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Glencore International V. Metro Trading Notes

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GLENCORE V. METRO FACTS Until early February, 1998 MTI was engaged in the business of buying, blending and selling fuel oil. It bought fuel oil of various grades and other oil products from a variety of sources which it stored temporarily and then re-sold, after carrying out any necessary blending, either to vessels as bunker fuel for their own consumption or to traders on the international oil market as cargoes or part-cargoes of fuel oil. These activities were carried on in Fujairah itself and in the water off Fujairah using four large vessels, Metrotank, Nafkratis, Athenian Splendour and Sea Giant as floating storage tanks. Glencore International A.G. ("Glencore"), Caltex Trading Pte. Ltd. ("Caltex"), Mobil Export Corporation ("Mobil") and Arexco International Ltd. ("Arexco") all entered into agreements at one time or another with MTI under which they delivered oil products to MTI for storage. Metro Oil Corporation ("MOC"), an associated company of MTI, operated a refinery and oil storage facilities in Fujairah. In February, 1995 Texaco International Trader Inc. ("Texaco") entered into a processing agreement with MOC for the processing of crude oil. Under that agreement Texaco was to deliver certain quantities of crude oil to MOC and was to receive in return stipulated quantities of refined products. In February, 1998 it became clear that MTI was insolvent and could not continue its operations. An inventory taken in early March that year showed that there remained in the possession of MTI about 750,000 tonnes of fuel oil, far less than the depositors calculated that it should have been holding. For example, Glencore alleges that MTI should have been holding over 2.5 m. tonnes of oil products to its order. Glencore, Caltex, Mobil, Texaco and Arexco (the "oil claimants") have all asserted proprietary claims to the remaining oil held by MTI. During January and February, 1998 MTI sold various parcels of fuel oil to third parties in the form of bunkers and whole-cargo parcels. The receivers were authorized to get in the amounts due in respect of the sale of these goods. These amounts, which have become known as "the receivables", are subject to competing claims from MTI, the banks and the oil claimants who assert that the proceeds of sale now represent the oil sold by MTI which was their property. Since MTI is insolvent, the litigation largely revolves around the question of title to the oil which remained in MTI's possession at the time the receivership order was made and

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