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Mon 8 Nov 2010 05:01 PM

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Emarat to appeal UK contempt ruling in Trafigura oil dispute

UK order said UAE firm's GM must spend a year in a jail for ignoring court rulings in a civil lawsuit

Emarat to appeal UK contempt ruling in Trafigura oil dispute
(Getty Images)
Emarat to appeal UK contempt ruling in Trafigura oil dispute

Emarat, the UAE's state-owned fuel retailer, will appeal a UK order that its general manager must spend a year in a jail for ignoring court rulings in a civil lawsuit filed by Trafigura Beheer.

Britain doesn’t have jurisdiction in the dispute and Trafigura “misled” the court that’s overseeing a parallel case in the UAE to shift the lawsuit to the UK, Emarat’s lawyer, Youssef Moftah, said in an e-mail on Sunday.

Judge Nigel Teare in London ruled November 4 that Emarat General Manager Jamal Al Midfa was in contempt of court for failing to supply financial data after Emarat lost a trial in January over $83m in unpaid gasoil shipments. Emarat claims Trafigura inflated invoices by about $24m and shipped oil that didn’t meet quality requirements.

“Trafigura is trying by all means to avoid facing the harsh reality of having fraudulently contracted and invoiced the off-spec product,” Moftah said in an e-mail yesterday. “There is no question” Trafigura “has accepted jurisdiction of the UAE courts.”

Al Midfa isn’t in custody and didn’t attend last week’s hearing.

Mark Eadie, a spokesman for Trafigura in London, said today that Emarat’s allegations had been rejected during the UK trial.

Trafigura, an Amsterdam-based commodities trader, sued Emarat in 2009 after it refused to fully pay for two cargoes of oil shipped the previous year. Trafigura initially gave Emarat an extension on the payment while Emarat awaited an infusion of cash from the government, according to a Jan. 26 ruling in the case. Emarat eventually challenged the invoice.

During an October 26 hearing in the UAE, Trafigura’s lawyers asked the judge for an extension to negotiate a settlement with Emarat, Moftah said. The company was given four additional months, he said.

Emarat now owes $90m including interest, Teare said at the November 4 UK hearing, and a worldwide freezing order was issued by the UK court against the company in February.

“Trafigura has misled the claimant by requesting time extension before the UAE courts while its real intention is apparently to gain enough time to seek unlawful legal proceedings in foreign jurisdictions,” Moftah said.

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NotInMyBackYard 9 years ago

As UAE companies seem not to recognise the jurisdiction of courts in other countries when it suits them, perhaps they will not pursue lawsuits through those same unrecognised judicial systems in order to have access to a legal system that may be more beneficial to them than their own. I'm sure some would gladly use the UK legal system that is able to imprison a GM of another company for contempt of court.

khdmohd- Energy expert 9 years ago

Emarat is 100% UAE Federal Government Corporation and all its assets are immune against freezing orders or any means of take over by any court system . The Emarat GM reports to Emarat Board Chairman that reports to the UAE Prime Minister . The UK court was not wise in its decision to issue a freeze on all Emarat assets worldwide , this should have been consulted with the UAE Federal Counsel and not Emarat GM .
Any way Emarat has been operating many JV with European companies for 30 years with all relationships having excellent reputations , the latest is only a summer cloud and will be wiped out legally . Thinking of the future relation between the two companies , this will need to be monitored , also for any future JV contracts , using UK law may be the last thing any UAE company will think about . Dubai courts are currently proposed to be the ultimate courts for any dispute in JV contracts .