The High Court of England has ruled in the case of ABFA Commodities v Petraco: thanks to the expert evidence of Maxim Kulkov, Petraco has proved the unreasonableness of a claim for interference with another’s contractual relations

On 30 January 2024, Mr Justice Foxton ruled to dismiss ABFA Commodities Trading Limited’s claim against Petraco Oil Company SA. KK&P Trial Lawyers Managing Partner Maxim Kulkov acted as an expert witness for Petraco, one of the oldest independent oil trading companies in Europe.

The case, which has been pending for almost 5 years, started with an injunction sought by VTB Commodities (now ABFA Commodities Trading), a former subsidiary of VTB PJSC, against its counterparty, the Antipinsky Oil Refinery. VTB Commodities obtained an injunction in an English court to prevent Antipinsky Oil Refinery from supplying Petraco with petroleum products on board a tanker because, in its opinion, these petroleum products were intended for it.

Petraco intervened in the case with a claim to recognise the prohibition as illegal and to recover losses from VTB Commodities caused by the prohibition. In its turn, VTB Commodities filed a counterclaim against Petraco for recovery of losses incurred as a result of deliveries by Antipinsky Oil Refinery to Petraco that took place prior to the injunction.

According to VTB Commodities, Petraco’s actions, i.e., entering into contracts with the Antipinsky Refinery’s intermediaries, were unconscionable because Petraco allegedly knew that the Antipinsky Refinery’s capacity had been fully contracted by VTB Commodities (which is known as a ‘double sale’).

Russian law as seen by an English court

The principle of good faith is increasingly discussed in English courts. This case was no exception, and in the apt words of a well-known civil law expert Roman Bevzenko, the judgment contains “the most comprehensive and thorough analysis of the doctrine of good faith under Russian civil law“.

The English court had to consider whether the second buyer’s knowledge that the thing he bought had been previously promised to another person was sufficient to find him in bad faith. The already difficult question of the standard of good faith was complicated by the fact that petroleum products are a generic item.

This and other ambiguous provisions of Russian property, obligation and tort law were explored in expert reports by Maxim Kulkov with the support of partner Oleg Kolotilov and associate Alexandr Karlovskiy.

In answering the key question in the case, Judge Foxton agreed with Maxim Kulkov’s position that “Russian law has yet to embrace a principle that entering into an agreement to buy specific goods with the knowledge of an earlier inconsistent contract is, without more, an abuse of rights which invalidates the second transaction“.

Guided by Maxim’s expert reports and oral testimony given during two days of cross-examination, the court preferred his conclusions to those of the VTB Commodities’ expert.

The full text of the judgment is available at: https://www.bailii.org/ew/cases/EWHC/Comm/2024/147.html