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Petrom v Glencore [2016] Lloyd's Rep. 432

On 13 March 2015 Judgment was handed down by Flaux J in the long-running and high-profile fraud claim brought by the Romanian oil company OMV Petrom against Glencore (which was listed by The Lawyer magazine as one of the top 20 cases of 2015). 

Petrom’s claim arose out of the delivery by Glencore of oil to Romania in the mid-1990s.  Petrom contended that Glencore systematically defrauded it over a period of about 4 years by delivering blended cargoes of crude oil in the place of the more expensive grades of oil Petrom had contracted for and which Glencore had represented it was delivering.  Petrom claimed as damages the difference between the price paid for the cargoes less the market value of the blends which were delivered to it.     

In an emphatic judgment, Flaux J held that Petrom’s claim succeeded, awarding damages in excess of US$40 million (plus interest).  The Judge held that the individuals who gave evidence for Glencore were “duplicitous witnesses” who were both “knowing participants” in the fraud on Petrom.  So far as the quantum of the claim was concerned, Flaux J rejected Glencore’s submission that the quantum should be measured by reference to the difference in refining yield between the oil which was provided and the oil which should have been provided (which was in the region of US$6 million), as opposed to the difference between the price paid and the market value of the blends which were received (which was in region of US$40 million), on the ground that what Petrom did with the oil after delivery was res inter alios acta.  In this regard, the judgment contains an interesting discussion of the law of damages for deceit, and an analysis of the controversial decision of the Court of Appeal in Bence Graphics v Fasson [1998] QB 87 (a breach of contract case).

Duncan Matthews QC, Andrew Fulton and Luke Pearce appeared on behalf of Petrom, instructed by Withers LLP.