of the Fuel Oil from the Eser K onto the
Nordic Sirius. At about 10:00 p.m. on 18.9.2020, after about
34,242.852 (out of 35,000) metric tons of the 1st Lot had been
delivered and discharged onto the Nordic Sirius, the Master of the
Nordic Sirius instructed the STS operation to cease on the ground
that the Fuel Oil was from Venezuela and that he could not accept
Venezuelan oil onboard the Nordic Sirius. By an email dated
18.9.2020, the Master of the Nordic Sirius forwarded to Orin Energy
an email from NAT Chartering Ltd (agent of the owners of the Nordic
Sirius), attaching a certificate of origin of the Fuel Oil issued by one
PdVSA Petroleo SA, a Venezuelan state oil company. For ease of
reference, the registered owners of the Nordic Sirius, its parent
company, and the agent are referred to throughout this judgment as
“NAT.”

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Status of Fuel Oil when STS operation aborted – the Cargo, Balance of
1st Lot and the Remaining Lots

[19] When the STS operation between the Eser K and the Nordic Sirius
ceased on 18.9.2020, approximately 34,242.852 metric tons of Fuel
Oil had been discharged onto the Nordic Sirius (“the Cargo”) with
approximately 717.15 metric tons’ balance of the 1st Lot (“the
Balance of the 1st Lot”) together with the balance of the Fuel Oil
purchased under the Sales Contract not discharged onto the Nordic
Sirius remaining onboard the Eser K (“the Remaining Lots”).

The Dispute on Origin of Fuel Oil and actions taken post termination of
the STS Operation

[20] In this action, Orin Energy contended that it had disputed the said
certificate of origin and demanded for proof that the certificate was
in respect of the Fuel Oil. Orin Energy claimed that the certificate of
origin was never shown or produced to it until after the STS
operation ceased on 18.9.2020. Orin Energy stated that it had
thought that the certificate of origin was false and a fabrication to
disrupt the discharge of the Fuel Oil. In particular, Orin Energy
referred to its email to NAT on 18.9.2020, which is reproduced
below:

“…Chtrs have reviewed owners edition of cert of origin allegedly

coming from the vessel Eser K. Chtrs request owners to provide
evidence that it is without doubt the cert of origin of the cargo
currently onboard Eser K; which as per cargo inspectors
Amspec has stated as Grade RMK Fuel Oil and origin of
Gibralter.

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 …In addition the alleged cert of origin is dated April and the cargo
destined for Greece NOT Malaysia. The Eser K sailed from
Algeciras to Malaysia. ...
…The current cert of origin of the cargo on board the Eser K is
with the cargo owners of the cargo on board the Eser K. This again
supports the allegation that the cert of origin that is presented by
the owners of the Nordic Sirius is either false or of previous cargo
onboard the Eser K.This especially since the Cert of Origin is
dated April 2020.
…Owners of Nordic Sirius are also respectfully reminded that
the Eser K 2010 built is LR classed and SKULD is the P&I
Insurance provider. As such the allegations made by owners
Nordic Sirius may be construed by these parties as malacious
[sic]”
[emphasis added]

[21] Orin Energy further claimed that when it discovered that the
certificate of origin was provided by the Master of the Eser K to the
Master of the Nordic Sirius, it had thought that both the Eser K and
the Nordic Sirius were colluding against it (since both vessels were
managed by V Ship Group), to deprive Orin Energy of the Cargo
that it had paid for and to induce a breach of the Nordic Charterparty
for which advance freight had already been paid.

[22] By email dated 18.9.2020, NAT inter alia insisted that Orin Energy
instruct the Master of the Eser K to allow the Nordic Sirius to
backload the Cargo onto the Eser K which Orin Energy rejected on
the ground that it had legal rights over the Cargo, having paid USD
$4.5 million as part of its purchase price. Further, Orin Energy
maintained that it had constructive possession of the Cargo because
it had been discharged onboard the Nordic Sirius which it chartered,
and therefore had control over its employment.

8
[23] By email dated 21.9.2020, despite Orin Energy's assurance that it
would find a replacement vessel to take the Cargo that was onboard
the Nordic Sirius, NAT insisted that the Cargo be backloaded onto
the Eser K and alleged that Orin Energy was in breach of the Nordic
Charterparty by having placed sanctioned cargo onboard the Nordic
Sirius.

[24] While Orin Energy was still looking for a suitable vessel to take the
Cargo from the Nordic Sirius, Futura informed its broker (Allied
Chartering) that it had received "a clear indication" from Orin Energy
to backload the Cargo onto the Eser K and instructed Allied
Chartering to obtain approval from the owners of the Eser K to "free
that path for our clients."

[25] At the same time, Futura kept pressuring Orin Energy to take
delivery of the Remaining Lots of the Fuel Oil. Throughout this
period, Orin Energy did not receive any response from NAT or
confirmation that NAT would not instruct and or allow the Nordic
Sirius to backload the Cargo onto the Eser K.

[26] On 25.9.2020 (Friday), Orin Energy received an email from Futura's

solicitors in Monaco, demanding Orin Energy to pay the balance
USD $2.2 million to Futura for the Cargo within 2 hours and
threatened Orin Energy that Futura would otherwise issue an
invoice for the whole Fuel Oil, including demurrage and other costs
and if Orin Energy failed to pay the said invoice by 29.9.2020
(Tuesday), Futura would terminate the Sales Contract.

9
[27] With regards to the aforesaid, Orin Energy’s solicitors responded on
26.9.2020, refuting Futura's right to make such claims.

[28] By email dated 26.9.2020, Futura forwarded to Orin Energy its

invoice dated 25.9.2020 in the sum of USD $3,788,874.10, which
included not only the USD $2.2 million balance in respect of the 1st
Lot but also 22.5 days of demurrage.

[29] Orin Energy disputed Futura's demand and invoice for being
contrary to the terms of the Sales Contract and put Futura on notice
inter alia of Futura's breach of the Sales Contract in delivering
sanctioned cargo, and of Orin Energy's right to claim for costs,
damages and expenses that it suffered as a result of the breach.

[30] By an email from Futura’s solicitors dated 29.9.2020, Futura

terminated the Sales Contract.

[31] On 5.10.2020, Orin Energy arrested the Nordic Sirius. On

8.10.2020, Orin Energy obtained an ex parte injunction order
against Futura in this Suit to inter alia restrain Futura from interfering
with the Cargo and from threatening or demanding NAT or the
Master of the Nordic Sirius from handling the Cargo in any manner
contrary to Orin Energy's instructions (“the ex parte Injunction
Order”).

[32] By letter dated 27.10.2020, Orin Energy treated Futura’s termination

of the Sales Contract as wrongful repudiation, accepted the
repudiatory breaches and in turn terminated the Sales Contract.

10
[33] It is not disputed that the Cargo that was transferred from the Eser
K to the Nordic Sirius was eventually transferred out to another
vessel, “Vera”/”Dazzle” for Orin Energy’s further action and
shipment to its buyers in China pursuant to a settlement agreement
between Orin Energy and the owner of the Nordic Sirius.

Parties’ respective claims

[34] In this Suit, Orin Energy sought inter alia various declaratory reliefs
and damages (general, special, aggravated and exemplary) against
Futura premised on a breach of what Orin Energy contended was
an express and fundamental term of the Sales Contract, namely,
that Futura had in breach of the said contract delivered sanctioned
oil of Venezuelan origin to Orin Energy.

[35] Orin Energy claimed that there was fraudulent misrepresentation,

contending that Futura had actively concealed the true origin of the
Fuel Oil. In addition, Orin Energy claimed that Futura had wrongfully
induced a breach of the Nordic Charterparty.

[36] On the other hand, Futura counterclaimed against Orin Energy inter
alia for the balance purchase price of the Cargo, the loss of profits
or diminution in the market value of the Remaining Lots, demurrage
incurred by the Eser K and other wasted costs incurred by Futura
after the STS operation was aborted on 18.9.2020. The
Counterclaim was premised on the breach of the Sales Contract by
Orin Energy in failing to pay for the balance purchase price for the
Cargo and to take delivery of the Remaining Lots.

11
[37] It was Futura’s case that Orin Energy, at the beginning and at all
times, had knowledge that the Fuel Oil was from Venezuela.
Premised on the fact that Orin Energy had knowledge of the Fuel
Oil being purchased, its origin and specifications, and had accepted
the Fuel Oil, Futura contended that Orin Energy had no basis to
claim for misrepresentation (fraudulently or otherwise) as regards
the origin of the Fuel Oil or the breach of the Sales Contract.

[38] As regards the claim for inducing breach of the Nordic Charterparty,
it was contended that there was hardly any evidence led in support
of the same and by reason thereof, this claim was obviously
unstainable and bound to fail.

Legal and Factual Issues

[39] Arising from the aforesaid contentions of the parties, it is necessary

for this Court to consider and to determine the following issues:

a) whether as a matter of fact, Orin Energy knew all along that

the Fuel Oil that it purchased from Futura originated from
Venezuela;

b) whether Orin Energy was subject to the U.S. Sanction laws

when it purchased the Fuel Oil from Futura. Connected to the
aforesaid issue is whether the Fuel Oil was sanctioned oil by
reason of the fact that the same originated from Venezuela.

12
Court’s Considerations

[40] The crux of Orin Energy’s claims is that prior to and at the time of
the Sales Contract, it did not know that the true origin of the Fuel Oil
onboard the Eser K that it purchased from Futura was from
Venezuela, more specifically from Petroleos de Venezuela
(“PdVSA”), the state-owned company of Venezuela. In fact, Orin
Energy made a positive claim that Futura had represented that the
Fuel Oil was from Gibraltar.

[41] Orin Energy relied heavily on various contemporaneous documents

to support its claim that it had purchased the Fuel Oil believing that
its origin was from Gibraltar, contending that Futura had concealed
the fact that the origin of the Fuel Oil was Venezuela.

[42] Orin Energy mounted its causes of action against Futura for
fraudulent misrepresentation, breach of contract and for conspiracy
to injure and or inducing breach of contract.

[43] In support of its claims, Orin Energy referred to:

a) the Amspec Report, a document providing an analysis of the

Fuel Oil, where next to the word ‘origin’ was the reference to
‘Gibraltar’. It was contended that this must mean or convey
the meaning that the origin of the Fuel Oil that was sold to Orin
Energy was from Gibraltar. It was submitted that the reference
to ‘Gibraltar’ could not be intended to identify the location
where the sample of the Fuel Oil was drawn as contended by

13
 Futura because the word ‘location’ would have been used
instead of ‘origin’ if this was indeed the case;

b) the Eser K March 2020 Q88, a document which showed the

Eser K’s last 3 cargoes, charters and voyages. None of these
had stated or referred to Venezuela and or PdVSA. Orin
Energy contended that Futura had intentionally omitted any
reference to the fact that the vessel, Eser K had called at
Amuay Bay, Venezuela where the Fuel Oil was loaded;

c) the BP Oil International Limited General Terms and

Conditions for Sales and Purchases of Crude Oil and
Petroleum Products, 2015 Edition, version 1.2 (“BPGTC”)
which was expressly incorporated into the Sales Contract, in
particular section 71.1 thereto which expressly provided that
neither party shall be obliged to perform any obligation under
the Sales Contract, which includes the obligation to pay or to
accept (delivery of the Fuel Oil), if that would expose such
party to punitive measures under inter alia laws of the United
States applicable to parties relating to trade sanctions and
foreign trade controls. By this, it was contended that the origin
of the Fuel Oil from a non-sanctioned country or entity was
made a fundamental term of the Sales Contract and the
performance of the same. Alternatively, it is contended that in
the Sales Contract, the parties agreed that the Fuel Oil sold
would not be sanctioned cargo, that is, the same would not be
subjected to any trade restrictions or that in dealing with such
Fuel Oil, the parties would not be exposed to punitive
measures, including secondary sanctions.

14
[44] Further, Orin Energy contended that Futura had deliberately
withheld providing the Material and Safety Data Sheet (“MSDS”),
which was the safety data sheet containing information relating to
the Fuel Oil. The MSDS was received by Futura from PdVSA at the
load port between March and April 2020 and if provided, would have
disclosed that the Fuel Oil was from PdVSA.

For ease of reference, the Amspec Report, the Eser K March 2020
Q88, the BPGTC and the MSDS shall collectively be referred as the
“Contemporaneous Documents” in this judgment.

[45] Based on the aforesaid, Orin Energy contended that the only
conclusion that this Court should arrive at is that the product that the
parties had agreed to sell and purchase was Fuel Oil of Gibraltar
origin, and not of Venezuelan origin.

[46] Premised upon the aforesaid, Orin Energy contended that since the
language of the Sales Contract (gleaned from the
Contemporaneous Documents) being unambiguous and clear,
there is no scope to consider the supposed intention of parties from
the factual matrix that formed the background of the Sales Contract,
particularly if the purpose is to contradict the express terms of the
Sales Contract.

[47] If accepted, this would preclude any examination and/or reliance on

any or all pre-contractual communication between parties (which
includes telephone conversations, exchange of WhatsApp
messages and exchange of emails) in the interpretation of the terms
of the Sales Contract. Orin Energy contended that all

15
 communications between the parties after the Sales Contract was
executed were even more irrelevant and should be totally
disregarded.

[48] With respect, I am unable to agree.

[49] At the outset, it must be noted that whilst Orin Energy claimed that
it was induced to enter into the Sales Contract by reason of the
fraudulent misrepresentation by Futura, nevertheless, it was not
seeking to rescind the Sales Contract and instead had chosen to
affirm the same, and for the repudiatory breach of the condition as
to the origin of the Fuel Oil, Orin Energy had accepted the breach
and terminated the Sales Contract.

[50] Accordingly, the thrust of Orin Energy’s claims is based primarily on

a cause of action for breach of the terms of the Sales Contract.

[51] In this regard, whilst Orin Energy may be keen to confine the Court’s
determination on the issue of knowledge of the origin of the Fuel Oil
to only the Contemporaneous Documents, this Court cannot ignore
the claim by Futura that both Orin Energy and Futura were fully
aware of the fact that the Fuel Oil was of Venezuelan origin and had
deliberately proceeded with the sale and purchase of the same by
taking measures to conceal the Venezuelan origin of the Fuel Oil
from other third parties. In other words, Orin Energy was complicit
in avoiding any reference to the true origin of the Fuel Oil in the
Contemporaneous Documents.

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[52] In any case, it is my judgment that the terms of the Sales Contract
as evidenced from the Contemporaneous Documents are far from
clear for the preclusion of any reference to extraneous pre-
contractual communications and even post-contractual
communications to determine the meaning of the terms of the Sales
Contract and or in construing the intention of the parties, especially
as regards the origin of the Fuel Oil.

[53] Contrary to Orin Energy’s contention, it is Futura’s case that at all

times, Orin Energy had full knowledge that the origin of the Fuel Oil
was from Venezuela. Premised on the fact that Orin Energy had
knowledge of the origin and specifications of the Fuel Oil purchased
under the Sales Contract, Orin Energy would have no basis to allege
that Futura had misrepresented (fraudulently or otherwise) the origin
of the Fuel Oil and or that the word ‘origin’ in the Amspec Report
was understood by Orin Energy to mean that the Fuel Oil had
originated from Gibraltar

[54] To my mind, there is ample evidence in support of Futura’s

contention and I do find that, in fact and in truth, Orin Energy did
know at the time of the Sales Contract that it was purchasing from
Futura the Fuel Oil which originated from Venezuela.

[55] The dealings between Orin Energy and Futura started on 4.6.2020,
when Mr Don Lloyd (“PW1”) reconnected with Futura’s trader, one
Mr Andre Klein. At that time Orin Energy had already been made
aware via Skype messages that Futura was trading crude and fuel
oil from Venezuela. The messages were not disputed by PW1 at
trial, in particular the WhatsApp message which stated as follows:

17
 “I’m living in Germany, and working with a Hong Kong company
called Futura Asia Limited.
Trading crude and fuel oil from Venz”
[emphasis added]

[56] There is no dispute that “Venz” in this case meant Venezuela.

[57] On the 12.6.2020, PW1 was provided with more details of the Fuel
Oil on board the Eser K by Mr Andre Klein via an email with 2
attachments. This included the document known as the Amspec
Q&Q for the RMK 700 which referred to the Fuel Oil on board the
Eser K that was subsequently purchased by Orin Energy and a legal
opinion by one Mr Bravo (“1st Legal Opinion”) of Messrs Badell &
Grau. The said email stated thus:

“Please see attached the Amspec Q&Q for our RMK 700 cargo
onboard the Eser K, as well as Arturo Bravo’s legal opinion with
regard to Futura Asia Limited for your review.”
[emphasis added]

[58] The 1st Legal Opinion, issued by Messrs Badell & Grau, was
specifically to address the dealings between Futura and PdVSA, in
particular, whether the U.S. sanctions would apply to Futura when it
purchased oils from PdVSA. The 1st Legal Opinion concluded that
Futura, being a non-U.S. person, would not be subject to the scope
of the U.S. sanctions.

[59] The 1st Legal Opinion was intended to assure Orin Energy that it
would not be subject to any U.S. sanctions in its purchase of the

18
 Fuel Oil from Futura since Futura was not subject to the U.S.
sanctions in doing business with PdVSA.

[60] There is no dispute that PW1 had received the 1st Legal Opinion. In
fact, on 15.6.2020, via WhatsApp, PW1 again confirmed that he had
not only received but had also reviewed the 1st Legal Opinion:

ANDRE KLEIN : Hey man, good morning. Did you review

the Eser K Q&Q, as well as the legal
opinion?
DON : Yes thanks, We checking with end users.
ANDRE KLEIN : Great Don, as soon as your clients bite,
she can set sail.
[emphasis added]

[61] At the trial, PW1 had sought to get around the 1st Legal Opinion and
the obvious reference therein that the Fuel Oil on board the Eser K
was from Venezuela by stating that he had not read the contents of
the same because he was supposedly on holiday at the time and or
that the 1st Legal Opinion was an unsolicited document. This was
what he testified when cross examined on the 1st Legal Opinion:

PT : Yes. Just tell us what it’s about.

DON : It has something to do with Futura, and
something about Venezuela and some, it shows
here relations and something to do with the
executive order from the United States or
something like that. But –
PT : Do you agree this document is on the scope of
the US sanctions against Venezuela as well as
Venezuelan oil?

19
 DON : First of all, I must remind you that on the 13th,
Mr Andre Klein sent me this document, which is
late at night, and 14th I was on my holiday. I
have no idea about this document, never
bother to read. I'm not a legal person or I
have no background of, in the legal system
at all. So, I have no idea about this document
and the only thing that he kept pushing me the
last few days when I was on my holiday, did you
check the report on the AmSpec. That's what I
looked at and regards to this document, I've
never seen this, only until the 18th of
September because he actually asked me to
have a look at all these documents
[emphasis added]

[62] PW1’s testimony was clearly inconsistent with his response to Mr

Andre Klein on 15.6.2020 where he affirmatively confirmed having
reviewed the 1st Legal Opinion.

[63] In fact, after having received and reviewed the 1st Legal Opinion,
PW1 had attached an article with the title “Special Report: How
China got shipments of Venezuela oil despite U.S. Sanction” to Mr
Andre Klien via WhatsApp. The said article had highlighted the sales
to purchasers from China of bituminous mixture formed from fuel oil
originating from Venezuela.

[64] In this regard, it is not insignificant that in this particular case, Orin
Energy had intended to blend the Fuel Oil purchased from Futura
with other oils to form bituminous mixture to be sold to its purchasers

20
 in China, something similar to the activities referred to in the said
article.

[65] The aforesaid lends force to the contention that at all times, PW1
had always intended to purchase and resell the Fuel Oil which he
knew originated from Venezuela to Orin Energy’s Chinese buyers
as bituminous mixture. From the discussions between PW1 and Mr
Andre Klein it is clear that PW1 was aware of ways to avoid the U.S.
sanctions and PW1 had communicated this to Mr Andre Klein
referencing the aforesaid article.

[66] In fact, further to and in continuance of PW1’s discussions with Mr

Andre Klein, on 19.6.2020, a follow-up email with an attachment of
a second legal opinion by Messrs Badell & Grau (“2nd Legal
Opinion”) was sent to PW1 by Mr Andre Klein:

“As discussed, please review Arturo Bravo’s legal opinion,

specifically related to Coral Energy.
We can always ask him to provide a similar legal analysis for
both our companies, subject to receipt of Orin’s KYC package”
[emphasis added]

[67] To my mind, the aforesaid is a significant email. The 2nd Legal

Opinion deals with the intended purchase of the Fuel Oil on board
the Eser K by one Coral Energy. It addressed the issue of the U.S.
Sanctions relating to the sale and purchase of Venezuelan oil
originating from PdVSA. It concluded that Coral Energy and Futura
could ‘do business or transactions in connection with petroleum
products (oil) originated in Venezuela (PdVSA) as part of their

21
 current business regardless of the prohibitions under the Executive
Orders and the Venezuela-related Sanctions issued by OFAC and
the Treasury Department.’

[68] The fact that Mr Andre Klein had specifically mentioned that ‘… a
similar legal analysis for both our company…’ can be provided to
PW1 suggests that Orin Energy was fully aware of the fact that the
Fuel Oil on board the Eser K originated from Venezuela and that
Orin Energy was contemplating a similar purchase from Futura.
There would be no need for ‘a similar legal analysis for both our
company’ if as contended by Orin Energy, it had purchased the Fuel
Oil on the basis that the same had originated from Gibraltar.

[69] Notwithstanding the aforesaid, PW1 would want this Court to

believe that he was led to believe that the Fuel Oil on board the Eser
K had originated from Gibraltar because the Amspec Report had
referred to ‘Gibraltar’ as ‘origin’.

[70] With respect, PW1’s testimony in this regard is disingenuous. This

is because on 16.6.2020, PW1 was informed by Mr Andre Klein by
WhatsApp that Amspec had samples of the Fuel Oil onboard the
Eser K in Gibraltar. This was in response to PW1’s text message to
Mr Andre Klein that the Plaintiff’s clients may need some test on the
Fuel Oil. The WhatsApp messages are set out below:

“Mr Andre Klein : Hey man, I have a call with my guys in half
an hour … any progress on the RMK
cargo?

22
 PW1 : Rmk. So far they will come back with
some test needed. Will reply tomorrow.
Mr Andre Klein : Don, pls give me a shout ..
We should still have samples with
Amspec in Gibraltar …”
[emphasis added]

[71] It is abundantly clear from the above WhatsApp messages that PW1
knew that the reference to Gibraltar was in respect of the samples
that were in possession of Amspec at Gibraltar.

[72] The contention that the Fuel Oil had originated from Gibraltar is
simply untenable. Gibraltar is not an oil-producing country. Gibraltar
has no oil refinery and Gibraltar only exports refined oil imported
from other oil-producing countries. Hence, the Fuel Oil cannot
originate from Gibraltar. As an experienced oil trader, PW1 would
know this. In fact, Mr Emanuele Oste (“DW1”)’s testimony on this
point was not contradicted at all by Orin Energy.

[73] DW1 had testified that the specifications of the Fuel Oil on board the
Eser K were unique to that originating from Venezuela. This was
what he said:

“My comment is, you can see that some elements like the
vanadium, the viscosity, the sulphur, the asphaltenes is classic
product originated, produced in Venezuela. Our fuel oil has
always between 2.5 and 3% of sulphur. The viscosity is always
above 380, always. The asphaltenes always above 6, the
vanadium, it’s always around 400. This is what I can tell about
and comment about this report. For example, if I see any Iranian
fuel oil, the sulphur is around 3.5 but all the other elements, the

23
 viscosity is 380 always, the vanadium is very low and the
asphaltenes is below 6”.

[74] Again, this part of DW1’s testimony was not contradicted and or
challenged at the trial. PW1 as an experienced oil trader would know
of this fact as well.

[75] In truth, the AmSpec Report was meant to be an Analytical Report

of the testing by the surveyors in Gibraltar. The Defendant had
purposely directed the vessel, Eser K to call at Gibraltar for this
testing. That this was so is clear from the Addendum No. 2 to the
Eser K Charterparty dated 2.5.2020 which clearly states that the
Eser K was to be diverted to Gibraltar merely for sampling.

“SAMPLING: CHARTERER’S OPTION VESSEL TO PROCEED

TO GIBRALTAR FOR THE PURPOSE OF SAMPLING OF THE
CARGO PROVIDED

CHARTERERS TO REIMBURSE ALL TIME AND BUNKERS

USED FOR THE DEVIATION FROM VESSEL’S TURNING
POSITION IN CENTRAL MED TOWARDS GIBRALTAR”.

[emphasis added]

[76] No oil was loaded, much less originated, from Gibraltar. The Fuel
Oil was already on board the Eser K when she was diverted to
Gibraltar. The word “origin” in the Amspec Report clearly referred to
Gibraltar not as the origin of the Fuel Oil but the origin where the
samples were located and the tests on the samples were done.

24
[77] A visual perusal of the Amspec Report itself shows two columns. On
the left is the Sample Information and on the right is the Laboratory
Information. The mention of “Gibraltar” is found under the left
column under the Sample Information. This is because Gibraltar
was the place where the sample was taken.

[78] This was also explained in the letter from AmSpec dated 20.10.2020
which stated as follows:

“For your information, since Amspec is accredited by ENAC as

per ISO 17025, all our analytical reports must show the origin of
where the fuel sample was taken. In this case, the sample was
taken on board the M/T Eser K in Gibraltar, which is why Gibraltar
is stated in the column “Origin”. The lab is not allowed to
speculate the fuel’s load port origin. It should be clarified
that our report do not and are not intended to show the load
port or actual origin of the fuel oil but where the oil sample
was drawn from.”
[emphasis added]

[79] The above was in fact agreed by PW1 under cross examination.

PT : AmSpec is explaining, “Origin,” simply means

where the sample was taken, you agree? From
the explanation at 1367?
DON : That’s what it says here.

[emphasis added]

[80] Whilst it is true that the aforesaid letter from Amspec was only
issued after the action herein was filed, it is a confirmation that the
word “origin” in the Amspec Report does not in fact refer to the

25
 country of origin for the Fuel Oil. PW1 knew that the samples were
taken from the Eser K and to my mind, given his experience and the
factual matrix of this case, could not have understood the word
“origin” in the Amspec Report as intended to refer to the country of
origin of the Fuel Oil.

[81] PW1 had also sought to rely on the port clearance to establish that
the origin of the Fuel Oil was from Gibraltar. However, a port
clearance is simply the port authority’s written approval for the
vessel to sail from that port. There is nothing in the port clearance
that mentioned the cargo on board, much less the origin of this
cargo. Other than the fact that the Eser K was given port clearance
from the authority of Algeciras in Spain, nothing else in that
document would suggest that the cargo onboard the Eser K, which
was the Fuel Oil, had its origin from Gibraltar. In other words, the
port clearance is merely a document that shows that the Eser K has
the necessary approval to sail from the port. It does not show the
origin of the cargo on board the Eser K at all.

[82] Counsel for Orin Energy had put to DW1 that the sending of the port
clearance to PW1 was an intention to deceive Orin Energy into
believing that the Fuel Oil was from Gibraltar. With respect, this is
simply untenable given that PW1 knew all along that the Fuel Oil
originated from Venezuela. PW1, being an experienced trader,
knew that a Certificate of Origin would have been the relevant
document that shows the origin of the Fuel Oil and that this
document was necessary to be provided to the port. If Orin Energy
was indeed concerned with the origin of the Fuel Oil as contended,
he would have demanded a copy of the Certificate of Origin and

26
 would not have relied on the Amspec Report and the Port
Clearance. These two documents do not show the origin and are
not meant for that purpose, a fact that PW1 agreed to under cross
examination.

[83] In fact, Orin Energy’s knowledge that the Fuel Oil was of
Venezuelan-origin can be further established by the following
WhatsApp correspondences between Orin Energy and Futura:

a) in the WhatsApp messages dated 17.6.2024, it is clear that

PW1 was aware that the Fuel Oil had originated from
Venezuela and was concerned about sanctions. PW1 was
actively looking for a “friendly” vessel that could carry
Venezuelan-origin cargo.

ANDRE KLEIN : As for the change of documents have

to send a letter to the owner for
approval. What documents other than
the new B/L do you require the owner,
and/or agent to sign?
DON : At moment. Just option. Not needed
yet. Finding vessel that will be
friendly is the priority
[emphasis added]

In this regard, it is of significance that PW1 had testified that he

was aware that by having a ‘switched’ Bill of Lading (“B/L”),
there would be a new B/L issued and the purpose of doing this
was to hide the actual origin of the cargo.

27
 PT : You agree that Venezuelan cargo if there
is switching of bill of lading will not show
the port of loading was in Venezuela?

DON : Yes, some of them come in and tend to

do that. This article says that.
[emphasis added]

b) in the WhatsApp messages dated 18.6.2024, it is again clear

that PW1 was aware of the origin of the cargo and was trying
to hide the origin through re-documentation or switching of the
B/L in order to get a lightering vessel to transport the cargo to
Orin Energy’s buyer:

ANDRE KLEIN : Do you need me to assist you in

identifying a friendly lightering vsl?

DON : At moment no need. The client said they

have 1. But need us to redoc.
[emphasis added]

c) In the WhatsApp messages dated 26.8.2020, PW1 was trying

to conceal the origin of the cargo to Orin Energy’s bank and the
Suezmax owner/master.

ANDRE KLEIN : also question. sts with eser k he asked

what we will have as cert of origin
when he does the sts. to what concerns
Icaria owner he wants to know keep in
mind
DON : Malaysia

28
 ANDRE KLEIN : Don, will the owner/master of the
Suez see any Venz load port docs
from either the Eser K, or your FSU,
or will all the clearing docs refer to
Malaysia origin at of the
transshipment already?
DON : None from mine
Eser k. All docs done by us habibi
ANDRE KLEIN : Reason why I’m raising this question,
because Suezmax owner does not
want see any docs relating to load
port…
This is why we are utilizing Letters of
Indemnity…
Perfect, let me get the offer over to you,
and then call you.
DON : For sure man. My bank also don’t
want to see it.
Cause today the whole interview was
asking us wtf these companies we
showing them. Are we doing anything
with sanctioned.
ANDRE KLEIN : Don, our cargo is as clean as it can get.
We are literally examed, die to debt
collection, and the way the company has
been structured…
[emphasis added]

[84] The aforesaid put paid to Orin Energy’s reliance on the Eser K
March 2020 Q88 (which shows the Eser K's last 3 cargoes, charters,
and voyages) and the BPGTC terms of the Sales Contract (which
prohibits trading of sanctioned cargo) in support of its claim that
Futura had intentionally concealed the origin of the Fuel Oil from it.

29
[85] The truth of the matter is that Orin Energy had actively taken
measures to conceal the origin of the Fuel Oil from its financiers and
from the master of the vessel that would be receiving the Fuel Oil
through the ship-to-ship transfer at the Malaysian Linggi port. The
entire conversation about the need to ‘re-do’ the documents to
reflect the origin of the cargo to be from ‘Malaysia’ for the
transhipment, the search for a ‘friendly’ vessel to receive the Fuel
Oil and whether the master of the Suez would see “any Venz load
port docs” was precisely because both Orin Energy and Futura knew
that they were dealing with cargo that originated from Venezuela.
This was also the reason the parties were trying to avoid payment
in U.S. dollars.

[86] Although Mr Andre Klein had provided PW1 with the 1st and 2nd
Legal Opinions to assure Orin Energy that the Fuel Oil was not
sanctioned cargo, nevertheless, the parties were acutely aware that
third parties who may be risk adverse and who may not be fully
informed of the U.S. Sanction laws (which are far from clear but with
disastrous consequences) would not want to deal with the Fuel Oil
that originates from Venezuela at all.

[87] That Orin Energy was ‘in the know’ that it was purchasing Fuel Oil
from Venezuela is further shown by PW1’s reaction when the Master
of Nordic Sirius instructed the STS operation to cease on 18.9.2020,
on the ground that the Fuel Oil was from Venezuela and that he
could not accept Venezuelan oil onboard the Nordic Sirius. This is
because PW1, instead of expressing surprise that the Fuel Oil was
said to originate from Venezuela, responded by demanding to know
how the Master got to know about the Fuel Oil’s origin. The following

30
 WhatsApp exchanges between PW1 and DW1 are conspicuously
telling:

On 18.9.2020:
Don: Crazy mate. How the owners got the origin.
Problem is both vessels are v ship

On 19.9.2020
Don: Bad news. The vessel master eser K gave it out
Emanuele: But to Who????
Don: The vessel master revealed to nat owners
I guess must be some issues with eser k owners
Now my vessels and team exposed. We are
finding a solution.

On 21.9.2020
Don: Yes. But he did not have to provide venz.
None of the vessels here if they are. They don’t
provide.
Your loi is good enough.
Plus your port calls and port clearance.
[emphasis added]

[88] The above, to my mind, is clear evidence that Orin Energy knew all
along that it was purchasing from Futura Fuel Oil originating from
Venezuela. PW1’s statement that “… the vessel master … did not
have to provide venz” belies Orin Energy’s claim that it did not know
that the Fuel Oil was of Venezuelan origin.

[89] For Orin Energy to now come to court pleading that Futura had
misrepresented the origin of the Fuel Oil to be from Gibraltar is not

31
 only completely against the weight of the contemporaneous
evidence but is also, with respect, disingenuous.

[90] The contention that the bill of lading dated 2.4.2020, the MSDS and
the certificate of origin dated 2.4.2020, and the Q88 document
dated 16-8-2020 which identified Amuay Bay as the last place of
STS operation of the Eser K on 9.4.2020, all of which were within
Futura’s possession before the Sales Contract was concluded, were
intentionally not disclosed by Futura before the Sales Contract was
concluded, to hide the true origin of the Fuel Oil, rings hollow in light
of this Court’s finding that Orin Energy knew all along that the Fuel
Oil on board the Eser K had originated from Venezuela.

[91] Following from the aforesaid, it is the judgment of this Court that
Orin Energy’s claims against Futura - that Futura should bear all
Orin Energy’s losses and or damages arising from the decision of
the Master of Nordic Sirius to cease the STS operation upon
discovering that the Fuel Oil was from Venezuela - are wholly
without any merits at all.

[92] Orin Energy knew that it was dealing with Fuel Oil from Venezuela.
In this regard, it was Orin Energy who had nominated the vessel
Nordic Sirius to receive the Fuel Oil from the Eser K. Futura cannot
be responsible for the decision by the Master of Nordic Sirius to
cease the STS operation. This is so regardless of whether the
Master of Nordic Sirius was legally correct to regard the Fuel Oil as
blocked cargo under the U.S. Sanction laws.

32
[93] At the trial, expert evidence was adduced by both parties on the U.S.
Sanction laws in relation to oil originating from Venezuela. This was
made necessary because Orin Energy had claimed that it had been
led into believing that the Fuel Oil onboard the Eser K had originated
from Gibraltar and not Venezuela. It was its contention that if the
Fuel Oil was from Gibraltar, the STS operation would not have been
halted and Orin Energy would not have suffered any losses.

[94] The expert evidence was introduced to support Orin Energy’s claims
that it did not and or could not have agreed to accept the Fuel Oil
from Venezuela because of the drastic consequences of dealing
with sanctioned cargo. According to learned counsel for Orin
Energy, the testimony of the experts on sanctions is important to aid
the Court in appreciating the effect of the Venezuela origin of the
Fuel Oil, the importance of the terms of the Sales Contract on
sanctioned cargo and the effect of Section 71 of the BPGTC in
suspending further performance of contractual obligations under the
Sales Contract once it came to light that the Fuel Oil was of
Venezuelan origin.

[95] In particular Section 71 of the BPGTC provides as follow:

“71.1 Notwithstanding anything to the contrary elsewhere in the

Agreement
71.1.1 Nothing in the Agreement is intended, and nothing
herein should be interpreted or construed, to induce
or require either party hereto to act in any manner
(including failing to take any actions in connection
with a transaction) which is inconsistent with,
penalised or prohibited under any laws, regulations,

33
 decrees, ordinance, order, demand, request, rules
or requirements of the United States of America
applicable to such party which relate to international
boycotts of any type; and
71.1.2 Neither party shall be obliged to perform any
obligation otherwise required by this Agreement
(including without limitation an obligation to (a)
perform, deliver, accept, sell, purchase, pay or
receive monies to, from, or through a person or
entity, or (b) engage in any other acts) if this would
in violation of, inconsistent with, or expose such
party to punitive measures under, any laws,
regulations, decrees, ordinance, orders, demands,
requests, rules or requirements of the European
Union, any EU member state, the United Nations or
the United States of America applicable to the
parties relating to trade sanction, foreign trade
controls, export controls, non-proliferation,
antiterrorism and similar laws ("Trade
Restrictions").

71.2 Where any performance by a party would be in violation

of, inconsistent with, or expose such party to punitive
measures under, the Trade Restrictions, such party (the
"Affected Party") shall, as soon as reasonably practicable
give written notice to the other party of its inability to
perform. Once such notice has been given the Affected
Party shall be entitled:
71.2.1 immediately to suspend the affected obligation
(whether payment or performance) until such time
as the Affected Party may lawfully discharge such
obligation; and/or
71.2.2 where the inability to discharge the obligation
continues (or is reasonably expected to continue)

34
 until the end of the contractual time for discharge
thereof, to a full release from the affected
obligation, provided that where the relevant
obligation relates to payment for goods which have
already been delivered, the affected payment
obligation shall remain suspended (without
prejudice to the accrual of any interest on an
outstanding payment amount) until such time as the
Affected Party may lawfully resume payment;
and/or
71.2.3 where the obligation affected is acceptance of the
vessel, to require the other party to nominate an
alternative vessel."

71.3 Nothing in this Section shall be taken to limit or prevent the

operation, where available under the governing law of the
Agreement, of any doctrine analogous to the English
Common Law doctrine of frustration.”

[96] If, as a result of Futura’s concealment of the Venezuelan origin of

the Fuel Oil, Orin Energy had come into possession and receipt of
blocked or sanctioned cargo and exposed itself to secondary
sanctions, it was contended that the performance of Orin Energy’s
contractual obligation under the Sales Contract to pay the balance
purchase price of the Fuel Oil would be suspended, and thus, Orin
Energy was not in breach of the Sales Contract when it refused to
accede to Futura’s solicitors' demand for payment on 25.9.2020.

[97] When this Court enquired of counsel for Orin Energy as to whether
the suspension of payment can still be maintained notwithstanding
that Orin Energy had taken delivery of the 1st Lot and in fact sold the

35
 same to its Chinese buyers, learned counsel for Orin Energy
contended that Section 71.2.2 stipulates that the suspension
remains until such time when “… the Affected Party may lawfully
resume payment …”.

[98] With respect, I find this contention to be wholly untenable. It seems

to me incredulous that Orin Energy can, on the one hand, contend
that the 1st Lot is sanctioned cargo, which necessarily means that it
cannot deal with the same, but on the other hand maintained that
notwithstanding its sanction status, it could take delivery of the same
from Nordic Sirius, sell it to its Chinese buyers and yet argue that its
payment obligation to Futura is suspended.

[99] In truth, Section 71 of the BPGTC was never invoked at all. This is
because the Fuel Oil that Orin Energy had purchased from Futura
was never subjected to the U.S. Sanctions law in this case. In this
regard, I am persuaded more by the opinion of Mr Bravo to that of
Mr Skoufalos.

[100] Much time and costs had been spent by the parties in procuring their
respective experts to address this Court on the U.S. Sanctions laws.
In dealing with the experts’ opinions, I had departed from the
traditional procedure where each party’s expert would testify
through the process of examination in chief followed by cross-
examination and re-examination. Instead, this Court had, by
agreement of the parties, applied what is known as the concurrent
expert evidence approach which is colloquially known as “hot-
tubbing”.

36
[101] To be clear, “hot-tubbing” is the practice where 2 or more experts at
a hearing give their evidence concurrently, enabling simultaneous
questioning and discussions on key issues. Before the trial, each
expert had issued their written reports and had engaged in pre-trial
meetings or conclaves to identify areas of agreement and
disagreements. At the trial, the experts are sworn in together and
the judge will chair a discussion between them, shaped by an
agreed agenda derived from a joint statement or court-approved
issues of contentions.

[102] In the present case, both parties have sought from their respective
experts their opinions premised upon a set of agreed facts and
issues. An agreed procedural framework on how the experts’
testimonies shall be taken by the Court was also prepared and
followed. As this “hot-tubbing” process and protocol may be useful
for future cases and perhaps adopted with suitable modifications to
suit the circumstances of the case, I have annexed the entire order
and protocol that were adopted in this case as reference.

[103] Coming to the substance of the expert opinions, the material

differences in the opinions expressed by Mr Skoufalos, Orin
Energy’s expert and Mr Bravo, the expert for Futura, come down to
2 issues:

(i) First Issue: Whether a non-U.S. person is potentially exposed

to a secondary sanction in buying and accepting the Fuel Oil
and the consequences of such a secondary sanction;

37
 (ii) Second Issue: Whether the Fuel Oil was a blocked property
or sanctioned cargo in the hands of Futura, and whether such
sanctioned status remained throughout the subsequent sale
of the Fuel Oil from Futura to Orin Energy

(collectively, “the Sanctions Issues”).

[104] The First Issue addresses the consequences, if any, to Futura when
it purchased the Fuel Oil from PdVSA.

[105] The main authority that issues directives and regulations pertaining
to sanctions under the United States laws and system is the Office
of Foreign Asset Control (“OFAC”). In this regard, written opinions
and oral testimonies were provided by both experts at the trial and
the Court has also been provided with the applicable sanctions and
or appropriate Executive Orders (“EO/EOs”) issued by OFAC.

[106] The Court can interpret these EOs not constrained by the
interpretation of either sanction experts. Conversely, the Court can
also be guided and choose to follow the view of any of the experts
if the Court finds the reasoning in line with what the Court interprets.

[107] This approach is supported in the English case of Bahamas

International Trust Co Ltd v Threadgold [1974] 1 WLR 1514 which
was also cited in the Malaysian case of Padiberas Nasional Bhd v
Kontena Nasional Bhd [2010] 3 MLJ 134 stating that:

“In a case which turns, as this one does, on the construction to

be given to a written document, a court called on to construe the
document in the absence of any claim to rectification, cannot be

38
 bound by any concession made by any of the parties as to what
its language means. That is so even in the court before which the
concession is made; a fortiori in the court to which an appeal from
the judgment of the court is brought. The reason is that the
construction of written document is a question of law. It is for the
judge to decide for himself what the law is, not to accept it
from any or even all of the parties to the suit; having so
decided it is his duty to apply it to the facts of the case. He
would be acting contrary to his judicial oath if he were to
determine the case by applying what the parties conceived
to be the law, if in his own opinion it were erroneous.”
[emphasis added]

[108] The two main Executive Orders relevant to the Sanctions issues are
EO 13850 and EO 13884. The relevant provisions of the EOs are
as follows:

“Executive Order 13850 – Blocking Property of Additional

Persons Contributing to the Situation in Venezuela
Section 1
(a) All property and interests in property that are in the United
States, that hereafter come within the United States, or that are
or hereafter come within the possession or control of any United
States person of the following persons are blocked and may not
be transferred, paid, exported, withdrawn, or otherwise dealt in:
any person determined by the Secretary of the Treasury, in
consultation with the Secretary of State:
(i) to operate in the gold sector of the Venezuelan economy or in
any other sector of the Venezuelan economy as may be
determined by the Secretary of the Treasury, in consultation
with the Secretary of State;
(ii) to be responsible for or complicit in, or to have directly or
indirectly engaged in, any transaction or series of transactions

39
 involving deceptive practices or corruption and the Government
of Venezuela or projects or programs administered by the
Government of Venezuela, or to be an immediate adult family
member of such a person;
(iii) to have materially assisted, sponsored, or provided
financial, material, or technological support for, or goods or
services to or in support of, any activity or transaction
described in subsection (a)(ii) of this section, or any person
whose property and interests in property are blocked
pursuant to this order; or
(iv) to be owned or controlled by, or to have acted or purported
to act for or on behalf of, directly or indirectly, any person
whose property and interests in property are blocked pursuant to
this order.
….
Sec. 4. The prohibitions in section 1 of this order include:
(a) the making or any contribution or provision of funds, goods,
or services by, to, or for the benefit of any person whose property
and interests in property are blocked pursuant to this order; and
(b) the receipt of any contribution or provision of funds, goods, or
service from any such person.
…
Sec. 5.
(a) Any transaction that evades or avoids, has the purpose of
evading or avoiding, causes a violation of, or attempts to violate
any of the prohibitions set forth in this order is prohibited.
(b) any conspiracy formed to violate any of the prohibitions set
forth in this order is prohibited.
[emphasis added]

[109] For our present purpose, I understand the EO 13850 to mean that
once the Secretary of the Treasury, in consultation with the
Secretary of State, makes a ‘determination’ that:

40
 a) a person is found to operate in “any other sector” of the
Venezuelan economy as may be determined by the Secretary
of the Treasury, in consultation with the Secretary of State;

b) a person is found to have materially assisted, sponsored, or

provided financial, material, or technological support for, or
goods or services to or in support of a person determined by
the Secretary of the Treasury, in consultation with the
Secretary of State to be responsible for or complicit in, or to
have directly or indirectly engaged in, any transaction or series
of transactions involving deceptive practices or corruption and
the Government of Venezuela or projects or programs
administered by the Government of Venezuela, or to be an
immediate adult family member of such a person; or

c) a person is found to be owned or controlled by, or to have

acted or purported to act for or on behalf of, directly or
indirectly, any person whose property and interests in property
are blocked pursuant to this order;

then all property and interests in property of the aforesaid person

that come within the possession or control of a U.S. person are
blocked and may not be transferred, paid, exported, withdrawn, or
otherwise dealt with. In other words, such property become “blocked
property” in the hands of the U.S. person.

[110] Executive Order 13884 provides:

41
Executive Order 13884 – Blocking Property of the
Government of Venezuela
Section 1
(a) All property and interests in property of the Government of
Venezuela that are in the United States, that hereafter come
within the United States, or that are or hereafter come within the
possession or control of any United States person are blocked
and may not be transferred, paid, exported, withdrawn, or
otherwise dealt in.
(b) All property and interests in property that are in the
United States, that hereafter come within the United States,
or that are or hereafter come within the possession or
control of any United States person of the following persons
are blocked and may not be transferred, paid, exported,
withdrawn, or otherwise dealt in: any person determined by
the Secretary of the Treasury, in consultation with the
Secretary of State:
(i) to have materially assisted, sponsored, or provided
financial, material, or technological support for, or goods or
services to or in support of, any person included on the list
of Specially Designated Nationals and Blocked Persons
maintained by the Office of Foreign Assets Control whose
property and interests in property are blocked pursuant to
this order; or
(ii) to be owned or controlled by, or to have acted or purported to
act for or on behalf of, directly or indirectly, any person whose
property and interests in property are blocked pursuant to this
order.
…
Sec. 3 The prohibitions in section 1 of this order include:
the making of any contribution or provision of funds, goods, or
services by, to, or for the benefit of any person whose property
and interests in property are blocked pursuant to this order; and

42
 the receipt of any contribution or provision of funds goods, or
services from any such person.
…
Sec. 4.
Any transaction that evades or avoids, has the purpose of
evading or avoiding, causes a violation of, or attempts to violate
any of the prohibitions set forth in this order is prohibited.
Any conspiracy formed to violate any of the prohibitions set forth
in this order is prohibited person.”
[emphasis added]

[111] EO 13884 has the same effects as EO 13850 save that it applies to
all property or interest in property of any person included on the list
of Specially Designated Nationals and Blocked Persons maintained
by the OFAC whose property and interests in property are blocked
pursuant to the order, which come into the possession or control of
a U.S person are similarly blocked and may not be transferred, paid,
exported, withdrawn, or otherwise dealt in.

[112] In short, once it is determined by the Secretary of the Treasury in

consultation with the Secretary of State that an entity is caught
under the EO 13850, then all property and interests in property of
the said entity that come within the possession or control of a U.S.
person are blocked and may not be transferred, paid, exported,
withdrawn, or otherwise dealt with. In other words, the property and
interests in property of such a person will only be blocked when they
come under the possession or control of a U.S. person.

43
[113] It is undisputed that PdVSA is on the SDN list. Hence, its properties
are blocked property when they come within the possession or
control of a U.S. person. Both the experts agree on this point.

[114] However, the parties’ experts differ on the position where both the
seller and buyer are non-U.S. persons, whether in such
circumstances, the mere origin of the commodity from Venezuela
would make the transaction subject to sanctions. This of course
refers to the sale by PdSVA of the Fuel Oil to Futura, a non-U.S.
person, and the subsequent sale by Futura to Orin Energy, both
non-U.S. persons.

[115] In this regard, Mr Skoufalos’ opinion is that if the Fuel Oil is property
of the Government of Venezuela or PdVSA (both being SDNs), then
the Fuel Oil would be considered blocked property immediately and
even non-U.S. persons would be prohibited from entering into any
transactions or activities involving the Fuel Oil.

[116] Mr Skoufalos held the view that Futura, being a non-U.S. person,
when it purchased the Fuel Oil from PdVSA would be exposed
under the EOs to secondary sanctions, in particular, under E.O.
13884, at paragraph 1(b), which provides for the blocking of property
or property interests of “any person” who ‘(1) providing material
assistance (including financial, material or technological support) to
sanctioned entities, including PdVSA and (2) owned or controlled,
or acting on behalf of a designated entity, including PdVSA”.

[117] Mr Skoufalos further opined that a blocked property, by reason of its

being owned by a sanctioned entity, remained a blocked property

44
 despite having been sold to a subsequent non-sanctioned entity or
entities. This is because the transfer of a blocked property is ‘null
and void’, namely, the subsequent sale to a non-sanction entity is
incapable of transferring an interest in the block property to the
buyer. Reference was made to sections 581.201, 591.202 and
591.310 of 31 CFR 591, Venezuela Sanction Regulations. The
subsequent buyers could still be exposed to secondary sanctions
for flouting EO 13850 ‘for operating within the sector’ or for ‘material
support of a blocked entity’ in dealing with the blocked property.

[118] To be clear, Mr Skoufalos is saying that Futura, by purchasing the

Fuel Oil from PdVSA, being a sanctioned or blocked entity, is
subject to secondary sanctions by OFAC by the mere fact that it had
purchased the Fuel Oil from a sanctioned or blocked entity. This is
because the ‘purchase’ constitutes a ‘financial or material support’
and or an operation in the oil sector of Venezuela under EO 13850.

[119] On the other hand, Mr Bravo opined that the mere purchase of the
Fuel Oil without more cannot amount to providing ‘material or
financial’ support, nor can it constitute treating Futura as operating
in the oil sector of Venezuela.

[120] In any case and more significantly, it is Mr Bravo’s opinion that the
Secretary of the Treasury, in consultation with the Secretary of State
had not made any such determination at all in the present case.
According to Mr Bravo, the secondary sanctions against non-U.S.
persons come in the form of OFAC placing the said persons in the
SDN list upon the determination made. Until this is done, there is no
secondary sanctions at all against the non-U.S. person which

45
 means that the said non-U.S. person could deal with anyone
including a U.S person as regards the property purchased from
PdVSA.

[121] Thus, Mr Bravo opined that there is no prohibition for Futura, a non-
U.S. person to purchase Fuel Oil from PdVSA, a sanctioned entity
and there is also no prohibition for Futura to thereafter deal with the
Fuel Oil with any third party including a U.S person since OFAC had
not designated Futura as an SDN as a form of secondary sanctions.

[122] Mr Bravo also disagreed with Mr Skoufalos’ view that the status of
the blocked property would not change even with the transfer of the
same to a third party by sale. According to Mr Bravo, once a
sanctioned entity sells its property to a non-U.S. person, the
property is no longer blocked property. The blocked status of the
property ends when the sanctioned entity transfers the property to a
non-U.S. third party. This means that once PdVSA sold the Fuel Oil
to Futura, the Fuel Oil which he opined was blocked property was
no longer treated as blocked property. Thereafter when Futura sold
the Fuel Oil to Orin Energy, the parties were in fact not dealing with
blocked property. In other words, even a U.S person may thereafter
deal with the Fuel Oil without any exposure to the U.S sanction laws.

[123] With respect to Mr Skoufalos, I am unable to agree with his

interpretation of the EOs and its application to the facts of this case.
I also do not agree with both the experts’ opinion that the Fuel Oil
was considered as blocked property merely because PdVSA was at
the material times designated as an SDN.

46
[124] To begin, I am not persuaded that Futura, by its purchase of the
Fuel Oil from PdVSA, is to be treated as having “materially assisted,
sponsored, or provided financial, material, or technological support”
to PdVSA. In this regard, I am more inclined to the view expressed
by Mr Bravo that although there is no specific threshold as to what
could be considered as “materially assisted” or “provided financial,
material support”, one mere commercial transaction cannot be
equated to “materially” assisting or “providing financial, material
support” to the Government of Venezuela or PdVSA.

[125] I agree with Mr Bravo that a mere purchase of PdVSA products is

not “supporting” as there must be an overact (more than merely
purchasing of the products). This is clear when one considers the
examples of designated entities and individuals provided by Mr
Skoufalos as having been found to have “materially assisted” or
“provided financial or material support” to PdVSA. The
circumstances in these examples can be distinguished from the
facts in the present case. More particularly:

(a) In the case of Elemento – it was listed as an SDN by OFAC

as the entity had been purchasing oil directly from PdVSA and
reselling it to third-party customers on behalf of another SDN
(i.e. Bazzoni). Elemento was involved in multiple transactions
of such nature, therefore falling under the definition of
materially assisted, sponsored, or provided financial, material
or technological support for PdVSA;

(b) In the case of Swissoil – it was an entity based in Geneva,

Switzerland which had participated in a scheme by assisting

47
 in the sale and shipping of Venezuelan-origin crude oil to
buyers in Asia. Swissoil often acted as the consignee for the
receipt of oil shipments brokered by Elemento, who is a
designated entity;

(c) The designation of D’Agostino (a Spanish-Venezuelan

citizen), Bazzoni (Italian citizen), and Apikian (Swiss citizen)
were the consequence of their roles involving Swissoil and oil
from PdVSA. D’Agostino had been involved in the
Venezuelan oil sector since 2012 and involved in several
projects in the Venezuelan oil sector; Bazzoni is a core
facilitator of the network connecting Elemento and Swissoil;
Apikian is the director of Swissoil. These individuals play a
significant role in the Venezuelan oil sector.

[126] I agree with Mr Bravo that it would be disproportionate to compare

the present commercial transactions with the transactions by the
various entities cited above. The entities and individuals above
clearly worked for the benefit of PdVSA and the Government of
Venezuela. There were multiple transactions and most, if not all, of
the transactions were done for the benefit of PdVSA. The
transactions were also done by way of a scheme which would
amount to deceptive transactions and conspiracy to avoid
sanctions. This should be distinguished from the present facts of the
case where it is not shown that Futura did play a significant role in
the Venezuelan oil sector and or was involved in a scheme or
network related to the Venezuelan oil sector.

48
[127] The reference to OFAC’s FAQ number 629, to my mind, is
instructive:

“… OFAC expects to use its discretion to target those who

operate corruptly in the identified sectors of the Venezuela
economy, and not those who are operating legitimately in
such sectors. This includes, for example, persons engaging in
dishonest or fraudulent conduct, illicit activity, or deceptive
transactions within identified Venezuela sectors, with the
purpose or effect of misappropriating Venezuelan resources in
those sectors for personal, professional, or political gain.”
[emphasis added]

[128] The sale of Fuel Oil between Futura and PdVSA and the subsequent
sale of the Fuel Oil between Orin Energy and Futura in this current
action do not contain any of the characteristics in the EOs above. It
is merely a commercial transaction between two non-U.S. parties.

[129] I accept Mr Bravo’s distinction between the OFAC’s country-based

sanctions and secondary sanctions. OFAC’s Venezuelan Sanctions
Program falls under the category of country-based sanctions
whereby the primary sanctions target a designated country like
Venezuela.

[130] OFAC’s secondary sanctions, on the other hand, target non-U.S.

persons that aid, help or materially assist a sanctioned entity or
SDNs. The U.S. sanctions against Venezuela is not an open
sanction. The entity or individual needs to be specified and
determined by OFAC or by an executive order to be placed under

49
 the SDN list before a U.S. person is prohibited from dealing with
them.

[131] A determination by the Department of Treasury would have to be

made whereby there should first be a subjective evaluation of the
transaction(s) in question. One of the deciding factors that the
Department of Treasury would take into account is whether an entity
or individual has materially assisted PdVSA and or the Venezuelan
Government. The interpretation of ‘materially assisted’ remains
subjective and fully up to the discretion of the Department of
Treasury.

[132] As such, not every non-U.S. person conducting business with the
Venezuelan market is automatically subject to secondary sanctions
as contended by Mr Skoufalos. I agree with Mr Bravo that Mr
Skoufalos’ assertion that simply engaging in any business activity of
a Venezuelan entity will automatically equate to materially assisting
PdVSA and or the Government of Venezuela is overly simplistic.

[133] In fact, it is only after the determination has been made by the
Secretary of the Treasury, in consultation with the Secretary of
State, that a person has violated the EOs 13884 and 13850 that
OFAC would enforce the violation by designating the person or
entity as an SDN, which effectively cuts off the person or entity from
a major portion of international business and financial transactions
as no U.S. person could deal with the entity and it is cut-off from the
US dollar denominated financial system. This position is shared by
Mr Skoufalos:

50
 “12.8 As discussed in Paragraph 10.19 above, enforcement action
against non-U.S. persons will vary. However, from a
commercial standpoint, among the harshest actions OFAC
can take is to designate a person/entity as a Specially
Designated National (SDN) and add the person/entity to
OFAC’s SDN List.
12.9 A person/entity placed on OFAC’s SDN List will be
effectively cut off from a major portion of international
business and financial transactions, access to most
bank accounts and restrictions on international travel.
U.S. nationals are prohibited from transactions of any kind
with SDNs, and OFAC will act to block a designated
person/entity’s assets in the U.S. Furthermore, all U.S.
persons (including companies and financial
institutions) are prohibited from engaging in
transactions or conducting business with a designated
party anywhere in the world, and the targeted party is cut
off from the dollar-denominated U.S. financial system.
All U.S. persons (including companies and financial
institutions) would also be prohibited from engaging in
transactions or conducting business with any subsidiary
owned or controlled more than 50 percent by the
listed/sanctioned person or entity”.
[emphasis added]

[134] Of importance for the present case is that the sanctions are only
applicable to U.S. persons who trade with SDNs. The wording in the
EOs itself mentioned “U.S. persons.” As mentioned above and as
agreed by both Orin Energy’s and Futura’s experts, neither Orin
Energy nor Futura is a U.S. person nor an entity that has been
determined by the Department of Treasury. Neither do the parties
have any U.S. nexus. If one is not placed under the SDN list, there
is no risk as the blocking sanction only applies when one deals with
another entity or individual designated under the SDN list.

51
[135] Thus, it is my judgment that based on the EOs, it is only when the
property of an SDN is in the possession or control of the U.S. person
that the property is blocked, namely, the property may not be
transferred, paid, exported, withdrawn, or otherwise dealt with. For
this reason, I found that Section 71 of the BPGTC was never
triggered since the sale of the Fuel Oil from PdVSA to Futura was a
sale from an SDN to a non-U.S person, and hence did not become
blocked or sanctioned property. Similarly, the sale from Futura to
Orin Energy also did not attract the U.S. Sanction laws at all.

[136] In fact, this was the reason why Orin Energy could take delivery of
the 1st Lot from the Nordic Sirius and thereafter sell the same to its
Chinese buyers. When the 1st Lot was loaded onto Nordic Sirius
from the Eser K, it was a transfer from a non-U.S person and a non-
SDN i.e. Futura to a U.S. person, i.e. Nordic Sirius. Such a
transaction does not attract the U.S. Sanction laws at all.

[137] Orin Energy had sought to refer this Court to the case of Unicious
Energy Pte Ltd v The Owners and/or Demise Charterers of the Ship
or Vessel “Alpine Mathilde” [2023] CLJU 2516 (“Unicious”) on the
status of ‘blocked property’. In that case, I had said as follows:

“[58] Once property is blocked, it cannot be unblocked by

the sanctioned owner (like the Plaintiff in this case) by
selling the property to a non-sanctioned third party. [See: 31
C.F.R. § 560.211(c)] This was made clear in the case of Zarmach
Oil Services., Inc. v U.S. Department of Treasury, 750 F. Supp.
2d 150 (D.D.C. 2010).
[emphasis added]

52
[138] It was contended that because both experts had opined that the Fuel
Oil was considered ‘blocked property’ because it had originated
from PdVSA, the Fuel Oil remained blocked property and could not
be unblocked.

[139] With respect, I do not agree that the Fuel Oil is blocked property
merely because it had originated from PdVSA. “Blocked property”
means that it cannot be transferred, paid, exported, withdrawn, or
otherwise dealt with. This is so only when the property is in the
control or possession of a U.S. person. To hold that the Fuel Oil is
blocked property by reason only of its origin from PdVSA would
mean that OFAC has put a total embargo or ban on all products from
PdVSA, prohibiting the whole world from dealing with its products.

[140] To accept the aforesaid position would mean that the entire world
will not be able to engage in any oil trade with the Government of
Venezuela or PdVSA. It is not only a position that is inconsistent
with the existing facts, since there are still some countries that
continue to trade with Venezuela, but is also an impermissible
exercise by a country of extraterritorial coercive powers which in any
case can hardly be enforced.

[141] The facts in Unicious are easily distinguishable. The plaintiff,

Unicious Energy Pte Ltd was designated an SDN by OFAC and the
owner of the vessel, Alpine Mathilde being a U.S. person was
prohibited from dealing with the cargo belonging to the plaintiff which
had come to its possession or control. In other words, by reason of
the plaintiff being an SDN and the owner of Alpine Mathilde being a
U.S. person, the cargo had become a “blocked property”. The

53
 plaintiff had sought to “unblock” the blocked cargo by seeking to sell
the same to a third party so that the said third party could claim
possession of the cargo from the master of the vessel. The remark
that “once property is blocked, it cannot be unblocked by the
sanctioned owner” was made in that context.

[142] What this means is that the Master of Nordic Sirius had no legal
basis to cease the STS operation on 18.9.2020 on the ground that
the Fuel Oil had originated from Venezuela. This is because at the
time when the Fuel Oil was being discharged into Nordic Sirius, the
Fuel Oil was not a blocked property at all. Neither Orin Energy nor
Futura was listed as an SDN by OFAC at the time.

[143] In fact, if indeed the Fuel Oil was deemed as blocked property as
contended by Mr Skoufalos, the cargo that was loaded onboard
Nordic Sirius from the STS operation would have been treated as
coming within the possession and or control of the owner of Nordic
Sirius, who is undisputedly a U.S person. This must mean that it was
not open to the owner of Nordic Sirius to deal with the cargo onboard
without the license from OFAC. However, what had transpired after
the cessation of the STS operation was that a settlement agreement
was reached between the owner of Nordic Sirius with Orin Energy
where the cargo onboard the vessel was released to Orin Energy.

[144] Accordingly, it is my judgment that Futura was never in breach of

Section 71 of the BPGTC since the Fuel Oil was never sanctioned
property at all material times. Orin Energy was never entitled to
suspend payment for the Fuel Oil at all.

54
[145] In the premises, it is the judgment of this Court that Orin Energy’s
claims in this action seeking inter alia various declaratory reliefs and
claiming damages (general, special, aggravated and exemplary)
against Futura, premised on Futura's breach of the express and
fundamental term of the Sales Contract in delivering sanctioned oil
of Venezuelan origin and premised on Futura’s fraudulent
misrepresentation in concealing the true origin of the Fuel Oil from
Orin Energy, are without any merits and must be dismissed.

[146] Orin Energy has also failed to adduce any credible evidence in
support of Futura’s purported wrongful act(s) in inducing a breach
of the Nordic Charterparty and by reason thereof, this aspect of the
claims is similarly without any merits and must be dismissed.

Futura’s Counterclaims

[147] The Court will now turn to Futura’s Counterclaims against Orin
Energy for the balance purchase price of the Cargo that was
delivered to Nordic Sirius, the loss of profits or diminution in market
value of the Remaining Lots, demurrage claims in respect of the
Eser K and other wasted costs incurred by Futura after the STS
operation was aborted on 18.9.2020, premised on the breach of the
Sales Contract by Orin Energy in failing to pay for the balance
purchase price for the Fuel Oil and to take delivery of the Remaining
Lots.

[148] As a start, following from my findings above that Orin Energy knew
of the true origin of the Fuel Oil and that the Fuel Oil was never a
blocked or sanctioned property, it must follow that Orin Energy was

55
 not entitled to invoke Sections 71.1.2 and 71.2 of the BPGTC to
suspend further performance of its obligations under the Sales
Contract and to refuse the payment demanded by Futura on
26.9.2020. The termination of the Sales Contract by Futura on
29.9.2020 for Orin Energy’s breach of its obligation to pay was
accordingly not wrongful.

[149] The STS operation between the Eser K and the Nordic Sirius that
was aborted cannot be used as a reason by Orin Energy not to make
payment for the Fuel Oil. The STS operation ceased because of the
decision by the Master of Nordic Sirius that the Fuel Oil was
sanctioned property being a product from PdVSA. However, the
Fuel Oil was not sanctioned or blocked property at the time of the
STS operation.

[150] Futura’s contractual duty was to provide Fuel Oil of agreed and
acceptable quality as per the Sales Contract. In turn, Orin Energy
was fully in charge of nominating and appointing the receiving
vessel, the Nordic Sirius at Linggi, to receive the Fuel Oil from
Futura’s nominated vessel, Eser K, which was to be transferred by
STS operation.

[151] The failure of delivery by STS to Orin Energy’s nominated vessel,

the Nordic Sirius, which resulted in the failure to complete full
delivery of the 1st Lot was not due to Futura and indeed could not be
attributed to Futura at all.

[152] The Sales Contract incorporated the BPGTC terms and pursuant to
section 5.2.1 of the BPGTC, it is the Buyer’s (Orin Energy) duty to

56
 nominate a vessel to take delivery of the Fuel Oil from the Seller’s
(Futura) Vessel, i.e., the Eser K. Although the BPGTC under section
5.5 gave Futura the right to reject the nomination of vessels by way
of notice, it does not negate Orin Energy’s duty to nominate a
suitable vessel. A suitable vessel in the present case was a vessel
that is able to accept or carry onboard the type of Fuel Oil agreed
between the parties.

[153] Futura sold the Fuel Oil to Orin Energy under FOB terms. Under
such terms, it would be for Orin Energy as the Buyer to nominate or
charter the receiving vessel which in this case was the Nordic Sirius.
Indeed, DW1 explained that Futura did not have the duty or play any
part in the nomination of the Nordic Sirius as this lay entirely on Orin
Energy to nominate a suitable vessel to take delivery of the Fuel Oil.
In short, the charter of the Nordic Sirius was strictly a matter
between the Plaintiff and NAT only. Futura was not a party to the
contract.

[154] Orin Energy’s claim that Futura had in fact sabotaged the STS
transfer of the Fuel Oil into the Nordic Sirius is, with respect, fanciful
and completely without any evidential basis. Indeed, as rightly
pointed out by learned counsel for Futura, it is against Futura’s
interests as seller of the Fuel Oil to frustrate the Sales Contract
when it had every intention to complete the transaction and Orin
Energy had shown every intention to pay Futura the remaining full
price of the Fuel Oil.

[155] The fact that the Master of Nordic Sirius had discovered the origin
of the Fuel Oil from the documents provided to him during the STS

57
 operation cannot, without more, support the claim of sabotage or
inducing breach of contract. As testified by PW1, Silk Straits is the
port or shipping agent for both Orin Energy and Futura. Silk Straits
dealt with TAG Marine directly in the STS operation, including
handling the Certificate of Origin. PW1 confirmed that it is between
the port and the vessel owner or charterer to provide the necessary
documents for STS. At the trial, it was clear that PW1 well knew the
STS procedures and the relevant documents required to be given
to the port.

[156] Moreover, as per the email from Silk Straits dated 23.8.2020, Silk
Straits in requesting for a list of pre-arrival documents stated as
follows:

“Kindly be informed that as per new information/directives

received from the Custom Department, the Service Provider shall
not be allowed to commence STS operation unless the
Authorities received all required documents for inward
clearance on pre-arrival and also documents relating to STS
Operations.

As Port Agent and STS Service Provider Agent, we T.A.G

Logistics Management Sdn Bhd need to process and submit a
complete documents prior to STS Operation being granted and
commence.”
[emphasis added]

[157] Amongst other documents provided by the Master of the Eser K was
the MSDS i.e Material Safety Data Sheet. The MSDS also clearly
showed that the Fuel Oil was from PdVSA, Venezuela. Clearly, the

58
 origin of the Fuel Oil would be known from the pre-arrival documents
provided by the Master of Eser K as required by Silk Straits.

[158] Futura’s act of providing such documents was merely to comply with
the requirements and protocol for the STS operations. Similar to Silk
Straits, the Master of Eser K had provided the Certificate of Origin
upon the request of the Master of Nordic Sirius. Futura, again, was
merely complying with the request of the relevant parties just to
ensure the commencement of the STS operation.

[159] As such, Orin Energy has failed to prove on the balance of

probabilities that Futura did in fact interfere with the transfer of Fuel
Oil into the Nordic Sirius.

[160] There is no dispute that Orin Energy failed and/or refused to take
delivery of the remaining Fuel Oil onboard the Eser K. Orin Energy
had no reasons not to accept or take delivery of the remaining Fuel
Oil, not only because Orin Energy knew of the origin from the
beginning, but Orin Energy had in fact accepted the 1st Lot of Fuel
Oil which was eventually delivered to their end buyers.

[161] In this regard, Orin Energy contended that the Sales Contract was
a divisible contract whilst Futura contended that the Sales Contract
was an entire indivisible contract. To my mind, the distinction is
irrelevant in this case, since it is my judgment that Orin Energy was
obliged to take delivery of the entire Fuel Oil onboard the Eser K
and this, Orin Energy had failed to do. Accordingly, Orin Energy was
in breach of the Sales Contract for its failure to perform its
contractual obligations as a Buyer of the Fuel Oil.

59
[162] Section 40 of the Contracts Act 1950 states as follows:

“When a party to a contract has refused to perform, or disabled

himself from performing, his promise in its entirety, the promise
may put an end to the contract, unless he has signified, by words
or conducts, his acquiescence in its continuance.”

[163] As Orin Energy had evinced a clear intention not to perform its
obligation to take delivery and to pay for the remaining Fuel Oil
onboard the Eser K, Futura was legally entitled to treat the refusal
as a repudiatory breach and to terminate the Sales Contract by way
of its email dated 29.9.2020.

[164] It is also my judgment that Orin Energy’s claim that the Fuel Oil did
not meet the contracted specifications is wholly without merits. The
specifications of the Fuel Oil were never raised as an issue at all at
the time Orin Energy terminated the Sales Contract. In fact, as
conceded by PW1, prior to the commencement of the STS
operation, Orin Energy had by its appointed surveyor taken samples
of the Fuel Oil for testing. If indeed, the specifications of the Fuel Oil
were inconsistent with the terms of the Sales Contract, Orin Energy
would not have agreed to the commencement of the STS operation.

[165] Furthermore, Orin Energy had accepted the Cargo and was able to
on-sell the same to its purchasers in China. To my mind, Orin
Energy is clearly blowing hot and cold. On the one hand, Orin
Energy is contending that the Cargo was sanctioned property which
would subject it to secondary sanctions for dealing with the same,
yet, Orin Energy had refused to re-deliver the Cargo to Futura and

60
 was quite prepared to enter into an arrangement with the owner of
the Nordic Sirius to take possession of the same for its onwards sale
to its Chinese purchasers.

[166] The truth is that Orin Energy knew all along that there were no risks
for it to purchase Fuel Oil from Futura. The sanction risks did not
attach to the Fuel Oil, as Futura was never designated as an SDN.
Most importantly, neither party was a “U.S. person.”

Futura’s Losses

[167] Orin Energy has taken delivery of the Cargo but refused to take
delivery of the Remaining Lots and the Balance of the 1st Lot.

[168] In this regard, the pricing and calculation of the Fuel Oil is stipulated
in the Sales Contract. However, Orin Energy disputed the accuracy
of the amount owing and the loss of profit suffered by Futura. As
such, Orin Energy had engaged a pricing expert, PW4, who testified
at trial and who also rendered his expert report and opinion.

[169] Futura is in fact relying on PW4’s expert testimony and opinion

adduced at trial for the calculation of its loss of profit.

[170] Addendum No.1 of the Sales Contract provides that Orin Energy
had agreed to make payment of USD $11,400,000.00 alongside an
acceptable Assignment of Proceeds (“AOP”) which would be fully
cash backed at an amount covering the final sales price percentage
due to Futura and that the pricing of the Fuel Oil is determined or
calculated on basis of B/L+3. The AOP would allow Futura to

61
 demand payment from Barclays Bank London when presenting the
final invoice. Once full payments had been received, the Remaining
Lots and the Balance of the 1st Lot would be transferred and the title
of ownership of the Fuel Oil accordingly would be transferred to Orin
Energy.

[171] In determining the market value of the Fuel Oil, PW4 had provided
his calculation based on the Standard & Poor (“S&P”) Global Platts.
PW4 provided his calculations based on the question posed to him
by Orin Energy. As per the Sales Contract, PW4 was requested to
provide the average mid quotations published in “Platts Fuel Oil,
HSFO 380 CST” under the heading “Singapore, HSFO 380 CST
($/MT)” between 21.9.2020 and 23.9.2020. PW4 stated that no
explanation as to the specific dates used in the calculation was
given to him and that he was merely answering to the questions
given to him.

[172] Based on PW4’s testimony, the Cargo, comprising 34,242.852MT

of Fuel Oil was transferred to the Nordic Sirius before the stoppage
of the STS operation. Assuming that the remaining Fuel Oil is to be
fully transferred within the 72+6 hours laytime stipulated in the Sales
Contract, a Bill of Lading would have been issued at least 3 days
after the beginning of the transfer, i.e., 20.9.2020. As stated in the
Sales Contract, the price of the Fuel Oil should be the average mid
quotations of 3 effective quotations published after the Bill of Lading
being issued, i.e., 21.9.2020, 22.9.2020 and 23.9.2020. The price of
the Fuel Oil should be for the price of the entire contract, which the
parties agreed was for the final quantity of approximately
105,000MT.

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[173] As I have found above, the Sales Contract was an entire contract
for the full payment to be made for the whole of approximately
105,000MT (+/-5%) of Fuel Oil. Orin Energy has failed to make the
remaining payment of the Fuel Oil. As such, the money owed to
Futura by Orin Energy would be the total price of approximately
105,000MT of Fuel Oil less the amount already paid by Orin Energy.

[174] Referring to table 5 of PW4’s expert report, the average mid

quotation was USD $241.95 for the transferred Cargo. Pursuant to
the Sales Contract, USD $45.00 per MT discount was applicable,
therefore, the price of the Cargo would be USD $196.94 per MT.
This means that the total sum for the transferred Cargo should be
USD $6,743,787.27 (being 34,242.853 MT x USD $196.94).

[175] However, Orin Energy had only made payment of USD

$4,500,000.00. Hence, it still owes to Futura the sum of USD
$2,243,787.27 for the transferred Cargo that was accepted by Orin
Energy.

[176] In terms on the loss of profit for the Remaining Lots and the Balance
of the 1st Lot, the total amount for all the Fuel Oil which Orin Energy
agreed to purchase would be USD $20,678,700.00 i.e. 105,000 MT
x USD $196.94.

[177] Futura would have been paid another USD $13,934,912.70 (being
USD $20,678,700.00 – USD $4,500,000.00 – USD $2,243,787.27)
if not for Orin Energy’s breach of the Sales Contract.

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[178] In this regard, in mitigation, Futura had sold the Remaining Lots and
the Balance of the 1st Lot to another buyer, i.e., Eastern Petroleum,
for a total of USD $14,047,827.22. The sum is in fact higher than the
said sum of USD $13,934,912.70 that Futura would have otherwise
received from Orin Energy. Therefore, Futura had suffered no loss
at all in respect of the Remaining Lots.

[179] Futura is also entitled to claim for demurrage incurred for the Eser
K due the stoppage of the STS operation. The Eser K was made to
lay idle at the waters of Linggi when the STS operation was stopped
and await further instructions on the continuation of the transfer,
which did not happen. In this regard, learned counsel for Futura at
the oral hearing confirmed that Futura is claiming demurrage only
for the period from 28.9.2020 to 5.10.2020 given that the Notice of
Readiness was tendered on 8.9.2020. This works out to be USD
$184,000.00 based on the agreed demurrage rate of USD $23,000
per day.

[180] The Defendant also claimed additional port costs for the Eser K due
to the stoppage of the STS operation, amounting to USD $59,988.40
based on an invoice dated 7.10.2020, sum of USD $2,282.16 for
Invoice dated 2.11.2020 and the further sum of USD $4,564.32 for
Invoice dated 9.11.2020. However, Orin Energy has produced a
receipt for the payment of only USD $53,141.92 for the invoice dated
7.10.2020.

[181] Similarly, in respect of Futura’s claims in respect of USD $7,006.30

as additional ports charges, USD $91,750.00 incurred for the STS
operation costs and USD $13,555.53 being survey costs and launch

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 and transport costs arising from the sale of the remaining Fuel Oil to
the new Buyer involving the vessel MT Prestigious, the documents
relied upon are mere estimated costs and no evidence that
payments had in fact been made by Futura in respect thereof was
tendered to this Court.

[182] Accordingly, in respect of Futura’s Counterclaims, it is my judgment

that Orin Energy is liable to pay Futura the amount of USD
$2,478,929.19 only, being the total from the following sums:

a) the sum of USD $2,243,787.27 being the balance due for the
transferred Cargo that was accepted by Orin Energy with
interest thereon at the rate of 5% per annum from 18.9.2020
until full realisation;

b) the sum of USD $184,000.00 for the demurrage charges for

the period from 28.9.2020 to 5.10.2020 with interest thereon
at 5% per annum from 5.10.2024 until full realisation;

c) the sum of USD $51,141.92 for the additional port costs for
the Eser K as a result of the stoppage of the STS operation
with interest thereon at 5% per annum from 7.10.2020 until full
realisation.

Conclusions

[183] In the premises, it is the judgment of this Court that the Plaintiff’s
action against the Defendant is dismissed and the Defendant’s
Counterclaims allowed for the sums stated in paragraph 182 above.

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 The Plaintiff is to pay the Defendant the costs of the action and the
Counterclaims fixed at RM 150,000.00 subject to allocator.

Dated the 2nd day of September 2024

ONG CHEE KWAN

Judge of the High Court of Malaya
High Court of Kuala Lumpur, NCC2 & Admiralty

Counsel:
1. Ms. Sitpah Selvaratnam, Mr. Alan Gomez, Mr. Kevin Wong, Ms.
Rahayu Mumazaini, Ms. Ng Dee Ming, Mr. Daniel Tan and Mr.
Ahmad Azad for the Plaintiff
Messrs. Kevin Wong & Partners (Kuala Lumpur)
2. Mr. Philip Teoh together with Ms. Lim Wai Yee, Ms. Lee Jie Zing
(PDK) and Ms. Laura Yew Quo Jane (PDK) for Defendant
Messrs. Azmi & Associates (Subang Jaya)

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Case Reference:
1. Bahamas International Trust Co Ltd v Threadgold [1974] 1 WLR
1514
2. Padiberas Nasional Bhd v Kontena Nasional Bhd [2010] 3 MLJ 134
3. Unicious Energy Pte Ltd v The Owners and/or Demise Charterers
of the Ship or Vessel “Alpine Mathilde” [2023] CLJU 2516

Legislation Reference:
1. Labuan Companies Act 1990
2. Section 40 of the Contracts Act 1950

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 Annexure

Protocol For “Hot-Tubbing” Session

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY OF KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO.: WA-27NCC-17-03/2021

Between

ORIN ENERGY INVESTMENTS LTD

(Labuan Company No. LL14514) ... PLAINTIFF

And

FUTURA ASIA LIMITED

(Hong Kong Company No.: 2485758) ... DEFENDANT

BEFORE THE JUDGE

ONG CHEE KWAN IN CHAMBERS
ON THIS 6 JUNE 2023 VIA ZOOM VIDEO CONFERENCE

ORDER
[Pre-Trial Case Management Directions]

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 THIS SUIT came up for pre-trial case management on 6 June
2023 AND UPON HEARING Sitpah Selvaratnam (Kevin Wong and
Rahayu Mumazaini with her) of Counsel for the Plaintiff and Philip Teoh
(Gabrielle Lim Wai Yee with him) of Counsel for the Defendant. IT IS
HEREBY ORDERED BY CONSENT THAT

(1) the scope of the report and testimony of parties' experts on

sanction laws are to be confined to the issues set out in
APPENDIX A to this Order: and
(2) the protocol for all expert evidence, not limited to experts on
sanction laws is as set out in APPENDIX B to this Order,
including the relevant timelines annexed as TABLE
1 to APPENDIX B.

Dated 6 June ,2023

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 APPENDIX A

SCOPE OF EVIDENCE: EXPERT WITNESS ON SANCTION LAWS

In the context of the following set of facts, which are alleged but was not
have all been proven:

(a) the seller of 700,000 barrels of fuel oil ("Fuel Oil"), Futura Asia
Limited ("Futura"), is a company incorporated and with a
registered address in Hong Kong;

(b) the buyer of the Fuel Oil, Orin Energy Investments Ltd ("Orin
Energy"), is a company incorporated in Malaysia pursuant to
the Labuan Companies Act, 1990;

(c) the Fuel Oil purchased was onboard the vessel MT “Eser K”
(“Eser K”);

(d) the registered owner and commercial operator of the Eser K

at the material times was Rossi Marine Ltd, a Maltese
company;

(e) the technical operator of the Eser K at the material times was
International Tanker Management Limited, a United Arab
Emirates (UAE) company;

(f) based on the sale contract between Futura and Orin Energy,
Orin Energy hired a vessel MT "Nordic Sirius" ("Nordic

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 Sirius") to take delivery of the Fuel Oil by way of ship-to-ship
transfer ("STS") operation with another vessel;

(g) the registered owner of the Nordic Sirius at the material times
was NAT Bermuda Holdings Limited, a company incorporated
in Bermuda and carrying on business in the United States and
listed on the New York Stock Exchange;

(h) the technical operator of the Nordic Sirius at the material

times was V.Ships Norway AS, a Norwegian company;

(i) the commercial operator of the Nordic Sirius at the material

times was V.Ships UK Ltd, a U.K. company;

(j) at all material times, the Nordic Sirius was insured by GARD,
a Norwegian insurance company;

(k) during the STS operation in respect of the Fuel Oil, the Master
of the Nordic Sirius ordered the transfer to cease, stating that
the Fuel Oil was sanctioned cargo originated from Venezuela,
which the Nordic Sirius would not accept; and

(l) the origin of the Fuel Oil is in dispute, premised on the

following documents and communication:

i. communication between Futura (as Seller) and Orin (as

Buyer) of the Fuel Oil;

ii. the Analytical Report issued by AmSpec Iberia S.L.

Unipersonal, which states Gibraltar as its origin; and

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 iii. the Origin Certificate issued by PDVSA, which states
that the Fuel Oil was produced in Venezuela,

the experts on sanction laws are required to express their opinion on the
following:

(i) the basis, origin and scope of sanctions affecting oil

originating from Venezuela;

(ii) whether any and if so, which sanctions would be relevant for
consideration by the Court of the conduct of the various
parties identified above;

(iii) whether such sanctions would be binding on any of the parties

identified above;

(iv) whether such sanctions extend in their application to

Malaysia;

(v) whether there would be consequences upon a US person in

violating such sanctions; and

(vi) whether there would be consequences upon a non US-person

in violating such sanctions.

• Those footnote in red are premised on agreed facts; those in blue

are based on documents that have yet to be proven.

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 APPENDIX B

PROTOCOL FOR PREPARING AND GIVING EXPERT EVIDENCE

BY PARTY-APPOINTED EXPERT WITNESSES

1. The expert written report should comply with the requirements set
out in Order 40A, Rule 3 of the Rules of Court, 2012 and contains:

(a) details of the expert's qualifications;

(b) details of any literature or other material which the expert

witness has relied on in making the report;

(c) a statement setting out the issues which he has been asked
to consider and the basis upon which the evidence was given;

(d) if applicable, state the name and qualifications of the person

who carried our any test or experiment which the expert has
used for the report and whether such test or experiment has
been carried out under the expert's supervision;

(e) where there is a range of opinion on the matters dealt with in

the report –

(i) summarise the range of opinion; and

(ii) give reasons for his opinion;

(f) a summary of the conclusions reached;

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 (g) a statement of belief of correctness of the expert's opinion;
and

(h) a statement that the expert understands that in giving his

report, his overriding duty is to the Court and that he complies
with that duty.

2. The experts shall hold a discussion pursuant to Order 40A Rule 5

of the Rules of Court, 2012 for the purpose of:

(a) identifying and listing the issues upon which they are to provide an
opinion in the proceedings; and

(b) where possible, reaching an agreement on those issues.

3. Following a discussion between the experts, the experts shall

prepare a statement for the Court showing:

(a) the issue on which they agree; and

(b) the issues on which they disagree and a summary of their

reasons for disagreeing.

[Order 40A Rule 5(3) of the Rules of Court, 2012]

4. The contents of the discussions between the experts shall not be

referred to at the trial, unless the parties agree in writing to the
disclosure [Order 40A Rule 5(4) of the Rules of Court, 2012].

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5. Where the experts reach an agreement on an issue during their
discussions, the agreement shall not bind the parties, unless the
parties expressly agree to be bound by the agreement disclosure
[Order 40A Rule 5(5) of the Rules of Court, 2012].

6. The timeline for the non-sanction law experts to prepare a report

and confer shall be as stated in "TABLE 1".

7. The procedural framework for expert testimony shall be as follows:

(a) the Court shall administer an oath or take an affirmation from

each expert, before the expert begin their testimony.

(b) Each expert shall confirm that the written evidence submitted
by him/her is his/her own and shall identify any corrections
that is to be made.

(c) Each expert shall give oral presentation of his/her position.

The Court shall determine the length of the presentations and
the Order in which the experts shall make them.

(d) After the presentation:

(i) The Judge will question the experts in relation to the

areas of disagreement, and on any other matter it
considers appropriate;

75
 (ii) The Judge will ask each expert to express his/her views
on each of the areas and why he/she disagrees with the
views of the other expert; and

(iii) The Judge shall give each expert an opportunity to

respond to the evidence of another.

(e) After the Judge has completed his questioning, each party's
counsel may question the expert of the other party, and may
invite their own party's expert to respond to the opposing
expert's answer.

(f) The Judge may at any time permit or invite discussion

between the experts, or any of them, on any area of
disagreement and on any other matter the Judge considers
appropriate.

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