Failed Action Brought By Bank Unicredit Over Disappearance Of Oil

Niall Hearty of commercial litigation specialists Rahman Ravelli summarises the case.

UniCredit bank has lost its $24.7 million damages lawsuit over the loss of thousands of tons of oil at a United Arab Emirates port.

The High Court ruled that the owners of a ship, Euronav, that had carried the oil were not responsible for the bank’s losses. UniCredit had sued Euronav for allegedly breaching its contractual obligations.  

The bank had said that it provided the oil trader Gulf Petrochem with financing to buy oil from BP. But, according to UniCredit, invoices from Euronav that appeared to show the oil had been discharged to six organisations that had bought the oil from Gulf Petrochem "were not genuine." The oil is said to have disappeared at the port of Fujairah.

Judge Clare Moulder said that UniCredit had accepted that the oil would not be discharged into storage at Fujairah because the storage tanks there were full. This, she stated, meant that the bank knew it was losing "the additional protection of control". She added that the lack of a bill of lading (a receipt for shipped goods) that was highlighted in the case did not cause the loss to the bank.

The court found that while UniCredit was unaware of Gulf Petrochem authorising Euronav to transfer some oil to other ships without production of the bill of lading, the bank would not have halted the process if it had known about it.

While the judge did emphasise that UniCredit would have suffered the loss even if a bill of lading had been produced, there were other factors at play in this particular situation. Issues such as access to the port, logistics and personnel were all considerations, particularly as the transfer of the oil occurred during the peak of the Covid-19 pandemic.