Transportation and Logistic Consulting SA v Schlumberger Seaco Inc [2009] EWHC 120 (Comm)

[2009] EWHC 120 (Comm)Case No 2007 Folio 1657
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday, 27 th January 2009
Before
His Honour Judge Chambers QCsitting as a judge of the Queen’s Bench Division
Between
TRANSPORTATION AND LOGISTIC CONSULTING S.A.ClaimantsSCHLUMBERGER SEACO INCDefendants
Chirag Karia (instructed by Hill Dickinson LLP) for ClaimantsThe Defendants took no active part in the trialHearing Hearing date : 26 th January 2009
Judgment

HHJ Chambers QC :

[1]The Amended Agreed List of Issues states the sole issue that I have to decide to be as follows:
“Was the payment of [Central African Francs] 37,000,000 made by the Claimants to the Luba customs administration a bribe paid by the Claimants with the corrupt intent and purpose to influence the Luba customs administration acting in their lawful capacity, to do or omit to do an act in violation of their lawful duty namely to hide violations of the CEMAC Customs Code by the Defendants arising from [their] alleged actions in breaking and entering into and manipulating and/or smuggling stocks in [their] bonded warehouse at Luba Free Port.”
The circumstances of the trial of the issue[2]Shortly before the trial of the issue, the Defendants indicated that they proposed to take no part of any sort in its determination. This position was confirmed at the start of the hearing.[3]Although, in other circumstances, this situation might have raised some question as to the status of the defence and counterclaim, I do not think that a problem arises as it is not suggested that the document retains any potential evidential value.[4]More to the point, I do not think that the Defendants’ position detracts from the status of the Amended Agreed List of Issues which, despite its name, sets out an extensive number of agreed facts and some agreed statements of law. I have found the document very helpful.[5]Another aspect of the Defendants’ position is that they make no positive case in respect of the very grave question formulated by the issue.[6]It is trite law that there is no obligation on the Claimants to disprove an allegation that they were guilty of bribery, particularly one neither positively made nor supported. However, the reality is that it is in the interests of both parties to have a determination of the issue after as full a hearing as the circumstances permit. History and analysis[7]By an agreement dated 15 February 2004, the Claimants agreed to provide the Defendants with logistic and marine agency services. The recipient of those services was a company in the Defendant group called Schlumberger Galaxie (“Galaxie”).[8]Although the Claimants discharged their obligations, in whole or in part, through a company called TLC Guinea Equatorial S.A., there is no need to draw any distinction between the two companies for the purposes of this judgment and I shall usually refer to them compendiously as ‘the Claimants’.[9]The relevant operations centred upon Luba Free Port in Equatorial Guinea, into and out of which moved goods required for oil drilling operations. While, as its name indicates, Luba was a free port, the Customs Administration of the Republic of Equatorial Guinea (“the Customs Administration”) was closely interested in its activities in order to ensure that there was no abuse of the privileges conferred by its status.[10]Breaches of the regulatory requirements were punished by the levying of administrative fines by the Customs Administration. However, insofar as this case is concerned, such fines were normally administered by the Luba office of the Customs Administration (“the Luba customs administration”).[11]By January 2007, Galaxie had acquired a poor record with the Luba customs administration and been subject to a number of administrative fines paid, as I find was the usual practice, in cash.[12]On or about 20 January 2007, two employees and/or agents of the Defendants acting at the direction and/or with the authority of the Defendants and/or Galaxie forced the locks of and broke into a bonded warehouse in Luba that held equipment and materials that related to Galaxie’s operations.[13]The serious nature of the action described in the previous paragraph involved a real risk that the incident would be dealt with at a higher level than the Luba customs administration with materially adverse consequences for the Defendants.[14]The written evidence clearly shows that the Defendants were anxious for the Claimants to negotiate the best settlement that they could.[15]Under the law of Equatorial Guinea it is permissible to negotiate liability for customs infractions. There is nothing to suggest that the Defendants or Galaxie encouraged the Claimants to break the law of Equatorial Guinea or that the Claimants indicated they were willing to do so.[16]The person entrusted with the task of obtaining the best solution that he could was M. Stephane Canal, the Claimants’ country manager for Equatorial Guinea. He made a detailed statement for the purposes of this litigation. Only part of it relates to the issue. Insofar as it does, I accept it. I do so because it is well supported by the contemporaneous documents and the probabilities. He was called as a witness to give his confirmation of his cogent account. He was not cross-examined.[17]While there appears to be some divergence between the statement of M. Canal and the Amended Agreed List of Issues as to precisely when and how the final figure was agreed, it is the undoubted fact that M. Canal kept negotiations at the Luba level, albeit under Malabo supervision, and achieved the final agreement as to CFA 37,000,000 which was paid in cash as required by the Luba customs authority (“the Luba payment”).[18]There was no suggestion before me that it was illegal for the fine to be paid in cash.[19]The fine was paid on 30 January 2007 and payment was acknowledged by a receipt bearing the stamp of the Customs Authority and signed by the signatories of the Luba customs authority.[20]M. Canal’s evidence was largely corroborated by that of M. Masserey, the Claimants’, i.e. Transportation’s, General Manager. His evidence was given in the same circumstances as that of M. Canal.[21]Before going further, I pause to consider by what possible characterisation the conduct that I have described could have constituted the Luba payment a bribe.[22]One notes first that the issue acknowledges that the payment was “to the Luba customs administration” and not to an individual.[23]One further notes that the question posed by the issue is whether the purpose of the payment was “to influence the Luba customs administration acting in their lawful capacity … to hide violations of the CEMAC Customs Code by the Defendants”.[24]But the violations in question were notorious. There was no question of hiding them.[25]The only conceivable motive for a bribe would have been to try to mitigate the consequences of the conduct, in other words to try to reduce the amount of the fine by bribing the person who imposed it.[26]It flies in the face of logic to suggest it was the punishment that was the bribe.[27]Not only does the issue contain no suggestion that the payment was for the benefit of a third party, I cannot see how it could have been.[28]I find nothing to support any suggestion that the Luba payment was a bribe. Subsequent events[29]On 31 January 2007, the Claimants were summoned to Malabo and ordered by the Prime Minister of Equatorial Guinea to pay an additional sum of CFA 100,000,000 within 48 hours on the purported ground that the Luba payment was a bribe (“the Malabo fine”). No tenable reason was advanced by him as to why this was so. The money was paid by banker’s draft.[31]The Prime Minister had no legal authority to adjudicate upon the nature of the Luba payment or to impose the Malabo fine.[32]The Claimants have not challenged the Malabo fine. There were understandable pragmatic reasons for not doing so.[33]No one has advanced any reason as to why the Prime Minister’s accusation might have been well founded. However, it appears that after the Luba payment was made, a recipient of the money tried to keep a material part of it and it is possible that someone in authority mistakenly thought that the Claimants were involved.[34]Another view is that the Prime Minister thought that the amount of the Luba payment was too low and arbitrarily raised it by making the accusation.[35]What I think to be clear is that the circumstances of the Malabo fine give no support to any case that the Luba payment was a bribe. Conclusion I resolve the issue in favour of the Claimants.