OMV Supply and Trading AG (the “Buyer”) v Kazmunaygaz Trading AG (the “Seller”)
In the appeals from two judgments in the Commercial Court, the Court of Appeal was faced with a case that concerned a contract of sale of 1000 m.t. of biodiesel +/- 5% in seller’s option c.i.f. Constanza (Romania). This was the last contract in a string whose first contract stated that biodiesel should be of Canadian origin.
Clause 6 of the subject contract provided that:
“All fees such as but not limited to customs duties and penalties incurred by non EU origin, in force at the time of cargo customs clearance will be deducted from invoice value. Buyer will notify seller of such fees and send supporting documents latest by the first business day after vessels completion of discharge and seller will issue the final invoice within five business days from such notification.”
The contract was performed and OMV notified to Vector –later renamed as Kazmunaygaz–, five days after discharge, that import duties for Canadian origin biodiesel amounted to USD 58,910.43. In accordance with clause 6, the Seller issued an invoice for a sum of USD 862,695.43, where those duties had been deducted.
Three years later, as a result of an investigation by the European Commission’s anti-fraud office, which discovered that the diesel was of US origin –and reported that information to Romanian Customs–, Romanian Customs claimed from the Buyer payment of USD 1.029,811.18 (including interest and penalties), since goods of US origin were also subject to antidumping and countervailing duties that were applicable at the time of customs clearance.
The dispute arose when the Buyer claimed that it was entitled to recover such amount from the Seller under clause 6 of the sale contract; which the Seller rejected. In the first instance, there were two judgments. The first judgment was in favour of OMV but the judge found that the Buyer was only entitled to recover the amount of the final invoice issued by the Seller –i.e. all that could be deducted from the invoice amount–, and gave permission to defend as to the balance. And on the second judgment it was decided that the Buyer was not entitled to recover the balance of USD 1,029,973.95 under the specific clause of this contract.
Hence, the Court of Appeal had to decide on the extent to which the c.i.f. seller was, under clause 6 of the contract of sale, liable for duties on the import of biodiesel into Romania. The Court of Appeal upheld both first instance decisions in the following judgment: OMV-vs-Kazmunaygaz