A local oil bunkering company was ordered by a civil court to pay over one million US dollars by way of compensation for damages after failing to honour its obligations arising from a fuel storage agreement.

In June 2010, Mediterranean Offshore Bunkering Company Ltd had signed a contract with Island Bunker Oils Ltd to provide storage facilities for fuel oil and gas oil imported by the latter.

However, in April 2011, following years of complaints regarding foul odours allegedly emanating from MOBC's facilities, the Malta Environment and Planning Authority issued stop orders targeting certain operations conducted by the oil bunkering company. MEPA pointed out that MOBC lacked the necessary permits to load and unload fuels as well as to transfer the stored goods from one tank to another.

MOBC informed its client that owing to this restriction upon its operations, it could no longer honour its commitment as detailed in the agreement with Island Bunker Oils Ltd. Indeed, between April 26 and May 31, 2011 the latter was denied its rightful use of MOBC's storage facilities, being authorised only twice by MEPA to effect withdrawals from its fuel reserves.

This led Island Bunker Oils Ltd to institute civil proceedings for damages estimated to exceed one million US dollars.

Before the First Hall, Civil Court, presided over by Mr Justice Silvio Meli, MOBC Ltd claimed 'force majeure', an event reasonably beyond the control of the company, including "restrictions imposed by any governmental authority" as stipulated in the agreement.

However, the court rejected this claim stating that "after an exaggeratedly long lapse of time", during which MOBC Ltd had totally disregarded "the physical well-being of all persons involved", the authorities had done well to issue the stop orders.

MOBC Ltd had known for years of the problem concerning foul and harmful odours at its storage facilities since talks with the relative authorities had been ongoing. Yet the company had not done anything to remedy the situation. The regulatory measure taken by MEPA was long overdue and could certainly not be deemed to constitute 'force majeure'.

For this reason, the court upheld the claim of the applicant company and ordered MOBC Ltd to pay $1,229,365.55 by way of damages in addition to expenses and interests related to the suit.