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A dispute involving UBS, two Moroccan gas companies, a Swiss offshoot of Crédit Agricole and collapsed commodities trader Gulf Petrochem is set for a High Court trial in London.

CA Indosuez, a subsidiary of France’s Crédit Agricole which specialises in wealth management and trade finance, said in a 2020 claim that it was owed almost US$4mn by Morocco’s Afriquia Gaz and Maghreb Gaz.

The duo purchased cargoes of butane gas from Gulf Petrochem shortly before it ran into financial strife in mid-2020, according to judgement handed down on November 11 this year and court documents seen by GTR.

Instead of making payment to CA Indosuez, which says it was entitled to the funds under an assignment of claims agreement and a letter of credit, the two companies transferred the money to a Gulf Petrochem bank account with UBS.

UBS subsequently moved to the money what “what appears to have been [Gulf Petrochem’s] loan or overdraft account”, according to the judgement. Gulf Petrochem instructed UBS to transfer the amount to CA Indosuez, but the Swiss banking giant refused, arguing it was entitled to use the money to offset Gulf Petrochem’s debts.

Afriquia and Maghreb have since settled CA Indosuez’s claim against them, the judgement shows, but “on terms which do not reduce the level of [the gas companies’] claim against UBS”. They are pursuing a suit against UBS for unjust enrichment and a separate claim against Gulf Petrochem, which is not defending the action or participating in the litigation.

The case is one of many disputes that have spilled into courtrooms since GP Global, the parent company of Gulf Petrochem and once a major trader of oil and other soft commodities, ceased operations and was forced into a restructuring led by FTI Consulting in late July 2020.

UBS was listed as a top three creditor for the company’s Asia Pacific subsidiary, GP Apac, GTR has previously reported.

CA Indosuez’s claim was filed in November 2020 but the case was not listed on public databases and the identities of the parties were anonymised due a mistake by court staff, which only came to light after GTR made enquiries following the November judgement and has since been corrected.

The judgement deals only with UBS’s request to strike out the claim by the gas companies and also challenges the court’s jurisdiction due to a dispute over whether the companies needed permission to serve it with notice of the suit outside of England, due to technicalities arising from Brexit.

 

UBS bid to dismiss rejected

CA Indosuez’s original claim shows that the lender provided a US$125mn credit facility for Gulf Petrochem and benefited from a corresponding agreement which assigned to the bank rights in respect of any goods it financed.

On June 19, 2020, the bank issued a letter of credit to finance Gulf Petrochem’s purchase of butane from Vilma Oil Singapore. One portion of the cargo was sold on to Afriquia for US$1.02mn and a second to Maghreb for US$2.95mn and shipped from Pennsylvania in late June, with payment due on August 21.

CA Indosuez informed the two gas companies of its notice of assignment under the agreement with Gulf Petrochem in late July and asked for direct payment, according to the claim. However both companies instead paid into Gulf Petrochem’s UBS account on August 19, more than two weeks after the company entered restructuring.

On August 21, the judgement says, Gulf Petrochem wrote to UBS saying that “the payments are the property of [CA Indosuez] and have been paid to UBS by mistake”. The judgement notes that UBS “refused” the request, claiming “to have been entitled to set off those sums against [Gulf Petrochem’s] liabilities to it”.

In their joint defence to CA Indosuez’s claim, Afriquia and Mahgreb acknowledged that the invoices for the transaction requested that payment be made to Gulf Petrochem’s account with the bank but rejected that the instructions constituted a notice of assignment or that it was effective or binding on them.

They claimed that the payment to UBS had discharged their liabilities to Gulf Petrochem, although in his judgement, Justice Robin Knowles writes that he “understands” that the gas companies contend that the letter from Gulf Petrochem to UBS saying the payment was made by mistake was sent on their behalf.

Justice Knowles rejected UBS’s application to strike out Afriquia and Maghreb’s claim, writing that it “has a real prospect of succeeding in an English court” and that “in particular I would wish to have evidence, and argument, that would allow me to know and understand the full context and circumstances of the pieces of correspondence available”. The trial should be “short and concise”, he said.

Spokespeople for CA Indosuez, UBS and Gulf Petrochem declined to comment.

Bird & Bird, the law firm representing Afriquia and Maghreb, did not respond to a request for comment on behalf of its clients.