Commercial Court Confirms That Findings By An Arbitral Tribunal Can Have Binding Effects Upon Third Parties

OMV Petrom SA v Glencore Interenational AG (2014)

The claim arose from a supply contract between Glencore International AG (Glencore) and a commission agent Petex for the supply of crude oil to Romania between 1993 and 1997. Petex alleged that Glencore supplied a blended cargo of oil made up of cheaper and heavier forms of crude oil contrary to contractual specifications. An arbitration was commenced by Petex against Glencore, purporting to bring a claim on behalf of its principals, two Romanian companies, for losses resulting from breach of contract and/or fraud.

The arbitration tribunal held that Glencore were in breach of the supply contract. Glencore's defence that Petex's action was time barred was rejected on grounds that Glencore had concealed the relevant facts from Petex. However, while the tribunal concluded that Petex had title to sue, no damages were rewarded in respect of the substantial USD 64 million claim one the basis that Petex had suffered no loss. The loss sustained had been suffered by the two Romanian companies, who had since ceased to exist and had been succeeded in title by OMV Petrom (OMV)...