Standard Chartered Bank v Ceylon Petroleum Corporation [2012] EWCA Civ 1049 (27 July 2012)

Standard Chartered Bank v Ceylon Petroleum Corporation [2012] EWCA Civ 1049 (27 July 2012)

CPC had capacity to enter into the derivative contracts T8 and T9 because they were incidental or conducive to its statutory objects as a commercial oil importer and refiner, regardless of whether they were characterised as hedging or speculation; the contracts were binding on CPC.

Citation
[2012] EWCA Civ 1049
Parties
Claimant/respondent: Standard Chartered Bank; Defendant/appellant: Ceylon Petroleum Corporation
Jurisdiction
England and Wales
Judgment Date
27 July 2012
Procedural Posture
Civil Appeal / Appeal From High Court (commercial Court) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Corporate Capacity, Derivatives Contracts, Ultra Vires Doctrine, Statutory Interpretation, Risk Management Vs Speculation
Commercial Law Corporate Law Banking and Finance Corporate Capacity Derivatives Contracts Ultra Vires Doctrine Statutory Interpretation Risk Management Vs Speculation

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Parties

Standard Chartered Bank

Claimant/respondent

Ceylon Petroleum Corporation

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From High Court (commercial Court) to Court of Appeal

Legal Issues

  1. 1 Whether Ceylon Petroleum Corporation (CPC) had capacity to enter into derivative contracts T8 and T9 under its statutory objects and powers
  2. 2 Whether the contracts were ultra vires CPC as speculative transactions

Ratio Decidendi

CPC had capacity to enter into the derivative contracts T8 and T9 because they were incidental or conducive to its statutory objects as a commercial oil importer and refiner, regardless of whether they were characterised as hedging or speculation; the contracts were binding on CPC.

Court Disposition

Appeal dismissed

Orders

  • Judgment for Standard Chartered Bank for US$166,476,281 under contracts T8 and T9
  • CPC held liable under the contracts; contracts binding