Glencore Energy (UK) Ltd v Sonol Israel Ltd

JurisdictionEngland & Wales
JudgeMr Justice Beatson
Judgment Date26 October 2011
Neutral Citation[2011] EWHC 2756 (Comm)
Docket NumberCase No: CLAIM NO. 2011 FOLIO 493
Date26 October 2011
CourtQueen's Bench Division (Commercial Court)

[2011] EWHC 2756 (Comm)




Royal Courts of Justice

Strand, London, WC2A 2LL


The Honourable Mr Justice Beatson

Case No: CLAIM NO. 2011 FOLIO 493

Glencore Energy (UK) Ltd
Sonol Israel Ltd

Claudia Wilmot-Smith (instructed by Clyde & Co LLP) for the Claimant

Saira Paruk (instructed by Waltons and Morse LLP) for the Defendant

Hearing date: 21 October 2011

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Beatson

The defendant, Sonol Israel Ltd, has applied to strike out the claim by Glencore Energy (UK) Ltd ("the claimant") for US$76,260.95 in (see paragraph 1 of the Particulars of Claim) "unpaid demurrage". It does so on the ground that the claimant's Particulars of Claim discloses no reasonable grounds for bringing the claim because, on the facts asserted by the claimant, the claim is time barred.


The evidence on behalf of the defendant consists of two statements of Michael Biltoo, a solicitor at Waltons & Morse LLP, dated 14 July and 17 October 2011. That on behalf of the claimant consists of the statement of Edward Mills-Webb, a partner of Clyde & Co LLP, dated 27 September 2011.


Since the issue is the applicability of a time bar, I first set out the factual chronology as pleaded by the claimant. For the purposes only of this application the defendant proceeded on that factual basis, but it does not admit those facts.


The claimant entered into two contracts to sell transportation gasoil to the defendant on 15 December 2004 and 10 January 2005. The terms of the contracts are contained in letters on those dates from the claimant to the defendant. The first sentence of both letters is "as discussed, we are pleased to confirm the following sale of Transportation Gasoil subject to your agreement of the following terms". The defendant agreed to buy a total of 18,100 metric tonnes of gasoil from the claimant to be delivered between 1 and 12 January 2005 at the port of Ashkelon in Israel; 12,500 mts under the first contract and 5,600 mts under the second contract. The claimant had purchased the cargo on cif terms from BP, which was not itself the charterer of the relevant vessel, the "Team Anmaj". The vessel arrived at Ashkelon at 17:00 on 28 December 2004 and tendered Notice of Readiness. No berth was available, and it only arrived at its berth on 9 January 2005. Discharge was completed at 00:25 on 11 January.


BP presented its demurrage claim to the claimant on 27 April 2005. The claimant issued a demurrage invoice to the defendant on 28 April 2005. The demurrage invoice stated:



Demurrage value

USD 76,260.95

Due date







Section 5 of the Limitation Act 1980 provides that "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued". These proceedings were launched on 19 April 2011. If the cause of action accrued on either 11 January 2005, when discharge was completed or 10 January, the last day for which demurrage is claimed, the claim is time barred. But the demurrage invoice was issued five years and 361 days before proceedings were launched. If the cause of action accrued on that date, the claim is just in time.


The date on which the cause of action accrued depends on the nature of the laytime and demurrage provisions in the sale contracts. Miss Paruk, on behalf of the defendant, submitted that on their true construction they are free-standing independent obligations by the buyer to pay demurrage. If so, it is common ground the obligation accrued day by day pro rata from the moment when the laydays expired (see President of India v LIPS Martime Corp [1998] 1 AC 395per Lord Brandon at 422) and time has expired. But Mr Mills-Webb (statement, paragraphs 12–13) suggested they constitute obligations to indemnify the seller. He described them (paragraph 24) as contractual payment provisions reflecting the risk that sellers may be liable in demurrage which pass that risk and the payment obligation to the ultimate buyer. Miss Wilmot-Smith, on behalf of the claimant, submitted that, as either indemnities or contractual payment provisions the obligation only accrues when the buyer is presented with the relevant documents including an invoice, and time has not expired.


The defendant's application to strike out the claim was lodged on 14 July 2011. On 18 October the claimant applied to amend its Particulars of Claim. The application states that the amendment is sought because "for reasons that are not presently clear, the defendant does not appear to have understood the claimant's case as set out in the original Particulars of Claim". It is stated that the claim is for sums due and owing pursuant to "laytime" and "demurrage" provisions in two contracts of sale and not a claim for demurrage under a charter-party. Paragraph 1 of the draft amended Particulars of Claim states: "The Claimant's claim is for US$76,260.95 in unpaid monies due and owing under two contracts of sale, described therein as demurrage". It is stated on behalf of the defendant that, if its strike out application is not successful it will not contest the application to amend, but that the amendment is evidence of the fact the claimant has attempted to reformulate its claim in the light of the application to strike out the claim.


I turn to the relevant terms of the sale contracts, which are in materially identical terms. They provide:


DDU adjusted for out-turn quantity, one safe port/one safe berth Ashkelon which shall be delivered within the period 1–12 January 2005.

Delivery to buyers' storage facilities directly or via port storage facility. Buyers' responsibility to arrange pumping schedule with port facility for quantity stored.

Buyers to ensure they arrange to receive full allocated quantity as confirmed by independent inspectors.


Laytime allowed for discharging is 48 hours, Sundays and holidays included, pro rata for part cargo (if applicable).

If vessel arrives within the contractual laycan, laytime shall commence berth or no berth six hours after notice of readiness has been tendered at nominated or ordered anchorage or when vessel is all fast in berth, whichever occurs first.

If vessel arrives and tenders her notice of readiness before the contractual laycan, laytime shall commence, berth or no berth, six hours after the beginning of the contractual laycan or when the vessel is all fast in berth, whichever occurs first.

If vessel arrives and tenders her notice of readiness after the contractual laycan, laytime shall commence when vessel is all fast in berth.


As per charter-party rate, terms and conditions."


The charter-party to which the sale contracts refer is contained in or evidenced by a fixture recap dated 30 November 2004. The material provisions of the fixture recap are:





The material provisions of the Exxonvoy 84 charter-party are:


(a) COMMENCEMENT/RESUMPTION. Laytime or time on demurrage, as herein provided, shall commence or resume upon the expiration of six (6) hours after receipt by charterer or its representative of notice of readiness or upon vessel's arrival in berth, whichever occurs first. Laytime shall not commence before 06:00 local time on the commencing date specified in part I(B) unless charterers shall otherwise agree, in which laytime shall commence upon the vessel's arrival in berth.

(b) PAYMENT. Charterer shall pay demurrage per running day and pro rata for a part thereof for all time by which the allowed laytime specified in part I(I) is exceeded by the time taken for loading and discharging, and for all other charterer's purposes and which, under this charter, counts as laytime or as time on demurrage."


I should also set out clause 35 of the charter-party. Although, at the hearing it was common ground that it was an ancillary provision and (see OK Petroleum AB v Vitol Energy SA [1995] 2 Lloyd's Rep. 160) not incorporated into the sale contract. But, (see the discussion at [24]), Miss Willmott-Smith placed some reliance on it. It is headed "WAIVER OF CLAIMS" and provides:

"Any claim for freight, dead freight, demurrage and/or charges or expenses under this charter shall be deemed waived, extinguished and absolutely barred if such claim is not received by charterer or owner, as the case may be, in writing with supporting documentation within 180 days from the final date of discharge of the cargo on the voyage with respect to which said claim arises. This clause shall not apply with respect to claims for damage, loss, or shortage of cargo".



I start with a point in Miss Wilmot-Smith's written submissions but not developed at the hearing. In paragraph 9 of her skeleton argument she submitted that the defendant's strike-out application is misconceived because the proper meaning of "demurrage" provisions is a question of construction; as with all questions of construction, the factual matrix is relevant; and the Court must approach the task of contractual construction against the relevant commercial background. It is undoubtedly correct that the Court must approach the task of contractual construction against the relevant commercial background. Miss Wilmot-Smith did not, however, suggest that the claimant would be adducing additional evidence if this case proceeds to trial or disagree with...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT