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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Petromec Inc v Petroleo Brasileiro S.A Petrobras & Ors [2003] EWHC 179 (Comm) (18 February 2003) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2003/179.html Cite as: [2003] EWHC 179 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		18 February 2003

Mr Justice Tomlinson:

1. In June 1997 Societa Armamento Navi Appoggio S.p.A, hereinafter "SANA," the owners of a large semi-submersible production platform then called "Spirit of Columbus" were apparently in financial difficulty. A complex set of sale and charter contracts and associated financial arrangements was put into place pursuant to which the platform was sold, resold and then finally chartered, the ultimate sub bareboat charterer being Petroleo Brasileiro S.A Petrobras, hereinafter " Petrobras," the state oil company of Brazil. Thus the platform was sold by SANA to Petro-Deep Inc, hereinafter "Petro-Deep," on terms whereby the price was paid over twelve years. Petro-Deep in turn concluded a "Bareboat Charter Purchase Agreement" with Braspetro Oil Services Company, hereinafter "Brasoil." This contract too had a term of twelve years. On payment of all sums due under the head Bareboat Charter title in the platform would pass to Brasoil. Brasoil in turn concluded a "Bareboat Sub-Charter" Agreement with Petrobras, similarly with a term of twelve years.
2. Before being put into operation by Petrobras the platform was to be upgraded. This was to be done pursuant to a contract concluded between Petro-Deep, the purchasers from SANA, and Petromec Inc, the Claimant in this action. The cost of the upgrade was reflected in the quarterly hire due from the two bareboat charterers.
3. SANA, Petro-Deep and Brasoil assigned to a "Security Agent" their entitlement to receive payment pursuant to these various arrangements. The Security Agent acted as trustee on behalf of various interested parties, including SANA and Petromec whose interests derive from their role as seller and upgrading contractor respectively. This accounts for the appearance of Petromec as Claimant in this action notwithstanding it is not party to the agreement out of which arises the dispute which I must resolve.
4. On 15 March 2001 there was an explosion onboard the platform and on 20 March 2001 it sank.
5. Each of the sale or charter contracts to which I have so far referred made provision for a "Loss Payment" to be made by the purchaser or the charterer as the case may be in the event that the platform became a total loss as therein defined. The Loss Payment included an amount in respect of future payments which would have fallen due under the contracts had they been performed according to their tenor over their intended twelve year duration. Those payments were to be discounted pursuant to an agreed formula. A dispute has arisen between the parties concerning the date to which the future payments should be discounted. Because of a movement in LIBOR between the rival dates this makes a difference of about US$2.5million on a payment which it is agreed was in any event in excess of US$330million. Had the rates moved in the contrary direction it would have been in each of the protagonists' interests to adopt a position diametrically opposed to that which was in fact adopted in argument before me. The parties have other disputes concerning the manner in which matters were resolved consequent upon the total loss of the platform, but in the first instance the court is asked to resolve the short point concerning the date to which the discounting should be made and to that end the trial of a Preliminary Issue was ordered. The point which I have to decide is whether the discounting should be to 20 March 2001, the date on which the platform became a total loss or 18 June 2001, which is 90 days thereafter and which, pursuant to the contract, was the date by which the Loss Payment was required to be paid.
6. For the purpose of the Preliminary Issue I was asked to consider only the position between Petro-Deep and Brasoil pursuant to the Bareboat Charter and Purchase Agreement dated 20 June 1997. It is however agreed that in the light of my determination of the position under that contract it is appropriate that I should make a declaration concerning the position as between Brasoil and Petrobras where the relevant provisions are identical.
7. At the hearing before me Petromec and SANA made common cause as did Petrobras and Brasoil. Den Norske Bank ASA were present although not represented by Counsel and they made no submissions.
8. The point which I have to decide is a point of construction. Very much at the eleventh hour, having earlier agreed that no expert evidence was necessary to assist the court in this exercise, Petrobras and Brasoil sought leave to introduce expert evidence "in the field of market practice as to calculation of Loss Payments in single asset structured financings." However no particular market usage or special meaning of words by reason thereof is relied upon and it is not suggested that the documents are in a standard form, still less one to which a customary meaning is ascribed. In order to consider the application I read reports prepared by two experts in this field, one instructed by Petrobras and Brasoil and one instructed by SANA. The latter expert was only approached by SANA out of an abundance of caution lest the court should consider it appropriate to admit expert evidence tendered on behalf of Petrobras and Brasoil. It was the position of SANA that expert evidence was not relevant, admissible or helpful. I mean the authors of these reports no disrespect when I observe that they could not assist me in my task. One expert thought that discounting to a date earlier than the date of payment is common in transactions such as this. The other expert said that in his experience the relevant discounting is mostly to the date of payment, or more usually to a day two working days prior to the date of payment so as to allow for implementation. I was relieved to observe that one expert regarded the relevant definition of Loss Payment which I have to construe as unusual in three respects whereas the other expert observed that the documents are not in a standard form and are unique to this transaction. The existence of these reports was therefore helpful in confirming that the task for the court is simply to give to the words used their ordinary and natural meaning without preconception as to what the parties are likely to have intended to achieve. Further than that my views are in no way informed by these reports and I declined to permit the reports to be adduced in evidence by means of their makers being called to give oral evidence.
9. I must set out the bare minimum of the contractual provisions necessary to render my judgment intelligible. The Bareboat Charter Purchase Agreement dated 20 June 1997 between Petro-Deep and Brasoil should be regarded as annexed to this judgment. The relevant provisions include: -

" 1. DEFINITIONS

"Final Payment" means the sum payable to Petro-Deep, in order to effect transfer of title to the Vessel to Brasoil, equal to that amount of the Outstanding Indebtedness under the ABC Loan which Brasoil acquires from ABC pursuant to the Debt Purchase Agreement."

"Loss Payment" means a sum payable to Petro-Deep by Brasoil as liquidated damages in the case of any event described in Clause 11.1 hereof, in the amount equal to the aggregate of (i) all the outstanding instalments of Fixed Hire falling due under this Agreement and not paid, discounted to the date the payment is declared due, for amounts that fall due after such date, at the lower of nine per cent (9%) per annum and LIBOR plus three per cent (LIBOR + 3%) compounded annually, and (ii) all the Subsidy not yet paid, discounted to the date the payment is declared due, for amounts of Subsidy that fall after such date, at the then prevailing ABI Rate compounded annually, and (iii) all Over-due Interest that remains unpaid on all payments that fell due prior to the date payment is declared due."

"Other Indebtedness" means the aggregate sums of moneys owing by Brasoil to Petro-Deep hereunder and outstanding at any relevant time other than (i) Fixed Hires, (ii) Supplemental Hires, (iii) Loss Payment and (iv) Termination Payment."

"Termination Payment" means an amount equal to the Loss Payment payable by Brasoil to Petro-Deep as liquidated damages upon declaration by Petro-Deep pursuant to Clause 13 hereof in the event of the happening of any Termination Event."

"Total Loss" means an actual, constructive, compromised or arranged total loss of the Vessel; or Compulsory Acquisition; or capture, seizure, detention, confiscation or requisition for hire of the Vessel by any government or any person acting or purporting to act on behalf of any government or by pirates, whether such capture, seizure, detention, confiscation or requisition is lawful or wrongful, unless the Vessel is released from such capture, seizure, arrest, detention, confiscation or requisition within 90 days of after the occurrence of thereof."

3. AGREEMENT TO LET AND HIRE BY BAREBOAT CHARTERING

3.1 Bareboat Chartering of Vessel

Subject to the terms and conditions hereinafter set forth, (i) Petro- Deep hereby agrees to charter the Vessel to Brasoil and Brasoil hereby agrees to charter the Vessel from Petro-Deep on abareboat basis for the Charter Peiod, and (ii) Petro-Deep agrees, upon the expiry of the Charter Period by effluxion of time or earlier termination, to transfer or procure the transfer of title to and ownership of the Vessel to Brasoil and Brasoil agrees to accept such transfer.

7. RISKS AND INSURANCES ON VESSEL AND BELONGINGS

7.1 Risks of Vessel and Belongings

The Vessel and Belongings shall, throughout the Post-Delivery

period, be in every respect the risk of Brasoil…..

7.2 The Insurance

Brasoil shall, not later than the Pre-Delivery Date, either take out and effect or procure that Petrobras takes out and effects the following insurances at Brasoil's or Petrobras'expense on and in respect of the Vessel and shall throughout the Post-Delivery Period maintain the said insurances effective with such Insurer or insurers as are acceptable to SANA, at Brasoil's or Petrobras's own expense;

1. Hull and Machinery Insurance shall be taken out and maintained to be effective in the joint names of SANA, Petro-Deep, Brasoil and Petrobras as co-assured with the Insurer against such fire and usual marine risks…….

7.3 Conditions of Insurance

The terms and conditions of all insurances referred to in (1) and (2) of Clause 7.2 hereof and all rules and articles of the P&I Club shall be subject to the prior approval of SANA (such approval not to be unreasonably withheld or delayed). Furthermore, every hull and Machinery insurance and War Risk insurance shall, throughout the Post-Delivery Period, be maintained to be effective in such amounts as shall at least be equivalent to the full commercial value of the Vessel, but in any event in such amounts as shall be not less than one hundred ten per cent (110%) of the applicable Loss Payment in the relevant policy period.

11. TOTAL LOSS

11.1 Loss Payment

Notwithstanding anything to the contrary contained in this Agreement, if the Vessel shall become a Total Loss or if for any reason Brasoil shall be permanently deprived of her use prior to the end of the Charter Period, Brasoil shall pay or procure the payment to Petro-Deep (out of the proceeds of an insurance claim or claims and/or from Requisition Compensation and/or by payment by Brasoil direct) of the Loss Payment and all Other Indebtedness within 90 days of the occurrence of such Total Loss or permanent deprivation.

11.2 Payment of Over-due Interest

Notwithstanding and in addition to the payment of the Loss Payment and all Other Indebtedness, Brasoil shall pay to Petro-Deep the Over-due Interest on the Loss Payment from the date such payment is declared due and all Other Indebtedness until the receipt by Petro-Deep thereof in full.

12. PAYMENT OF CHARTER HIRES

12.1 Charter Hires

12.5 For the avoidance of doubt, Brasoil shall continue to pay hire under this Agreement notwithstanding that the Vessel shall have become a Total Loss or subject to Compulsory Acquisition provided always that no further instalments of hire shall become due and payable after the date on which all sums due under Clause 11.1 shall have been received in full by Petro-Deep, and the Charter Period shall terminate on that date.

12.6 For the avoidance of doubt, Brasoil shall continue to pay hire under this Agreement notwithstanding termination of the chartering of the Vessel pursuant to Clauses 13 or 15 provided always that no further instalments of hire shall become due and payable after the date on which all sums due under Clauses 13 and 15 shall have been received in full by Petro-Deep, and the Charter Period shall terminate on that date.

13. TERMINATION EVENT

13.1 Termination Event

A Termination Event shall mean any or each of the following events, states of affairs, conditions and acts (whether any such event, state of affairs, condition or act shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) (it is expressly agreed and confirmed that Clause 11 hereof shall apply to, and Clause 13 shall not apply to, the case in which any event or act which falls within the scope of a Total Loss and where a Termination Event occurs or exists)…………………………………………

13.2 Special Powers

1. Upon the occurrence of a Termination Event and at any time thereafter so long as the same shall be continuing, Petro-Deep may, at its option, exercise all or any one or more of the following powers at any time and as Petro-Deep may think fit:

(a) To declare by notice given to Brasoil the Termination Payment and all Other Indebtedness to be immediately due and payable whereupon the same shall become immediately due and payable and Brasoil shall pay the same together with any Over-due Interest thereon for the period from the date the Termination Payment is declared due until the full payment thereof;

(b) To take any action at law or in equity to collect the Termination Payment and all Other Indebtedness then due and thereafter to become due and the Over-due Interest thereon or to enforce performance and observance of any obligation, agreement or covenant of Brasoil under this Agreement; and

(c) To receive all of the insurance proceeds and recoveries which Petro-Deep may use for payment of repair or liability.

14. PURCHASE AND TRANSFER OF TITLE

14.1 Purchase

In consideration of the full payment of (i) all Charter Hires hereunder or, if the Vessel becomes a Total Loss or there is earlier termination of the Charter Period, the Loss Payment or the Termination Payment respectively, (ii) all Other Indebtedness and (iii) all accrued Over-due Interest, Petro-Deep shall or shall procure that SANA shall transfer the legal title to and ownership of the Vessel to Brasoil or its nominee pursuant to the terms of this Clause by means of delivery of a bill of sale executed and notarised at Brasoil's expense; provided that Brasoil has paid the Final Payment to Petro-Deep and has performed all of its other obligations under this Agreement.

17. OVER-DUE INTEREST

In the event of any failure by Brasoil to pay on the due date for payment thereof, or in the case of any sum payable on demand, the date of demand therefor, any hire or other amount payable by it under this Charter (including, without limitation, any amounts payable under Clauses 11.1 or 13.3 or 15 (but not including amounts not paid due to the exercise by Brasoil of its entitlement to defer or suspend payments pursuant to Clauses 20.4 and 20.5 in which case no interest will be payable under the provisions of this Clause 17)), Brasoil shall pay to Petro-Deep on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of Brasoil) at the rate determined by Petro-Deep and certified by it to Brasoil either (i) in respect of such payment in Dollars hereunder to be the greater of 9% and that rate which is the aggregate of:

(1) two per cent (2%); and

(2) the London Inter-Bank Offered for Dollar deposits of not more than one month's duration (as selected by Petro- Deep in the light of the likely duration of the fault in question)……….

10. A process of discounting means in this context a reduction for accelerated payment. Insofar as I approach the task of construction with any a priori assumption, I would normally expect a reduction for accelerated payment to relate to the period of acceleration. It should be noted that the rate of discount which is stipulated does not reflect a rate at which the money could be reinvested for the balance of the term of the transaction, rather it reflects a rate relevant to six month deposits. The discount is not therefore designed to bring about an actuarially determined net present value. However that does not detract from the force of my general observation that I would expect the discounting to reflect the period of acceleration.
11. The difficulty in construing the definition of Loss Payment stems, at any rate in part, from the use of the expression "declared due." The Loss Payment was not, by reason of the actual total loss of the platform of 20 March, in any real or meaningful sense "declared due." By reason of clause 11.1 the occurrence of the total loss automatically brought about the result that the Loss Payment became payable within 90 days. Payment would be due on day 90 and would not be overdue until day 90 plus one. In some cases of total loss there would have to be a process of ascertainment and possibly of agreement as to the existence of a total loss, particularly in the case of a constructive, compromised or arranged total loss. Such a process would not ordinarily lead to a declaration as to anything, although I suppose that it might plausibly be said that an announcement or an agreement that the platform was to be regarded as, say, a constructive total loss, amounted, for the purposes of this contract, to a declaration that the Loss Payment was due 90 days after the agreed or announced date upon which the platform had become a constructive total loss.
12. In contrast the procedure envisaged by clause 13 pursuant to which a Termination Payment may become due necessarily and expressly involves a declaration by notice that the Termination Payment and all Other Indebtedness is immediately due and payable. The Termination Payment is defined, albeit in somewhat confusing terms, by reference to the Loss Payment. Mr Hancock QC for Petrobras and Brasoil suggests that the cross reference is a pointer to the intention that the Loss Payment and the Termination Payment should be calculated in the same way. It is, he submits, only natural that they should be. In each case, he submits, the intention must be to compensate Petro-Deep for the same loss, the loss of future entitlements under the contract. That being so, the compensation must be similarly calculated. The discounting process must therefore in the case of total loss be to the date when the need for a Loss Payment is triggered, i.e. the date of the total loss, just as in the case of a Termination Event it is to the date when the need for a Termination Payment is triggered, i.e. the date of the declaration by notice that the Termination Payment is due and payable.
13. In my judgment this approach is flawed and it brings about results which, it can be deduced from the contract, are not intended. In the case of the actual total loss which here occurred Mr Hancock's suggested construction gives no more sensible meaning to the word " declared" in the definition of Loss Payment than does the rival approach. In my judgment it is clear that a drafting error has been made in the definition of Loss Payment, which is carried through into, or perhaps has its origin in, Tables A and B of Declaration III appended to the Participation Deed and Security Assignment. In those Tables the draftsman has rolled together the process required by clauses 11 and 13 and used a word, declaration, which is in fact appropriate only to clause 13. The substance of the matter is however apparent from the fact that whereas Table A has provision for over-due interest, Table B does not.
14. Declaration III would accompany a Loss Payment or a Termination Payment and Tables A and B indicate the manner in which such payment is to be calculated. Table A deals with payments which have accrued due prior to the date on which the Loss or Termination Payment is due and had not by then been paid, and provides for the calculation of overdue interest thereon as prescribed by sub-clause (iii) of the definition of Loss Payment. Table A makes no provision for discounting because those payments, by definition, are not to be discounted – they are in fact over-due. Table B deals with the fixed hire payments falling due after the date on which the Loss or Termination Payment is due – over-due interest is not due on them on that day and hence Table B makes no reference to such over-due interest, and nor is there any provision therefor in the definition of Loss Payment.
15. On the approach favoured by Petrobras and Brasoil by contrast, the effect of discounting back to the date of total loss will in virtually every case involve discounting the fixed hire payment falling due in the 90 days between the total loss and the date prescribed for payment – see clause 12.5 – on the basis (i) that it is outstanding; (ii) it is (almost by definition) not paid as at the date the payment is declared due, on this hypothesis the date of loss; and (iii) it must therefore be discounted. However since on this hypothesis the instalment will not have been paid on what is now the due date, the date of loss, the discounted instalment will also pursuant to clause 17 carry over-due interest at the default rate of interest which is fixed at at least 9%. This is not a sensible outcome. It involves the payment of a penal or default rate of interest on principal for a period beginning to run before the principal is payable. It is inconsistent with the fact that the definition of Loss Payment does not refer to over-due interest on payments falling due after the Loss Payment is declared due and it is inconsistent with the scheme of Tables A and B. It is also in my judgment inconsistent with the clear contrast between clauses 11.1 and 13.2.
16. Clause 11.1 envisages that the payment which will become due in consequence of a total loss is the Loss Payment and all Other Indebtedness. Other Indebtedness is separately defined and does not include over-due interest. Clause 11.1 makes no reference to over-due interest, whereas if Petrobras is correct the payment which will fall to be made will necessarily always include over-due interest (a) on the discounted instalment of hire falling due within 90 days of the loss and (b) on the Loss Payment itself if not paid, as it is inconceivable it would be, on the date of total loss. By contrast Clause 13.1 (1) (a) which is the equivalent provision in relation to the Termination Payment does expressly envisage that the payment which will fall to be paid in consequence of a declaration by notice given thereunder will include over-due interest. It necessarily will, because the Termination Payment becomes immediately due and payable upon the giving of the notice. Thus in this instance all instalments falling due after the date of the notice will be discounted – because all by definition are then outstanding and not paid and the Termination Payment itself will bear over-due interest as from the date of the declaration by notice until payment, which will inevitably take place later, indeed it is envisaged that it will be within 60 days – see clause 13.3 (1).
17. There is also an interesting contrast between clauses12.5 and 12.6. As Mr Hancock explained a cash flow requirement may underlie the notion that instalments of hire remain payable notwithstanding there has been a total loss or a declaration of termination of chartering. However the two situations are dealt with differently. Under Clause 12.5 instalments of hire cease to be payable once Brasoil has paid all sums due under clause 11.1, which does not include or refer to over-due interest. Under clause 12.6 instalments of hire remain due and payable until all sums due under clause 13 shall have been paid, which includes over-due interest.
18. All these are pointers to the regimes under clauses 11 and 13 being different. Clause 13 spells out in turn that the regimes are distinct, providing that where an event or act amounts both to a Total Loss and to a Termination Event it is the regime prescribed by clause 11 which shall apply to the exclusion of the clause 13 regime. There is no intrinsic reason why the parties should not have chosen to adopt two distinct regimes. A total loss necessarily brings about termination of the chartering of the platform and automatically brings into play those provisions of the contract which are designed to reflect (a) the agreed allocation of risk consistent with its nature and (b) the acceleration in the passing of title which it is envisaged should follow termination of chartering. A Termination Event by contrast has no necessary consequences. It is a matter for Petro-Deep to decide whether and if so when, assuming the Termination Event is continuing, it wishes in the light of the same to terminate the chartering and to set in train the machinery which will bring about an acceleration in the passing of title. There are twenty-two separate Termination Events. Most of them can properly be characterised as involving fault or default on the part of Brasoil or Petrobras. Those that cannot relate to matters where it is understandable that the risk of their occurrence should by agreement be cast on to Petrobras/Brasoil rather than on to Petro-Deep. If Petro-Deep so elects, it is its declaration which renders the Termination Payment due, not the antecedent event which empowered it so to elect.
19. In the light of these provisions I can see no reason why it should be presumed that a total loss will bring about under clause 11.1 consequences which are precisely numerically equivalent to a declaration of termination of chartering under clause 13.2. On the contrary I can see every indication in the contract that that is not intended, and I have endeavoured to set out some of those indications. The high watermark of Mr Hancock's argument is perhaps the definition of Termination Payment as being an amount equal to the Loss Payment. On any showing the definition is not very happily worded. There is no Loss Payment payable pursuant to clause 13. Mr Hancock suggested that a full stop should actually or notionally be placed after the words Loss Payment in the definition. That does not really help. Liquidated damages are not payable pursuant to clause 13 because Termination Event is defined in terms which embrace many events which do not amount to breaches of contract by Brasoil, and indeed include faults, defaults or failings of Petrobras which is not a party to the agreement. The concept of liquidated damages first appears in the definition of Loss Payment where it is equally if not more inappropriate. The sense of the definition of Termination Payment is I think entirely clear. It is that a Termination Payment is an amount equal to what a Loss Payment would be if calculated as at the date of the declaration notice given pursuant to clause 13.2. That reflects the two different approaches spelled out in clauses 11.1 and 13.2. Clause 11.1 spells out in terms that the Loss Payment will be payable within 90 days of the occurrence of the loss. It is not immediately due and payable on occurrence of the loss. That is unsurprising, since it may take some time to establish that a loss has occurred. At all events the provision could not be more clear. Clause 13.2 is equally clear. Here by contrast service of a notice expressly renders the Termination Payment immediately due and payable. The definition of Termination Payment means that it is to be calculated as if it were a Loss Payment being calculated by reference to the date of the declaration notice.
20. In my judgment the scheme of the contract is clear. The relevant date to which the discounting is calculated is, in the one case, total loss, 90 days after the occurrence of the total loss and, in the other, occurrence of a Termination Event, the date of declaration by notice that the Termination Payment is payable. It makes no sense whatever to regard the occurrence of an actual total loss (or any total loss) as a declaration that a Loss Payment is due and the attempt to do so is born out of a misguided assumption that there should be a precise assimilation between the consequences of a total loss and the consequences of a declaration of termination of chartering. The method of calculation of a Termination Payment is indeed identical to the method of calculation of a Loss Payment but the crucial distinction spelled out by the contract is that the date by reference to which the discounting will be carried out is, in the one case, 90 days after an event which automatically brings about a termination of the chartering and, in the other, the date upon which one party unilaterally declares the chartering to be terminated. There are many understandable reasons why the parties should have chosen to proceed in that way but in view of their having so clearly achieved that result, which is a perfectly sensible result, it is idle to speculate as to either the cogency of those reasons or the nature of considerations which might have led to the adoption of a different regime.
21. The parties have not expressly catered for an early payment of the Loss Payment, no doubt because it is not ordinarily envisaged that parties to contracts such as these will, at possibly unnecessary cost to themselves, discharge their liabilities early. The facts of this case demonstrate that it might be possible to speculate by reference to trends in interest rates that early payment of a Loss Payment could result in a lesser liability, although of course one would have to balance the resultant earlier loss of use of the money consequent upon early payment. The point is academic because payment was here made on 18 June 2001, 90 days after the total loss. However in case it is suggested that my preferred construction is incorrect or unworkable by reason alone of its failure to provide a formula by reference to which an early payment could be calculated, I should add that it is in my view an obviously necessary implication that if payment of the Loss Payment is made prior to the due date, the discounting is to the date of payment. No doubt the parties did not spell that out (a) because it did not cross their minds that a payment would be made early and (b) because if they had been asked what was in that unlikely event to happen they would have replied that the answer was obvious.
22. The parties were agreed that in the event that I reached the conclusion which I have I should give effect to it by declaring that the correct amount of the Loss Payment required pursuant to Clause 11 of (i) the Bareboat Charter and Purchase Agreement dated 20 June 1997 between Petro-Deep Inc. and Braspetro Oil Services Company and (ii) the Bareboat Sub-Charter Agreement dated 20 June 1997 between Braspetro Oil Services Company and Petroleo Brasileiro S.A. Petrobras is US$ 334,557,499.34. I so declare.