Oil majors approval - Norton Rose

Briefing 

May 2012 

Summary 

This article considers the recent Court of 

Appeal decision in Transpetrol Maritime 

Services Limited v SJB (Marine Energy) BV in 

which the Court was asked to decide (i) the 

construction and meaning to be applied to 

standard terms which are followed by recap 

terms as they relate to oil major approval 

for a Vessel; and (ii) having determined 

the meaning of those terms, whether the 

Owners were in breach of those terms 

following a negative SIRE report whilst the 

Vessel was on charter. In finding for Owners, 

the Court held that the standard terms 

were not to be read together with the recap 

terms and that the recap terms were instead 

a substitution for the standard terms. As 

the recap terms did not place a continuing 

obligation on the part of Owners, the recap 

was confined to a promise at the time it 

was made that the Vessel was oil major 

approved. 

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Oil majors approval 

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Court of Appeal confirms meaning 

of “approved” 

Transpetrol Maritime Services Limited v SJB (Marine Energy) BV 

(the Rowan) [2012] EWCA Civ 198 

The charterparty 

This case is an appeal from a 2011 first instance decision and concerns 

an oil tanker voyage charterparty dated 6 June 2007 between Transpetrol 

Maritime Services Ltd, as Owners of the tanker Rowan (Vessel), and SJB 

(Marine Energy) BV as Charterers for the carriage of fuel and/or vacuum gas 

oil from safe ports in the Black Sea to safe ports in the US Gulf with an option 

on the part of the Charterers to top up or discharge and re-load at Antwerp. 

No formal documents were ever produced, but the terms of the charterparty 

were found in a recap e-mail between the parties. The charterparty had 

provisions about “approvals” given by some oil companies, the purpose of 

which the Court viewed as being designed to afford a measure of comfort 

to charterers about the quality of the Vessel they were chartering. The 

charterparty also incorporated Vitol’s Voyage Chartering Terms as Amended 

on 1 November 1999, and which are themselves based on the well-known 

Asbatankvoy Charterparty. Clause 18 of the Vitol Terms, and under the 

heading “Oil Company Approvals Clauses” states: 

Owner warrants that the Vessel is approved by the following companies 

and will remain so throughout the duration of this charterparty 

adding in brackets and heavy type: 

(Owners(s) to advise, including inspection dates and expiry dates). 

Prior to about 1999, it was common for oil majors to inspect oil tankers and 

record the results of their inspections in the SIRE database. Owners could 

comment on any inspection report and those comments would also be 

available through the SIRE database. The relevant oil major would then, if

Oil majors 

02 Norton Rose LLP May 2012 

satisfied, issue an approval of the Vessel. The approvals would be dated and 

would often be expressed to be valid for a particular period of time and thus 

have an expiry date and which the Owners could write in to any contract. All 

of this was contemplated by the Vitol Terms of 1999. 

The practice outlined above changed following the pollution incidents 

involving the tankers Erika in 1999 and Prestige in 2002, largely as both 

tankers had been “approved” by oil majors and this led to damaging 

publicity for the oil majors concerned. Whilst it continued to be the practice 

of oil majors to issue reports through SIRE, together with the issuing of letters 

reflecting “approval”, these were now issued in more guarded terms and 

often stated that blanket approval had not been granted and should not be 

assumed by other parties. 

In this case the Lukoil approval for the Vessel stated as follows: 

“We have now received sufficient information with regard to this vessel and 

will not normally require re-inspecting the vessel for a 12 month period from 

the date of the inspection. 

Please note, however, that this letter does not constitute a blanket approval 

of the vessel for LUKOIL-LITASCO business or for visits to Lukoil terminals or 

facilities. The vessel will be screened by us on each occasion it is tended for 

Lukoil/Litasco business or intends to visit one of our terminals or facilities. 

Amongst other criteria, our decision will be based on the continued 

satisfactory performance of the vessel and any feedback that we may receive.” 

In the recap and under the heading “(VESSEL INFO)” it stated: 

“TBOOK WOG VSL IS APPROVED BY:– 

BP/LITASCO/STATOIL-EXXON VIA SIRE” 

and which, according to the Court understanding of the translation, reads: 

“To best of Owner’s knowledge, without Owner’s guarantee, vessel is 

approved by the oil companies [there identified, via the SIRE database]” 

Under the heading (“TERMS”) it states, inter alia: 

“VITOL VOYAGE CHARTERING TERMS – AMENDED 1ST NOVEMBER 1999” 

Each of the Vitol Terms is then referred to for the purpose of express 

inclusion, amendment, deletion or substitution as required by the parties. 

However, opposite number 18, the recap states: 

TBOOK VESSEL APPROVED BY:– 

BP/EXXON/LUKOIL/STATOIL/MOH

The facts 

After loading in the Black Sea the Charterers exercised their option to 

discharge and re-load in Antwerp. Whilst at Antwerp a Class inspection 

showed that the low suction sea-chest valve needed repair before the Vessel 

could sail. Notwithstanding the need for repair, Class subsequently issued 

an interim certificate permitting the sea-chest valve to be repaired at the 

next port and a Condition of Class was imposed. At the same time Shell was 

invited by the Owners to inspect the Vessel on the reasoning that if Shell 

“approval” could be obtained, it would represent a valuable asset in the 

marketing of the Vessel. Following inspection Shell filed a SIRE report which 

contained 33 adverse comments, none of which related to the sea-chest 

valve, and none of which produced a response from the Owners. 

The Charterers then made an agreement with Shell, subject to vetting, for the 

sale of the cargo. Shell subsequently said that the Vessel was not acceptable 

and that Shell had decided not to purchase the Charterers’ cargo. Despite 

the Owners pointing out that Shell was not listed among those oil majors as 

“approving” the Vessel, the Charterers said that they had no option but to 

sell the cargo elsewhere and claim the difference in price by way of damages 

from the Owners on the basis that the Vessel was not in a fit state to be 

approved by any oil company and, in particular, the companies identified in 

the recap e-mail containing the charterparty. 

The issues to be determined 

According to the Court there were three questions to be resolved: 

• What were the relevant terms of the charterparty? 

• What do those terms mean on their true construction? 

• Were the Owners in breach of those terms? 

What were the relevant terms of the charterparty? 

For the Court, the critical question was whether the provision numbered “18” 

in the recap e-mail was to be read together with the printed version of clause 

18 of the Vitol terms or in substitution of it. In this the Owners argued that 

express inclusion, amendment or deletion are not the same exercise as the 

substitution of one clause for another. In this the Court agreed with Owners, 

and pointed to a number of other examples in the charterparty in which the 

parties intended to substitute various clauses, including those headed “Bills 

of Lading/Indemnity Clause”, “Weather Clause” and the “Blending Clause”. 

The Court also took the view that as the recap e-mail contained a new title 

for clause 18, namely “TBOOK VSL APPROVED BY” instead of “Oil Company 

Approvals Clause”, and followed by “TBOOK VESSEL APPROVED BY: BP/ 

EXXON/LUKOIL/STATOIL/MOH”, this discounted any argument that the 

parties intended the Vitol Clause 18 and the recap to be read together, but 


Norton Rose LLP May 2012 03



rather buttressed the view that the recap was in substitution for the Vitol 

Clause 18. 

The Court also observed the difficulty that would be experienced in reading 

the recap clause and clause 18 of the Vitol terms together. In this the 

Charterers expressed the view that the collective reading of the recap and 

printed Vitol terms would read: 

Owner warrants that the vessel is approved by the following companies and 

will remain so throughout the duration of this Charterparty to the best of 

owner’s knowledge: BP/EXXON/LUKOIL/STATOIL MOH. 

According to the Court, this would be a difficult clause to construe, but in 

any event the concept of a “continuing warranty to the best of the owner’s 

knowledge” is a curious one and one that the Court did not believe the 

parties intended to agree. 

In this the Court held that clause 18 of the Vitol terms had been replaced by 

clause 18 of the recap, which also contained a reference to approvals under 

the heading “VESSEL INFO”, and it was these two terms which had to be 

construed together and without reference to the Vitol terms. 

What do those terms mean on their true construction? 

WOG 

Whilst the Owners argued that the “WOG” (without guarantee) under 

“VESSEL INFO” should also form a part of the new (substituted) clause 18, 

the Court disagreed. According to the Court, the Vessel info clause and 

clause 18 perform entirely different functions, despite both being concerned 

with oil company approval. The Vessel info clause constitutes the description 

of the Vessel and the information contained in it will normally be a condition 

of the contract entitling the Charterers to terminate the charterparty if the 

condition is not fulfilled. In this it is not surprising that the parties may wish 

to limit the obligation in relation to approval by saying that it is without 

guarantee, which the Court stated has a comparatively well settled meaning 

(namely that there is to be no liability in the absence of fraud or bad faith). 

In this the Court took the view that there was no reason to import that well 

settled meaning into clauses where the rubric “WOG” is not present. 

Notwithstanding the foregoing, the Court reiterated that: 

• clause 18 of the recap is different from clause 18 of the Vitol terms 

• the Vitol clause is an express continuing warranty of approval for the 

duration of the charterparty

• clause 18 of the recap has no such express continuing warranty 

and that on its true construction clause 18 of the recap is confined to a 

promise at the time when it was made. 

TBOOK 

According to the Court, the force of “TBOOK” (to the best of Owners 

knowledge), so far as voyage charterparties are concerned, is that that 

the Owners had first, and to the best of their knowledge, at the date of 

the charterparty, procured approvals from the named oil companies and 

secondly, that at the date of the charterparty, did not know of facts which 

would cause the Vessel to lose the approval of those oil companies in the 

course of the duration of the charterparty. 

Were the Owners in breach of those terms? 

In answering the question of whether the Owners were in breach of the above 

terms, the Court considered that there were two issues: 

• Was the Vessel approved by the named oil companies at the date of the 

charterparty? 

• Did the Owners know anything at that date which would cause the 

approval of the oil companies to be lost? 

Against the findings of the trial judge there was no dispute that the Owners 

had obtained the “approvals” of the named oil companies at the date of the 

charterparty. In this the trial judge noted: 

Despite the wording of the letters the evidence from both sides was virtually 

unanimous that the words “approval” in this context was taken, at least in 

2007, to mean not literally “approval by” but “acceptable to” and subject to 

further approval. Although it seems that some in the market prefer not to use 

the expression “approval letter” there is no doubt that the word “approved” 

in the clause is referring to such letters. 

Nor was there anything on the facts that at the date of the charterparty 

the Owners knew anything about the Vessel that would cause the named 

oil companies to disapprove the Vessel or alter the terms of the letters 

which they had given in relation to the Vessel. In other words, there was no 

suggestion that the Owners were aware of anything in early June 2007 which 

could have warned it of the impending events, let alone anything which 

would have caused any of the named oil companies to alter or cancel the 

terms of their letters of “approval”. On this basis the Court found in favour of 

the Owners and disallowed the damages claim by the Charterers. 


Norton Rose LLP May 2012 05



Conclusion 

This case highlights the importance of Owners being conscious of the 

likely legal effect that any recap clause may have on the standard terms 

of a charterparty, irrespective of whether or not the terms are express or 

referenced by way of incorporation. It also illustrates the need to be fully 

cognizant of any onboard condition that may give rise to an adverse finding 

as a result of an oil major SIRE inspection.

Notes

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Contacts 

If you would like further information 

please contact: 

Philip Roche 

Partner 

Norton Rose LLP, London 

Tel + 44 (0)20 7444 2609 

philip.roche@nortonrose.com 

Peter Glover 

Senior associate and master mariner 

Norton Rose LLP, London 

Tel + 44 (0)20 7444 2071 

peter.glover@nortonrose.com 

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Oil majors approval - Norton Rose

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