Integral Petroleum S.A. v Bank GPB International S.A.
Trade finance facility, guarantees, factoring, discounting, fraud, forged documents, sanctions, oral agreement to extend, repayment plan, restructuring, no oral variation clause
Integral Petroleum obtained a trade finance facility from Gazprombank in order to purchase petroleum products and fertilisers from Turkmenistan. The trade finance facility was guaranteed by Integral Petroleum’s owner, Murat Seitnepesov, and certain technical companies, purchasers of the goods from the producers in Turkmenistan.
Integral Petroleum was late in repaying the facility. Gazprombank further accused it of fraud by presenting forged invoices allegedly issued to Gunvor in respect of transactions which, according to Gunvor, have never taken place.
On this basis, Gazprombank obtained a worldwide freezing order against the owner of Integral Petroleum and one of the guarantors, Murat Seitnepesov. The order was discharged on the return date hearing.
Gazprombank then sought a summary judgment against Integral, because it was clear that Integral was late in repaying the facility and the bank could therefore accelerate / demand repayment of the entire facility immediately.
Integral opposed this claim on the basis that it negotiated an extension of payments / extended repayment plan with representatives of Gazprombank. These discussions were partly oral and partly conducted over email.
Gazprombank denied that any repayment plan was agreed, and asserted that in any event the agreement had to be in signed writing.
On 24 March 2022 the London High Court in London dismissed the bank’s summary judgment application. The court could not without further evidence establish whether the bank’s case that the parties had agreed an extension of payment terms had no real prospect of success. Further evidence was also needed to resolve the question of whether, if such an extension had been agreed, it was legally binding. It could reasonably be expected that such evidence would be available at trial where the court could also assess the credibility of witnesses. The Court of Appeal dismissed the bank’s appeal against the first instance judgment.
The judgment was rendered shortly after Russia invaded Ukraine in February 2022. Following the invasion, Gazprombank was subject to UK sanctions. A further issue for the Court to consider was then how the bank would pay the costs order resulting from its unsuccessful application for summary judgment and whether it would be able to cover any subsequent costs orders. A further issue was whether or not the Gazprombank could actually continue its case, when sanctions would ordinarily prevent Integral from making payments to Gazprombank. The parties have made submissions on these issues, but they have not been decided by the Court at the time of writing.
For a more complete case discussion and a link to the case, click here: https://fortiorlaw.com/news/fortior-law-represents-successful-respondents-against-a-summary-judgment-application-filed-by-bank-gpb-international-s-a/
Vitaliy Kozachenko was part of the solicitor team representing Integral Petroleum S.A. against Gazprombank.
If you are a commodity trader involved in a trade finance dispute, get in touch with Vitaliy to see how we can assist (vk@vtlcapital.com) or reach out to one of our other specialists at info@vtlcapital.com.
