Galaxy Energy International Ltd v Bayoil SA [2000] EWCA Civ 3031 (06 December 2000)

Galaxy Energy International Ltd v Bayoil SA [2000] EWCA Civ 3031 (06 December 2000)

Clause 11 of the sale contract is to be construed as requiring Bayoil to exercise due diligence to recover demurrage from Mahroukat; failure to do so entitles Galaxy to recover demurrage from Bayoil. The obligation is not satisfied merely by presenting a claim and demanding payment; reasonable efforts, including potentially commencing proceedings, may be required. Interest on demurrage is payable from the date Galaxy was required to pay demurrage under its charterparty, as the proviso in clause 11 does not operate where due diligence is not exercised.

Citation
[2000] EWCA Civ 3031
Parties
Claimant/respondent: Galaxy Energy International Limited; Defendant/appellant: Bayoil SA
Jurisdiction
England and Wales
Judgment Date
06 December 2000
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From Central London County Court
Outcome
Appeal dismissed; cross-appeal allowed.
Legal Topics
Implied Terms, Demurrage, Due Diligence, Interest on Damages, Construction of Contractual Clauses
Contract Law Commercial Law Implied Terms Demurrage Due Diligence Interest on Damages Construction of Contractual Clauses

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Parties

Galaxy Energy International Limited

Claimant/respondent

Bayoil SA

Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From Central London County Court

Legal Issues

  1. 1 Whether clause 11 of the sale contract requires Bayoil to exercise due diligence to recover demurrage from Mahroukat before Galaxy can recover from Bayoil.
  2. 2 Whether interest on demurrage should run from the date demurrage became due under the charterparty or from a later date.

Ratio Decidendi

Clause 11 of the sale contract is to be construed as requiring Bayoil to exercise due diligence to recover demurrage from Mahroukat; failure to do so entitles Galaxy to recover demurrage from Bayoil. The obligation is not satisfied merely by presenting a claim and demanding payment; reasonable efforts, including potentially commencing proceedings, may be required. Interest on demurrage is payable from the date Galaxy was required to pay demurrage under its charterparty, as the proviso in clause 11 does not operate where due diligence is not exercised.

Court Disposition

Appeal dismissed; cross-appeal allowed.

Orders

  • Bayoil to pay demurrage of US$130,155.90 to Galaxy.
  • Interest on demurrage payable from 30 August 1993.